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In this conversation, Andrew Gibbs and William Wang discuss the defense industry, particularly in the US in the 21st century. They explore the procurement process and the challenges faced by both established players and new entrants. They also touch on the significance of cost plus contracts and firm fixed price contracts in defense procurement. The conversation then shifts to the collaborative combat aircraft program, where Anduril was selected as one of two vendors to move forward. This selection signals the company's growth and the Air Force's commitment to introducing more competition in the industry. The conversation covers topics such as the development of stealth aircraft, the timeline for prototype development, the challenges of working with the DOD, and the potential for innovation in the defense industry. The guest, Andrew Gibbs, discusses the development of the stealth aircraft prototype, which was built in 18 months and had low observability. He also talks about the TITAN project, a collaboration between Anduril and Palantir, which delivered a prototype in a short timeframe. The conversation explores the challenges of working with the DOD and the reasons why Silicon Valley companies have become more interested in defense innovation.
Takeaways
The defense industry in the US in the 21st century involves a complex procurement process that is more transparent than commercial markets in terms of budget documents and doctrine, but more opaque in terms of actual business transactions.
Cost plus contracts transfer the risk to the government, while firm fixed price contracts transfer the risk to the contractor. The choice of contract type depends on the nature of the project and the level of technical risk involved.
Anduril's selection as one of two vendors in the collaborative combat aircraft program is a significant achievement, indicating the company's growth and the Air Force's commitment to introducing more competition in the industry.
The Air Force's selection of smaller firms like Anduril and General Atomics sends a signal to the major primes that they can no longer assume every contract will go to them, promoting a more competitive market.
Incremental development and managing fleets of different versions of a product can lead to better outcomes and more efficient use of resources in defense procurement. The development of stealth aircraft prototypes, can be achieved in a relatively short timeframe.
Collaborative projects, like the Titan project, can deliver prototypes quickly by mitigating technical risks and making smart design decisions.
The defense industry faces challenges in working with Silicon Valley startups due to low profitability and barriers to entry.
The DOD is interested in fostering innovation and has established defense innovation offices, but there are still barriers to collaboration.
The potential for innovation in the defense industry lies in the integration of autonomy and software, as well as the use of non-traditional acquisition tools.
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