Why Space Startups Are Excited by Space Force’s New Rocket Contracts

A few weeks back SpaceX won a giant $734 Million launch contract from the U.S. Space Force’s Space Systems Command to launch nine secretive military satellites into orbit. Now the Space Force has opened up the next lot of funding for more launches, in a deal worth nearly $6 billion. Industry site SpaceNews explains that the motivation for these launches is to act as an “on-ramp strategy” to help get new space companies to bid for contracts alongside existing winners.

The new contracts technically form part of what the armed services branch calls the “Phase 3 Lane 1” scheme, comprising some 70 additional missions on top of the nine SpaceX recently won. To qualify to bid on any of the contracts, a company must demonstrate that it can be ready to make a first launch by December 2025. Col. Douglas Pentecost, deputy program executive officer for Assured Access to Space at Space Systems Command, told SpaceNews these contracts really are all about enabling competition among different new launch providers, with the diversity of options seen as guaranteeing access to space. Part of the rationale, for example, is that if one launch provider encounters an issue with their rocket design, a competitor’s vehicle will still be available to get critical military hardware into orbit when needed. 

But who are these potential “launch provider” companies? One of the bigger names, SpaceNews suggests, is Rocket Lab. This U.S.-New Zealand startup is developing a rocket powerful and large enough to carry Space Force satellites. Named Neutron, the rocket will rely on a similar economic model of reusability as trailblazer SpaceX pioneered with its Falcon 9 rocket. Neutron was expected to take its maiden flight in November, but SpaceNews indicates that this launch may now be pushed to mid-2025—which would still make it eligible to bid for the new Space Force launch contracts.

Industry news site DefenseOne.com dug into the Space Force’s plans to energize the growing commercial space industry, noting that three companies were selected to be eligible for the first group of launches: SpaceX, Amazon mogul Jeff Bezos’ Blue Origin company, and United Launch Alliance—a launch provider that was created in 2006 as a joint venture between space industry veterans Boeing Defense, Space and Security and Lockheed Martin Space. Only one provider met all the criteria, and won the entire contract: SpaceX. That could be seen as a sign that the government’s effort to embrace the fast-growing commercial space market was stumbling, and that SpaceX was positioning itself—through sheer prowess and success alone—as a pseudo-monopoly. 

But Brig. Gen. Kristin Panzenhagen, program executive officer for Assured Access to Space, said that she didn’t think of that award as a failure. “We fully anticipated it. I mean, everybody knows who’s launching right now. We knew it was going to be a very limited set, but we knew we had to start somewhere,” she said last week at the Space Systems Command’s annual Space Industry Days conference.

SpaceX, which is expected to launch its innovative partially reusable Falcon 9 vehicle around 120 times this year, is simply the only company with the right level of readiness. The Space Force knows this, but Panzenhagen told reporters that the service didn’t want to wait for rivals to reach the same readiness before launching its new launch contract system. “Developing rockets, designing them, producing them, buying them, is hard. We’ve got a lot of new companies working at it that we’re excited to bring on, but we know that it’s going to take time to flush all this out,” she said. Rocket science is, of course, hard.

Why should you care about this? Apart from getting some assurance that tax dollars are being spent efficiently trying to “spin up” a whole new commercial space industry, based more on the move-fast-break-things startup mentality than old, expensive space industry thinking, the new contracts are a reminder that the space business is changing significantly, creating room for smaller companies to win a slice of a multibillion-dollar pie.