The U.S. Army announced late Friday that it has signed a 10-year contract with Anduril Industries worth up to $20 billion, marking a major milestone for the defense technology startup and a signal of how deeply Silicon Valley-born companies are now embedded in the American military supply chain.
The contract begins with a five-year base period, with the option to extend for an additional five years. It covers Anduril’s hardware, software, infrastructure, and services, and consolidates what had previously been more than 120 separate procurement actions for the company’s commercial solutions into a single enterprise agreement.
The U.S. Department of Defense framed the deal in terms of speed and software, mentioning that “the modern battlefield is increasingly defined by software and that maintaining an advantage requires the ability to acquire and deploy capabilities quickly.”
“The modern battlefield is increasingly defined by software,” said Gabe Chiulli, the chief technology officer at the Department of Defense’s Office of the Chief Information Officer, in a statement.
Anduril was co-founded by Palmer Luckey, who first gained prominence by selling VR startup Oculus to Facebook. Facebook later fired Luckey after controversy erupted following a news report that he’d donated to a pro-Trump political group.
The company, named after a magical sword in The Lord of the Rings, has positioned itself as a challenger to traditional defense contractors by building autonomous fighter jets, drones, submarines, and AI-powered command systems. It brought in approximately $2 billion in revenue last year and is reportedly in talks to raise a new funding round at a $60 billion valuation.
The contract comes at a turbulent moment for the intersection of AI and defense. Anthropic is currently suing the Department of Defense over its designation as a supply chain risk following a failed contract negotiation, while OpenAI has faced consumer backlash and at least one executive departure after signing its own Pentagon deal.
Luckey weighed in on the dispute, arguing on X that Anthropic’s attempt to set limits on the use of AI in autonomous weapons or domestic surveillance is a position the United States cannot accept.
For the broader defense industry, the U.S. Army-Anduril deal shows a shift that has been building for years. The Pentagon is increasingly turning to venture-backed startups rather than legacy contractors for the software and autonomous systems it considers essential to future warfare. Especially at a time when U.S. Army is heavily involved with the Iranian conflict in the Middle East, the timing of this deal could not have been perfect.
