After years of delays, hardware and software development for the IVAS project will shift to Anduril, with Microsoft continuing to supply cloud infrastructure.

Palmer Luckey-founded defense tech startup Anduril will take over the development and production of Microsoft's mixed-reality headset program for the U.S. Army, the companies said on Tuesday.

Anduril Industries, led by Palmer Luckey, is set to take over Microsoft’s contract for the U.S. Army’s Integrated Visual Augmentation System (IVAS). The deal, first reported by Axios, originally tasked Microsoft with developing augmented reality goggles for military use.

Microsoft plans to quit developing augmented-reality headsets for the US Army and have Oculus founder Palmer Luckey's Anduril Industries take over the gig. The software giant’s AR-for-Army project is called the Integrated Visual Augmentation System (IVAS) and began in 2018 using hardware based on Microsoft's now-discontinued HoloLens headsets.

Under the arrangement, Anduril will designate Microsoft Azure as its preferred cloud provider for all IVAS-related workloads including Anduril's artificial intelligence capabilities. Integrating augmented reality and virtual reality capabilities into a soldier-worn device,

Through this partnership agreement, and pending Department of Defense approval, Anduril will assume oversight of production, future development of hardware and software, and delivery timelines. This agreement also establishes Microsoft Azure as Anduril’s preferred hyperscale cloud for all workloads related to IVAS and Anduril AI technologies.

Anduril Industries will take control of Microsoft’s multibillion-dollar augmented reality headset program for the U.S. Army.

"The IVAS program represents the future of mission command, combining technology and human capability to give soldiers the edge they need on the battlefield," said Palmer Luckey, founder of Anduril Industries.