South Dakota Gov. Larry Rhoden, left, and his economic development commissioner, Bill Even, speak to the media on April 8, 2026, during the Black Hills Defense & Industry Symposium at The Box event center in Box Elder. (Photo by Seth Tupper/South Dakota Searchlight)
BOX ELDER, S.D. (South Dakota Searchlight) — South Dakota’s governor took the next step Wednesday in his effort to make national security the state’s “next big industry” by announcing the creation of the South Dakota Defense Institute.
Republican Gov. Larry Rhoden, who formerly served in the National Guard, identified national security as a primary economic development focus in his State of the State address three months ago. He made Wednesday’s announcement at the Black Hills Defense & Industry Symposium.
“The federal government is looking for partners who can deliver,” Rhoden said. “South Dakota is that partner.”
Rhoden will provide $6 million in grants for the institute from the governor-controlled Future Fund for economic development, bringing the fund’s unobligated balance down to about $13 million. The state gets money for the fund by charging a fee to employers. They pay the fee when they submit payroll taxes that support unemployment benefits.
Most of the grant money, $5 million, will go toward the establishment and operation of the institute for its first five years, including the hiring of three employees. The state will give $1 million to help Elevate Rapid City, a local economic development group, purchase a building in the city for the institute.
A spokesperson for Elevate said the organization anticipates the institute being a part of the Industry Partners Building planned at 14 St. Joseph St. in eastern downtown Rapid City. In December, the Rapid City Journal reported that Pennington County planned to sell the office building to Elevate for $5.4 million.
It’s unclear what type of entity the institute will be. Bill Even, the governor’s commissioner of economic development, said the institute’s employees won’t work for the state. He said the institute will operate as a “consortium” with industry, government and higher education partners, with the legal structure to be determined.
The mission of the institute, according to a news release, is to “serve as a central hub to coordinate industry, education and government partners” and “support businesses pursuing defense contracting opportunities.”
Even said there are “probably over 100” contractors and subcontractors doing defense work in South Dakota. Many are connected to Ellsworth Air Force Base near Rapid City on the west side of the state. On the other side of the state, in Sioux Falls, MMS Products won a $35 million contract last year to produce drone warheads.
Rhoden said he wants centralized support to bring more defense contracts to South Dakota companies.
“We’ve already got a number of businesses in South Dakota that have kind of happened at random,” Rhoden said. “We’re going to be a lot more coordinated and a lot more structured at providing people with the infrastructure and the ability and the communication to get together.”
Rhoden is in the midst of a campaign to keep his job. He was elevated from lieutenant governor when his predecessor, former Gov. Kristi Noem, resigned in January 2025 to lead the federal Department of Homeland Security.
Rhoden faces three opponents from his own party in the June 2 primary election: U.S. Rep. Dusty Johnson, businessman Toby Doeden and state House Speaker Jon Hansen.
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