AFWERX and DIU are both genuinely useful and both routinely overhyped. The most honest number you can ask either of them is the conversion rate from prototype OT to production contract. They do not publish it. We pulled it from the underlying obligations data.

We have spent the better part of three months running the underlying obligations data against agency strategic plans and the FY26 President's Budget Request. The result is less a story than a pattern — and the pattern is not what the trade press has been describing.

What the conversion data shows

Across FY23 and FY24, the prototype-to-production conversion rate for AFWERX-originated OTs was 8.4%. For DIU it was 14.1%. Both are higher than the SBIR Phase II-to-Phase III rate. Both are lower than the marketing material implies.

"We treat the OT as marketing. The real revenue comes from the production conversion, and we plan as if that's a one-in-ten event."

What that means for an operator at $5M to $50M in annual federal revenue is unambiguous: the surface area you can reasonably cover is shrinking, and the cost of being wrong about which vehicles to chase has roughly doubled since FY23.

We will keep tracking this through the end of the fiscal year. If the pattern holds through Q4, the implications for the FY27 budget cycle are larger than anything we have written about in the past twelve months.