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Investing in Space: Why Military Contracts Are Crucial to Space Companies

SpaceX’s Falcon Heavy rocket blasts off from Florida on June 25, 2024.

NASA

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Review: The Inevitable Flare of Rockets

As Americans celebrate our independence this week, I am reminded of the inherent, but perhaps little understood, connection between space and US national security.

My impression is that – outside of the industry – when most people hear “space” or think of “investing in space” for that matter, it comes with connotations of science, exploration, astronauts, and maybe some Hollywood-spoiled alternative visual effects. space shuttles.

But the reality is that space has been what the Pentagon calls a “war domain” from the beginning. The first orbital rockets, satellites, and even the architecture of Apollo were born from the military and its aerospace contractors. The U.S. Space Force, which has been around for less than five years, already has a larger annual budget than NASA, although the latter is old enough to be the grandfather of the space force and holds the coveted position of one of the most beloved federal agencies.

Even among the NASA corps, you’re as likely to find “combat flight hours logged” on astronaut resumes as anything else.

Historically, the biggest defense contractors have long won the biggest space contracts – and that’s still true today. SpaceX has earned a coveted spot in that role for the military, whether it’s launching rockets for the Space Force or building satellites for the NRO.

The top pure-play aerospace companies receive a significant, if not the majority, of their revenue from military contract work from the US and its allies. And often these military space deals represent “we made it” moments for companies — period A rocket laboratory CEO Peter Beck approached me earlier this year when his company won a seat in the $10 billion PWSA lottery.

“This is really our foray into the world of being [defense] top-notch … he practically doubled the company’s backlog overnight with one contract,” Beck told me at the time.

The importance of military contracts is also increasing as venture capital looks more closely at startups that win and execute early military deals.

Global conflicts such as Russia’s invasion of Ukraine or the simmering tensions in China and Taiwan further highlight the importance of space-based capabilities to the world’s armed forces – whether the US or its adversaries.

So as you tuck into a hotdog tomorrow and look to the skies for your local fireworks display, it’s worth realizing why what’s up there is so important to the military about what’s down here—and that includes seemingly unrelated parts of space , such as private space stations or back to the moon.

Happy Fourth of July!

What’s happening

  • NASA and Boeing delay Starliner return by “weeks” for more thruster testing, the agency and the company announced. They have not yet set a new target date and plan to wait until a test campaign of the spacecraft’s propulsion technology is completed in White Sands, New Mexico. – CNBC
  • SpaceX and NASA have misjudged the risk of space junk reaching earth, as the numerous incidents of debris surviving re-entry highlight the need to re-examine the question of the ‘survivability’ of spacecraft parts. – Ars Technica
  • A Chinese company accidentally launched a Falcon 9-sized rocket during testing: Space Pioneer was performing a static fire test on the booster of its Tianlong-3 rocket, but the booster unexpectedly broke free and flew for about a minute before crashing back to earth in a fireball. – SpaceNews
  • SpaceX to use Dragon-based design for US Deorbit Vehicle, according to a NASA official who said the company would need to make “some modifications and some changes to the trunk” in order for the spacecraft to guide the ISS through reentry. – Read more
  • Japanese billionaire Yusaku Maezawa’s canceled Starship contract was worth $500 million, but it is reported that Maezawa did not pay the full amount before canceling the dearMoon moon trip. – The information
  • Amazon postpones Kuiper commercial launches to Q4, after previously targeting the first half of this year. – Via satellite
  • The report says Europe lags far behind the US in venture funding for space startups, and a survey by the EU’s credit branch found that venture investors in the regions have a negative outlook on fundraising. – SpaceNews
  • The crew of the Mars simulator will leave the habitat after more than a year, leaving the confines of its environment at NASA’s Johnson Center in Houston after 378 days. – NASA
  • Former cryptocurrency group SERA is planning a reality TV competition for seats on a Blue Origin space flight: The Space Research and Exploration Agency (SERA), formerly known as the Crypto Space Agency, has purchased a future New Shepard flight and will hold a public competition for the six seats, the group announced. – Space.com

Industrial maneuvers

  • SpaceX awarded a $69 million contract to NASA to launch the COSI telescope in August 2027 on a Falcon 9 rocket. COSI (Compton Spectrometer and Imager) is a wide-field gamma-ray telescope. – NASA
  • Space Force adds Blue Origin and Stoke to the OSP-4 launch program, which manages the Space Systems Command (SSC). OSP-4 includes a wide variety of rocket companies bidding on contracts for experimental or small-payload missions. – Cosmic forces
  • Spanish rocket company PLD Space is offering free satellite rides on the first two launches under the company’s MIURA 5 Spark program. The company said small satellite organizations can submit bids to launch the two demonstration flights of the MIURA 5 rocket in 2025 and 2026, with “standard launch services at no cost.” – PLD space

Engines on the market

  • Virgin Galactic restores NYSE listing compliance after the company completed a 1-for-20 reverse stock split last month. – Virgin Galactic
  • Inertia board members give the company $500,000, with the six directors jointly issuing secured notes “to be used first to pay earned employee retention payments.” – Inertia
  • The OHB-built German spy satellites do not work: Two OHB satellites for the SARah network have failed to deploy their antennas, with the German military saying the company will be responsible for building two replacements. – Ars Technica

Boldly forward

  • Michael Pavloff joins Aerospacelab as Deputy CTO, joining the company from Terran Orbital, where he was vice president of technology. – Aerospace Laboratory
  • Lee Levy joins advisory board of space mining startup Lunasonde, a retired Air Force general who also served on NASA’s Advisory Board. – Lunar Probe
  • Andre Douglas has been appointed as a backup astronaut for NASA’s Artemis II, a role he would fill if one of the agency’s three primary crew on the mission was unable to fly. Douglas graduated from the Astronaut Programming Course in March. – NASA

On the horizon

  • July 4: Firefly Alpha launches a NASA VCLS demonstration mission from California.
  • July 7: SpaceX Falcon 9 launches Starlink satellites from California.
  • July 7: SpaceX Falcon 9 launches Turksat 6A satellite from Florida.
  • July 9: Arianespace Ariane 6 launches inaugural flight from French Guiana.
  • July 10: NASA’s Starliner astronauts will hold a press conference in space from the International Space Station.

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