An assortment of new firms, born in Silicon Valley or incorporating its disruptive ethos, are beginning to win lucrative military contracts, writes Michael T. Klare.
A General Atomics MQ-9 Reaper drone refueling at an undisclosed location in December 2022. (U.S. Air Force, Daniel Asselta, Public domain)
A New Military-Industrial
Complex Is Being Born
By Michael T. Klare
TomDispatch.com
Last April, in a move generating scant media attention, the U.S. Air Force announced that it had chosen two little-known drone manufacturers — Anduril Industries of Costa Mesa, California, and General Atomics of San Diego — to build prototype versions of its proposed Collaborative Combat Aircraft (CCA), a future unmanned plane intended to accompany piloted aircraft on high-risk combat missions.
The lack of press coverage was surprising, given that the Air Force expects to acquire at least 1,000 CCAs over the coming decade at around $30 million each, making this one of the Pentagon’s costliest new projects.
But consider that the least of what the media failed to note. In winning the CCA contract, Anduril and General Atomics beat out three of the country’s largest and most powerful defense contractors — Boeing, Lockheed Martin and Northrop Grumman — posing a severe threat to the continued dominance of the existing military-industrial complex, or MIC.
For decades, a handful of giant firms like those three have garnered the lion’s share of Pentagon arms contracts, producing the same planes, ships and missiles year after year while generating huge profits for their owners.
But an assortment of new firms, born in Silicon Valley or incorporating its disruptive ethos, have begun to challenge the older ones for access to lucrative Pentagon awards.
In the process, something groundbreaking, though barely covered in the mainstream media, is underway: a new MIC is being born, one that potentially will have very different goals and profit-takers than the existing one.
How the inevitable battles between the old and the new MICs play out can’t be foreseen, but count on one thing: they are sure to generate significant political turbulence in the years to come.
The very notion of a “military-industrial complex” linking giant defense contractors to powerful figures in Congress and the military was introduced on Jan. 17, 1961, by President Dwight D. Eisenhower in his farewell address to Congress and the American people.
In that Cold War moment, he noted that “we have been compelled to create a permanent armaments industry of vast proportions.”
Nevertheless, he added, using the phrase for the first time, “we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.”
Ever since, debate over the MIC’s accumulating power has roiled American politics. A number of politicians and prominent public figures have portrayed U.S. entry into a catastrophic series of foreign wars — in Vietnam, Cambodia, Laos, Iraq, Afghanistan, and elsewhere — as a consequence of that complex’s undue influence on policymaking.
No such claims and complaints, however, have ever succeeded in loosening the MIC’s iron grip on Pentagon arms procurement.
This year’s record defense budget of approximately $850 billion includes $143.2 billion for research and development and another $167.5 billion for the procurement of weaponry. That $311 billion, most of which will be funneled to those giant defense firms, exceeds the total amount spent on defense by every other country on Earth.
Over time, the competition for billion-dollar Pentagon contracts has led to a winnowing of the MIC ecosystem, resulting in the dominance of a few major industrial behemoths.
In 2024, just five companies — Lockheed Martin (with $64.7 billion in defense revenues), RTX (formerly Raytheon, with $40.6 billion), Northrop Grumman ($35.2 billion), General Dynamics ($33.7 billion), and Boeing ($32.7 billion) — claimed the vast bulk of Pentagon contracts. (Anduril and General Atomics didn’t even appear on a list of the top 100 contract recipients.)
Typically, these companies are the lead, or “prime,” contractors for major weapons systems that the Pentagon keeps buying year after year.
Lockheed Martin, for example, is the prime contractor for the Air Force’s top-priority F-35 stealth fighter (a plane that has often proved distinctly disappointing in operation); Northrop Grumman is building the B-21 stealth bomber; Boeing produces the F-15EX combat jet; and General Dynamics makes the Navy’s Los Angeles-class attack submarines.
“Big-ticket” items like these are usually purchased in substantial numbers over many years, ensuring steady profits for their producers. When the initial buys of such systems seem to be nearing completion, their producers usually generate new or upgraded versions of the same weapons, while employing their powerful lobbying arms in Washington to convince Congress to fund the new designs.
Over the years, non-governmental organizations like the National Priorities Project and the Friends Committee on National Legislation have heroically tried to persuade lawmakers to resist the MIC’s lobbying efforts and reduce military spending, but without noticeable success.
Now, however, a new force — Silicon Valley startup culture — has entered the fray, and the military-industrial complex equation is suddenly changing dramatically.
Along Came Anduril
Palmer Luckey, founder of Oculus VR Anduril Industries, in 2019 at an event in Toronto. (Stephen McCarthy, Collision via Sportsfile, Flickr, CC BY 2.0)
Consider Anduril Industries, one of two under-the-radar companies that left three MIC heavyweights in the dust last April by winning the contract to build a prototype of the Collaborative Combat Aircraft.
Anduril (named after the sword carried by Aragorn in J.R.R. Tolkien’s The Lord of the Rings) was founded in 2017 by Palmer Luckey, a virtual-reality headset designer, with the goal of incorporating artificial intelligence into novel weapons systems.
He was supported in that effort by prominent Silicon Valley investors, including Peter Thiel of the Founders Fund and the head of another defense-oriented startup, Palantir (a name also derived from The Lord of the Rings).
From the start, Luckey and his associates sought to shoulder aside traditional defense contractors to make room for their high-tech startups. Those two companies and other new-fledged tech firms often found themselves frozen out of major Pentagon contracts that had long been written to favor the MIC giants with their bevies of lawyers and mastery of government paperwork.
In 2016, Palantir even sued the U.S. Army for refusing to consider it for a large data-processing contract and later prevailed in court, opening the door for future Department of Defense awards.
In addition to its aggressive legal stance, Anduril has also gained notoriety thanks to the outspokenness of its founder, Palmer Luckey. Whereas other corporate leaders were usually restrained in their language when discussing Department of Defense operations, Luckey openly criticized the Pentagon’s inbred preference for working with traditional defense contractors at the expense of investments in the advanced technologies he believes are needed to overpower China and Russia in some future conflict.
Such technology, he insisted, was only available from the commercial tech industry. “The largest defense contractors are staffed with patriots who nevertheless do not have the software expertise or business model to build the technology we need,” Luckey and his top associates claimed in their 2022 Mission Document.
“These companies work slowly, while the best [software] engineers relish working at speed. And the software engineering talent who can build faster than our adversaries resides in the commercial sector, not at large defense primes.”
To overcome obstacles to military modernization, Luckey argued, the government needed to loosen its contracting rules and make it easier for defense startups and software companies to do business with the Pentagon.
“We need defense companies that are fast. That won’t happen simply by wishing it to be so: it will only happen if companies are incentivized to move” by far more permissive Pentagon policies, he said.
Buttressed by such arguments, as well as the influence of key figures like Thiel, Anduril began to secure modest but strategic contracts from the military and the Department of Homeland Security.
In 2019, it received a small Marine Corps contract to install AI-enabled perimeter surveillance systems at bases in Japan and the United States. A year later, it won a five-year, $25 million contract to build surveillance towers on the U.S.-Mexican border for Customs and Border Protection (CBP). In September 2020, it also received a $36 million CBP contract to build additional sentry towers along that border.
An Anduril Sentry surveillance device in Imperial County, California, 2022. (Jasonateff, Wikimedia Commons, CC BY 3.0)
After that, bigger awards began to roll in. In February 2023, the Department of Defense started buying Anduril’s Altius-600 surveillance/attack drone for delivery to the Ukrainian military and, last September, the Army announced that it would purchase its Ghost-X drone for battlefield surveillance operations.
Anduril is also now one of four companies selected by the Air Force to develop prototypes for its proposed Enterprise Test Vehicle, a medium-sized drone intended to launch salvos of smaller surveillance and attack drones.
The @USArmy has selected Ghost-X for its Company Level Small Unmanned Aircraft System Directed Requirement (DR).
Ghost-X offers a unique, highly-modular aircraft that builds upon Ghost’s multi-mission capabilities proven in a range of operating theaters and contested… pic.twitter.com/dhBAmlzm8y
— Anduril Industries (@anduriltech) September 25, 2024
Anduril’s success in winning ever-larger Pentagon contracts has attracted the interest of wealthy investors looking for opportunities to profit from the expected growth of defense-oriented startups. In July 2020, it received fresh investments of $200 million from Thiel’s Founders Fund and prominent Silicon Valley investor Andreessen Horowitz, raising the company’s valuation to nearly $2 billion.
A year later, Anduril obtained another $450 million from those and other venture capital firms, bringing its estimated valuation to $4.5 billion (double what it had been in 2020). More finance capital has flowed into Anduril since then, spearheading a major drive by private investors to fuel the rise of defense startups — and profit from their growth as it materializes.
The Replicator Initiative
Then U.S. Deputy Secretary of Defense Kathleen Hicks addressing a Pentagon event in June 2023. (DoD, John Wright)
Along with its success in attracting big defense contracts and capital infusions, Anduril has succeeded in convincing many senior Pentagon officials of the need to reform the department’s contracting operations so as to make more room for defense startups and tech firms.
On Aug. 28, 2023, Deputy Secretary of Defense Kathleen Hicks, then the department’s second-highest official, announced the inauguration of the “Replicator” initiative, designed to speed the delivery of advanced weaponry to the armed forces.
“[Our] budgeting and bureaucratic processes are slow, cumbersome, and byzantine,” she acknowledged. To overcome such obstacles, she indicated, the Replicator initiative would cut through red tape and award contracts directly to startups for the rapid development and delivery of cutting-edge weaponry.
“Our goal,” she declared, “is to seed, spark, and stoke the flames of innovation.”
As Hicks suggested, Replicator contracts would indeed be awarded in successive batches, or “tranches.” The first tranche, announced last May, included AeroVironment Switchblade 600 kamikaze drones (called that because they are supposed to crash into their intended targets, exploding on contact).
Anduril was a triple winner in the second tranche, announced on Nov. 13. According to the Department of Defense, that batch included funding for the Army’s purchase of Ghost-X surveillance drones, the Marine Corps’ acquisition of Altius-600 kamikaze drones, and development of the Air Force’s Enterprise Test Vehicle, of which Anduril is one of four participating vendors.
Just as important, perhaps, was Hicks’ embrace of Palmer Luckey’s blueprint for reforming Pentagon purchasing. “The Replicator initiative is demonstrably reducing barriers to innovation, and delivering capabilities to warfighters at a rapid pace,” she affirmed in November.
“We are creating opportunities for a broad range of traditional and nontraditional defense and technology companies… and we are building the capability to do that again and again.”
Enter the Trumpians
J.D. Vance being sworn in as vice president by Supreme Court Justice Brett Kavanaugh on Jan. 20. (Office of Vice President of the United States, Wikimedia Commons, Public domain)
Kathleen Hicks stepped down as deputy secretary of defense on Jan. 20 when Donald Trump reoccupied the White House, as did many of her top aides. Exactly how the incoming administration will address the issue of military procurement remains to be seen, but many in Trump’s inner circle, including Elon Musk and Vice President J.D. Vance, have strong ties to Silicon Valley and so are likely to favor Replicator-like policies.
Pete Hegseth, the former Fox News host who recently won confirmation as secretary of defense, has no background in weapons development and has said little about the topic. However, Trump’s choice as deputy secretary (and Hick’s replacement) is billionaire investor Stephen A. Feinberg who, as chief investment officer of Cerberus Capital Management, acquired the military startup Stratolaunch — suggesting that he might favor extending programs like Replicator.
In a sense, the Trump moment will fit past Washington patterns when it comes to the Pentagon in that the president and his Republican allies in Congress will undoubtedly push for a massive increase in military spending, despite the fact that the military budget is already at a staggering all-time high.
Every arms producer is likely to profit from such a move, whether traditional prime contractors or Silicon Valley startups. If, however, defense spending is kept at current levels — in order to finance the tax cuts and other costly measures favored by Trump and the Republicans — fierce competition between the two versions of the military-industrial complex could easily arise again.
That, in turn, might trigger divisions within Trump’s inner circle, pitting loyalists to the old MIC against adherents to the new one.
Most Republican lawmakers, who generally rely on contributions from the old MIC companies to finance their campaigns, are bound to support the major prime contractors in such a rivalry. But two of Trump’s key advisers, Vance and Musk, could push him in the opposite direction.
Vance, a former Silicon Valley functionary who reportedly became Trump’s running mate only after heavy lobbying by Peter Thiel and other tech billionaires, is likely to be encouraged by his former allies to steer more Pentagon contracts to Anduril, Palantir, and related companies. And that would hardly be surprising, since Vance’s private venture fund, Narya Capital (yes, another name derived from The Lord of the Rings), has invested in Anduril and other military/space ventures.
Named by Trump to direct the as-yet-to-be-established Department of Government Efficiency, Musk, like Anduril’s Luckey, fought the Department of Defense to obtain contracts for one of his companies, SpaceX, and has expressed deep contempt for the Pentagon’s traditional way of doing things.
In particular, he has denigrated the costly, generally ill-performing Lockheed-made F-35 jet fighter at a time when AI-governed drones are becoming ever more capable. Despite that progress, as he wrote on X, the social media platform he now owns, “some idiots are still building manned fighter jets like the F-35.”
In a subsequent post, he added that “manned fighter jets are obsolete in the age of drones anyway.” His critique of the F-35 ruffled feathers at the Air Force and caused Lockheed’s stock to fall by more than 3 percent.
“We are committed to delivering the world’s most advanced aircraft — the F-35 — and its unrivaled capabilities with the government and our industry partners,” Lockheed declared in response to Musk’s tweets.
Over at the Pentagon, Air Force Secretary Frank Kendall had this to say: “I have a lot of respect for Elon Musk as an engineer. He’s not a warfighter, and he needs to learn a little bit more about the business, I think, before he makes such grand announcements as he did.”
He then added, “I don’t see F-35 being replaced. We should continue to buy it, and we also should continue to upgrade it.”
President Trump has yet to indicate his stance on the F-35 or other high-priced items in the Pentagon’s budget lineup. He may (or may not) call for a slowdown in purchases of that plane and seek greater investment in other projects.
Still, the divide exposed by Musk — between costly manned weapons made by traditional defense contractors and more affordable unmanned systems made by the likes of Anduril, General Atomics, and AeroVironment — is bound to widen in the years to come as the new version of the military-industrial complex only grows in wealth and power.
How the old MIC will address such a threat to its primacy remains to be seen, but multibillion-dollar weapons companies are not likely to step aside without a fight. And that fight will likely divide the Trumpian universe.
Michael T. Klare, a TomDispatch regular, is the five-college professor emeritus of peace and world security studies at Hampshire College and a senior visiting fellow at the Arms Control Association. He is the author of 15 books, the latest of which is All Hell Breaking Loose: The Pentagon’s Perspective on Climate Change.
This article is from TomDispatch.com.
Views expressed in this article may or may not reflect those of Consortium News.
Here’s a couple of examples of what bombing missions have looked like on the Ukrainian Front.
The Russians have a hyper-sonic missile (5x sound) that can not be intercepted. Its launched from a Mig-31. It gets its speed from a ballistic flight path, so the Mig flies high, back behind its own lines, and launches this missile, possibly while at full climb, and the missile climbs higher. It then gets its hyper-sonic speed from the principle of what goes up must come down. Accurately guided onto its target., with a big warhead, unstoppable. The Mig never crosses the front lines to launch this. I’m too lazy to look up the range, but its doesn’t seem like a hard day at the office for the flight crew. Launch, climb, arm missile, fire, land. Back to the officer’s club.
The Russians have also done what the Americans did back under Cheney which is make kits that convert their arsenal of old dumb bombs into modern, smart guided weapons via a strap-on. These seem to have a similar flight plan. The firing point is at high altitude back behind your own lines, then let it glide and steer to its target.
In WW2, air defense was fighters with machine guns flying over your base. Today, trying to stop enemy bombers would appear to be a raid into enemy territory to hit a bomber that never comes very close to your country. I said appears to be, as I don’t recall seeing too many reports of anyone trying it. But this is a war where nobody admits their mistakes.
The Ukrainians have been staying low and close to the base to launch cruise missiles type weapons like Storm Shadow. Those too have the range to fire from close to the launching base. Since the Ukrainians don’t have air superiority, they don’t seem to do much more that take off, fly low, fire missile, land. That has a range of 300km or maybe longer since I’m too lazy to look it up. That’s what the F-16 pilots took those quicky, crash corporate training classes for.
If the USAF wanted to try to raid into Russian airspace to stop a bomber firing at them, they’ll be flying into the best SAMs (surface to air missile) in the world. The Russians saw Shock and Awe and decided to build good SAMs while the Americans were declaring the end of history. And, even the American overpriced stuff has been good enough to apparently teach the Russians that the best tactics these days are not to fly into the other country. The Russians use anything from ballistic missiles to long-range cruise missiles to hit places that they can’t reach from back behind their lines. They also have a selection of long and short range drones. Why risk an expensive plane and a pilot that apparently takes a year or more to train?
That’s what air combat looks like in the 2020’s. The top Russian fighters, the Su-57, haven’t had much to do, and iirc have been refitting for bombing missions. A vague memory says that some of them got refitted to carry the hyper-sonic missiles as the modern battlefield (so far) has not had the sort of air superiority, fighter versus fighter for control of the skies, type of aerial battles that they and the American jets were designed for.
Another classic case of preparing to fight the last war. On the American side, with fleets of planes that costs hundreds of millions of tax payer dollars a piece. Yippee. But who knows, Tom Cruise has not yet flown into battle to scare the Russians to death with his gray hair.
Sometimes even people like Musk can be right. There are no fighter versus fighter air superiority fights over Ukraine. If America had tried a “no-fly” zone, they’d have been dodging SAMs. Both fighters and tanks have different roles on the modern battlefield than they did during World War II. A lot changes in 80 years. More so in a world where people write fiction about approaching a singularity as we seem to keep going faster and faster. A lot has changed since the Iraq War(s).
I’ve laughed for years at people talking about fighter jets and their “dogfighting” ability. Combat had long been launching missiles from 50 miles away. The last time a fighter jet shot a plane down with a machine gun was something like Vietnam if not Korea. No Snoopy on his doghouse fighting the Red Baron with fancy top gun acrobatics to get on his tail. But, even that has changed again in a battlefield of drones and lots of weapons with long range strikes. You don’t have to fly over a place to bomb it any more. Most bombing missions are now launched from behind your own lines.
In trying to make a misaligned and badly designed military (for anything other than profit that is) function, they’ve been doing absurd things like flying expensive jets at tens of thousand dollars an hour of flight time, and firing missiles that cost hundreds of thousands of dollars, at drones that cost maybe $50k to $100k. And that would probably be the overpriced American defense contractor price. The defense of Israel against a wave of mainly old Iranian drones was reported to cost $1 billion.
The F-22 appears to be headed for retirement with one combat kill …. a Chinese weather balloon. And, iirc, it took down that deadly target with one of the air to air missiles that cost hundreds of thousands of dollars.
Musk was right… the F 35 was waaaaay over budget and was full of bugs. A MIC cautionary tale. Nobody wanted it
The headline gave me a completely different mental image … and a smile.
All that brass running for the shelters and pretending that they don’t need to change their underwear. Of course, America would go broke form all the combat medals that they’d give themselves from a single drone.
The title gave me a very different picture of events–my mistake, I suppose.
I suppose the Lord of the Rings references come because the digerati has gotten deeply involved in things military. The name “Palantir” is surprisingly revelatory, though the progenitors of “Anduril” seem confused about which side they are on.
Either way, for all that Tolkien does well, it seems it may be the Manichean qualities of his work that get carried forward.
Does Jeff Bezos own a stake in all of them? Of course, the mindset of the writer who wrote tales of darkness overwhelming the the world during the time when the radio was reporting on the rise of Hitler is one thing, the mindset of the people choosing these names today is another.
Given our other names like Predator drones and Brimstone missiles, I’m only surprised that Palantir wasn’t named “Sauron’s Eye.”
Which ever iteration of the MIC prevails, all these people are addicted to war profits. They pose a grave danger to all humanity. I propose we pack all of them onto Musk’s rocket ships and shoot them into the sun. That should at least give anyone else who has leanings in their direction pause before trying to resurrect the MIC for the foreseeable future.
“The Fletcher Memorial Home” by Pink Floyd, poetry by Roger Waters (I believe)
hxxps://www.youtube.com/watch?v=zDDzR2zSgsM
Sadly, only the names need updating.
All you need to do is to pack then onto one of Musk’s rockets and try to launch them. Don’t really need to aim. Musk’s rockets seem to blow up during launch as often as the old Cold War, pre-Nasa American rockets used to do. At least the old America aeronautical pioneers used to test fly their own creations. Howard Hughes was a pilot before he became an oligarch. Now they watch on TV from another city so they can be well clear of the explosions. Dang furriners.