[News] A New Military-Industrial Complex Arises

[Anti-Imperialist News]

tomdispatch.com
<https://tomdispatch.com/a-new-military-industrial-complex-arises/>
A New Military-Industrial Complex Arises
Michael Klare, Droning Washington - February 9, 2025
The Secret War Within the Pentagon

Last April, in a move generating scant media attention, the Air Force
announced
<https://breakingdefense.com/2024/04/air-force-picks-anduril-general-atomics-for-next-round-of-cca-work/>
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
<https://www.idga.org/aviation/articles/2024-updates-to-air-force-collaborative-combat-aircraft-cca>
(CCA), a future unmanned plane intended to accompany piloted aircraft on
high-risk combat missions. The lack of 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 January 17, 1961, by President Dwight D. Eisenhower in his farewell
address to Congress and the American people. In that Cold War moment, in
response to powerful foreign threats, he noted
<https://www.archives.gov/milestone-documents/president-dwight-d-eisenhowers-farewell-address>
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
<https://www.defense.gov/News/Releases/Release/Article/3703410/department-of-defense-releases-the-presidents-fiscal-year-2025-defense-budget/>
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
<https://people.defensenews.com/top-100/> 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
<https://www.forbes.com/sites/greatspeculations/2025/01/13/aerospace--defense-stocks-to-watch-the-biggest-us-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
<https://jacobin.com/2023/05/military-industrial-complex-pentagon-budget-weapons-manufacturing-influence-revolving-door>
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 <https://www.nationalpriorities.org/> and the Friends Committee on
National Legislation <https://www.fcnl.org/> 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*

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
<https://www.defensenews.com/land/2019/03/29/palantir-who-successfully-sued-the-army-just-won-a-major-army-contract/>
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
<https://www.tabletmag.com/feature/american-vulcan-palmer-luckey-anduril>
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
<https://www.anduril.com/article/rebooting-the-arsenal-of-democracy-anduril-mission-document/>
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.

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
<https://www.nbcnews.com/tech/security/inside-anduril-startup-building-ai-powered-military-technology-n1061771>
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
<https://www.washingtonpost.com/immigration/trump-virtual-border-wall/2020/07/02/7b380490-b0ac-11ea-a567-6172530208bd_story.html>
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.

After that, bigger awards began to roll in. In February 2023, the
Department of Defense started buying
<https://www.defense.gov/News/Releases/Release/Article/3308633/biden-administration-announces-additional-security-assistance-for-ukraine/>
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
<https://www.diu.mil/latest/four-companies-selected-to-support-the-u-s-air-force-and-defense-innovation>
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.

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
<https://www.washingtonpost.com/business/2020/07/01/silicon-valley-tech-start-up-anduril-raises-200-million-create-software-driven-defense-company/>
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
<https://www.ocbj.com/news/weekly-news/anduril-gets-450m-series-d-funding/>
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
<https://quincyinst.org/research/private-finance-and-the-quest-to-remake-modern-warfare/>
by private investors to fuel the rise of defense startups — and profit from
their growth as it materializes.

*The Replicator Initiative*

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 August 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
<https://www.defense.gov/News/Speeches/Speech/Article/3507156/deputy-secretary-of-defense-kathleen-hicks-keynote-address-the-urgency-to-innov/>.
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
<https://www.defense.gov/News/Releases/Release/Article/3765644/deputy-secretary-of-defense-hicks-announces-first-tranche-of-replicator-capabil/>
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 November 13th. According to the Department of Defense, that
batch included funding
<https://www.defense.gov/News/Releases/Release/Article/3963289/deputy-secretary-of-defense-kathleen-hicks-announces-additional-replicator-all/>
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*

Kathleen Hicks stepped down as deputy secretary of defense on January 20th
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
<https://breakingdefense.com/2024/12/trump-names-picks-for-top-pentagon-posts-with-financier-in-the-lead/>
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
<https://breakingdefense.com/2024/12/defense-industry-could-see-big-shakeup-under-trump-2025-preview/>
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, J.D.
Vance and Elon Musk, could push him in the opposite direction. Vance, a
former Silicon Valley functionary who reportedly became
<https://www.nytimes.com/2024/07/17/technology/jd-vance-tech-silicon-valley.html>
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
<https://www.theguardian.com/us-news/article/2024/aug/08/jd-vance-financial-investments>
in Anduril and other military/space ventures.

Named by Trump to direct the as-yet-to-be-established Department of
Government Efficiency, Elon Musk, like Anduril’s Palmer Luckey, fought
<https://www.washingtonpost.com/business/economy/elon-musks-spacex-to-drop-lawsuit-against-air-force/2015/01/23/c5e8ff80-a34c-11e4-9f89-561284a573f8_story.html>
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
<https://www.forbes.com/sites/davidhambling/2024/11/26/elon-musk-calls-f-35-builders-idiots-favors-drone-swarms/>
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 <https://x.com/elonmusk/status/1860574377013838033>
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%
<https://www.investors.com/news/elon-musk-shoots-down-lockheed-martin-other-f-35-defense-stocks/>.
“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
<https://breakingdefense.com/2024/12/not-a-warfighter-air-force-secretary-hits-back-at-musk-comments-on-canceling-manned-fighters/>
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.

Copyright 2025 Michael Klare

Featured image: Pentagon
<https://flickr.com/photos/thomashawk/49388710608/in/photolist-6FW8b7-2SpFRX-d7y3Pd-s5U48q-3EgH68-2mhu7f5-2ifj3Zf-4m7mNY-2aVmrKp-2hA1KrW-h3Njrb-5nCVG5-5nCVPN-5nCVZs-5nyFxg-6gTWrq-9DBcnk-h3K5NC-2bYGwjQ-nED7d-5mwBzz-3ieJbc-4m3it4-h3Njmm-9DBbv6-5mB3ZJ-5mAUn1-5mB3kb-5mB2qN-5mAVcw-2gufNGK-5mB4Cz-5mwCTK-5mARUW-5mwFLF-2nkxnEy-5mwApM-2jXAADb-4RTEy-2mHbbGa-2jzj2rU-2iWFfC7-5mAT3G-buT6p9-2jyRXfY-74Tfyk-8fww25-9DE43G-29EdzyP-5VSUed>
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