DIU Low Cost ISR (LC-ISR) Prize Challenge: Executive Summary for Startups

Executive Summary

The Defense Innovation Unit (DIU) has opened the Low Cost ISR (LC-ISR) prize challenge for mature unmanned aircraft that deliver intelligence, surveillance and reconnaissance (ISR) at low total lifecycle cost. DIU wants medium-endurance and long-endurance systems carrying EO/IR, SAR or SIGINT payloads that can launch and recover from expeditionary or austere sites. Submissions are due by 11:59:59 PM Eastern Time on October 14, 2026.

The challenge rewards affordable scale. DIU states that it may favor lower-cost solutions that provide sufficient mission capability at greater scale over higher-performing solutions whose cost limits the quantity that can be fielded. Companies that succeed in the fly-offs receive cash prizes and become eligible for prototype agreements and follow-on work.

Solicitation at a Glance

• Agency: Defense Innovation Unit (DIU), Department of War
• Opportunity: Low Cost ISR (LC-ISR) Prize Challenge
• Project ID: PROJ00711
• Authority: 10 U.S.C. § 4025 (prize competitions), with potential follow-on under 10 U.S.C. §§ 4022 and 4023
• Funding: $100M total prize and initial follow-on pool; up to $250M additionally budgeted for development, production and theater integration
• Technology Maturity: Mature, flying systems (DIU: "mature solutions, not concepts")
• Submissions Due: October 14, 2026, 11:59:59 PM Eastern Time

Think your company or platform team qualifies? Talk with BW&CO before the October 14 deadline.

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What Is the LC-ISR Prize Challenge?

LC-ISR is a DIU prize competition. Companies submit a pitch deck, DIU selects participants for pitches, and selected companies fly their systems in government fly-offs. The challenge is designed to find ISR aircraft the joint force can buy in quantity, so cost, sustainment and production readiness are evaluated alongside sensor and flight performance.

Because the challenge runs under 10 U.S.C. § 4025, DIU states that submissions constitute a competitive procedure for purposes of potential follow-on actions. That means DIU may use the results to award prototype agreements or other follow-on actions without running a separate competition. Other Department of War components may also use the results.

What Problem Is DIU Trying to Solve?

The joint force needs persistent ISR in places where large, expensive aircraft and long runways are not practical. DIU is looking for systems that can deploy by expeditionary means, set up quickly, operate with small crews and keep collecting in contested conditions, at a cost low enough to field in meaningful numbers.

Priority Capability Areas: What DIU Is Looking For

• Two endurance classes: Medium endurance (3 to 12+ hours) and long endurance (12 to 24+ hours).
• Multi-intelligence payloads: EO/IR, SAR and SIGINT.
• Expeditionary operations: Launch and recovery from austere sites, transport by truck, military helicopter, ISO or MIL containers or pallets, and launch within three hours of offload.
• Low lifecycle cost: Platform, sensors, personnel, operations and sustainment.
• Open, integrable architecture: A third-party C2 integration technical data package (interface documentation and SDK/API), a Modular Open Systems Approach supporting future integration with Project AVO (Autonomous Vehicle Orchestrator), and the ability to pass sensor data over government-directed radios and waveforms.
• Contested operations: Beyond-line-of-sight operation (SATCOM and RF-contested considerations are viewed favorably) and reliable navigation in GNSS-degraded or denied environments.
• Minimal manpower: Small crews for launch, recovery, maintenance, logistics and operations, plus autonomy that reduces operator workload.

DIU's evaluation areas include sensor performance, flight performance, expeditionary capability, cost, payload modularity, architecture design, autonomy, command and control in contested environments, reliability and maintainability, environmental suitability, manufacturing readiness and future business models. DIU also wants to explore ISR as a Service and contractor-owned/contractor-operated (COCO) or government-owned/contractor-operated (GOCO) models.

Prize Structure and Funding

• Fly-Off 1 (early Q2 FY27): $250,000 cash prize to each participant who demonstrates successfully.
• Fly-Off 2 (Q3 FY27): $50,000 cash prize to each participant who demonstrates successfully.
• Follow-on eligibility: Successful participants become eligible for further prizes or agreements.
• $100M pool: The $100M figure is a combined prize and initial follow-on pool. DIU has not published how it splits between prizes and follow-on work.
• Additional budget: The government has budgeted up to $250M more for further development, system improvement, scaled production and sustained theater integration, based on government needs and program execution.
• Subject to change: Prize amounts, structure, continuation criteria and the number of awards remain subject to government refinement.

Eligibility and Participation

• Companies may submit independently or as part of a team, partnership or joint venture.
• DIU is interested in both U.S. and non-U.S. capabilities. Participants are subject to a security screening before the fly-off.
• Participants provide the aircraft, payloads and operational teams, and are responsible for travel, transportation and logistics costs identified in later guidance.
• SAM.gov registration and a CAGE code are required to receive a prototype agreement. Start early if you do not have them.
• Section 889 compliance is required. Non-compliance may prevent an award.
• Small businesses and nontraditional defense contractors are encouraged to participate.

How to Apply

• Submit a pitch deck through the DIU submission form on the project page: a horizontal 16:9 PDF, 15 slides maximum, 10 MB maximum.
• Propose one platform per submission, for either endurance category and either fly-off, or one platform addressing multiple categories and fly-offs. Multiple submissions are allowed.
• Separate demonstrated capability from developmental capability, with supporting evidence.
• Make the cost case. Include a rough order of magnitude (ROM) cost, indicative pricing for individual systems, expected unit-cost reductions at higher production quantities and evidence that you can reach low-rate production quickly.
• Keep it CUI or below. Submissions may include Controlled Unclassified Information (CUI) but nothing higher.

What Happens After You Submit?

• November 2026: DIU notifies companies selected to pitch.
• November to December 2026: Pitches.
• By December 17, 2026: Fly-off selection notifications.
• Early Q2 FY27 and Q3 FY27: Fly-Off 1 and Fly-Off 2. Location to be announced.
• After the fly-offs: DIU may award prototype agreements or other follow-on actions without further competition, based on the results.

All dates after the submission deadline are tentative.

Is This Opportunity a Good Fit for Your Company?

LC-ISR is a strong fit for companies that already fly a medium- or long-endurance aircraft and can price it for volume production. It also creates a real route for companies that do not build airframes. Sensor makers (EO/IR, SAR, SIGINT), autonomy and C2 software companies, communications and navigation providers, and launch and recovery suppliers can join a platform team, because DIU explicitly evaluates payload modularity, third-party C2 integration, open architecture and contested navigation.

If you are still at the concept or lab-prototype stage, this challenge is likely too early. DoD SBIR/STTR or a DIU Commercial Solutions Opening may be a better first step, with LC-ISR follow-on iterations as a later target.

How BW&CO Can Help

BW&CO has helped deep-tech and dual-use founders secure more than $350M in non-dilutive funding. For DIU prize challenges like LC-ISR, we help you:

• Confirm fit against DIU's maturity, cost and expeditionary requirements
• Build a 15-slide pitch deck that separates demonstrated and developmental capability and makes the pricing and production case
• Identify platform or subsystem teaming partners and structure the team's submission
• Prepare for the pitch, the fly-off and prototype agreement negotiation
• Map adjacent pathways such as DoD SBIR/STTR, DIU CSOs and other OT routes if LC-ISR is not the right fit

Plan Your LC-ISR Submission

Frequently Asked Questions

What is the DIU LC-ISR prize challenge?

LC-ISR (Low Cost ISR) is a DIU prize competition, Project PROJ00711, seeking mature medium- and long-endurance unmanned aircraft that deliver multi-intelligence ISR at low lifecycle cost for expeditionary operations.

When are submissions due?

Submissions are due by October 14, 2026, at 11:59:59 PM Eastern Time.

How much funding is available?

DIU describes a total prize and initial follow-on pool of $100 million, plus up to $250 million budgeted for further development, production and theater integration. Cash prizes are $250,000 per successful participant at Fly-Off 1 and $50,000 at Fly-Off 2, subject to government refinement.

Does my company need to own an aircraft?

Every submission must include a mature, flying platform, and participants provide the aircraft, payloads and operational teams. Companies that make payloads, autonomy, C2 or communications can participate as part of a team, partnership or joint venture.

What should the submission include?

A 16:9 PDF pitch deck of up to 15 slides and 10 MB, separating demonstrated from developmental capability, with a ROM cost, indicative unit pricing, unit-cost reductions at volume and evidence of low-rate production readiness.

Can non-U.S. companies participate?

Yes. DIU is interested in U.S. and non-U.S. capabilities, subject to a security screening before the fly-off.

What happens after the fly-offs?

DIU may use the results to award prototype agreements or other follow-on actions without further competition, under 10 U.S.C. § 4025.

Who pays for the fly-off?

Participants are responsible for their own aircraft, crews, travel, transportation and logistics costs identified in later guidance.

Can BW&CO help with an LC-ISR submission?

Yes. BW&CO helps companies confirm fit, build the pitch deck and pricing case, structure teams and prepare for the pitch and fly-off. Book a call with our team.

Source: DIU, Low Cost ISR (LC-ISR), PROJ00711, released September 29, 2026