View / The scramble to remake America’s way of war

Feinberg, 65 and legendarily private, unsurprisingly declined to be interviewed. He once told Cerberus shareholders that “if anyone at Cerberus has his picture in the paper and a picture of his apartment, we will do more than fire that person. We will kill him. The jail sentence will be worth it.” When Cerberus acquired Chrysler in 2007, journalists could only find one picture of him on the internet. (A mellower Pentagon spokesman said merely that Feinberg “will politely decline to participate for your story.“)

He was a logical choice for the powerful Pentagon deputy role. Feinberg had been an unusual investor, and a good fit for this administration, because of his outspoken patriotism and investments in the gun business. (The biggest of those bets, a 2007 buyout of Remington, ended in bankruptcy under the weight of too much debt and lawsuits linked to the Sandy Hook shooting.)

Feinberg has emerged as one of the most effective figures in Trump’s new Washington, consolidating and centralizing control of the world’s largest bureaucracy while his boss, Defense Secretary Pete Hegseth, fights the culture wars, cracks down on the Pentagon press corps, and vies for a place in Trump’s inner circle.

Since his March confirmation, Feinberg has been focused on process reforms: centralizing control of contracting away from each armed service, digging aggressively into every major project, and shifting the focus of procurement from meeting static requirements to solving operational problems — whoever gets the contract.

He is putting particular pressure, industry and Hill officials said, on the delay-ridden effort to build a new generation of nuclear submarines. There’s ample space for finger-pointing: The project is being conducted across shipyards in Connecticut and Virginia owned by different contractors, General Dynamics and Huntington Ingalls, which have in turn blamed delays on the delivery of turbines from a third, Northrop Grumman.

Fixing problems like these was, after all, the logic of bringing in a private equity guy: He spent his career finding value inside rusty old companies like Safeway, ruthlessly reorganizing and purging them, and selling leaner and more effective versions of them back to the public markets. Cerberus was known for its discipline — squeezing out nickels where it could — and, famously, for dodging a bullet when it dropped out of the bidding for the real estate company Equity Office in 2007, just before the crash.

Now, Feinberg is applying that logic to a $300 billion-plus defense industry with, effectively, a single major customer: the US government.

A congressional staffer close to the debate attributes Feinberg’s posture toward this generation of defense startups to the skepticism private equity analysis brings to investing.

Private equity executives refer to venture capital, derisively, as “spray and pray”: Investors court talented founders, bet big on startups that often have no revenue or foreseeable path to profitability, and largely stay hands-off, assuming that most of their bets will fail but that a few will pay off big. In Wall Street jargon, PE firms are “control investors,” while VC take small stakes and wield little boardroom influence.

The venture-backed firms have a huge appetite for risk, and see themselves as taking risks on behalf of the United States. Anduril is building a huge factory outside Columbus, Ohio, on its own dime (with some generous tax incentives), and will manufacture everything from silent surveillance drones to large unmanned submarines to high-tech headsets for soldiers. Others have built shipyards on their own investors’ dimes — something unthinkable for the primes.

“I don’t think he’s picking on venture-backed companies,” said the industry official of Feinberg. “He’s scratching on everyone to figure out what’s real and what’s not.”

Feinberg is beginning to show his hand with a reform program focused less on new companies and more on new approaches.

Hegseth is set to give a major speech on the subject Friday and is said to be considering such radical changes as moving the department that coordinates with foreign militaries from the office of the undersecretary for policy to the office of the undersecretary for acquisitions. (If your impulse is to say, “Huh?” — that is a major change, and gives you a sense of how complex and tedious these issues are.)

Congress is also poring over the first, classified tranche of a twelve-figure reconciliation package. The congressional staffer said the substance of the request signals a push for systematic change.

Reformers are cautiously optimistic. But after a period of terror, the big defense contractors are breathing a cautious sigh of relief. Many agree with Feinberg’s critiques — though they blame the monopsony maintained by their lone customer for most of the inefficiency.

The savvy primes used to buy startups. They can’t afford the valuations of some of the new ones, but they have taken the note from the Trump administration that they need, at least, to cut them in as sub-contractors. Raytheon, for instance, is integrating Shield AI’s software into loitering munitions and working with Anduril on rocket motors.

Meanwhile, the VC-backed startups have built influence operations in Washington to compete with the traditional defense lobbying machines. And when it comes to staffing for Beltway influence, the newcomers have a real edge.

“They’re cooler than Lockheed. They have more podcasts. They have better parties,” said an executive at a small defense startup. “That narrative and that cultural and financial cachet subsidized by VCs gives them a lot of power to hire the right people in Washington.”