Anduril CEO defended government contracts amid ethics questions over co-founder's role

Anduril CEO Brian Schimpf told CNBC on Thursday that the company wins government contracts on merit as ethics questions surround co-founder Palmer Luckey's role in a Defense Department initiative.

"Everything goes through these very competitive processes, and we win based on the merits," Schimpf said on CNBC's "Squawk on the Street." He described the Defense Department's bid evaluation process as highly structured. He also said, "I'm a lifelong Dem," and that Anduril had grown rapidly under President Joe Biden.

Luckey was named a co-director of Project Meridian shortly before Oct. 6, according to CNBC. The initiative aims to develop and scale military capabilities, and SpaceX CEO Elon Musk also joined it. The appointments have prompted scrutiny of whether tech executives holding lucrative government contracts ought to have a hand in setting defense priorities.

In March, the Army awarded Anduril a firm-fixed-price contract with a cumulative total of $20 billion. Work locations and funding will be set with each order, and the estimated completion date is March 12, 2036.

Anduril also announced a Navy shipyard contract worth up to $2.9 billion on Oct. 6.

The State of Maryland and Baltimore County announced a $3.7 billion private investment by Anduril the same day. The money would build a shipyard called Arsenal-2 at Tradepoint Atlantic in Baltimore County. The state and county committed to match up to 13% of the investment through existing incentive programs and new appropriations. Those appropriations require approval from the Maryland General Assembly and the Baltimore County Council.

Anduril's website describes the facility as 2 million square feet of manufacturing space for components of Virginia-class submarines. The company said it expects more than 3,100 new direct jobs by 2034.

Federal Election Commission records show Luckey — who fundraised for President Donald Trump's 2020 campaign — has given more than $500,000 to Republican candidates and GOP-aligned groups so far this year.

Schimpf also addressed ethics concerns about the use of AI-equipped military systems. "Anytime you are making critical decisions about use of force or how to employ these, or what the consequences are of your actions, that is fundamentally a human decision," he told CNBC.