SpaceX, the space exploration technology company led by Elon Musk, did not get the eye of the Pentagon’s top brass in its early years. But now SpaceX has had unprecedented success in attracting U.S. military business. SpaceX has reached agreements with the U.S. military in recent months, from launching national security satellites, to improving the military’s weather forecasting facilities, to building a new generation of small spacecraft to track enemy missiles.
SpaceX is also working with the U.S. Air Force and Army to demonstrate communications link technology. A few weeks ago, the company signed an agreement with the Pentagon to study the feasibility of using SpaceX starships to deliver cargo around the world. The company’s engineers envision using the giant deep-space spacecraft with built-in rocket engines to ship 80 tons of cargo around the world in minutes.
From the start, Musk said his ultimate goal was to colonize Mars to provide humans with a safe way to escape earth if necessary. But in the process, SpaceX has accumulated about $5 billion in civil launch contracts. It also won contracts to provide the military with rocket launches and satellite prototypes, with an estimated total value of $6 billion. In addition, SpaceX and NASA have signed contracts worth more than $9 billion to deliver cargo and astronauts to the International Space Station.
That’s still dwarfed by the major defense suppliers. Boeing’s defense and aerospace business generated about $26 billion in revenue last year, while Lockheed Martin, the largest U.S. defense contractor, reported revenue of about $21 billion from its space and missile business last year. Both companies are also major contractors for NASA’s major projects, which have been funded by tens of billions of dollars over the past few years.
(Pictured: Musk says his goal is to colonize Mars and provide humans with a safe escape from Earth.) )
Many of SpaceX’s contracts depend not only on emerging technologies, but also on future Pentagon decisions and limited initial revenue. But as Congress and the Pentagon invest more in a range of space programs, industry officials say SpaceX’s U.S. military contracts will add billions of dollars over the next decade or so.
The main purpose of SpaceX’s shift to the U.S. military program is to make effective use of the company’s rockets and satellites. The devices were originally built for civilian and commercial customers in the United States, and NASA remains its largest customer. But according to analysts and industry officials, the company is developing a strategy to adapt existing systems to new tasks such as tracking space debris, helping to defend against super-fast missiles, and providing secure communications links.
Roger Rusch, a senior industry consultant, said that in order to win the trust of the US military, SpaceX executives “have persevered, done their homework and done everything they need to do”. “This persistence has paid off,” he said. “
A SpaceX spokesman did not respond to a request for comment.
Selling business to senior U.S. military officials, however, is very different from negotiating commercial contracts. SpaceX tends to have a huge influence in civil commercial contracts because its prices are much lower than those of its competitors. Keith Volkert, a consultant who represents major satellite operators contracted with SpaceX, said Musk’s team always likes to tell his corporate customers that they’re really just a hilarious place.
“We didn’t really sell you rockets, ” he recalls the company’s representatives often saying. “We’re just selling you a bus, and you don’t have a chance to pick and choose.”
In less than 24 years, SpaceX has grown from several employees working in warehouses to large companies with about 8,000 employees in Texas, Florida and Washington state. Within the U.S. government, SpaceX is known for its best and most successful lobbying groups.
SpaceX has become the largest commercial and civil launch service provider in the United States because of its lower price than traditional suppliers. But Mr. Volckert says the approach is not suitable for demanding military customers, who value reliability and rigorous oversight more than cost.
Musk’s plans to deploy thousands of small satellites as part of SpaceX’s “Starlink” program have attracted many private investors. Industry and U.S. military officials say the commercial broadband project could eventually become the basis for military applications. With Musk publicly estimating that it would cost at least $30 billion to develop and test new technologies to send humans to Mars, industry officials say SpaceX is increasingly hoping to get more revenue from the U.S. military to help meet the company’s growing cash needs.
The Pentagon has accepted the use of SpaceX’s Falcon 9 rocket to launch a series of U.S. Air Force navigation and intelligence satellite launches, including the previously controversial recovery and reuse of rocket-first-stage boosters.
In August, SpaceX beat Blue Origin, founded by Amazon CEO Jeff Bezos, to win 40 percent of the Pentagon’s launch contracts for the next few years. The United Launch Alliance (ULA), a joint venture between Boeing and Lockheed Martin, won the remaining missions. But ULA executives have expressed growing concern about SpaceX’s involvement. Just a few years ago, ULA was almost a monopoly on launching military payloads.
“They’re not just an emerging threat right now,” Ken Possenriede, Lockheed Martin’s chief financial officer, said in October. “
As part of efforts to strengthen ties with the Pentagon, SpaceX recently hired retired four-star Air Force General Terrence Shawnessy, who is not known to be a consultant or a full-time employee, according to industry sources. SpaceX has not officially announced the news, but it has recruited other retired U.S. military officers.
SpaceX’s approval also reflects the Pentagon’s growing emphasis on small, relatively inexpensive satellites rather than expensive behemoths that are harder to operate or defend.
Some Wall Street analysts believe SpaceX’s valuation is close to Lockheed Martin’s market capitalisation of about $103 billion, in part because the company has successfully launched 100 rockets so far and is expanding its prospects in the defense market. But some advisers and analysts worry that a further emphasis on the military could distract the company from the civilian and commercial sectors.
Being a top supplier to the Pentagon is a huge turning point for SpaceX, which was once overlooked. SpaceX filed a lawsuit years ago alleging that the Air Force shut it out of some of its operations. And earlier this year, SpaceX was still chattering about being excluded from Pentagon-led rocket development funding.
Musk gives the impression of a visionary who is committed to protecting the environment and finding another home for humanity in the solar system. Tim Farrar, an industry consultant who works for a broadband provider that competes with SpaceX, said: “If the military had been to pay for it, a lot of outsiders wouldn’t have looked at him with the same optimism. “