Defense firms bullish on ‘Space Force’

Defense firms bullish on ‘Space Force’

Defense contractors are eagerly awaiting the launch of President TrumpDonald John TrumpREAD: Transcript of James Comey's interview with House Republicans Klobuchar on 2020: ‘I do think you want voices from the Midwest’ Israel boycott fight roils Democrats in year-end spending debate MORE’s new “Space Force,” in hopes the Pentagon will go on a space-related shopping spree.

One of the driving forces behind creating a new branch of the military dedicated to space is addressing problems with the acquisition process. Supporters of Space Force say the acquisition process for space technology has been a mess without a dedicated military service.

The Trump administration has outlined its vision for Space Force in broad strokes, but most of the nitty-gritty details on issues such as acquisition won’t be resolved until it releases a legislative proposal for Congress to create the new branch.

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But contractors say if it is organized right, Space Force could be a boon to their businesses.

“It’s pretty exciting for all of us in the industry to see the intense level of interest that this
administration and our Congress has in space,” United Launch Alliance (ULA) CEO Tory Bruno said recently. “I think there is sort of, at last, an appreciation of how vitally important space is to all of our lives and certainly to our country.”

Critics of the way the Pentagon has handled its space programs consistently cite acquisition as one of the main issues. The current structure isn’t conducive to entertaining new ideas and both the decisionmaking process and the programs themselves take too long, critics say.

Last week, Vice President Pence outlined the administration’s plans for Space Force to become the sixth branch of the military by 2020.

The proposal has elicited online snickering from critics about fighting aliens, but it’s meant to protect U.S. space assets from countries such as Russia and China. Both countries in recent years have tested anti-satellite missiles, for example.

On Monday, President Trump touted the Space Force proposal, promising it would allow U.S. capabilities to get “so far ahead of [adversaries] in a very short period of time your head will spin.”

Congress needs to approve the creation a new branch of the military, but the administration plans to take several steps of its own to prepare for the new service.

Among them is the creation of a Space Development Agency to handle new space acquisition programs. The existing Air Force Space and Missile Systems Center would continue to handle legacy acquisition programs.

Deputy Defense Secretary Patrick Shanahan has said one of the goals of the new agency is to “leverage” the commercial space industry.

“Commercial space is the new NASA,” he told reporters last week. “It’s very important we leverage off the work and investment that’s been done there.”

Todd Harrison, director of the Aerospace Security Project at the Center for Strategic and International Studies, said the Space Development Agency could open the field for newer and smaller companies to compete for the Pentagon’s space contracts or allow companies that only focus on one area of national security space to expand into others.

“I think overall they’re probably happy,” Harrison said of contractors’ reaction to the Space Force proposal.

Harrison though acknowledged that some legacy companies are also wary of an industry shake-up.

“I think they’re also probably a little concerned because it’s going to be disruptive to the status quo. And if you’re an existing legacy contractor, the status quo works for you. In disrupting the status quo, you could come out better or you could come out worse,” he
added.

Harrison highlighted Blue Origin, the aerospace company founded by Amazon CEO Jeff Bezos, as one firm that may benefit from the new structure.

Blue Origin declined to comment on the Space Force plans. The company has been working to advance reusable rocket technology to compete with SpaceX.

While there is excitement over the prospects for Space Force, businesses acknowledge they still need more details.

Speaking to a small group of reporters Friday at ULA’s offices at Cape Canaveral Air Force Station, Fla., Bruno said he doesn’t believe any of the administration’s immediate steps, such as the Space Development Agency, will affect business with the Pentagon that much right away.

“It did not look like there would be any immediate impacts to us and our relationships, but we’ll see when we read the whole thing,” he said, cautioning that at that point he had only “skimmed” the Pentagon report.

For example, it appears that the Air Force’s Evolved Expendable Launch Vehicle program for launching sensitive payloads into space, on which ULA had a monopoly until recently, will remain under the purview of the Air Force Space and Missile Systems Center.

For future launch capabilities, though, the new Space Development Agency “might make it a bit more competitive for ULA,” Harrison said. 

ULA’s chief rival, SpaceX, did not return requests for comment on what it thinks of the Space Force proposal.

But space companies are hopeful the new branch will clear up a difficult acquisitions process.

Asked if he thinks a Space Force will open up more opportunities for business with the Pentagon, Bruno said it will “depend on how it’s done, more than whether it’s there or not.”

ULA, he said, will watch “pretty carefully” how Congress and the administration proceed. 

Outside of reorganizing how the Pentagon handles space acquisitions, there’s also the money.

Pence said last week the administration will request $8 billion from Congress over the next five years for space acquisition.

With the Pentagon’s budget standing at $716 billion, $8 billion over five years is relatively small, Harrison said.

It’s also unclear what exactly that money intends to buy. That likely won’t become apparent until the administration releases its fiscal 2020 budget request next year. 

Sean O’Keefe, a former NASA administrator and Navy secretary, said contractors’ reactions will depend on what the $8 billion entails.

“A contractor’s going to look at this and say, ‘Tell me what it is I ought be paying attention to. I don’t know. I don’t know whether to salivate or just look at and say it’s the same $8 billion I’ve seen before,’ ” he said.

Further, Harrison said, the Pentagon may use some creative accounting to include some existing monies in the $8 billion. That means actual new money going to space acquisition could be less than advertised.

But the plan does point to a trend of increasing the nation’s space budget in the future, which should please contractors, he added. 

“The trends are going in the direction that the military is going to be spending more and more on space capabilities,” Harrison said. “There should be more opportunities for contractors.”