In unveiling a panel to study the future of warfare this week, Defense Secretary Pete Hegseth did more than announce some advisers. He brought Elon Musk, the world’s richest man, back into the Trump administration fold.
With him came a raft of potential new conflicts of interest.
Mr. Musk had largely failed at his high-profile government cost-cutting expedition last year, not coming close to meeting his stated goals and leaving some agencies in disarray. After departing government duty, he prompted an epic fight with President Trump and threatened to start his own political party.
But after a long make-nice campaign, Mr. Musk is back in Washington with a seat at the table of the Pentagon, as a co-director of a group advising an agency that is a source of his vast personal wealth. As before when he was a special government employee, Mr. Musk’s appointment immediately set off concerns about whether he would have too much sway over decisions affecting his interests and those of his allies.
“It’s extraordinary to see the return without any recognition of the exceptional harm that he was responsible for in round one,” said Max Stier, the chief executive of the Partnership for Public Service, a nonpartisan organization that estimates that Mr. Musk’s cost-cutting efforts, dubbed the Department of Government Efficiency, cost each taxpayer more than $1,000 last year in waste.
Now, added Mr. Stier, “there’s no question that his financial interests are directly engaged in the position he’s going to fill here.”
Other members of the panel have major defense contract interests, including another co-director, Palmer Luckey, the founder of Anduril, which makes semiautonomous fighter jets. (Representatives from legacy defense companies, like Lockheed Martin and Raytheon, are largely absent.)
The members largely share Mr. Hegseth’s desire for a nimbler military that relies more on autonomous, state-of-the-art technology, like drones. But their appointments, like Mr. Musk’s, raise the potential for actual conflicts, or the perception of conflicts, even if they remain sincere and impartial in their advice, ethics advisers say.
Though Mr. Musk and Mr. Luckey may never explicitly say that the Defense Department should increase its reliance on their companies, they could still benefit from their insider vantage points, according to Virginia Burger, a senior defense policy analyst for the Project on Government Oversight, an independent watchdog organization.
“They could easily tailor the suggestions and findings to fall directly in line with the products they have in development,” Ms. Burger added in an email, “or turn around and use the developed materials to shape SpaceX and Anduril’s future operations in a twisted version of insider trading, eliminating competition from the start.”
Officials involved in the new initiative said conflicts of interest would be managed so such activity would not occur.
A Pentagon spokesman said that the nonprofit organization Mitre Corporation, which conducts independent research for federal government agencies, was overseeing the group’s analysis and recommendations. As part of that, Mitre “will evaluate all inputs with technical rigor while applying appropriate conflict-of-interest and information safeguards,” the spokesman wrote in an email.
Mitre, which was founded in 1958 to address air-defense challenges, uses its own laboratories and focuses on a range of issues from aviation to cancer treatment.
Mr. Musk appeared in the Washington area on Wednesday in his new role as a co-director of what the Pentagon has named Project Meridian, which will consider the evolving nature of battle and pinpoint gaps in readiness to prepare U.S. armed forces for the next two decades.
He then spent three days meeting with fellow panelists in Quantico, Va., at the Pentagon and at the Mitre offices in McLean, Va., hashing out ideas, according to Newt Gingrich, a former Republican House speaker and a co-director of the initiative.
Mr. Musk did not respond to requests for comment on the potential conflicts in his new role. But in a brief phone interview on Friday from Dulles International Airport, Mr. Gingrich criticized those who had raised conflict concerns.
“As if the richest guy in the world is going to think that deeply about something that will help him,” Mr. Gingrich said, “that he’s going to go, ‘Oh, gosh, I could get a real advantage here, I could make another $5 million.’ It just tells you how sick the system is.”
Jack Beyrer, a spokesman for Anduril, said in a statement that “as Palmer works with Pentagon leadership, he and Anduril will commit to complying with highest ethical standards where actual conflicts of interest arise.”
Mr. Musk’s selection, which Mr. Hegseth announced at a gathering of 600 junior officers and enlisted leaders at a military base in Quantico, comes as the billionaire entrepreneur’s influence is waxing once again.
In the final months of the 2024 presidential campaign, Mr. Musk gave more than a quarter of a billion dollars to groups supporting Mr. Trump, according to an analysis conducted by The New York Times. Mr. Musk became a headliner at Mr. Trump’s political rallies, where the Tesla chief inveighed against government bloat and urged people to vote for the former president’s return.
Mr. Trump in turn praised Mr. Musk at his presidential victory speech, calling him “a special guy, a super genius.” Mr. Trump put the tech billionaire in charge of DOGE, which conveyed broad access to the Oval Office and a number of powerful federal government agencies. The president also installed officials who were allied with Mr. Musk at NASA and in the Air Force, two of SpaceX’s key customers, and at the Federal Communications Commission, a key regulator.
But the honeymoon did not last. Mr. Musk’s exaggerations about his DOGE efforts — including that he had discovered “massive” fraud in Social Security spending — created an embarrassing distraction. His opposition to Mr. Trump’s signature government funding bill was a nuisance. And within a week of Mr. Musk’s exit from Washington, private tensions began spilling into public view.
“Without me, Trump would have lost the election,” Mr. Musk wrote on X last June. “Such ingratitude.” Mr. Trump fired back with a social media post of his own, describing himself as “very disappointed in Elon” and musing about canceling Mr. Musk’s government contracts to save money.
The two later reconciled. Mr. Musk has committed — and spent — at least $100 million to help Republican candidates in battleground states around the country in the midterm elections.
Since early last year, his aerospace company SpaceX, which recently undertook the largest initial public offering of stock in history, has received at least $6.9 billion in Pentagon and NASA contracts for services, manufacturing and technology, according to a New York Times analysis of spending records.
Mr. Gingrich and Mr. Luckey joined Mr. Musk in attending the speech in which Mr. Hegseth announced Project Meridian. The defense secretary requested a standing ovation for the co-directors, clapping and thanking them for being there.
The initiative, Mr. Hegseth said, would “creatively look to the future and identify the domains that we must conquer and capabilities we must master.” The Pentagon “should have been thinking about autonomous warfare command” — an area where Mr. Musk and Mr. Luckey both do business — “10 years ago.”
The Defense Department on Thursday posted images of the initiative’s leaders holding an initial meeting with Mr. Hegseth and his aides around a large conference table at the Pentagon.
The additional panel members, some of whom featured prominently in the pictures:
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Dino Mavrookas, the chief executive of the drone boat company Saronic;
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Joe Lonsdale, the venture capitalist who co-founded the software company Palantir;
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Safra Catz, the executive vice chair of the software company Oracle; and
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Gen. James Rainey, a retired Army official who now advises two defense technology companies.
In the days that followed, Mr. Gingrich said, the conversations covered an array of challenges facing the U.S. military, of which autonomy was a mere “5 or 6 percent.” He said he was astonished by the brain power in the room.
Mr. Musk, whose publicly traded SpaceX was recently valued at nearly $1.8 trillion, makes partly reusable space rockets, and provides satellite internet service. Earlier this year, the Texas-based company was merged with the artificial intelligence company xAI, itself the parent of the social media platform X.
Anduril, the autonomous systems manufacturer founded nine years ago by Mr. Luckey, is also a major vendor to the Pentagon.
In March, the Army awarded the company a contract worth up to $20 billion. In June, Anduril won an Air Force production contract to make a line of new fighter jets. No dollar figure was announced.
Mr. Beyrer, the Anduril spokesman, said that Project Meridian “fits squarely” with a Defense Department tradition of working with industry partners on new technology and fighting techniques.
An Oracle spokeswoman declined to comment. Representatives for Mr. Lonsdale and Saronic did not respond to requests for comment. General Rainey could not be reached.
Mr. Hegseth has set a Jan. 28 deadline for the panel to submit recommendations.
Aaron Krolik contributed reporting.
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