On January 15, 2023, a Falcon Heavy rocket launched the USSF-67 mission from NASA’s Kennedy Space Center in Florida.
The U.S. military is ramping up and expanding its high-profile competition for Space Force mission contracts.
The Space Force plans to buy more rocket launches from companies in the coming years than previously expected, giving more companies access to potential multibillion-dollar contracts.
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“It’s a big deal,” Col. Doug Pentecost, deputy program executive officer for the U.S. Space Force’s Space Systems Command, told reporters at a news conference this week.
Earlier this year, the Space Force launched a lucrative program called National Security Space Launch (NSSL) Phase 3, kicking off the process of buying launches for five years. Now it is scaling up.
The U.S. sees a growing drive to improve its military capabilities in space, necessitating a nearly three-fold increase in the number of launches it buys in the second phase of 2020.
“It blew my mind,” Pentecost said. “We only estimated 36 tasks for phase 2. For phase 3, we estimated 90 tasks.”
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In February, the Space Force created a “common fund” strategy for buying launch products from companies. It divides NSSL Phase 3 into two groups. Lane 1 is a new approach with lower requirements and a more flexible bidding process, allowing companies to compete when rockets debut in the coming years. Lane 2 represents the existing approach, and Space Force plans to select a certain number of companies to perform missions that meet the most demanding requirements.
Pentecost said the Space Force held an industry day in February to discuss details of the program, with 22 companies participating. The Space Force has since made some tweaks to Phase 3. It adds more quests, introduces price caps, expands the second channel, and creates an annual quest distribution schedule.
The government weighs bids against a company’s “total assessed price” each time it publishes. It’s divided into “launch services,” which refers to the cost of building and launching a rocket, and “launch service support,” which covers special requirements the military may have for a launch. Startup Services support is capped at $100 million per company per year.
“We’ve implemented some cost-limiting tools so we’re not inflated. We don’t want everyone to have a mission — you get a mission, you get a mission, you get a mission — because then there’s no real competition,” Pentecost said.
“We do think that all of our industry partners want to be number one, so we think this will offer competitive pricing to keep our costs down,” Pentecost added.
Widen Lane 2
While Lane 1 is expected to attract the highest number of bids and award 30 assignments, Lane 2 is the most important.
Through “Lane 2,” the Space Force offers the most valuable contract, launching national security satellites with the highest risk.
“These satellites will have payloads worth $1 billion and will go into unique orbits,” Pentecost said.
Not only has Lane 2 increased the number of missions up for grabs (currently an estimated 58 launches, compared to 39 in February), but the Space Force has also decided to expand the number of available spots eventually awarded to three companies, rather than being limited to two.
A joint venture between Elon Musk’s SpaceX and the United Launch Alliance Boeing and lockheed martinwere considered the two main contenders for Lane 2, but now another company, such as Jeff Bezos’ Blue Origin, has opened the door.
The Space Force will allocate 60% and 40% of the 51 missions to the top two bidders, respectively, and the remaining seven launches will be allocated to the third-ranked bidder.
No matter where a company ranks, it must demonstrate that it can meet all of Track 2’s requirements, which include having launch sites on both the east and west coasts and being able to hit nine “reference” orbits with high precision, some of which are farther from Earth than Track 1’s low-Earth orbit requirements.
When asked by CNBC how many companies were developing rockets capable of meeting those requirements by the launch deadline, a Space Force spokesperson declined to give specifics, saying the military was “tracking a few” companies that were “expanding their launch capabilities to most orbits.”
“We hope it’s not just ULA, SpaceX, and Blue Origin competing, but other companies that have expressed interest in the past,” Col. Chad Mellon, chief of Space Systems Command’s launch acquisition and integration division, said during the briefing.
The Space Force sets October 1 each year as a deadline for assignments to companies that win contracts.
Pentecost explained that the first missions will take place in October 2025, but noted that the contract does not guarantee mission completion, which protects the Space Force from possible delays in the company’s rocket development and flight.
“You can actually win the contract because you’ve got a great plan for how you’re going to fly by 2027 (fiscal year). But since you haven’t flown yet and I have a satellite that needs to fly in two years, we’re not going to give you the mission — we’re going to hand it over to another guy,” Pentecost said.
The Space Force aims to complete the request for bidders by September, submit all proposals by December, and then award contracts in October 2024.
A big driver of that push, Space Force officials said, is “guaranteed capability” because there are “a ton of other companies” trying to buy satellite launches, and the Space Force needs to lock in their orders.
“We want to make sure that we’re basically hedging against launch scarcity that could happen because if there’s a lot of demand for a launch and everybody’s (buying), the price can be very high,” Mellon said.
But despite such concerns, Pentecost said 2026 “seems to be the sweet spot” when a number of companies’ rockets will have finished development and are ready to fly. Companies that stay on track will prevail in NSSL Phase 3.
“If you fly before then, or if your schedule shows you will, you will have a significant advantage, which will put you in a much better position to win the race for best or second best provider,” Pentecost said.