What happens when national-security and competition concerns point in different directions?
The recent IonQ-SkyWater merger raises a question that extends well beyond the transaction itself: What happens when national security and competition concerns point in different directions?
The issue arrives at a time of growing concern about the capacity of the U.S. defense industrial base to sustain prolonged conflict, replenish weapons stockpiles, and support rapid technological modernization.
National security should matter when a deal affects defense supply chains, military readiness, critical technologies, or domestic manufacturing. The harder cases arise when those concerns do not point in the same direction as ordinary antitrust analysis.
That tension is becoming harder to avoid as merger review absorbs more industrial-policy and national-security objectives.
Section 857 of the Fiscal Year 2024 National Defense Authorization Act reflects that shift. It requires certain parties making Hart-Scott-Rodino filings also to provide their materials to the Department of Defense when a transaction requires DOD review.
The Federal Trade Commission’s own premerger-notification page quotes Section 857 as applying to parties to a proposed merger or acquisition that “will require a review by the Department of Defense” and that are also required to file HSR materials with DOJ or the FTC.
From Competition Review to Strategic Review
U.S. merger enforcement focuses primarily on competition: concentration, entry barriers, foreclosure risks, critical inputs, innovation effects, and likely harm to customers or consumers.
In defense-related transactions, competition analysis can overlap with national-security concerns because a competitive supplier base may preserve alternatives, encourage innovation, and reduce procurement risk.
But the frameworks are different. Competition enforcers ask whether the market will remain competitive. Defense officials may ask whether the country will remain secure. A merger that increases concentration might still be defended as strengthening domestic supply chains or accelerating strategically important technology.
Section 857 is more than a filing rule. It gives defense officials a more formal role in transactions that may affect national-security supply chains.
[Editor’s Note: For purposes of this article, the agency’s statutory name remains the Department of Defense (DOD), even though some current government materials use “Department of War” (DOW).]
What Does Section 857 Do?
DOJ and the FTC remain the federal competition law enforcers, of course, but Section 857 gives DOD earlier visibility into certain transactions that may affect defense. Attorneys at Greenberg Traurig described the 2026 guidance as requiring “parallel M&A notification during Hart-Scott-Rodino Act (HSR) review” for covered defense-sector transactions.
The guidance identifies a broad, non-exhaustive set of transactions involving defense contracts, critical national-security technologies, defense-industrial-base sectors, or related intellectual property. Greenberg Traurig noted open questions about timing, capacity, and late notice.
Attorneys at Haynes Boone read the statute more narrowly, saying Section 857 applies when a transaction “will require a review” by DOD but does not itself appear to require such a review.
If the trigger for mandatory DOD review remains unclear, the practical scope of the filing obligation may depend heavily on DOD guidance and agency expectations.
See the sidebar, “A Murky Implementation of Section 857.”
The Shift from Ad Hoc Consultation
DOD has played a role in selected defense-sector merger reviews, usually when DOJ or the FTC shared HSR filings involving major defense suppliers. The new guidance directs parties to notify DoD directly in covered transactions, giving the department earlier access to information and a more direct role in assessing procurement, readiness, security, and supply-chain implications.
That earlier role raises practical questions:
- How should DOD views be weighed against competition concerns?
- Should DOD support for a transaction make a merger challenge less likely?
- Should DOD concern make a merger challenge more likely?
- Should the public know when DOD supports or opposes a transaction?
These questions will matter more as defense and commercial technology markets converge. See the sidebar, “Defense Contractors by Category.”
The IonQ-SkyWater Example
The recent IonQ-SkyWater transaction shows why these questions matter. The deal sat at the intersection of quantum computing, semiconductor manufacturing, domestic supply chains, and defense-adjacent technology. IonQ said the acquisition would accelerate its quantum-computing roadmap and secure supply chain capabilities domestically.
The FTC granted early termination after examining potential vertical concerns. Weighing in favor of the merger, according to the commissioners, was the Trump administration’s investment in and desire to take the lead in quantum computing.
Despite many references to national security, there was no indication in the commissioners’ statements that the DOD was or was not involved in reviewing the merger.
For more on the transaction itself, read our related piece, “What the FTC’s IonQ/SkyWater Review Reveals,” which examines the IonQ-SkyWater deal, the FTC’s review, and what the transaction says about merger scrutiny in quantum computing, semiconductor manufacturing, and defense-adjacent technology.
Who decides what is strategic?
Section 857 and the DOD guidance raise a basic question: who decides what counts as strategic technology? The 2026 guidance identifies areas such as applied AI, biomanufacturing, quantum, hypersonics, directed energy, and battlefield information dominance. Some are plainly defense-related; others, including AI, quantum technologies, and semiconductors, also reach deep into commercial markets.
Transparency and Accountability
Competition law enforcement usually leaves a public record: complaints, consent orders, closing statements, guidelines, filings, and court opinions that allow parties and practitioners to identify patterns.
National-security review is different: relevant concerns may be classified, procurement-sensitive, or otherwise difficult to disclose. If DOD input increasingly affects merger outcomes, businesses will need to know how that input is generated, weighed, and treated — advisory or decisive — with as much clarity as national-security constraints reasonably allow.
Beyond IonQ and SkyWater
IonQ-SkyWater matters less as a standalone merger than as an example of how emerging-technology deals can raise competition, industrial-policy, and national-security issues at once.
Section 857 may bring DOD into merger review earlier, but its relevance will be clearest in deals involving defense contractors, strategic technologies, supply chains, or critical infrastructure.
The harder cases will be those in which national-security arguments support a deal that raises ordinary antitrust concerns, forcing agencies to explain whether they are applying competition law, industrial policy, or both.
Edited by Tom Hagy, Editor-in-Chief, Mogin Law Blog.
Takeaways
Filing requirements replace ad hoc sharing. Section 857 of the Fiscal Year 2024 National Defense Authorization Act requires Hart-Scott-Rodino filings relating to defense industry deals also be submitted to the Department of Defense.
National security and traditional antitrust concerns differ. National security should matter when a deal affects defense supply chains, military readiness, critical technologies, or domestic manufacturing. The harder cases arise when those concerns do not point in the same direction as ordinary antitrust analysis. The two frameworks are different.
The IonQ-SkyWater merger shows why these questions matter. Weighing in favor of the merger, the FTC commissioners cited the Trump administration’s investment in and desire to take the lead in quantum computing. Despite many references to national security, there was no indication in the commissioners’ statements that the DOD was or was not involved in reviewing the merger.
Section 857 in Brief
What it is. Section 857 of the Fiscal Year 2024 National Defense Authorization Act requires parties to certain HSR-reportable mergers or acquisitions that will require Department of Defense review to provide HSR materials to DoD during the HSR waiting period. The FTC’s premerger-notification page quotes the statutory language and provides submission instructions: “The parties to a proposed merger or acquisition that will require a review by the Department of Defense who are required to file the notification and provide supplementary information to the Department of Justice or the Federal Trade Commission under section 7A of the Clayton Act (15 U.S.C. 18a) shall concurrently provide such information to the Department of Defense during the waiting period under section 7A of the Clayton Act (15 U.S.C. 18a).”
What changed. In February 2026, DOD issued guidance identifying categories of transactions that may require review, including defense-directed business, critical technologies, defense-industrial-base sectors, and related intellectual property. Finding the language, however, takes patience. As Law360 wrote earlier this year, the text is “buried on Page 211 of the nearly 1,000-page National Defense Authorization Act”
What practitioners are watching. The guidance shifts some notice obligations from agency referral to direct notice to DOD during HSR review. That raises practical questions about timing, DOD capacity, and what happens if parties fail to provide timely notice.
The unresolved issue. Section 857 applies when a transaction will require DOD review, but the statute does not clearly define when that review is required. For now, the practical scope of the obligation may depend on DOD guidance, agency expectations, and how cautious parties choose to be.
Defense Contractors by Category
This list is illustrative, not exhaustive. Defense-revenue figures are included only where a reliable public ranking provides comparable data; smaller or emerging-technology companies are listed without contract sizing where public figures are not directly comparable.
Tanks and Ground Combat Vehicles
General Dynamics Corporation — Abrams tanks, nuclear submarines, and defense IT; Defense News reported $36.5 billion in 2024 defense revenue.
BAE Systems plc — combat vehicles, electronic systems, munitions, and naval systems; Defense News reported about $32.3 billion in 2024 defense revenue.
Combat Aircraft
Lockheed Martin Corporation — F-35 aircraft, missiles, space systems, and C4ISR; Defense News reported $68.39 billion in 2024 defense revenue.
The Boeing Company — military aircraft, tankers, satellites, and space systems; Defense News reported $31.75 billion in 2024 defense revenue.
Northrop Grumman Corporation — B-21 bomber, space systems, missile defense, and strategic systems; Defense News reported $36.6 billion in 2024 defense revenue.
Missiles and Missile Defense
RTX Corporation — Raytheon missile-defense systems, Pratt & Whitney military engines, and defense sensors; Defense News reported $43.5 billion in 2024 defense revenue.
Lockheed Martin Corporation — missile and missile-defense programs, including air and missile defense systems.
Northrop Grumman Corporation — missile defense, propulsion, space, and strategic deterrence programs.
Naval Shipbuilding
HII, formerly Huntington Ingalls Industries, Inc. — aircraft carriers, submarines, and naval shipbuilding; Defense News reported $11.53 billion in 2024 defense revenue.
General Dynamics Corporation, through General Dynamics Electric Boat — nuclear submarines and undersea systems.
Nuclear and Strategic Systems
Northrop Grumman Corporation — strategic deterrence, missile defense, space, and nuclear command-and-control systems.
General Dynamics Corporation — nuclear submarines and related naval systems.
Lockheed Martin Corporation — strategic missile, space, and command-and-control programs.
Space and Satellite Systems
Lockheed Martin Corporation — military space, satellites, and strategic systems.
Northrop Grumman Corporation — military space systems, satellites, sensors, and command-and-control systems.
The Boeing Company — military satellites, space systems, and related defense programs.
Quantum and Emerging Technologies
IonQ, Inc. — quantum computing, networking, sensing, and security; selected for the Missile Defense Agency SHIELD IDIQ vehicle, which has a $151 billion ceiling, but individual task-order revenue is not established by that award.
Quantinuum Ltd. — quantum computing and related technologies; public defense-contract sizing was not readily comparable.
Rigetti Computing, Inc. — quantum computing hardware and cloud-access systems; public defense-contract sizing was not readily comparable.
D-Wave Quantum Inc. — quantum computing systems and services; public defense-contract sizing was not readily comparable.
Semiconductor and Trusted Foundry Infrastructure
SkyWater Technology, Inc. — U.S.-based semiconductor foundry serving aerospace, defense, and commercial customers; now a wholly owned subsidiary of IonQ, Inc.
GlobalFoundries Inc. — U.S.-based semiconductor manufacturing and secure foundry infrastructure; public defense-contract sizing was not readily comparable.
Intel Corporation, through Intel Foundry — advanced semiconductor manufacturing and U.S. trusted-foundry capacity; public defense-contract sizing was not readily comparable.
Editor’s note: Comparable defense-revenue figures are drawn from Defense News’ 2025 Top 100 ranking, which reports 2024 defense revenue.
When DOD Has Been Engaged in Merger Reviews
The Department of Defense has participated in selected defense-sector merger reviews for years. Public examples include:
1998 — Lockheed Martin Corporation / Northrop Grumman Corporation: DOJ sued to block the deal, saying the investigation had been conducted jointly with DoD and that the merger threatened competition in systems “vital” to national defense.
2019–2020 — United Technologies Corporation / Raytheon Company: DOJ required divestitures of UTC’s military GPS and optical systems businesses and Raytheon’s military airborne radios business before allowing the combination that created Raytheon Technologies Corporation, now RTX Corporation.
2019 — Harris Corporation / L3 Technologies, Inc.: DOJ required divestiture of Harris’s night-vision business after alleging the merger would eliminate competition between the only two suppliers of U.S. military-grade image intensifier tubes used in night-vision devices purchased by DoD.
2022 — Lockheed Martin Corporation / Aerojet Rocketdyne Holdings, Inc.: The FTC sued to block Lockheed Martin’s proposed $4.4 billion acquisition of Aerojet Rocketdyne, describing Aerojet as the last independent U.S. supplier of missile propulsion systems and warning of harm to markets critical to national security and defense.
Why SpaceX/Starshield is worth noting. SpaceX is not a merger-review example, but it illustrates the same convergence problem: commercial space infrastructure is becoming part of the national-security architecture.
In 2023, the U.S. Space Force awarded Space Exploration Technologies Corp. a one-year Starshield contract with a maximum value of $70 million for end-to-end service via the Starlink constellation, user terminals, network management, and related support for military mission partners.
The IonQ connection is also notable: in 2025, IonQ appointed General John W. “Jay” Raymond, the first Chief of Space Operations for the U.S. Space Force, to its board of directors as the company emphasized quantum computing, networking, and sensing for government, defense, and space applications.
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FAQ
What is Section 857 of the FY 2024 NDAA? Section 857 requires parties to certain HSR-reportable mergers or acquisitions that will require Department of Defense review to provide their filing materials to DOD during the HSR waiting period.
How does Section 857 affect merger review? It gives DOD earlier visibility into certain transactions that may affect defense supply chains, critical technologies, military readiness, or the defense industrial base.
Does DOD replace DOJ or FTC in antitrust review? No. DOJ and the FTC remain the federal antitrust enforcers. DOD’s role is focused on defense, procurement, national-security, and industrial-base considerations that may inform the review of covered transactions.
Why does the IonQ-SkyWater deal matter? The transaction illustrates how emerging-technology mergers can raise antitrust, semiconductor-supply-chain, quantum-computing, and national-security questions at the same time.