WASHINGTON — The incoming Trump administration’s close ties to Elon Musk and other tech billionaires could upend traditional Pentagon procurem

Space firms see government contracting shakeup in second Trump term

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2024-11-25 15:30:37

WASHINGTON — The incoming Trump administration’s close ties to Elon Musk and other tech billionaires could upend traditional Pentagon procurement practices, space and defense industry executives said at last week’s Baird Defense & Government Conference in McLean, Virginia.

One theme that emerged from the conference is that the established defense contractor ecosystem might face disruption from newer, tech-focused players.

“Cost minus” is a new buzzword circulating among Trump transition team insiders, according to Gabe Dominocielo, co-founder and president of Umbra Space, an Earth observation satellite operator. What this means is “whatever the opposite of what we’re doing now,” he said. This would pose a direct challenge to the traditional “cost plus” model where the contractor is compensated for all direct costs incurred during a project along with an additional fee that serves as profit and is typically a percentage of the total project costs. Direct line to power

A new guard of tech-driven defense contractors sees opportunity in the transition. Vice President-elect JD Vance’s background as a venture capitalist, including investments in defense and space tech company Anduril Industries through his firm Narya Ventures, exemplifies these connections. Vance’s close relationships with influential tech figures like the co-founder of Palantir Technologies Peter Thiel and Anduril co-founder Palmer Luckey suggest a potential realignment in defense procurement.