Investing in Space: Pentagon’s satellite constellation awards near $10 billion

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I’ve written a bit about the Space Force’s satellite constellation program before but, with new awards already rolling this year, it’s worth checking in on who’s been added to the fray that I’m calling the PWSA Sweepstakes.

A quick refresher: In the few years since the Space Force became the first new U.S. military service branch since before the Cold War, one of its units has evolved into a satellite-building, money-slinging, fast-moving agency. Known as SDA, or the Space Development Agency, the unit is aggressively ordering and launching satellites for a new network known as the “Proliferated Warfighter Space Architecture,” or PWSA.

The idea is to build an interconnected constellation, a la Starlink, that consists of hundreds of satellites, instead of dozens or less. The goal of PWSA is to have more redundancy and greater connectivity for lower risk, as each satellite in the constellation costs a fraction of the powerful but bespoke military assets of the past. Additionally, each “Tranche” (or generation) is aimed to be bigger and badder than the last – expanding the Space Force’s support of the broader U.S. military with capabilities like communications, location targeting and missile defense.

When we last discussed PWSA in this newsletter, the SDA had awarded about $5 billion in contracts to five different companies. Now we’re pushing $10 billion in awards, to build more than 400 satellites, with seven companies in the mix.

The current PWSA winners, by contact value, are three of the usual suspects – Northrop Grumman, Lockheed Martin and L3Harris – but then it gets interesting. York Space has been tapped to make more satellites than anyone but Northrop Grumman, to the tune of $1.3 billion. Then you’ve got Rocket Lab and Sierra Space in the mix, who jumped into PWSA with awards this month.

You can see what it’s meant to those two most recent additions to the program: Rocket Lab heralded its award as marking a “new era as a leading satellite prime,” while Sierra Space emphasized being put “on the short list of companies that can deliver, as a prime, in missions critical to the warfighter.”

A quick caveat is that these contracts are not all equal, especially since they’re fixed-price deals. Each company bid what they thought they could make the satellites for, and each of the Tranches have different layers with varying requirements, i.e., different use cases and different demands.

But the bottom line is that big money is rolling out now from SDA. Already the agency’s launched the first PWSA satellites it began ordering in 2020, and it has about 350 satellites on tap for delivery and launch in the next three years. SDA’s closing out the Tranche 2 ordering phase, and it’s already outlined that orders for Tranches 3 and 4 will be coming through the end of the decade.

And there’s another key part of these Tranches, in addition to upgrading PWSA’s capabilities: Replenishment. A low Earth orbit constellation means the PWSA satellites will need to be replaced with newer ones, and companies who deliver fastest and perform the best will have even stronger bids for what’s likely to be more lucrative contracts in the years to come.

• Space investment bounced back in 2023 with $12.5 billion raised, according to Space Capital’s Q4 report. That’s more than $3 billion above last year but still below 2021’s record high. – CNBC
• Momentus is running dangerously low on funds: The company abandoned plans for its next mission that was set to launch in March, citing its “limited liquidity and cash balance.” Momentus warned shareholders that its “ability to continue to fund operations for the next few weeks and months will be dependent on its ability to raise equity capital or engage in a strategic transaction,” but that it has no “definitive commitments at this time.” – CNBC
• NASA and Boeing conduct Starliner parachute test: A key milestone before the spacecraft carries crew on a flight test planned for April, preliminary analysis of the parachute drop test suggests it was successful. – NASA
• ESA budget increases 10% to $8.5 billion, with satellite imagery remaining its largest funded obligation. – Payload
• Pentagon looks to lower classified barriers to entry for space companies: The DOD’s assistant secretary of defense for space policy John Plumb emphasized that the department is putting into action a memo that “removes legacy classification barriers that have inhibited our ability to collaborate across the U.S. government and also with allies on issues related to space,” especially in places where those levels of secrecy are unnecessary. – SpaceNews
• Congressional hearing expresses support for NASA’s Artemis despite delays, as members of the agency testified before the House Science, Space and Technology Committee, with questions focused on whether current timelines are realistic. NASA leaders believe the latest schedule has enough “margin” for flexibility to hit its Artemis mission goals. – SpacePolicyOnline
• Tom Mueller’s Impulse unveils large space tug called Helios, which will feature a new engine called Deneb to deliver upwards of 4,000 kilograms from low above Earth to distant orbits like GEO. – Impulse Space
• Redwire deploys roll-out solar arrays on Ovzon 3 mission, the first time the company used the technology on a commercial satellite. – Redwire
• Astrobotic’s moon mission to burn up in Earth’s atmosphere on Jan. 18, as the damaged Peregrine spacecraft concludes the company’s first lunar landing attempt. – Astrobotic

• NASA issued a $478 million total award to 12 companies for ISS services. The seven-year contract includes a two-year extension option to continue supporting the space station until 2032. – NASA
• SpaceX and Deere partner to link farm equipment via Starlink: Deere, the world’s largest manufacturer of farm machinery, signed a deal as part of its effort to build out computer-assisted connectivity services for farmers. The service will debut in the U.S. and Brazil later this year. – The Wall Street Journal / Deere
• Hyperspectral satellite imagery company Pixxel opens Bengaluru facility, a 30,000-square-foot facility in India for satellite manufacturing. – Pixxel

• KeyBanc begins coverage of Rocket Lab with buy call, putting an overweight rating on the stock and an $8 price target, meaning the firm sees the stock climbing about 50% from current levels. KeyBanc called Rocket Lab “one of the handful of companies within the Space industry with a proven business model and viable path to profitability in the next 1-3 years.” – KeyBanc

• Kurt Vogel named as NASA associate administrator for the agency’s space technology directorate, effective immediately, previously having been the director of space architectures at the agency. – NASA
• Chiara Pedersoli appointed CEO of German space and technology group OHB, succeeding Marco Fuchs, as the company goes private via a deal with KKR. – OHB
• Frank Di Pentino named Chief Strategy Officer of startup True Anomaly, joining the space national security-focused company having previously served as the Space Force’s Director of Advanced Concepts, Tactics and Wargaming. – True Anomaly

• Jan. 18: SpaceX Falcon 9 launches Ax-3 crew mission from Florida.
• Jan. 18: Astrobotic’s Peregrine lander burns up on reentry above the South Pacific after the first moon mission was cut short.
• Jan. 19: Axiom’s Ax-3 mission docks with the International Space Station.
• Jan. 19: Japan’s SLIM mission attempts moon landing.
• Jan. 23: Lockheed Martin reports Q4 results.
• Jan. 25: Northrop Grumman reports Q4 results.