Boston-based software firm Code Metal has secured an $80 million Pentagon contract to modernise and AI-enable WarMatrix, the Department of Defence’s wargaming simulation environment, in a process that took less than 12 months from pitch to full funding.
The Code Metal WarMatrix contract was awarded as an Other Transaction Authority (OTA) agreement, a procurement route that bypasses standard acquisition rules and allowed the Pentagon to move at an unusual pace for a defence technology deal.
Chief executive Peter Morales said the speed was unprecedented in his experience. ‘I have never seen them move this fast, and that’s been really exciting,’ he told Fortune, adding that the firm first secured $17 million to deliver the initial operating capability before receiving the full $80 million.
How the Code Metal WarMatrix contract came together
The roots of the deal stretch back further than the OTA agreement. According to Tectonic Defense, Code Metal began work on the underlying technology in 2024 with a $145,000 SBIR Phase I grant for its STRATEGIC Engine wargaming platform.
That early-stage work led to a formal Phase III award. GovTribe records show The District Washington awarded Code Metal a $17.4 million SBIR Phase III definitive contract for WarMatrix research and development on 30 September 2025, a step that preceded the larger OTA agreement.
WarMatrix is designed to help military planners run sophisticated wargaming and analysis. Code Metal’s work is expected to allow analyses that once took months to be completed in days.
‘We’re not replacing decades of validated code,’ Morales said. ‘We’re really making it reachable to the warfighter and to AI.’
A startup in a crowded defence market
Code Metal builds AI-powered software that translates code across programming languages and verifies it works on different types of hardware. The company was valued at $1.25 billion in February, when it closed a $125 million Series B led by Salesforce Ventures.
About 75% of its business is currently defence-related. The company employs 123 people and counts the US Air Force, Raytheon, L3Harris, and Boeing among its clients. Morales said he views the established defence primes not as competitors but as partners.
‘The defense primes do things that only they could do,’ he said. ‘But in some of these forward pushing areas like AI, they understand they need help.’
Morales spent roughly a decade at the intersection of hardware and software, including roles at BAE Systems, MIT’s Lincoln Laboratory, and Microsoft. At BAE, he worked on software for the F-35 fighter jet.
The $80 million deal arrives as venture-backed defence companies race to convert investor enthusiasm into government contracts. Roughly 10,000 new defence companies have entered the market over the past two years, according to an analysis by the Center for Strategic and International Studies. In the first quarter of 2026, venture capitalists deployed a record $19.8 billion into defence technology across 262 deals.
Among the 15 highest-valued defence-tech startups, Pentagon contract spending tripled last fiscal year from 2022, according to The Wall Street Journal, though those companies still account for less than 1% of total dollars across all defence contractors.
For Code Metal, turning single contracts into scalable revenue is now the priority. The company hired Ryan Aytay, former chief business officer at Salesforce and chief executive of Tableau, as president and COO earlier this year to lead that push.
Morales, 38, described Aytay as the kind of leader who can help Code Metal become an ‘n of 1’, a company that creates its own category.
The OTA agreement follows the September 2025 Phase III definitive contract and represents the full funding Code Metal will need to deliver a modernised WarMatrix to the Pentagon.
