Defense technology company Anduril Industries Inc. should have no trouble paying the rent for its expansive new headquarters in Costa Mesa, after landing its largest-ever contract, a nearly $1 billion deal with a unit of the Pentagon.
The firm, which in less five years of operation has vaulted into the ranks of Orange County’s most valuable private companies with a nearly $5 billion valuation, this month confirmed that the Department of Defense’s U.S. Special Operations Command, or SOCOM, had awarded it a contract to help develop protections against drones, the rapidly proliferating flying devices that are increasingly seen as a threat to national security.
The 10-year counter-drone contract is worth up to $967.6 million.
It’s an order of magnitude larger that prior Anduril contract wins. The biggest military or government contract that Anduril was previously reported to have won, also a drone-related project, was in the $100 million range.
Industry Importance
Not only is it the largest contract win for the company, “this is the most important contract we have ever won,” said Anduril founder Palmer Luckey, in a tweet following the announcement.
SOCOM said it chose Anduril out of 12 competing proposals. The other bidders were undisclosed.
Defense industry trade publications cited the deal as a watershed one, showing that certain Pentagon divisions are increasingly looking to nontraditional tech and defense startups for the newest technologies, rather than relying on defense behemoths such as Raytheon Technologies Corp. (NYSE: RTX) and Lockheed Martin Corp. (NYSE: LMT).
It “sends a signal that startups and nontraditional companies can actually succeed in the federal marketplace,” Bill Greenwalt, a former deputy undersecretary of defense for industrial policy, told trade magazine and website Breaking Defense.
Greenwalt also noted that SOCOM “has been the most forward-leaning entrepreneurial segment of the Department of Defense” in terms of its contract awards.
Hardware & Software
Anduril utilizes technology such as drones, optics and artificial intelligence as it seeks to transform U.S. defense capabilities and solve national security challenges. The company also develops border protection systems.
In terms of the SOCOM project, it will use a variety of technologies to support the division’s “counter unmanned systems,” or CUxS for short.
Anduril’s CUxS family of offerings is powered by the company’s Lattice operating system, which “provides persistent coverage of defended assets and enables autonomous detection, classification, and tracking of targets,” according to the company.
Hardware components that are used in conjunction with Lattice’s software include sentry towers with long-range radar capabilities and AI processing features, and a variety of drones—including those, such as the aptly-named Anvil, that are designed to knock out other drones from the skies—among other next-gen components.
More Coming
Anduril said it will work as a “systems integration partner” joining different subsystems or components into one large system, under terms of the SOCOM contract.
The work “will be performed in various locations within and outside the continental U.S., and is expected to be completed by Jan. 19, 2032,” the Defense Department said in a statement on Jan. 20. There were no details on the specific development sites.
“The evolving unmanned aerial threat requires flexible, adaptable, and rapidly deployable technology approaches,” said Brian Schimpf, Anduril CEO, when commenting on the contract win on Jan. 24.
“We will be integrating tons of systems with Lattice AI—our own stuff (Sentry, Anvil, Altius, several currently unannounced products) and a wide variety of third-party sensors and effectors,” Luckey said.
“We will be showing off a lot more CuXS products in the future,” he wrote.
Prior to Anduril, Luckey, now 29, founded Oculus VR, which was sold to Facebook for $3 billion in 2014.
800 & Counting
The deal marks another major milestone for Anduril, OC’s fastest-growing defense firm, which has grown to more than 800 employees.
The company is just starting, execs have emphasized in recent months.
“We plan to grow rapidly,” company General Counsel Babak Siavoshy told the Business Journal in November.
“Our goal is to be the next generation’s defense prime [contractor],” meaning Anduril would be one of a handful of large defense firms that works directly with the U.S. government and manage subcontractors as necessary.
Anduril last year completed a $550 million funding round that valued the company at nearly $5 billion.
HQ Construction Continues
Anduril Industries Inc. in is the process of moving into its new headquarters in Costa Mesa.
When built out, the space at the Press creative office campus will run 640,000 square feet, making the upstart defense tech firm one of OC’s largest office tenants.
Blizzard Entertainment, which occupies about 740,000 square feet in and around its home base in the Irvine Spectrum, is currently No. 1 among office space users in the county.
Anduril says the new location, once the site of the L.A. Times printing facility, will support nearly 2,500 employees when fully built out.
Anduril last week reported having a companywide employee base of more than 800.
Alongside existing buildings that are being revamped for Anduril at the Press, a new office building will also be built from the ground up.
Heavy amounts of construction were still ongoing as of last week.
Anduril has been headquartered near the ultra-busy intersection of Michelson Drive and Jamboree Road in the John Wayne Airport area. It leases about 100,000 square feet of space at that building, which in late 2021 sold for $103 million.
Anduril founder Palmer Luckey, speaking before the Business Journal’s General Counsel awards event in November, said “we’re going to start moving in December and we’re going to finish by early next year (2022).”
“Right now, our whole place—we’re clearing it out. All our machines are going over,” he said then.
––Kevin Costelloe
