[entee]

I'm a little confused, does the military acquire companies wholesale? I've never heard of that happening, that's not to say it can't but what are some examples of this kind of scheme?

Instead was the plan to milk the military for a long time on R&D expenses and just pocket the cash as one goes along? If so how does that work for the VC-backed structure of the company?

[adventured]

I can answer that for you. No, the US military does not acquire private companies, except in extraordinary circumstances of national security (think: WW2 type events). They'd only do it if the company possesses something of extreme strategic importance and could no longer operate as an on-going concern, and the first thing they'd do is try to arrange a sale to another friendly defense contractor. Buying a private company would be the very last thing they would do in the chain of actions there; further, what they would do, is purchase the technology, not the corporation.

Accordingly, the theory about Theranos being set-up to be sold to the DoD, falls entirely flat.

[rzt]

I have no expertise in any of this, but I was assuming it would be something along the lines of an IDIQ (indefinite delivery, indefinite quantity) contract vehicle: https://en.wikipedia.org/wiki/IDIQ

[entee]

That makes some sense, though it seems they'd have to deliver something in that case. I'm sure one could keep the charade going for a little bit by delaying/delivering stuff that didn't work, but eventually the docs in the army medical corp would start to raise red flags and the jig would be up. One hopes anyway?

[dubdubbub]

The military pays as much, if not more, for contracts and products as the private sector would pay to acquire the companies involved.