Army Secretary Daniel Driscoll has boldly expressed his ambition to revolutionize the defense sector, and this week he escalated his stance by declaring it a sign of success if a major prime contractor goes out of business within the next few years due to inefficiency. This statement marks a significant shift in the expectations placed on defense contractors and their operational efficacy.
During his appearance on the TBPN podcast, he stated, “I will measure it as success if in the next two years, one of the primes is no longer in business, and the rest of them have all gotten stronger.” These remarks underscore a transformative vision for the military contracting landscape.
Driscoll’s statements align with the ongoing strategy of the Trump administration to integrate the venture capital and tech industries into the defense industrial base. This includes fostering relationships with VC-backed startups like Anduril and Palantir, which are becoming increasingly influential in the defense procurement process. Notably, Anduril has already secured a significant contract for the Integrated Visual Augmentation System.
Having previously served as the chief operating officer at the $200 million Flex Capital VC fund, Driscoll brings a wealth of experience from the private equity and venture capital sectors to his current role as the civilian leader of the Army. His background significantly informs his approach to modernizing Army operations and procurement practices.
As he engages with lawmakers on Capitol Hill and participates in various media discussions, Driscoll is advocating for a transformation in how the Army conducts its business. This includes a strong inclination towards collaborating with innovative, smaller VC-backed startups. His anticipated deputy, Michael Obadal, currently serves as a senior director at Anduril, further emphasizing this shift.
On the podcast, Driscoll articulated that the larger prime contractors are beginning to recognize the seriousness of the administration’s intent to challenge the status quo in the defense industry. They are realizing that traditional strategies, such as relying on lobbyists, may not shield them from impending changes.
“Their misunderstanding about this moment in time is, President Trump’s and Secretary Hegseth’s tolerance for pain to do the right thing on behalf of the American soldier, I truly believe it’s different and unique,” Driscoll explained. He forecasted that these contractors will soon understand the necessity to adapt, stating, “We are not going to come to bail them out again as a nation.”
Driscoll expressed a desire for the remaining contractors capable of selling to the Army in a few years to excel, asserting, “Those remaining ones that can sell to the Army in a couple of years, they’re going to be incredible, because we won’t buy it unless they are.”
While Driscoll’s remarks may seem new, both he and Army Chief of Staff Gen. Randy George are actively implementing a fresh vision for the Army. This vision includes significant program cancellations, such as the Joint Light Tactical Vehicle and the M10 Booker, a new light tank developed by General Dynamics Land Systems. Additionally, the development of the General Electric Improved Turbine Engine Program (ITEP) and the Future Tactical Uncrewed Aircraft System (FTUAS) is also under scrutiny.
Plans to finalize a deal with Textron for a new fleet of Robotic Combat Vehicles (RCVs) have been postponed due to what Driscoll identified as a misalignment of requirements and spending priorities within the Army. “We created this RCV. … It’s awesome,” he remarked on the podcast. “But is it worth $3 million per copy and an $800 drone can take it out? … The math doesn’t work.”
Driscoll is not alone in his mission to overhaul the defense sector. Other officials from the Trump administration and GOP lawmakers have also suggested that innovative, smaller tech companies may be better equipped to address evolving threats, particularly in critical domains like artificial intelligence and software development, compared to the often sluggish megaprimes.
During his confirmation hearing in February, Deputy Defense Secretary Steve Feinberg, co-founder of Cerberus Capital Management, stated that the existing acquisition system disproportionately benefits legacy defense contractors by incorporating “gold-plated” technical requirements and stringent regulations that inhibit commercial companies and nontraditional vendors.
Navy Secretary John Phelan, who has a background in finance, criticized the current “lack of urgency” in naval shipbuilding and has committed to accelerating the Navy’s acquisition strategies.
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