Darren Farber
speaker
722 appearances
2 recordings
1 series
first heard Apr 2025
last heard 26 May
Darren Farber’s voice in public audio — every appearance, attributed to the second.
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recordings per month · last 12 monthsRecordings per month over the last 12 months — 1 in all, peaking in May 2026 with 1.
Appearances
And it was exclusively the provenance of nation states. Now you can have... someone that's sufficiently capitalized with an alternative form of technology actually building a small tactical nuclear weapon. I'm not saying it's super easy, but the march of technology makes things easier.
And so what's going to happen when a non-state actor, choose your flavor of the month, gets access to these kinds of things? And we've been building a force exclusively to fight a near peer in China or something like that. And so... It's just a big world with a lot of different kinds of threats.
And I'm not as convinced that I need to just get rid of every enterprise class carrier, every submarine, every frigate. There are true failures like the littoral combat ship, and we should turn it off, and they're doing it. These enterprise carriers are $11 billion, and they take forever to build. And so we're going to need a better paradigm there. So...
To be responsive to your question, one is process of how we get the stuff out. That needs to be improved. And then the other thing is curating the portfolio. It's both. But I wouldn't say exclusively. It may sound like I'm dodging the question to a certain extent, but do we still need enterprise carriers? I would suggest we do. What the Israelis did with five F-35s was pretty much knock out 100%.
of Iran's aerial defense. That was five pilots. That's a pretty mission-capable plane. And I know that the autonomous logistics and the cost of the aircraft hasn't been great, but also the way detractors have marketed that, it's not totally fair. It's a joint strike fighter by definition. So what does it mean joint is that if you're the Navy and I'm the Air Force, we're
We all have one strike fighter now. It's joints, this F-35. And so it's taking away many other programs. That's why the program volume is so high. But we have it to sub 110 million a copy. And when a Gulfstream 800 is 85 million a copy, you say to yourself, OK, this is getting reasonable. There's some convergence here, but.
The cost of logistics and these things need to get better over time, but these are actually very well-run businesses. And if we work to change the incentives for these companies, which I think is very important, then you'll see fundamentally a change. The CEO of Lockheed Martin is a world-class capital allocator.
I don't know if we've ever talked about it before, but Jim was the CEO of American Tower. It had like $2 billion market cap. When he left, it was $100 billion. So 10 years, 50X. This is not someone who doesn't understand capital allocation or return. But when the incentive structure is to let the department figure out what they want and then give you a very complicated requirements document.
And then in the requirements document, they're asking you to push the limits of engineering, right? then what's the most appropriate way to compensate someone that's pushing the envelope of physics or technology? Historically, you had businesses that would leave the ecosystem because they're like, this is too tough. I don't want to take the risk on balance sheet.
And so that's how we came up with Cost Plus. We said, look, you're going to take this kind of risk and I'm going to find a way to make it good enough business for you that you don't want to abandon the effort. Cost Plus. And cost plus by contract volume is only 15% of the department. It's about 30% of the budget now because we have programs moving into something called LRIP.
That's when a program like grows up and pushes out. And then as it crosses into this mainstream production line, we go to firm fix. Sometimes the artifact stays too long because we're constantly pushing the envelope of the technology. And so you leave... cost plus in to make it meritorious for a business. But I think a lot of people think the budget's 100% cost plus. This is not true.
And the super majority of contract volume is lowest price technically acceptable. And so I work for a lot of people who drilled it into my brain of every contract that I would sign would be LPTA, lowest price technically acceptable. So In a budget so big, when the buffet is so big, it's very easy to point to these sides and say how inefficient it is. And there's a ton of inefficiency.
And this effort by Doge is extremely meritorious and it happens in defense about every 20 years. So for people to say this is unprecedented, it's bunk. There's precedent everywhere in the department. It's a necessary extinction event. We also have to be able to manage these other contingent activities and we need to modernize. And this happens over and over again.
And so it's just more exposed this time. There are tweet storms about it.
Well, doctrine would say it was our ability to fight two continuous wars at the same time of near peers all over the globe and maintain world order. And look, it largely worked. It's an amazing run at enormous expense to the U.S. taxpayer, enormous expense. If you look at the rest of the G20 and you add up their contributions.
And then you look at what the United States spent in order to protect the free world, which is really what it did. And the G20 got a huge peace dividend. What's the peace dividend? Well, outside of the United States, in the G19, education is largely free and health care is largely free. And you can do that when you don't have to protect the free world.
And I believe the American taxpayer funded all of that. to enormous effect for these countries. And look, they didn't live up to the contract that they signed. At what point is it no longer the U.S. 's obligation in order to maintain stability? Now, there's a classical thinking in Washington that if we don't lead what fills the void is, could be complete chaos.
And it's totally possible, but we've reached the guns and butter moment in terms of how big the deficit is. And so you have this perfect storm of
You have an executive that's tired of freeloading, plus a balance sheet that can't afford to do it in the same way anymore, and a technological shift, which is actually the perfect opportunity for these people to go ahead and give it a try and take responsibility for their own backyard. I mean... The aid that the Europeans have provided the Ukraine, don't get me wrong, is very important.
It is peer or near peer to the United States. The United States defense complex has gotten a huge benefit from it because they've been buying mostly American gear. But the Europeans gave a loan guarantee. They expect to get paid back. We gave the money no strings attached. So our Jess is expected at infinitum. And it's a very difficult moment, and I view it as a very necessary moment.
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