Washington DC in mid-September, Lockheed Martin Corp. lifted the tarp on a futuristic stealth drone: all sleek edges, mysterious vents and not a single pane of glass.

It was the first full-size glimpse of Vectis, an aircraft Lockheed’s chief executive hopes will help reshape the world’s biggest defense contractor.

“It’s probably the most valuable thing we can do independently for the US and our allies to advance deterrence,” CEO Jim Taiclet said in an extended Bloomberg Television interview that week. He says Vectis is the “big bet” that could boost the company’s fortunes and offer a new military capability.

The drone was born inside the company’s secretive Skunk Works, and is slightly smaller than an F-35 jet. Built for multimission stealth, it reflects Lockheed’s renewed focus on artificial intelligence and autonomy.

Vectis is also a test of Taiclet’s broader effort to remake the company amid a rapidly changing market. Lockheed’s business was built around enormous programs like the F-35, missiles and satellites, but well-funded startups are winning major Pentagon contracts with a focus on autonomy, software and speed.

Just how much the thinking inside the Pentagon is changing was brought into sharp relief this week, when Defense Secretary Pete Hegseth said he’d mandated Elon Musk, Anduril Industries Inc. founder Palmer Luckey and former House Speaker Newt Gingrich to lead a 120-day effort to identify future capabilities for the military.

The stakes are particularly high for Lockheed’s aircraft business. The F-35 remains the company’s dominant franchise, but rivals have captured all of the Pentagon’s known marquee next-generation aircraft programs: Northrop Grumman Corp. won the B-21 bomber and Boeing Co. the F-47 and F/A-XX fighters.

Taiclet says the Skunk Works division — the birthplace of fabled aircraft like the U-2, SR-71 and F-117 — is the “original defense technology startup” and wants to spread that culture across the company as it builds the Vectis.

“If we can get that right, build it at a reasonable cost, scale the production,” he said, and connect to other crewed aircraft and ships, “that’s going to be the game changer.”The field is already crowded with similar designs, dubbed collaborative combat aircraft; Lockheed lost out in an Air Force competition for such a system to Anduril and General Atomics Technologies Corp. Vectis could compete in the next round, but Lockheed says it is aimed at a broader range of US and international customers. Lockheed declined to say what the unit cost would be, but the Air Force competition aimed for about $20 million per aircraft.

Taiclet sayshe wants Lockheed to become the world’s leading defense technology company, combining industrial scale with technology from startups, tech companies and rivals. To accelerate the change, Taiclet plans to spend company money on research and development — even before the Pentagon has asked for a solution — which gives engineers greater freedom.

Lockheed is funding five Vectis prototypes without a production contract or committed buyer. The first prototype went from design to wind tunnel testing in just two months.

“What is different now is that the current leadership in the Pentagon has decided to take the straitjacket off the companies,” Taiclet said, allowing them “to be flexible, to propose solutions, to do prototypes, to go out in the field.”It’s a bold bet for a company facing doubts on Wall Street, including the lowest analyst rating among the US defense prime contractors. Lockheed’s 35% gain since Taiclet took charge in June 2020 ranks fourth among that group and significantly trails the S&P 500’s 150% surge in that span.

The challenge: Investors have discounted Lockheed against its peers because of slower growth and challenges around the F-35.

Lockheed also makes the Patriot PAC-3 interceptor and other critical military systems. The F-35 accounts for more than a quarter of the company’s sales, but has suffered years of delays and cost increases, with its estimated acquisition bill rising about 10% since late 2023 to $536 billion.

Taiclet says the biggest change in the current market is the Pentagon’s willingness to consider industry-proposed solutions. That shift carries risks. Kevin Marcus, a senior strategy official with the US Army in Europe and Africa, said at the IISS Prague Defense Summit last month that industry is developing some capabilities the military has no clear need for.

“I will tell you frankly, I am concerned that sometimes the private sector industry is driving us to have requirements that might not be required,” Marcus said.