U.S. Army awards Elroy Air $46 million cargo drone deal

The U.S. Army has awarded Elroy Air a $46 million contract to develop an autonomous, hybrid-electric VTOL aircraft for modular cargo delivery, according to a Department of War contract announcement.

The Phase III Small Business Innovation Research award covers development of a Group IV unmanned aircraft system, a Pentagon classification for larger drones weighing more than 1,320 pounds (600 kilograms). Elroy Air will perform the work at its South San Francisco, California, headquarters, with an estimated completion date of February 18, 2029. The Army obligated about $5.1 million in fiscal 2026 research and development funds at the time of the award. Army Contracting Command at Aberdeen Proving Ground, Maryland, is managing the contract, and only one bid was received after the solicitation was posted online.

Elroy Air builds the Chaparral, a hybrid-electric aircraft that takes off and lands vertically using eight lift rotors and cruises forward on four separate propellers. The aircraft can carry more than 500 pounds (227 kilograms) of cargo in detachable pods over a range of up to 450 miles (724 kilometers), according to the company.

The Army has separately worked with Elroy Air this year to develop three unattended delivery modes for the Chaparral: a precision airdrop from a hover, a precision airdrop during forward flight, and an autonomous ground delivery after landing. During a July 15 demonstration at Elroy Air’s test facility in Byron, California, the aircraft completed two payload releases in a single flight, releasing a 68-pound (31-kilogram) load from a close-in hover and a 70-pound (32-kilogram) load while cruising at 65 feet (20 meters). The Army has said the pre-programmed delivery software allows the aircraft to complete resupply runs even when jamming or lost communications prevent operators from issuing active commands.

“Contested logistics is one of the hardest problems the joint force faces, from maritime resupply to sustaining distributed forces far from established hubs,” said Mark Rodrigo, who leads federal business development at Elroy Air. “One Chaparral can now resupply multiple positions in a single sortie, with no pilot at risk and no personnel required at the drop point. That’s a force multiplier for units operating at the tactical edge.”

Kratos Defense & Security Solutions is the exclusive U.S. manufacturer of the Chaparral under a partnership announced July 20, building the aircraft at an expanding production facility in Sacramento, California. Kratos has said it plans to deliver the first production aircraft by late 2026.

Elroy Air has also worked with the U.S. Air Force through the Agility Prime program and was approved to demonstrate a Chaparral prototype for the Navy and Marine Corps’ Medium Aerial Resupply Vehicle-Expeditionary Logistics program. The company’s commercial customers include FedEx, and it has an evaluation agreement with the Japanese Ground Self-Defense Force.