Anduril Takes Over Microsoft's $22B VR Military Headset Program

Anduril to Take Control of Army's IVAS Program

The U.S. Army is poised to transfer leadership of the Integrated Visual Augmentation System (IVAS), a significant and previously problematic initiative, to emerging defense contractor Anduril. This transition is contingent upon final approval from the Department of Defense (DoD), as announced by Anduril founder Palmer Luckey on Tuesday.

Initial Contract and Budget

Originally, the IVAS contract was awarded to Microsoft in 2018. The goal was to develop augmented reality headsets for soldiers, utilizing a robust iteration of the HoloLens technology. The initial allocated budget for the IVAS project reached $21.9 billion.

Microsoft's Continued Role

While Anduril will assume the role of prime contractor, Microsoft will not be entirely removed from the project. The company will continue to provide cloud services, according to official statements released by Microsoft.

Anduril's Responsibilities

Anduril will be responsible for overseeing the production process. They will also manage the ongoing development of both the hardware and software components. Furthermore, the company will be accountable for adhering to established delivery timelines.

IVAS Functionality

The core concept behind IVAS is to equip soldiers with a heads-up display. This display would incorporate features such as thermal sensing capabilities, the Tactical Assault Kit software – delivering crucial mission data – and integrated mapping systems.

Integration of Lattice Software

Anduril’s Lattice software was previously integrated into Microsoft’s IVAS headsets, as announced in September. This addition provided enhanced computer vision AI, enabling the headset to identify, track, and categorize objects within the user’s field of view.

Past Challenges with IVAS

The IVAS program has faced a considerable number of obstacles throughout its development.

A 2022 report from the DoD’s inspector general highlighted concerns regarding the system’s effectiveness in meeting the needs of the soldiers who would ultimately utilize it. The report cautioned that proceeding with the procurement of IVAS without securing user acceptance could potentially result in a waste of up to $21.88 billion in taxpayer funds.

Technical Issues Encountered

Early prototypes developed by Microsoft experienced technical difficulties, common in the prototyping phase. These issues included challenges with accurately detecting virtual objects, as reported by sources to Breaking Defense in 2023.

Army's Consideration of a Change

In August, the Army signaled its willingness to consider replacing Microsoft as the prime contractor. However, Microsoft expressed its intention to participate in any subsequent bidding processes to retain its involvement, as previously reported by Breaking Defense.

Luckey's Reaction and Commentary

Luckey’s blog post announcing Anduril’s win was notably enthusiastic and included pointed remarks towards a competitor. The post contained elements of humor and celebratory tone.

“Tactical heads-up-displays that transform warfighters into technomancers and integrate them with weaponized robotics were a core element of Anduril’s original pitch,” he stated.

He continued, “Had Anduril been a larger organization when IVAS was initially conceived, I believe our innovative proposal could have secured this contract from the outset. Thankfully, our nation avoided a potentially detrimental outcome.”

Competitor Nickname and Other Bidders

Luckey referred to Magic Leap as “Tragic Heap,” and indicated they were among the eighty-plus companies competing for control of the project. Other contenders included Palantir and Kopin, a company specializing in displays used in F-35 fighter jet helmets, according to Breaking Defense.

Future Plans and Redacted Information

Luckey also hinted at a range of planned enhancements for the project, but deliberately withheld specific details, jokingly redacting the relevant paragraph.

“Your imagination, however ambitious, falls short of my plans. I am returning to the forefront, and my efforts are only just beginning,” he declared.

Budgetary Considerations

Whether the project, now under Anduril’s leadership, will maintain its full $22 billion budget remains uncertain. Ongoing discussions regarding potential funding cuts or even program cancellation have persisted for several years.

Microsoft's Statement

Robin Seiler, Microsoft’s VP of mixed reality, stated in a public release, “We are immensely proud of the dedication our teams have demonstrated in assisting the U.S. Army in realizing its vision for a soldier-borne, augmented reality headset with the IVAS program.”

Anduril's Future Outlook

2025 is anticipated to be a pivotal year for both Luckey and Anduril. The company is currently in negotiations to secure a funding round of up to $2.5 billion, potentially valuing the company at $28 billion. Additionally, Anduril has announced plans to establish a large-scale weapons manufacturing facility in Ohio.

Note: This report has been updated to include Microsoft’s official statement and to clarify that the formal transfer of control is still pending final DoD approval, despite announcements from both companies regarding the contract change.