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

(Image credit: U.S. Space Force)

By Michael Sheetz,
Published by CNBC, 18 January 2024

Overview: PWSA Sweepstakes

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.

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