Darren Farber

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...

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%.

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

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.

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.

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.

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 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.

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.

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 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.