Luckey: Cost-plus contracts incentivize defense contractors to maximize costs and delays
Palmer Luckey · Palmer Luckey - Future of Virtual Reality, AI War, Autonomous Killing Machines, Militarized Policing · Apr 4, 2023 · at 29:25
Palmer Luckey, founder of Anduril Industries, contrasts his company's private R&D model with legacy defense contractors' cost-plus procurement incentives.
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“Most companies in this space are defense contractors. They work on cost plus contracts where they get paid for their time and their materials, and then a fixed percentage of profit up to on top of that. Usually a very small percentage of profit. And so the only way for them to make money Is for their systems to be as expensive as possible, for them to be as exquisite as possible, for those contracts to go on as long as possible. In fact, they're incentivized in many cases to drag things out and for them to go for very long periods of time, because that's how they make more money.”
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