The Rise of Commercial Space in Christian Davenport’s “The Space Barons”
Washington Post Reporter to Release New Book, “Rocket Dreams,” in 2025
Christian Davenport, a space industry and NASA reporter for The Washington Post, has announced a forthcoming book: “Rocket Dreams: Musk, Bezos, and the Inside Story of the New, Trillion-Dollar Space Race.” The new book, set to be released in the fall of 2025, picks up where his previous book “The Space Barons: Elon Musk, Jeff Bezos and the Quest to Colonize the Cosmos,” concluded seven years ago. While his journalism career began as a metropolitan reporter and editor covering local politics in Washington, D.C., it was Davenport’s experience as an embedded reporter in Iraq and Kuwait that enabled him to recognize a unique story idea that led to writing “The Space Barons,” during a 2014 press conference.
“I was assigned to cover the military-industrial complex when, in 2014, Elon Musk held a press conference at the National Press Club in Washington, D.C., to announce he was filing a lawsuit against the Pentagon, specifically the Air Force, for the right to compete for national security launch contracts,” Christian Davenport said. “But Musk started the press conference by talking about building a re-usable launch vehicle that would bring the booster back by catching it. I wrote the story about the lawsuit, but during my research into SpaceX’s efforts to develop reusable rockets I found that Jeff Bezos and Blue Origin were trying to do that, too.”
At the time, the idea of a re-usable launch vehicle that would return to Earth was unproven. But Davenport took to heart an old journalism mantra that harkens back to Watergate: “Follow the money.”
“If the richest people in the world are investing their money in space exploration and advancing state of the art launch technology, then we should be paying more attention to that,” Davenport said. “So I interviewed Elon, Jeff, as well as Richard Branson and Paul Allen, for ‘The Space Barons.’ But while each of them approached their space companies with very different mindsets, there is a common thread through all of them: to lower the cost of access to space.”
A Starting Point for Commercial Space
The billionaires’ ambitions were diverse: Musk wanted to colonize Mars, Bezos wanted to reduce human impact on the Earth and Branson licensed technology from Allen’s StarShipOne to establish suborbital tourism. Each of them self-funded their space company’s efforts to varying degrees, but it was Allen’s original aspirations to win the Ansari X prize that today is viewed as a catalyzing moment for commercial space.
“The Ansari X Prize was a contest to see if a commercial venture can send a vehicle to the edge of space and back – twice – without government money,” Davenport said. “When Paul Allen and Burt Rutan, the famous inventor and aerospace engineer, came up with SpaceShipOne and won the Ansari X Prize, it was heralded at the time as a breakthrough moment for commercial space. But while it showed it could be done, we don’t have regular people going to the edge of space like originally envisioned.”
Davenport’s “The Space Barons” also takes readers inside a 2006 Valentine’s Day conference where the billionaires gathered together to brainstorm how to move the commercial space industry forward.
“Back then, it would have been fair to look at these space barons and say, ‘Commercial space is never going to happen,’” Davenport said. “Space is such an expensive and difficult proposition that requires immense expertise. So there were a lot of skeptics who thought space was always going to be an exclusively government enterprise. Yet, over time, the space barons persisted.”
The motives behind the Valentine’s Day conference meeting have clear repercussions that still resonate today.
“In a sense, they posed a question: ‘Is there a commercial space industry?’” Davenport said. “Well, the next book, Rocket Dreams, answers that question with a resounding ‘Yes,’ because anytime you put human beings in a commercially owned and operated rocket is a big deal. Today, we’re seeing a proliferation of a space market and a space economy beyond just the billionaires.”
The Government’s Role in Commercial Space Growth
A key shift in making today’s space market possible, however, was the actions government agencies made to facilitate the commercial space industry’s growth.
“There was a willingness from the government, from NASA and the Pentagon, to outsource some tasks and space missions to the private sector,” Davenport said. “Today, that outsourcing seems routine, but that was a revolutionary change to trust the private sector with vital space missions that had always been part of the national enterprise. That was a significant paradigm shift that enabled the space industry to take off.”
It took key government figures like NASA’s Mike Griffin or DARPA’s Tony Tether and Steve Walker to advocate for the government to embrace what was – at the time – a budding space industry.
“In the context of the time, there were two space shuttle disasters and the end of the space shuttle program, which meant the United States government would rely solely on Russia to get our astronauts to the International Space Station,” Davenport said. “So government officials began thinking about doing something radically different to access space. It started with industry partners flying cargo and supplies to the International Space Station before flying astronauts – but it was an incremental approach that developed over time.”
The Modern Commercial Space Industry
Today, that once-emerging commercial space market has established itself as a projected $1.8 trillion space industry by 2035. As such, government agencies will be looking more and more to their commercial partners for a variety of space missions.
“We’re seeing the space enterprise understand that if the commercial sector can fly astronauts to the space station, then maybe they should be the ones who land astronauts on the moon and build uncrewed spacecraft for scouting missions,” Davenport said. “The government can also get investors involved to help subsidize the cost of these missions. However, the commercial sector works by experimenting to move faster, which means at times they’re going to fail. So it will be interesting to see what the government tolerance level is for that.”
The balance of success and failure can perhaps be described by two recent commercial space endeavors funded by NASA’s Commercial Lunar Payload Services (CLPS) program. In early March, Firefly Aerospace landed their Blue Ghost spacecraft for a successful two-week mission, but Intuitive Machines’ Athena spacecraft had an imperfect landing that left much of its mission goals unfulfilled.
“It’s a balance of how much risk are we willing to take, because whether it’s astronauts on-board or even the cargo and supplies needed to service those astronauts – the government requires success,” Davenport said. “Even SpaceX has recently had problems with its Falcon-9, Dragon and Starship spacecraft. So while we often celebrate the success of American innovation, some of these setbacks call into question how much government oversight there should be.”
A New Space Race
The government has a vested interest in the success of commercial space companies, primarily because the United States has once again found itself in a modern-day space race.
“China has shown amazing progress for moon landings, as they are the first country to go to and bring samples back from the far side of the moon,” Davenport said. “They have a space station in low-Earth orbit and have operated a rover on Mars. But what many people don’t realize is there are no longer American flags on the moon. The flags from the Apollo era have been bleached white by the radiation and vacuum environment, meanwhile China has planted two flags: one made out of composite material specifically designed for space and another made with in-situ resource utilization (ISRU) technology so it can withstand the harsh space environment.”
In “The Space Barons,” Davenport catalogued how the commercial space industry rose up to meet today’s space race needs by delineating the book in three sections: Impossible, Improbable, Inevitable. But now that the commercial space industry is well on its way, “Rocket Dreams” will showcase how these companies will reach their destinations and achieve their goals in the modern space race.
“‘Impossible, Improbable, and Inevitable,’ encompass the narrative of ‘The Space Barons,’ but also the journey of space exploration in the commercial space sector,” Davenport said. “This next book, ‘Rocket Dreams,’ takes a more symbolic approach to its three sections: on the ground, on-orbit, and to the moon and beyond. The book ends more on ideas, because there’s a lot of questions being asked and certainly progress that is being made, but these unpredictable variables are what makes it an exciting time to be a part of the space industry.”
Elara Nova is a global consultancy and professional services firm focused on helping businesses and government agencies maximize the strategic advantages of the space domain. Learn more at https://elaranova.com/.
Episode 24: The Rise of Commercial Space in Christian Davenport’s “The Space Barons”
The Elara Edge: Expert Insights on Space Security
Intro/Outro: Scott King (SK)
Host: Mike Dickey, Founding Partner at Elara Nova: The Space Consultancy; former Chief Architect of the United States Space Force (MD)
SME: Christian Davenport, reporter at Washington Post; author of “The Space Barons” (CD)
00:02 – 01:23
(SK) Welcome to “The Elara Edge: Expert Insights on Space Security.” I’m your host, Scott King, and we have a new, special edition series to present to you today: “The Elara Epilogues,” where the space industry’s leading journalists and authors will join Elara Nova partners to discuss their published work covering today’s ever-evolving space environment.
Founding Partner Mike Dickey, former chief architect of the United States Space Force, will be your host today. And joining Mike as our inaugural guest is Christian Davenport, space industry and NASA reporter for The Washington Post.
Together, they’ll be discussing Christian’s 2018 book: “The Space Barons: Elon Musk, Jeff Bezos and the Quest to Colonize the Cosmos.” The Space Barons catalogues the rise of today’s commercial space industry, through the lens of the billionaires who founded – and funded – their own space companies at its outset.
But the conversation won’t stop there, as Christian shares with us a few teasers from his forthcoming book: “Rocket Dreams: Musk, Bezos, and the Inside Story of the New, Trillion-Dollar Space Race.” The new book, “Rocket Dreams,” is set to be released in the fall of 2025 and picks back up where “The Space Barons” concluded seven years ago.
With that, thank you for joining us and onto the show…
01:24 – 02:09
(MD) Christian, first. Thank you so much for coming on Elara Edge Expert Insights on Space Security. Our audience is primarily those who have a keen interest in the security and economic aspects of space, and certainly the role that the new space industry plays, [it] continues to be an important and a fascinating topic for a number of reasons that I hope we’re going to discuss today. I’m sure we will.
And you wrote the book on this: Space Barons, and it captures those very early days of this new order. And we appreciate the opportunity to talk to you about the early days. Also I understand, spoiler alert that you might have a new book coming up, and I hope we can also use this time to talk about that and to bring Space Barons into current context seven years on, as we await the new release.
02:10 – 02:33
(CD) Yeah, Mike, thanks so much for having me. It’s a real pleasure. I’ve been following, you know, what you guys have been up to over there, and it’s just such a fascinating time, which has, you know, kind of what led me to write the books. But, you know, as I say, I’ve got one of the best beats in all of journalism.
I just wish the news would slow down a little bit because there’s so much going on. But yeah, no, it’s a real pleasure to be here and I’m looking forward to the conversation.
02:33 – 02:44
(MD) Fantastic. Well, let’s rewind the tape and go back to the very beginning and what prompted you to write the book Space Barons and put it down in book form?
You’re a newspaper journalist by trade?
02:45 – 04:40
(CD) Yeah, so I’ve been doing a lot of things at The Washington Post. I was a metro reporter. I covered local politics. I went into editing and was covering the military for a long time, [I] was embedded in Iraq and in Kuwait and was then assigned to a beat on the business desk to cover the military-industrial complex as it were.
And in the 2014 timeframe, along came a guy named Elon Musk, who held a press conference at the National Press Club here in Washington, D.C., to announce he was going to file a lawsuit against the Pentagon, specifically against the Air Force, for the right to be able to compete for national security launch contracts.
And I remember going to that press conference and thinking, ‘Who the heck is this guy? What is SpaceX? And why would you be dumb enough to file a lawsuit against the government agency that you want to get contracts from?’ And anyway, he started the press conference by talking about bringing back the Falcon-9 booster and trying to catch it.
And in those days, they were trying to build the reusable vehicle. But by bringing it back to hover it over water at a specific spot in the ocean, and I’ll confess, Mike, I had no idea what he was talking about. But I thought it was really, really interesting and I ended up writing the story about the lawsuit, but ended up doing some research into SpaceX, into reusable rockets, and saw then, of course, that Jeff Bezos and Blue Origin was trying to do that.
And you know, one of the key mantras in journalism is ‘Follow the money,’ right? That goes back to Watergate. And I said, ‘Well, if some of the richest people in the world are investing their money in space exploration and advancing the state of the art and the technology, maybe we should be paying more attention to that.’
And so that’s when I sort of decided I need to start covering this, so that’s how it came about.
04:41 – 04:54
(MD) Yeah, fascinating. How did you go about writing? I mean, those are pretty unique individuals. We’re going to talk about some of the other individuals in the book.
Did they all give you access? Or, you know, how did you go about your research and your interviews and did everybody want to talk to you?
04:55 – 07:15
(CD) Yeah. For the first book, “The Space Barons,” I did interview Elon and Jeff and Richard Branson and Paul Allen at the time. I think it was one of Paul Allen’s last interviews before he died. But I did, and it wasn’t easy with Jeff, in particular.
You know, I work at The Washington Post. He owns The Washington Post. I think a lot of people thought that, ‘Oh, he would get access because of that – with his ownership.’ In fact, we treat him the way we treat everybody else and he’s a very difficult person.
He doesn’t do a lot of interviews. Blue Origin is very secretive, particularly then. So it took months upon months to get Jeff to sit down with me. In fact, and I tell this story in the book, what I ended up doing was I did a lot of research into Jeff and his fascination with space. I mean, he says now, ‘Space is the most important work I’m doing.’
And he’s focusing all of his efforts on Blue Origin, his space company. But at the time, he was still the CEO of Amazon. And people didn’t even really know anything about Blue Origin. But I knew that space was one of his key passions, from his very early childhood days and the time that he spent with his grandfather.
And his grandfather – as it turns out, was working for the Atomic Energy Commission in the late ‘50s and early ‘60s and was one of the first employees ever over at ARPA, the predecessor to DARPA and he helped stand up that agency.
And I do believe that Jeff’s passion for space and his desire to have his companies AWS and Blue Origin serve in the national interest and to work alongside the government and the Pentagon comes from his grandfather.
Anyway, in my research about Jeff and his grandfather I had come across a press release, from I believe it was 1961 or 1962 when his grandfather left ARPA to go back to the Atomic Energy Commission and the press release even had a picture of Jeff’s grandfather on it. And anyway, he was in Washington, D.C., at some convention, and I kind of buttonholed him.
And I showed him the press release, which he had never seen. And I said, you know, ‘I’m doing this research. I’m working on this book. I’ve been trying to interview you. Here’s the level of research I’m doing. I’m just trying to impress you.’ And then he finally relented to do it. So that’s the story of how I got that interview, but it took months to get it.
07:16 – 07:42
(MD) Each of those early space entrepreneurs or early space barons had their own dreams and wishes and vision for what they wanted to do. Elon and a multi-planetary species. Bezos and saving the planet. Robert Bigelow wanted space hotels. Richard Branson wanted suborbital tourism. Andy Beal wanted a commercial heavy lift rocket. All of those things ended in very different ways.
So what is it about either the timing or those individuals, you think, that led to those different outcomes?
07:43 – 09:58
(CD) Yeah, and it’s interesting. And they do come at it with very different approaches and very different mindsets. But there is a common thread through all of them. And that is to lower the cost of the access to space. I think there was a concern among all of them that the technology in space had not kept up with the advancements in technology that we had seen in computing power, you know, with the internet.
And we saw so many different aspects of our society make these giant leaps forward that they were witness to and not only witness to, but that each of these quote unquote, “Space Barons” is to a certain degree, helped progress, and that we’re part of that. Whether it’s with Amazon or Tesla or what have you. They’re part of this technology movement and wanting it to move forward.
But space is so difficult that it requires an enormous amount of capital upfront, which is one part of it. Elon famously funded SpaceX the first four launches with $100 million of his own money. Jeff was self-funding Blue Origin, actually, even to a large extent up until now. And so you needed that immense capital to come in because the barrier to entry is just so high when it comes to space.
As Jeff says, ‘I could start an internet company because the phone companies had put down the cables that became the internet. There was an invention called the Postal Service that allowed me to deliver books to people’s homes. There was this invention called the credit card so that I could take their money.’ That infrastructure was in place. That’s not necessarily true in space, so I think what they’re trying to do is build the infrastructure.
The other key part of it is, it was a willingness from the government, from NASA and the Pentagon to say, ‘You know what? We can outsource some of these missions to the private sector.’
And today, you know, I think we look at that and it’s routine. But back then that was something of a revolutionary change to allow the private sector to step in, in this way and trust them with vital missions that had always been part of the national enterprise that now were being taken over by the private sector and that is a significant paradigm shift that allowed this industry to take off.
09:59 – 10:30
(MD) Yeah, I definitely want to come back to that and spend a couple of minutes in a little bit, because as we get beyond “The Space Barons” book and probably into the field of your new endeavor, that becomes more and more important as we come to 2025.
But back on the individuals. So there’s this sort of rivalry, either explicit-implicit, I’m not sure. But everybody sees some of these individuals as in a rivalry.
Do you think that the rivalry is driving some of their behavior, or is it just that they have these overlapping passions that just end up sort of creating a rivalry?
10:31 – 11:51
(CD) I do think there is a rivalry and there has been between all of them. These are fierce competitors who have gone into various industries, whether it’s Amazon and taking on booksellers like Barnes and Noble or moving into retail to take on Target and Walmart and K-Mart. Elon with Tesla taking on Detroit. They’re fierce competitors.
What we’ve seen, however, is a domination of SpaceX lapping Blue Origin. And Elon has said this, that he lamented the fact that for a long time he didn’t have a clear rival and was goading Jeff Bezos and Blue Origin to move faster.
And he was urging Jeff to forget about Amazon. You know, ‘Amazon is set. You need to be focusing on Blue Origin,’ knowing that in the end, that would make SpaceX better to have some competition. I truly believe that. And I think that SpaceX’s success has been something of a roadmap for Blue Origin and for many other companies.
That A: you can be successful. And B: Here’s one way to do it. There’s a lot of argument now that SpaceX has maybe gotten too successful, too big, and is there really a broad commercial space industry or is there just SpaceX? That’s sort of an interesting dynamic, but I do think in any business like this, there is real, real competition.
11:52 – 12:08
(MD) Your book takes us inside a Valentine’s Day 2006 conference, where some of these eventual Space Barons got together and started talking about what the commercial space industry might look like.
What are the kinds of things that they were dealing with, and how on-track do you think they were? Now, looking back on that and talking about the right things?
12:09 – 13:48
(CD) Yeah, you know, if you look back on it now, you can say like, ‘Oh, well, weren’t they prescient? And they saw this coming.’ Because we do have something of a commercial space industry. I mean, I think if the space barons, in a sense, posed a question, I mean: ‘Is there this commercial space industry?’ And I think the next book that I’m working on sort of answers it with a resounding “Yes,” because anytime you put human beings in a commercially owned and operated rocket could say, “Yeah, that’s a big deal.”
You have a proliferation of a real market and a real space economy beyond just the billionaires that to some extent is self-sustaining. Businesses win, businesses some lose. They come and go and there’s some continuity of purpose with government being able to rely on them. That’s looking at it through the prism of today.
If you went back to then, I think it’s fair to look at them and say, “You guys are nuts. This is never going to happen. Space is so expensive. It’s so difficult. It requires such expertise. I mean, getting a rocket to orbit is such an immensely difficult proposition. To think you can do it is – you’re either wildly arrogant or you’re just incredibly ignorant because you have no idea what you don’t know.” And yet, over time, they persisted.
So I think you go back and you look at that. And there had been previous efforts to build a commercial space industry to move the technology forward. That had all failed. And I think there are a lot of skeptics who say, ‘You’re never going to do this, this is always going to be a national enterprise and it’s just sort of the one thing the government has to do and has to do exclusively.’ And now we’re seeing obviously that change.
13:49 – 14:21
(MD) You talk about this public-private kind of relationship. Was there people on the government side that you would also highlight that allowed these kinds of things to happen, that were also prescient in: ‘Look, we need to start investing in some of these companies?’
And I think of people like Steve Walker at DARPA who gave SpaceX some money to do those first four launches. And then you’ve got, of course, all the NASA input, which has been huge. But Mike Griffin as the administrator has thrown his weight against it. The different program managers – who are the government people that you would put in this periphery of the space barons?
14:22 – 16:34
(CD) Yeah, and you named a few of them. I mean, you know, DARPA looking for innovative technologies, funding SpaceX early on and giving them some seed money. And there were people within NASA these – when I talked to Elon about it, when I interviewed him for “The Space Barons” there were sort of these rebels inside the alliance who was like, ‘You know what? We need to place a bet, at least. Not saying we should turn anything over to the commercial sector, but maybe we give them some seed money to see if they can make it.’
And if, you know, you go back again, put yourself in that context in that time where you have two disasters with the space shuttle and the sort of idea that the space shuttle is coming to an end, and we’re not going to have any way, the United States government, NASA, is not going to have any way to fly humans anywhere.
And in fact, we’re going to turn that capability over to Russia. This country that we defeated in the Cold War space race to the moon is now going to be flying our astronauts, which nothing symbolizes the concerns about the lack and the complacency in the government enterprise in moving the technology forward, than the fact that NASA couldn’t fly astronauts.
And so I think you saw people within the government saying, ‘We have to try to do something different, even radically different.’ And sort of a step-by-step approach, starting with, “Okay, is it possible that they could fly cargo and supplies to the International Space Station? Is that even something we could consider?” And you sort of see that beginning to come up in the Bush administration.
At the time, you know, you mentioned Mike Griffin. There was this idea like, “Okay, maybe we’ll place a few bets to see if they can do that, but there’s no way we’re going to let them fly astronauts.” I mean, there was sort of a red line there.
Then you see the commercial sector starting to fly cargo and supplies. It’s working. Obama comes in, there’s no space shuttle. We’re paying Russia $70-80 million a seat for rides to the International Space Station and then they’re saying, “Well, maybe we can do that.”
So it’s not something that happened overnight. It was sort of an incremental approach that took place over time and I do think there were individuals within the agencies who saw that happening. And then, of course, companies like SpaceX were proving that they could do it and overcoming enormous skepticism to gain their trust.
16:35 – 17:00
(MD) So one of the earliest bits of seed money, and maybe you can’t even call it that, but it was the Ansari X Prize and Peter Diamandis, you know, kind of had that concept to create this prize and you can explain it for our listeners.
But do you think that was necessary? Important? Useful? And would there be room for another X Prize of some sort, do you think, to continue it? It was supposed to be an accelerant for the industry. Do you think it did that?
17:01 – 18:45
(CD) Well, so that’s such a great question. So the Ansari X Prize is this contest to see if a commercial venture, [with] no government money can send a vehicle to the edge of space and back and do it twice.
And there were, you know, a lot of stipulations about weight, mass and that sort of thing and it was successful. Paul Allen and Burt Rutan, the famous inventor, aerospace engineer, came up with SpaceShipOne and they won the Ansari X Prize and I think it was heralded as a moment, as a breakthrough, that, “Yes, this can be done.”
If you go to the Air and Space Museum – you can see this winged space plane that looked like it had no business flying in the air or, you know, it looked like a paraglider. And yet here it was, going to the edge of space and back on these really hair-raising rides that I think recalled bold, ambitious, swashbuckling days of early aviation.
I mean, these were incredibly dangerous and risky and edge of your seat, pushing the frontier, pushing the technology. And they did it. But did it touch off a greater revolution? I think the answer to that at the time is: “Not really.” It showed it could be done, but even today, we don’t have a lot of regular people going to the edge of space like they envisioned.
We do have space tourism. We do have Virgin Galactic, which is Richard Branson bought the rights from Paul Allen and started Virgin Galactic, which has gone through many iterations and is going through another one now and isn’t really flying. Blue Origin is flying, but the cadence isn’t very fast. They’ve done a number of space flights, but they’re not flying people on a regular basis. It’s enormously expensive.
So it didn’t touch off that revolution that I think a lot of people had hoped it could, but I don’t think it was a complete waste. It did show that it could be done, and in that sense helped pave the way for where we are today.
18:46 – 19:41
(MD) So I kind of want to zoom out now and just talk more about some of the things we’re already touching on the economic relationships between the government and these commercial companies. And I’ll go back to my generation considers the Apollo Era was the golden age of space and it was all about the competition, as you already brought up between the U.S. and the Soviet Union on putting a man in space and then putting a man on the surface of the moon.
And you talk about in the book how the resolution of that competition in the favor of the U.S. ended up driving some complacency, at least on the side of the U.S. government.
Now, it doesn’t feel like we’re in a complacent age, right? There’s just a ton of activity going on, in fact, two commercial companies put landers on the moon and so with that competition in mind: between governments, between companies. You know, what are the parallels and the differences between then and now in how we’re innovating in space?
19:42 – 21:54
(CD) Now, that’s a great question. And here’s one of the things that just jumps out at me, Mike, because I do believe we are in a space race, as we were during the Cold War – really against China.
China has shown amazing progress. Four for four [on] moon landings. First country to go to the far side of the moon. First country to retrieve samples from the far side of the moon. They have a space station in low-Earth orbit. They’ve operated a rover on Mars and one of the things people don’t realize is there are flags on the moon, and they’re not American flags.
They’re Chinese flags. And I say that because obviously during the Apollo era, we planted flags on the moon, but they have been bleached white, according to NASA scientists, by the radiation environment, by the harsh environment of space and being in that vacuum, that they’re essentially reduced, maybe even to tatters, but certainly not recognizable as American flags today.
China has now planted flags. One made out of a composite material designed specifically to withstand the harsh environment of space and to last for years, if not decades. The second flag they put up on the moon during the far side sample return mission, was actually done using an ISRU-like technique, In-Situ Resource Utilization, where you use the resources of the moon.
And they were able to take a form of volcanic rock basalt, which is, you see a lot of on the moon. They use samples, obviously from Earth, melt it to lava and using that lava extract out these very, very thin threads, let it cool down and then weave the threads into a Chinese flag.
That, again, is an ISRU technology and is designed to withstand the harsh environment of space. But here’s the thing. At least from where I’m sitting, and I may turn the tables and ask you this: to the American public, I think during the Cold War, we all knew we were in a space race with the Soviet Union. We all knew about Sputnik. We all knew about Kennedy’s charge.
It just doesn’t seem to me that it resonates that we’re in this great power competition with China in space and it’s not just civil space, but clearly national security space. And I’m just sort of curious from your perspective, you know, why isn’t it resonating and what are the stakes for that?
21:55 – 24:29
(MD) Well, I mean, you’re absolutely right. It doesn’t get the kind of publicity that it got. There’s a million other things that the populations are worried about, now. It’s not really that bipolar world, it’s more multipolar and all the complexities that come with that.
And the other thing is that a lot of the things that we do in space are information, right? It’s ones and zeros. You don’t see it all the time and where Elara Nova sits – our wheelhouse is the national security business and we understand probably more so than the general public of just how integrated space is into everyday life and the danger that comes with anyone who wants to interfere with those activities in space would interfere with everyday life.
It would readily become apparent if things started to happen in space that were against our interests, and because of some of the things that have been going on that we’ve been talking about: the lowering the barrier of entry, technologies are getting smaller, you can put better things in smaller packages. It’s really allowed lots of countries now to become space-faring countries.
China has obviously had the most resources to put to bear here, and they’ve created the ability to interfere with the things that the U.S. will do in space for the civil economy and for national security. So we worry a lot about our forces who are deployed all around the world suddenly being exposed to vulnerabilities that the Chinese can create by nefarious action in space.
And really, that’s why, the first Trump administration created a United States Space Force is to begin to address that competition in the national security arena to make sure that we could continue to do what we need to do in space, and that if the day comes, we could disrupt what others might try to do to us in space that will affect, again, not only our forces, but all of the economy, not just for the U.S., but around the world.
The interesting thing with China is because they’re doing so much in space, they’re also becoming somewhat dependent on that domain. And you hope there’s a bit of an understanding that we really don’t want to do something in space because it’s going to affect everybody equally. Now, more equally than probably in the past.
So let’s go back to this idea of investing, putting investments in space. And you talked about [the] Commercial Orbital Transportation System – 2006. And now NASA has really upped their game, right? There’s commercial payload services, commercial cargo, commercial LEO destinations. They’re talking about doing a Mars return with commercial ideas.
NASA is kind of all in here.
Is that good? Is that bad? Is it tilting this the economics of the market at all in ways that we should pay attention to?
24:30 – 27:22
(CD) Yeah, no. It’s such a fascinating evolution, and it shows the depth of this conversation that takes us from those early days of COTS and cargo delivery and then saying, “Okay, they can do that. Maybe they can fly astronauts to the space station. Okay, well, maybe they can fly astronauts to the space station. Maybe the commercial sector – they should be the ones who build the spacecraft to land astronauts on the moon and to build the uncrewed spacecraft to do the scouting missions under the Eclipse program to go to the moon. And maybe they should even build the spacesuits that the astronauts are going to wear on the moon.”
And so you’re seeing the enterprise go, and it’s allowed, I think, of what Thomas Zurbuchen, who was the head of NASA’s Science Mission Directorate when Eclipse was born, saying ‘The commercial sector can move faster. NASA will make a relatively small investment. They can maybe get other businesses investing in them, wanting to do science, wanting to send payloads to the lunar surface that help subsidize the cost that allows NASA to quote ‘Take shots on goal.’”
But some of those are going to miss. And you think of a national mission, and you’re going to put in a lot of work and a lot of costs and a lot of time to make sure that it works.
Well, that’s not the way the commercial sector works. They’re going to move faster, they’re going to experiment, and they’re going to fail and you have to wonder if they fail. What is the tolerance for that?
And we’ve now seen a company like Astrobotic didn’t quite reach the lunar surface. Intuitive Machines got there a year ago, first successful landing since the end of the Apollo era of an American spacecraft. First commercial spacecraft to reach the lunar surface. But it wasn’t a perfect landing. A leg broke. It ended up on its side. They tried again earlier this year. Again, it looks like they went into a crater. Maybe they toppled over. [They] were able to operate for a little bit. I mean, they reached the surface but [it] wasn’t perfect. So there is a trade-off there and that might be okay with experimenting on an uncrewed vehicle.
But when you talk about astronauts on-board, or if you even talk about the cargo and supplies that have to go up and service those astronauts, you need success. And you need that to be reliable. And you know, even SpaceX, which is the leader in all of this, recently has had some problems with the Falcon-9, even some concerns about Dragon recently. Starship, the last two flights, the ship has come apart and you know there’s no emergency abort system with Starship the way there is with the Falcon-9 and Dragon.
So I think people look at this success and they want to cheer it and, “Rah rah, way to go, American innovation.” But there have been some setbacks, and you are wondering what the appetite and what the right balance is supposed to be between government and between the private sector, and what sort of oversight should there be? And I’m sure there are a lot of people a lot smarter than me who can figure that out. For sure.
27:22 – 27:44
(MD) Yeah, and I think you’re right. It’s those challenges are interspersed with successes, right? So Firefly got their [system] upright? They’ll get a whole lunar day of science and so that’s a win.
So it’s a balance, as you rightfully say, of how much risk are we willing to take? How much failure is fine because you’re failing forward and you’re continuing to make progress, right?
27:45 – 28:11
(CD) Right, and let’s be clear. I mean, those failures, we use the term failure. But failure is actually a very positive term, particularly if you learn something and you get better and that you’re failing in a test environment, in a real world environment, in the vacuum in space, and you’re going to learn about the technology and the engineering in ways you just cannot learn when you’re on the ground doing simulations and so they will get better. They have gotten better, and they’ve shown enormous progress.
28:12 – 29:15
(MD) You know, I’ll say on the national security side, it’s been a little bit slower on the uptake in terms of the big investments in commercial. You mentioned launch services? Got it. That one’s pretty well set just because of the frequency and now it’s very reliable.
But it’s been nascent in other areas. You know everybody the Department of Defense talked about wanting to harness more commercial, but you know the remit for national security is you can’t fail in ways that are going to have catastrophic implications for either our forces or our objectives overseas and domestically.
So it’s been a little bit my opinion, Mike’s opinion, has been a little bit tepid. I think actually, the leader here is the National Reconnaissance Office, who have been buying some of the commercial imagery and other types of products from space companies.
The Space Force has some, again some of their own nascent ideas about how to bring commercial in. But the level of investment isn’t like what NASA has in terms of really sending a signal to the market that says, ‘If you build it, we will buy it.’ And we’re kind of not there yet. So I think that debate on the national security side is going to continue to unfold.
29:16 – 29:32
(CD) Yeah. Well, actually I’m curious about that. And if I could turn the tables just one more time, I’m curious why you think that is? Is it because the culture at the Pentagon is just more entrenched, that there weren’t those like, quote unquote, “rebels” that we saw at NASA early on, or it’s just a bigger bureaucracy.
I mean, why do you think it hasn’t taken hold that way?
29:33 – 31:42
(MD) It’s certainly the culture is a huge part of it. And the culture being a couple of things: one is the requirements that the government has are a lot of times not tightly aligned with commercial market objectives, right? So the Department of Defense needs things that don’t have its own commercial markets. So maybe we have to do those things ourselves, is what the question is.
And this idea of control when things are really getting bad, when countries are fighting with each other, when potentially economies are colliding with each other, right? In a big conflict like that, will the commercial companies still stand by their contract? I’ve seen no indication that that wouldn’t be the case, but those are some of the control issues. When you’re with the military, you want control on all parts of your system.
Now we do other things with commercial within the Department of Defense – that we buy vehicles that come off of commercial product lines. We buy services in a lot of places but the closer you get to the actual combat itself, it just gets a little more dicey from a cultural perspective of how much you want to have within your own control, and how much you want to have in a contractual relationship with another entity?
Certainly, the industry builds everything that the military has, so it’s really about that contractual relationship and who ends up owning and operating the end product at the end? So I think there’ll be more, but I don’t think it’s going to be as robust as some of the civil activities that we see going on.
So, Christian, let’s talk about where the money come from. The Space Barons had money, right? They created companies, became billionaires and then were allowed to channel that money into their space dreams. Then you went into a world where a lot of these smaller companies tried to come in and be part of this market.
They were mostly venture capital funded, so they were probably giving up a bunch of equity in the company for single millions and tens of millions of dollars. We went through this unfortunate period in 2021 of SPACs that were really more about the bankers making money for the bankers and not doing well by the companies.
That sort of flushed out now and now we’re seeing a maturation in those capital markets where becoming more private equity, institutional investors and even now, banks getting into debt financing for companies that have good revenue. So how do you see that as part of this overall space economy and moving forward?
31:43 – 33:00
(CD) Yeah, I mean, I think early on it was that old adage, you know, the quickest way to become a millionaire in a space business was to start out as a billionaire.
And you did see a lot of ebbs and flows. And it has matured. And that’s in large part because they see the way the government, NASA and to a lesser degree, the Pentagon, is investing in these companies and relying on them and providing a real service so that there is sort of a backbone for these companies.
And, you know, there’s that other leg of the stool that the companies have shown the capabilities to be able to do it, which gives, I think, the markets a lot more confidence. I mean, I think initially, you know, space investment was for hobbyists, it was for enthusiasts. Now it’s become much more mainstream. Is it still incredibly risky? Yeah, I think it is.
But I think it’s the upsides can be really high, particularly if the Pentagon gets involved, and particularly if these companies can dramatically lower the cost of access to space. And then you begin seeing what Jeff Bezos calls the ‘unleashing of an economic dynamism,’ like what he saw with the internet that allowed companies like Amazon to flourish, that there’s going to be a next wave of space companies building on top of the infrastructure that’s already there to do things like in-space resource utilization, mining, those sorts of things.
33:01 – 33:38
(MD) Let’s dig a little bit into the infrastructure piece. I mean, you’re right. Jeff Bezos has his story about: Amazon worked because the internet existed, because there were roads to everyone’s houses, there was a Postal Service that he could ship through, a payment system where people could sit on the couch and pay for merchandise. So now, if you think of infrastructure in the area of space, certainly launch, that’s got to be first. You have to have launch to be able to get to orbit. But there are probably other things that will help further unleash the space economy.
What do you think those items are, and what kind of services could commercial market bring to create infrastructure that then all of a sudden makes it easy for everybody else?
33:39 – 35:45
(CD) Yeah. I mean, I think and I’m guilty of this. A lot of us in the space press corps, we focus on launch. We focus on the rockets, we focus on the astronauts and we focus on the billionaires, too. But there’s a whole subset of issues that don’t get enough attention that are vital.
And those are the technologies that we’re going to need to create a self-sustaining economy in space and a permanent presence in space. That’s power generation, transportation, habitation, mining, all of those technologies: solar cells, nuclear power, being able to get around. And I don’t think we see a lot of government investment into that and I don’t know that even we see a lot of private sector investment.
And that, I think could be a hiccup at some point down the road. I mean, I think Blue Origin is focusing on that perhaps more than others. I mean, there is a story in the new book, “Rocket Dreams,” I actually visited. They have a secret laboratory outside of Los Angeles where they’re working to melt the lunar regolith, the moon dirt, and turn it into solar cells. If that technology can be achieved, that would really be amazing and help unleash all the other sorts of things that you see in space and have those technologies.
The other one, from a civil point of view, is, I think, back to a time where I visited General Purdy when he was at the 45th Space Wing down in Cape Canaveral. And he said something to me that always resonated with me. And that was, for the first 50 or 60 years of the space age, we were focused on getting to space, perfecting the way of building the rockets and the spacecraft that could get us to orbit.
Now, for the most part, that’s a soft problem, and what we’re focusing on now is being able to get through space, being able to change orbits, to move around, to go from one place to another, to point A to point B, service satellites, do reconnaissance, do all sorts of things in space that are very difficult, but that I think opens up a lot of possibilities, as well.
And when he said that, the light bulb kind of went off in my head to sort of think about where we’re going in the future and what are the technologies that are going to be needed going forward.
35:46 – 36:31
(MD) Even the infrastructure we have in orbit today that allows you to communicate to the Earth and, and navigate because GPS signals are floating through space. But you get out to the moon. You don’t even have those basic things. So the companies were talking about Astrobotics, Intuitive Machines, Firefly, have to bring their own infrastructure to communicate all the way back to Earth. You know, that adds weight, and it takes away from the things that they’d really like to be doing on the surface of the moon.
So yeah, having a communications infrastructure, navigation and timing infrastructure around the moon. All that could unleash that particular part of the space economy too, so really fascinating to think about. I’d add one more – regulatory environment for doing commerce in space, right?
And having space hotels and doing all the other things. That’s going to have to advance quite a bit, too. I don’t know if you had thoughts there?
36:32 – 37:07
(CD) Yeah. I mean, I always look back. There’s a law passed in 2015 signed by President Obama that gives companies the right to the resources they mine on the moon or other celestial bodies, which I thought was an interesting breakthrough. It will be interesting when that’s tested.
And then you talk about the regulatory regime, too. I mean, I immediately started thinking about space debris and just all of the stuff that’s up in space, too, that it’s space is vast, a lot of real estate up there, but it’s increasingly becoming congested. But I do think in a lot of ways the technology is outpacing the regulation.
37:08 – 38:04
(MD) The individuals we’re talking about have for 20 years, you know, decades have been sort of focused on what their end objective was, be that Bezos or Musk, Richard Branson, I mean, they’ve all been just plugging away for 20 years making this thing happen.
The government, talk about the government again, isn’t quite as good as staying the course. So President Obama in 2008 canceled the Constellation program. And that was kind of one of the things that said, “Well, I guess we’re going to have to push more money forward into the commercial market to help get our work done without that government-owned and operated program.”
We seem to be maybe at that point, again, with Artemis, lots of money going into Artemis, long schedules that seemingly are always delayed.
You know, what would be the implications of making changes to that? And compare that alongside with these space barons who have been taking the long view for decades and slowly getting to where they want to be. Not as fast as they’ve talked about or wanted to in the beginning, but they’re getting there.
38:05 – 40:21
(CD) Yeah. I mean, so it’s a great question again, and I think it depends on sort of the context: and when you cancel Constellation, you know, there was this glimmer of hope that the commercial sector would be there, would be able to fill in the gaps and maybe take over. Now, fast forward to where we are today, and you see that. You see the Falcon-9 launching what? You know, 100 times last year, going from well over a hundred times this year.
You know, Blue Origin finally got New Glenn off the ground. ULA with Vulcan flying. You’re seeing [from] a launch perspective, a lot more advancements. Starship had a couple of recent setbacks, but on the other hand, they’re now catching the booster with some frequency. So a lot of people have been concerned about today’s Constellation would be, right, the Space Launch System rocket, potentially Orion, which NASA has invested many billions of dollars in. Together they’ve flown one time.
The GAO has said the cost is about $2 billion per launch. SLS is not a reusable rocket, relies on the RS-25 engines, which were used during the Space Shuttle [and] developed in the 1970s. But today you could see if SLS went away, and I do think people are starting to come around to the fact that SLS’ days may be numbered, I don’t think it’s going to be canceled tomorrow.
I think they’ve already built it and paid for a number of these rockets. So you could see the Artemis II mission to launch a crew around the Moon on the Orion, potentially even Artemis III going on SLS in the ‘26-’27 timeframe. Then by then do you have some of these alternatives online, and not just online, but online in a way that they are, as we talked about earlier, safe, reliable?
[You can] really can put humans on, have proven themselves. You have complete control over them, complete faith in them. You know, I think we might be closer to that. I mean, I thought it was eye-opening when someone like Scott Pace, who was the executive secretary of the National Space Council under President Trump in the first administration and a long proponent of SLS, said something to the effect of, ‘We need an off-ramp for SLS.’ When even he is saying something. I think maybe the writing is on the wall to a certain extent there.
40:22 – 41:13
(MD) Yeah, just even if the means change, staying committed to the ends, you know, ends, ways and means I think is important. And NASA’s just been kind of jerked around back and forth over the years as administrations change and budgets change.
But I think having a goal and if we’re able to bring in other technologies and commercial actors to help achieve that goal – that’s great. But maybe we should stick to the goal and be in it for the long term.
So I’m going to give you a softball question here in “Space Barons,” you structured space barons in – there are three sections of the book.
And you had a one word title for each section. And they were “Impossible, Improbable, and Inevitable.”
So they seem to be three great words, you know, how did you come up with that? And now I’m looking forward to the new book. And what is the era between 2018 and 2025? What’s one or two words you’d use to describe the recent history?
41:14 – 43:31
(CD) Yeah, I’m glad you caught on to that. I do think those three words encompass the narrative of the book, but also the journey of space exploration in the commercial space sector. Like, it’s never going to happen. Well, maybe it will. And yeah, it’s happening. And as I said earlier, “The Space Barons,” I think, poses this question like, ‘Is this really going to happen? Is it really inevitable?’ And this book, the next one, Rocket Dreams, answers that with, “Yes.” And you’re sort of seeing it take over.
And so the new book is also broken up into three sections that sort of gets to that in a symbolic way: Earth, and then going to orbit and then going to the moon and beyond. That, you’re sort of on the ground, and then you’re going with people and extending this public-private partnership to low-Earth orbit with COTS, with astronauts, and then applying that with Artemis, building the landers and spacecraft that are going to go to the moon and beyond.
There’s a lot of questions now: Are we going to the moon? Are we going to Mars? And these books have to sort of end on ideas, not events. And here I am trying to finish up a book that’s going to come out later this fall and position it for there, and where are we going to be? And in some ways the destination, while important, doesn’t matter as much as the means of ascent.
And what I mean by that is the technologies that we have to be able to get to the moon, to get to low-Earth orbit or to get to Mars. And if we have a New Glenn, if we have Dragon, if we have Starship, if we have Neutron from Rocket Lab, if we have Vulcan, and we have Firefly and Astrobotic and all these companies, Intuitive Machines, building these technologies, then it’s like, are we going to the moon or Mars or low-Earth orbit?
And then the answer becomes, “Yes, yes we are.” And we can go to all of those because we’ve built technologies that can go to all those. So that’s sort of the structure that I’m building here is building on that platform that we saw at the end of Space Barons, building through to go to low-Earth orbit and extending that out to the moon and to beyond, and not just on a civil space program, too.
We tend to be so focused on big rockets and astronauts and all of that. But I think the national security space enterprise is incredibly important, as well. And you’re seeing much more of that as we’ve obviously talked about.
43:32 – 44:28
(MD) I’m struck by the fact that we’ve been talking here for about an hour now. And we don’t have real solid answers, right? We have questions and observations and certainly progress. And frankly, that’s probably what makes this business so exciting is there’s continued forward motion. Every once in a while, a backward step, but a really exciting time to be part of the space industry to be, I’m sure from your end, writing about the space industry and being in the middle of it in that way.
Christian, it’s been a really fun conversation on a topic that continues to inspire and fascinate so many people. And it’s not only those of us who are close to the industry, but this whole new generation of space enthusiasts, who I expect they’re going to continue to make the impossible, inevitable. And I, for one, am excited to get my own copy of “Rocket Dreams,” as soon as it comes out. I hope you’ll come back on the Elara Edge to talk about it.
And let me thank you again for coming on. And please, you take the last word.
44:29 – 44:44
(CD) Well, thanks for having me. It’s a real honor. I’d absolutely come back to talk about “Rocket Dreams.” And it’s fun to follow, you know, all of the work that you all are doing there. And I’m going to be calling you when I put my hat on for my day job at The Washington Post, for sure. But again, it’s a real privilege and an honor. So thank you.
44:45 – 45:29
(SK) This has been the inaugural episode of “The Elara Epilogues,” a special edition series presented by “The Elara Edge: Expert Insights on Space Security.” As a global consultancy and professional services firm focused on helping businesses and government agencies maximize the strategic advantages of the space domain, Elara Nova is your source for expertise and guidance in space security.
If you liked what you heard today, please subscribe to our channel and leave us a rating. Music for this podcast was created by Patrick Watkins of PW Audio. This episode was edited and produced by Regia Multimedia Services. I’m your host, Scott King, and join us next time at the Elara Edge.
Defense Science Board Offers Commercial Pathway to Integrated Deterrence
Study Recognizes the Value of Commercial Space Systems in Military Requirements
In November of 2022, the Under Secretary of Defense for Research and Engineering commissioned the Defense Science Board (DSB) to study commercial space systems and how they can be leveraged in support of Department of Defense (DOD) objectives. As the Federal Advisory Committee to the Office of the Secretary of Defense, the DSB engaged government and space industry stakeholders to assess the opportunities and challenges to integrating commercial space systems into military requirements. The study’s resulting document, “Final Report on Commercial Space System Access and Integrity,” was published nearly two years later with five recommendations toward what the DSB called its bottom line objective: “Integrated Deterrence Requires Integrated Operations.”
“The bottom line of ‘Integrated Deterrence Requires Integrated Operations,’ means we must budget and plan in advance to provide maximum capability to the warfighter,” said Dr. Brad Tousley, partner at Elara Nova: The Space Consultancy and a member of the Defense Science Board. “Economic power is a critical element to our military power. If commercial space capabilities exist that can support DOD objectives, they should be integrated into warfighter training now.”
Dual-Use Technologies in Space
The Defense Science Board’s findings come as an emerging commercial space market is increasingly developing “dual-use technologies,” or commercial space capabilities that can also be applied toward DOD objectives.
“Commercial space systems bring the collection and distribution of information to the fight,” said Mike Dickey, Founding Partner at Elara Nova. “For example, the military needs satellite communications to transmit orders from commanders to troops in the field, ships at sea and airplanes in the air, which is the same technology that puts the World Series in every home. Further, commercial satellite images that support economic monitoring of crude oil movement through ports around the world can also find Russian convoys in Ukraine.”
Commercial space systems have demonstrated their military value since the onset of Russia’s invasion of Ukraine in February of 2022. However, the Ukrainian military’s reliance on commercial space systems was not planned in advance, but rather came as a result of the inherent responsiveness of commercial space technologies.
Understanding Commercial Space
Now, the DOD is looking to understand how the commercial space industry – and the institutional investors financially backing it – can similarly be factored into their own warfighting plans today.
“Prior to the pandemic, commercial investment in space technologies peaked at about $15 billion a year, which was essentially the same as the Space Force’s budget in Fiscal Year 2021,” Dickey said. “Leveraging that commercial investment becomes a huge opportunity for the Department to double its financial resources toward space capabilities for military operations.”
The Defense Science Board defined “commercial space,” across four elements: innovation, development, products and services. But the report prioritized the two elements that can provide immediate value to a modern or future conflict: commercial products and commercial services.
“From a near-term standpoint, the Defense Science Board’s goal was to offer a set of recommendations for applying commercial solutions to immediate DOD needs,” Dr. Tousley said. “There are a variety of commercial space products or services the DOD can buy now, as demonstrated by the use of commercial space systems in Ukraine.”
Planning for Commercial Integration
To this end, the Defense Science Board offered five recommendations toward facilitating the growth of commercial space markets in ways that also align to fulfilling DOD objectives.
The first recommendation calls on the government to “implement an end-to-end framework to better integrate existing and planned commercial capabilities into national security architectures.”
This recommendation stems from opportunities to utilize commercial space technologies that have already matured, much like the commercial satellite communication (SATCOM) networks that exist today.
“United States Space Command has a Commercial Integration Cell that sits at Vandenberg Space Force Base primarily supporting satellite communications,” Dickey said. “By sitting with Space Command, those satellite communication providers are aware of ongoing operations and threats to their commercial systems, so they can translate those potential issues into enhancements, upgrades or defensive cyber operations to guarantee resiliency against the threat before a crisis emerges.”
While the Commercial Integration Cell at Vandenberg is an example of integrating a mature commercial space capability at the operational level, not all commercial space markets have reached the same level of maturity that makes this collaboration possible. However, the DOD can apply the same financial strategies it uses to buy services from the SATCOM market to support the growth of other emerging capabilities, too.
Budgeting and PPBE Flexibility
One of the significant advantages of a mature commercial space services market is the ability to respond to the ebbs and flows of supply and demand. Long-term budgeting for these variations, however, is difficult to predict. In the SATCOM market, the government has solved this by making use of a Defense Working Capital Fund as a funding tool.
“The working capital fund basically creates a checkbook that the government can use each year in the commercial market to support a certain requirement,” Dickey said. “DOD users can transfer money into that checkbook and have the purchases made on their behalf. With a multi-year funding process and the working capital fund, the DOD can get better market pricing that will drive the cost down for a service, while providing transparency to companies and their investors about the government’s buying habits.”
The Defense Science Board further addressed challenges in the DOD’s budgeting process directly in its second recommendation: “integrate evaluation of and provision for commercial space services into institutional processes.”
The DOD currently develops its budget through an institutional process known as Planning, Programming, Budgeting and Evaluation (PPBE). But the long-established PPBE process lacks the flexibility needed to keep pace with the rapid developments of commercial space technologies.
As such, the Defense Science Board advocates for more flexible funding measures within the PPBE process. In addition to the working capital fund model found in their first recommendation, the DSB also supports the flexible reallocation of operations and management (O&M) funds that were similarly recommended by a Congressionally mandated Commission on PPBE Reform earlier this year.
“Program executive officers need flexibility to move funds between program elements year-to-year, because sometimes one program might under-spend on a service or product, while another might have a greater need,” Dr. Tousley said. “So if the government can adopt a multi-year acquisition reform and leverage working capital fund-like models, the commercial market will have clarity on market demand. Then as long as Congress can review a multi-year appropriation in the appropriations process, their equities are served.”
Guaranteeing Resilience of Commercial Space Systems
A greater reliance on commercial space systems, however, presents its own set of risks for the DOD’s military requirements. These risks influenced the Defense Science Board’s third recommendation: “incentivize trust and build resilience in commercial providers.”
“The government can include resilience of a commercial space capability as a quality-of-service requirement, while acknowledging that quality assurance is going to cost more,” Dr. Tousley said. “But as long as the additional price is factored in as part of the economic model, then the vendors know what they have to do to ensure resiliency, and the government can rely on the enhanced capability as a function of the increased pricing.”
Commercially available space technologies also present the risk of adversaries leveraging them against the United States and its Allies. The Defense Science Board acknowledges this likelihood in its fourth recommendation: “develop suite of capabilities to monitor, assess and respond to adversary use of commercial space capabilities.”
“Commercial partners and the government have to acknowledge that adversaries will want to use the same commercial capabilities that we would want to use,” Dr. Tousley said. “So commercial vendors must ensure the U.S. government’s interest is best protected in a way that does not damage the commercial industry’s international growth.”
Government as Regulator, Investor and Customer
Navigating the complexities of the commercial space market may be a challenging endeavor, but the state of each market can inform how the DOD develops its policy. This dynamic created the Defense Science Board’s fifth recommendation: “account for maturity of the commercial market when making decisions on how it regulates, invests and buys commercial space services.”
The Defense Science Board proposes the DOD do this by avoiding over-regulation, while investing for “market creation, not market monopolization.” As an example, Dr. Tousley points to how the DOD actively relies on the GEO commercial satellite communications market today, while understanding the more nascent proliferated Low-Earth Orbit (pLEO) and cislunar markets will require a more calculated investment to facilitate their growth.
“Over-regulation can restrict a robust domestic market, while inhibiting commercial competition internationally,” Dr. Tousley said. “Competition in the commercial space market serves the DOD’s best interest in the long term with more competitive pricing, so the government must account for market maturity when it evaluates how it’s going to regulate, invest and buy these commercial space services.”
This final recommendation highlights the key challenge for the DOD as it looks to engage the more nascent industries within the commercial space market.
As an “anchor tenant,” the DOD can provide critical, early-stage funding for emerging space companies to grow their capability into a total addressable market. But the government’s influence can also inadvertently prevent other competitors from entering the market by creating “vendor lock” with a single provider, thereby also reducing the resiliency for a given military requirement.
“There are ways to navigate the government’s role as an anchor tenant while avoiding vendor lock,” Dickey said. “The government can put down the first investment in an emerging space technology as its first and majority customer, but the government also needs to mitigate the risk of vendor lock by creating on-ramps for other providers into the market and off-ramps for those who fall short of mutually agreed expectations.”
Achieving Integrated Deterrence
With each of these recommendations realized, the DOD can apply the lessons learned in Ukraine to achieve “integrated deterrence.”
“‘Integrated deterrence’ means the United States must integrate commercial capabilities into its military operations upfront,” Dr. Tousley said. “What happened in Ukraine demonstrates the agility and responsiveness of the commercial space market, but we must remember that wasn’t planned in advance. The government needs to plan for integrated operations now by developing contracts with the commercial space sector, because the DOD can’t just hope that a commercial space company is going to be there in an emergency.”
Now, partners at Elara Nova: The Space Consultancy, are positioned to provide their expertise to stakeholders similarly exploring solutions at the cross-section of military requirements and commercial space capabilities.
“Elara Nova lives at the intersection of the government, industry and the investment market,” Dickey said. “Elara Nova partners have direct experience in each of these sectors of the space economy, so we offer a unique opportunity to support the implementation of the Defense Science Board’s recommendations.”
Elara Nova is a global consultancy and professional services firm focused on helping businesses and government agencies maximize the strategic advantages of the space domain. Learn more at https://elaranova.com/.
Episode 19: Defense Science Board Offers Commercial Pathway to Integrated Deterrence
The Elara Edge: Expert Insights on Space Security
Host: Scott King (SK)
SME: Mike Dickey, Founding Partner at Elara Nova: The Space Consultancy (MD)
Dr. Brad Tousley, partner at Elara Nova: The Space Consultancy and Defense Science Board member (BT)
00:02 – 01:43
SK: In November of 2022, the Under Secretary of Defense for Research and Engineering commissioned the Defense Science Board – or DSB – a Federal Advisory Committee serving the Office of the Secretary of Defense, to study the commercial space market and how their systems can be leveraged to support Department of Defense – or DOD – objectives.
The study came in direct response to Russia’s invasion of Ukraine earlier that year, when commercial space systems provided critical capabilities in support of Ukraine’s defense. The use of these commercial space systems in Ukraine, however, was not planned in advance – but rather occurred organically at the onset of the invasion.
Now, the DOD wants to apply the lessons learned and capitalize on similar opportunities to integrate commercial space capabilities into their own military requirements.
The study concluded in May of 2024, when the Defense Science Board published its “Final Report on Commercial Space System Access and Integrity,” which provided five recommendations toward what the DSB determined to be its bottom line objective: “Integrated Deterrence Requires Integrated Operations.”
Welcome to “The Elara Edge: Expert Insights on Space Security.” I’m your host, Scott King, and today we’ll be exploring the Defense Science Board’s Final Report and how its recommendations offer a pathway toward integrating commercial space capabilities into military requirements.
Returning to The Elara Edge today is our first guest: Mike Dickey, Founding Partner at Elara Nova: The Space Consultancy and the former Chief Architect of the United States Space Force.
Mike, welcome to the show!
01:43 – 01:44
MD: Well thanks, Scott. Glad to be back.
01:45 – 02:01
SK: We’re happy to have you.
And our second guest today is Dr. Brad Tousley, who in addition to being a partner at Elara Nova, is a member of the Defense Science Board and directly contributed to the Final Report we’ll be discussing today.
Dr. Tousley, thanks for taking the time to join us today.
02:02 – 02:03
BT: Thanks, Scott. It’s a pleasure to be here.
02:04 – 02:29
SK: Now, the Defense Science Board’s Final Report comes at a time when the budding relationships between the military and the emerging commercial space market is drawing more and more attention.
I’d like to begin by understanding how we reached this point. Why are commercial companies – and the institutional investors financially supporting them – entering the space domain? And why has this development captured the DOD’s attention?
Mike, let’s start with you.
02:30 – 04:03
MD: Yeah and it’s very interesting. This is what we call dual-use technology. Those technologies that the commercial world is maybe focusing for commercial purposes can be transitioned into military use and vice versa.
Just a couple of examples, in the communications business, the military needs communications worldwide so that they can transmit orders from commanders to troops in the field, ships at sea, airplanes in the air. But it’s also the same technology that brings you the World Series, for instance.
And in the imagery market, the imagery can be used to find Russian convoys on highways in Ukraine. And it can also be used to monitor crude oil movement through ports around the world, which has obviously important impacts on the market.
PNT – positioning, navigation and timing. You use that to put bombs in very precise places to limit collateral damage. You also need that for precision farming, so farmers can increase yields in their crops by knowing where exactly to put fertilizer.
So, all of these technologies have a whole bunch of markets they can address. So when you’re an investor, you look at total addressable market and, by doing both military and commercial things with your technology, you get access to much bigger markets and coupled with the reduced barrier in access to launch, has made it cheaper to get to orbit so now something that’s more doable from an investor’s capital.
But those are the kinds of things that have driven the ability for commercial to come in and play in this world and not just sovereign governments.
04:04 – 05:11
BT: I would just add two minor points to that.
Number one, there’s a physical attribute within space that’s a little bit unique here, and that is that in other, I’ll say, warfighting domains, you can separate capabilities, military and commercial capabilities. But in the space domain, because of orbital dynamics, everything is intermingled. So what that means is – if I already have commercial capabilities in space and they’re growing because of the market pull, like Mike talked about, those systems are going to be physically GEO-located with military needs. So I think that’s one reason why you’re seeing this growth.
The other is the cost of launch, particularly in the last 15-20 years, has come down so much that as interest rates stay low, the private capital that’s always seeking the maximum return in a capitalist society – that return is going to be seen as promising.
And I think space has seen that. And when the fact that when launch comes down by a factor of ten and interest rates drop, all of a sudden you see these opportunities, venture capitalists are going to take that money, they’re going to flow it wherever they think there is a return. And space has been really arguably the hottest area of growth the last five years and all of the market projections indicate it’s not going to slow down for 10 to 15, 20 years.
05:12 – 05:52
MD: In the government’s Fiscal Year of 21, which was kind of the peak of where commercial investment was before the pandemic and a bunch of other things, the commercial market was investing in those dual-use technologies about $15 billion a year.
The Space Force’s budget in Fiscal Year 21 was $15 billion a year. So you literally had two Space Force’s worth of budget that you could apply to the problems that that the military had if you did that in the right way. And so that’s a huge opportunity for the Department of Defense to leverage that kind of investment.
And we’ll talk about all the different ways that they can leverage it. So I think we’re still in a long period here of a lot of outside money coming into the space business.
05:53 – 06:22
SK: These market developments have sparked a series of commercial space strategies across various DOD organizations.
But effectively integrating commercial space capabilities into military strategy also presents complex challenges, the first of which is the somewhat broad understanding of what actually defines quote – unquote “commercial space.”
Dr. Tousley, can you explain how the Defense Science Board defined “commercial space?”
And how does this understanding influence the government’s relationship with the commercial space market?
06:23 – 07:12
BT: Within the Terms of Reference and within that study, we really defined “commercial” in four buckets. We defined things as commercial innovation, which is more on the research end – which think of AFWERX and SPACEWERX and DIU and the things they are funding.
Then the second bucket we kind of identified is commercial development. So think of commercial systems that are being built and the government is trying to buy them in bulk for government use.
Then the third thing is essentially buying a commercial product, which means systems the commercial world is already building, and we just want to buy copies of it.
And then the last is services. The commercial world always builds things and offers them to customers for services, in this case the Department of Defense, the Space Force, the intelligence community.
They want to be acquiring these services, so we think of them in terms of those in bulk: innovation, development, products and services.
07:13 – 08:26
MD: The language here is really important because companies will come in and say, ‘Well, I’m a commercial company.’ So they think that that opens up a new world for them. But again, the language is important. What makes you a commercial company? If the government wants to think that when you say you’re a commercial company, you have something with a big market and you want the DOD to be one extra buyer in that market, and so you can just kind of buy at the margins.
That’s typically not been the case with some of these space companies, because the commercial markets in space have still not truly matured except in communications, probably, you can say that that’s a mature market.
But all the other markets, it’s still not mature. So really what these companies typically want is for the government to kind of be an anchor customer, to be their first customer, to be the biggest buyer of that product or that service.
And then allow that to be a demand signal to the rest of the world that a commercial market is possible through these products and services. So, it really starts the conversation, perhaps in a bad place because you can be one of those where you’re just one of many buyers or you could use the Federal Acquisition Regulations to buy in a commercial way and I think a lot of times that conversation will kind of spiral and slow down the progress between the commercial companies and the government.
08:27 – 09:33
BT: With the emergence of this robust commercial market. We think it’s important for the government as a wise customer to understand how they can affect the market in a good way or a bad way.
You have these companies, they want to grow into all these addressable markets. And yet the government what you really want long-term is you want a good, robust ecosystem of competitors.
So the prices stay in a margin range that’s acceptable. You can understand it. And so as some companies succeed and some fail, you aren’t totally reliant on one company. So the concern is that depending upon how the market unfolds, the government needs to be careful not to get themselves locked into a vendor lock.
Now, if I’m a commercial vendor, I want vendor lock. I want you to buy everything I have and don’t buy anything from my competitor. That’s capitalism. That’s my market drive.
But on the government side, when you’re supporting the warfighter and delivering operational capability. You want the capability, you want the best, but you also don’t want to be dependent on one vendor because you don’t know what will happen down the line.
You want prices to stay in control, and you want competition. I mean, that’s good. So there’s that balancing act that the U.S. government has to be concerned about and that’s kind of what we call out in terms of being careful of vendor lock.
09:34 – 10:40
MD: There are ways to navigate through that. It can get complicated and it’s tough, but an anchor tenant really means that, ‘I’m going to go in and I will put down the first investment in this technology. I’ll be the first customer. You know, I’ll be 51% or more of what you’re doing with the anticipation that other markets, the other markets are going to mature, other customers will come and you’re part of that customer pie will reduce over time.‘
You know, the government’s been bitten by this a little bit. And even in space with the first commercial imagery contracts, there were a couple of providers for that. As the government’s fiscal situation changed over time, the government couldn’t be anchor tenants for two. That sort of reduced to one and then now you get into this conversation, well have I created vendor lock because I was an anchor tenant?
So there’s a real concern, I think some of that gives the government pause on wanting to do that again. But I think they can find ways to back out of that.
You can have on-ramps for other vendors. You can switch to a different type of a model where, ‘Okay, the government’s going to have to start just defining requirements,’ kind of like we used to do back in the day. But those things are all sort of painful for all parties, but it’s a necessary part of maturing what it is we’re trying to do here.
10:41 – 12:49
BT: One of the other things that we discovered in the course of this study was there is not unanimity of understanding across the Department, and I mean all the services of what the law and what the policy allows the United States government to buy or to leverage.
And what I mean by that is we actually went to some of the general counsels of the services and said, ‘What do you understand as inherently governmental functions in space? And you did not find agreement across the board. And specifically what we discovered was it was very explicit in the law, in that pretty much the only thing required for the U.S. Air Force, I’ll say with the Air Force is nuclear command and control is a military and a government function. Period.
That will never, ever be commercial. But there are a host of other things that said, ‘No, that could be commercial, no it can’t.’ And what we discovered was that the difference in interpretation comes down to what’s the law say versus what is your policy. And unfortunately right now there’s not complete concurrence across the Department that’s causing part of the concern.
For example, is missile tracking, is that only military or could there be elements of that that could be commercial? Well, in fact, there are elements of that could be commercial. The law doesn’t specify missile tracking as being only military, and but the policy does. And so if there’s commercial entities out there, for example, that are developing infrared sensors for crop monitoring – is that commercial? Well, no, that’s only military.
So the reason I bring it up is that it’s important in understanding the emerging market dynamics for the government to be able to understand and operate that way. And unfortunately, we’re not there yet. But one of the things that we recommend is that there being careful look at the integration of capabilities.
And the other term we came up with was, integrated deterrence, which means that capabilities of the entire United States between military and commercial requires integrated operations early on.
We’ve identified that integrated operations are not happening in the planning phase upfront. So what happened in Ukraine. It wasn’t planned in advance. Our recommendation is these sorts of capabilities are emerging quickly now. Let’s think about integrated operations, upfront integrated contracts, all that. Get that laid out now and not try and have to respond later.
12:50 – 13:05
SK: And within those four definitions to “commercial space,” the Defense Science Board placed a specific emphasis on what it described as the more near-term elements: commercial products and commercial services.
Dr. Tousley, can you explain why this emphasis was necessary?
13:06 – 14:12
BT: Frankly, when we started digging in on it – in those four buckets we identified from a near-term standpoint. There’s tremendous opportunities, particularly in commercial satellite communications and communications as a service.
There’s particular opportunities there right now. There’s still questions about how that service model operates and how much the Department should leverage. There was concerns about essentially multi-year funding and color of money and working capital funds in terms of how those models could be implemented.
The second was there was a variety of products that you can buy right now. And in fact, whether you consider it a product or a service the, you know, what was going on in Ukraine was very clearly something – it’s happening quickly – so from an near-term standpoint, helping the Department arrive at a set of recommendations to implement that right now, you could think, ‘Well, why didn’t you go into more refined evaluation of Space Development Agency with commercial development or DIU and SpaceWERX and innovation’ like that’s already going on quickly.
We’re not necessarily going to stop or change any of that or we don’t have major recommendations at the moment. But on the services and the product side, there’s stuff already happening and we thought the Department needs to address that quickly.
14:13 – 14:40
SK: Now, to this end, the Defense Science Board – led by retired General Ellen Pawlikowski and Mandy Vaughn – published five recommendations toward integrating commercial space capabilities into military requirements.
The first recommendation calls on the government to “implement an end-to-end framework to better integrate existing and planned commercial capabilities into national security architectures.”
Dr. Tousley, can you elaborate on how the DOD can do this?
14:41 – 16:05
BT: The most direct one is to work within a working capital fund within a commercial services market – do the integrated operations upfront and tie those into the warfighting Combatant Commander’s plans – those are not done today.
When a commercial company wants to set up a service-based contract, that’s typically a multi-year process. Yet within the, you know, Plan, Program, Budget, Evaluation process. We do that every year. There’s colors of money, there’s appropriations within Congress, all that’s very carefully prescribed by law. The problem is when the law sets it up this way.
But the commercial world operates in a multi-year service contract. How in the heck do you make that work out? General Pawlikowski was very explicit that that has been worked in the past. She had to work that in her time as the head of acquisition for the Air Force and the phrase she uses is ‘working capital fund.‘
There are working capital funds that have been set up across various parts of the Department of Defense that are used for just this purpose: to establish, essentially, funds that allow services to be executed in a multi-year process where the equities of the government’s appropriation process are respected.
And her recommendation is that – the Board’s recommendation is that – it more broadly gets adopted by the Department and really robustly attack the working capital fund as a model to operate that. But it’s color money, color money, it’s appropriations. It’s the way our government operates, the commercial world just doesn’t operate that way. How do you get the benefit of both?
16:06 – 16:27
MD: So General Pawlakowski is certainly right. I mean, in space, the commercial, the communications market over which 80% of the Department of Defense communications travels is all done under a defense working capital fund that in the last few years, that’s been on the order of $8 billion for a bunch of different communications services, so that model is there and it’s a good way to proceed.
16:28 – 16:54
BT: And I think part of the reason that we we picked up on the near-term challenge and opportunity in SATCOM because as Mike said, the commercial SATCOM leveraged by the Department of Defense is such a dominant point, that getting that more integrated upfront is, to us from a model standpoint, that’s the number one recommendation we came up with.
Can be done, should be done. There’s an example of how it works financially. It will leverage the most out of the commercial market and it will provide the biggest benefit to the Department of Defense.
16:55 – 17:14
SK: The second recommendation is to “integrate evaluation of and provision for commercial space services into institutional processes.”
This recommendation ties back to the PPBE process that Dr. Tousley – you referenced earlier – so in what ways might commercial space services be factored into the DOD’s budgeting process?
17:15 – 18:26
BT: Part of what’s happening is from a Combatant Command perspective. That is not necessarily done upfront. It’s done after the fact. And so from an annual standpoint, if they’re going to budget within the support of working capital fund, that it needs to be prescribed by law in a way that the Department recognizes it as part of the Space Force budget. It’s identified appropriately. It’s also clearly understood by the commercial market as an addressable market.
Part of how you get the best out of the commercial marketplace is to make sure that the addressable market, which is how they evaluate what they’re going to spend money on, make sure it’s clear to them what the addressable market is. In many cases, there have been not necessary communications, but in other, I’ll say, remote sensing, sometimes the commercial markets, like I don’t actually know what the Department’s going to spend.
Or they’ll say one thing and then six months later, when the actual budget actions go through, it’s one-tenth of what they said. And so that lack of transparency makes it difficult for public or private investors to figure out just how big is the market going to be and how much capital can I deploy.
Given that this is an emerging market and the United States has a tremendous amount of private and public capital that can be brought to bear. It’s the government’s interest to leverage that to the maximum effect.
18:27 – 18:57
SK: Now, the PPBE process was the topic of our previous episode on The Elara Edge, when Elara Nova partner Shawn Barnes discussed the findings of a Congressionally-mandated Commission on PPBE Reform.
The Commission on PPBE Reform advocated for the creation of a new budgeting process it called the “Defense Resourcing System.” But whether or not the Commission’s findings are implemented, how do the recommendations similarly coming from the Defense Science Board remain relevant to whatever budgeting process the DOD adopts?
18:58 – 20:22
BT: So I’ll be going on a limb here because we didn’t actually look at that. But here’s one way to think about it: If they’re able to adopt a multi-year acquisition reform and they’re able to tie into working capital fund-like models, I think it’ll be great because I think coming back to the point, the commercial market just needs clarity of what the market is.
So that’s their interest here and you always want to think of this in terms of constituencies within our system of government. So, the industry partners would like the clarity. So if it’s able to be laid out as a multi-year approach, it’ll more carefully align with services. From a Congress perspective, as long as the appropriations process, they get to review it and look at it as a multi-year appropriation.
And they get to assess and evaluate it. I think their equities are served. The Department’s equity is going to be served. If we can set up a working capital fund model, because that means they’ll understand year-over-year what’s the burden on their budget.
And you know, from a Combatant Commander’s perspective, or the supporting command’s perspective, if they know what’s going to happen over a multi-year process, it allows them to support the operations plans better.
I’m sure they don’t want to go through the process wondering every year, ‘Well, Congress appropriated this, but not that. How does that support my need? I don’t have it.’ So I think it’s great all around.
I just I think the PPBE annual process was set up long ago when technology did not innovate as quickly, but now the technology, particularly in space, is innovating so quickly.
How do we respond to that? So I think it’s great.
20:23 – 21:00
MD: And I’ll say another aspect of the multi-year. So we talk about working capital funds. So the working capital fund basically creates a checkbook that the government can use each year, but it’s using at, in the spot market basically. So a requirement comes up. And now, we go ask the commercial servicing providers to give bids and then we select one.
But that bid is for today and you don’t get the best pricing. If you can say, ‘Look, I’m going to do this, but I’m going to, I want to do it for two or three years.’ You’re going to get much better pricing. The cost will go down for that service to the government and it provides the benefit of giving transparency and clarity to the investors and the companies.
21:01 – 21:40
BT: Scott one other thing I think was in, in our recommendation, in terms of working more effectively within PPBE, was the ability to allow program executive officers to move funds in between program elements year-to-year, because sometimes one program might under-spend on a service or product, the other might have a need.
And so that was one of the things we recommended that within a broader portfolio, the Department go to Congress and say, ‘We’d like to have more latitude of shifting funds from one to the other, because in many cases, the funds were underneath the program executive officer in total, but not within specific elements, because some programs are doing better than others.’ So we recommended – provide that flexibility.
21:41 – 21:59
SK: This leads us to the Defense Science Board’s third recommendation: “incentivize trust and build resilience among commercial providers.”
How does trust factor into this budding relationship between the military and its commercial space partners? And are there any examples of how the DOD can effectively do this?
22:00 – 23:05
BT: We identified a few things.
Number one it’s kind of a top level framework on the resilience and trust. The government has concerns about whether or not they can trust the performance and the security and the reliability of a commercial system. On the other hand, the commercial world knows that they depend on the government to help provide some clarity about the threat situation.
So there’s a need to work together on both sides. And we thought that one way of thinking about it is from a market perspective, include resilience as a quality of service requirement. The government and the contractors acknowledge it’s going to cost more for that. But as long as that’s priced in and considered a part of the economic model, then the vendors know what they have to do.
The government knows, ‘Okay, I’m going to get this enhanced capability as a function of increased pricing.’ I think that’s good and that’ll establish that market for premium pricing, which doesn’t exist today. There’s – it’s a gap in understanding.
And then I think, you know, without getting into further specifics, just to improve sharing of indications and warning, because the government has an awareness from a rapid timeline of what’s happening more than the commercial world does. Having said that, as proven in Ukraine, many aspects of the commercial world, once they know the situation, they can respond very quickly.
23:06 – 24:36
MD: The Department specifically, U.S. Space Command has a commercial integration cell that sits at Vandenberg that’s been very focused, for obvious reasons on SATCOM over the years it’s been in existence.
And in that case, there are representatives from some of these commercial communication providers that sit with the U.S. Space Command and are aware of ongoing operations, are aware of threats. They have clearances and so they are able then to go back and translate those potential issues into enhancements or upgrades or defensive cyber operations or whatever on the commercial side to be able to continue to provide the service.
That has got to grow and they recognize that has got to grow. There’s now, I think some remote sensing providers in that, as well.
In addition to that, which is probably the deepest level of integration, there’s also the Space ISAC. There’s a set of these ISAC information sharing organizations across a bunch of different infrastructure elements within the U.S.
Space is one of those – the Space ISAC is the Space Information Sharing and Analysis Center – and they share things that they’re seeing amongst themselves, at an unclassified level to help everybody sort of up their game in defense and understanding what’s, what’s coming at them so they can provide a more robust product. So there’s a lot of data-sharing that has to go on.
It is happening and, U.S. Space Command is going to expand as the markets expand for more access to these different mission sets with remote sensing, PNT, whatever else we get, is going to expand to commercial integration cell, too, in response.
24:37 – 25:04
SK: Now, the fourth recommendation requests that the government: “develop a suite of capabilities to monitor, assess and respond to adversaries and adversaries’ use of commercial space capabilities.”
This recommendation explicitly acknowledges that just as the DoD wants to leverage the commercial space capabilities available today, there is a risk that our adversaries can do the same.
Why is this acknowledgement important and how can the DOD mitigate that risk?
25:05 – 25:57
BT: Yeah. So this is one where most of our discussions and recommendations are not in the open document. There’s some classified stuff, but, I’ll put it this way. The commercial world and the U.S. government acknowledge that adversaries will also want to use some of the same commercial capabilities that we would want to use.
That’s pretty obviously known because if part of the commercial market for a commercial capability happens to reside over a foreign territory of concern to the U.S. government, then you have to know that multiple parties are going to try and use that capability, so that was an acknowledgement – everybody knows it. And yet the commercial vendors, particularly those in the United States, are very concerned about making sure the U.S. government is happy – happy in general.
So I think other than that, we’ve acknowledged that and there were a variety of discussions happening behind the scenes about how to best protect the U.S. government’s interest in this area and not damage commercial industry. I’ll just leave it at that.
25:58 – 26:21
SK: The fifth and final recommendation of the Defense Science Board’s report states the government must: “account for maturity of the commercial market when making decisions on how it regulates, invests and buys commercial space services.”
In what ways can the maturity of a given space capability influence how the government approaches its relationship with those relevant commercial partners?
26:22 – 29:02
BT: This is all in the vein of how can the U.S government leverage this capability while not damaging it and at the same time support the robust growth in the commercial sector?
I think the first thing is the DOD has got to account for maturity. And I’ll give you an example of the commercial market: the GEO commercial SATCOM market. It’s pretty mature. I think the government knows that. The government relies on it. pLEO market a little less mature. Cislunar market, very immature.
So my point in making those three comparisons is that when the government is making decisions on how it’s going to, you know, regulate, invest and buy these services, the government as a wise consumer of the commercial market needs to account for the maturity of those systems.
It’s just important for the government to constantly do that maturity assessment of these different markets to figure out if it’s going to regulate, invest or buy because the government is a dominant player. As Mike said, if the government’s 51% of your customer, that’s very important to the commercial sector. So that also means the government can be a damaging influence if it’s not careful. So I think that’s the first thing – account for maturity.
The second is I think just to avoid over-regulation, the commercial sector is always going to complain about regulation and anything that can inhibit their approach to work to obtain as much of the addressable market as they can because that’s their capitalist tendency. But avoid the over-regulation because a lot of commercial entities in the United States are concerned about over-regulation inhibiting their competition internationally.
You know, because if the government’s concerned about over-regulation, because there’s a perception of, ‘I got to do this, I go do that to protect my own equities,’ but then you damage the very commercial company you need to depend on.
Then at the end of the day, you’re left with an international company and nothing domestically. And I’ve talked about this with the vendor lock. Invest for market creation – now that’s a very sensitive statement. Not market monopolization. You don’t want market monopolization, not because of any particular vendor, I don’t think and I don’t think anybody the DSB believes that a dominant vendor is – without competition.
I don’t think anybody would think that’s in the best interest of the Department of Defense in the long-term. Maybe in the very short-term – it’s fine. But long-term, I don’t think anybody would think this ever works out well where you have a monopoly. It isn’t. So I think the government as a wise consumer and customer needs to think about ‘How do you invest for market creation and not market monopolization?’
And then the last thing is, this gets back to the law-policy, ‘what’s inherently governmental?’ Be careful and try and minimize unique requirements when you’re buying commercial services. In order to maximize the commercial service, you’ve got to keep the requirements within what’s feasible, as close as possible to that commercial product, or the commercial service, because that allows you to keep the costs down.
29:03 – 29:18
SK: The Final Report concluded with a specific emphasis on what it viewed as its bottom line: “Integrated Deterrence Requires Integrated Operations.”
Dr. Tousley, how do each of these five recommendations align to that bottom line objective?
29:19 – 30:39
BT: The bottom line about ‘Integrated Deterrence Requires Integrated Operations’ means I’m gonna put myself in the Combatant Commander’s shoes. In order to do an effective job of planning in advance, because you always want to have your plans all set to deal with potential contingencies.
If I’m going to have my plans well-crafted and articulated in advance, the commercial sector, if I plan on using them, needs to be a part of that plan upfront. It can’t simply be something I’m going to respond to.
For example, in Ukraine, that only happened as a happenstance. That was not planned in advance. The whole point of integrated operations and integrated deterrence means all kinds of capabilities like that. We ought to be doing plans, the budgeting and the work in advance, to provide the maximum capability to the warfighter.
The way I view it is, economic power is a critical element of our national and our military power. And if the commercial sector has capabilities that can support the United States Department of Defense and the intelligence community, we’re going to want to do all this planning and the work upfront to have the capabilities integrated.
You should be doing warfighter training right now. I don’t believe that we do a lot of training with the warfighter on the leverage of commercial communications in all of our war games today. But we should. So that’s kind of the foot stomp. Let’s get to work. Let’s we’ve got a lot of capabilities that could be integrated today. Let’s get to work and do it. Let’s do all the work upfront. And let’s not just wait for the next conflict to figure it out on the fly.
30:40 – 31:01
MD: Yeah, kind of the bottom line is that several of the military leaders have expressed is you want the adversary to look up into space and say, ‘Wow, that’s a lot of stuff I have to deal with and it’s frankly too hard. I’m gonna have to pursue my objectives in other ways and not take the fight to space.’ That’s the integrated part of this. We could have the same conversation about partnering with Allies as well.
31:02 – 31:25
SK: Going back to the purpose driving the Defense Science Board’s study, to facilitate the DOD’s understanding of the emerging commercial space market and how it can serve national security objectives – how does this also pertain to the expertise found at Elara Nova: The Space Consultancy?
And how can Elara Nova partners support these efforts at the cross-section of commercial space capabilities and military requirements?
31:26 – 32:09
MD: Elara Nova lives at the intersection of the three things we’ve been talking about here today: the government, the industry and the investment markets. And also with international partnerships is another part of integrated deterrence. The people that we have on the Elara Nova team and all of our partners, Doctor Tousley and many others.
They spent time in government and or they’ve spent time in industry and or they’ve spent time in the investment markets and that expertise, all of that expertise doesn’t exist in any one place, either in the government or the industry. And so we offer an opportunity for those different players in this space, to have that conversation to mature the discussion to come up with specific recommendations and I think that’s where we can help out. I hope Brad sees it the same way.
32:10 – 32:25
BT: Absolutely. Yeah. No, I think that Elara Nova, we’re a bunch of like-minded people that really want to see us, know U.S. capability pushing forward for integrated deterrence. We want to support the marketplace. And obviously, in order to do that, we are laser-focused on helping our customers achieve maximum success in doing that.
32:26 – 33:02
SK: This has been an episode of The Elara Edge: Expert Insights on Space Security. As a global consultancy and professional services firm focused on helping businesses and government agencies maximize the strategic advantages of the space domain, Elara Nova is your source for expertise and guidance in space security.
If you liked what you heard today, please subscribe to our channel and leave us a rating. Music for this podcast was created by Patrick Watkins of PW Audio. This episode was edited and produced by Regia Multimedia Services. I’m your host, Scott King, and join us next time at The Elara Edge.
Space Force Working Capital Fund to Facilitate Flexible Funding for Commercial Services
Announcement comes amidst broader reform push under the Acquisition Transformation Strategy
This fall, Space Systems Command announced the United States Space Force will have access to a working capital fund to buy commercial space services on-demand. But the fund, which is authorized to spend up to $1.2 billion in a given fiscal year, is not actually new money appropriated by Congress to the service. Rather, it presents another flexible funding option to move money in response to emerging mission requirements. The announcement also coincides with the broader Acquisition Transformation Strategy initiative recently unveiled by Secretary of War Pete Hegseth. Together, these actions represent how the Space Force, and the Department of War as a whole, is actively reforming how it acquires commercial services from industry partners.
“A working capital fund is almost like a checking account and a debit card: the account is there, but there’s no money in it unless somebody puts money into it,” said Mike Dickey, former Chief Architect of the Space Force and Founding Partner at Elara Nova. “But it’s important to understand that the working capital fund is not a new appropriation from the Congress. The military services have to take money from something else and put it into the working capital fund for it to become accessible.”
In the traditional appropriations process, military services build out their budgets two years in advance of a given fiscal year. Those budgets are then reviewed and revised by the Department of War and the Office of Management and Budget, respectively, before going to Congress for approval.
“Congress has the ultimate authority to decide how much money will be appropriated and what that money will be used for,” Dickey said. “But this means the services don’t have much flexibility in any given year to move money around as threats and capabilities change. So the working capital fund enables flexibility within the year of execution to take money that may have been appropriated for something else and move it to the working capital fund to meet emerging requirements.”
The Evolution of the Working Capital Fund
The Working Capital Fund concept itself is not new, but rather moves funding authority for space activities, originally housed within the Defense Information Systems Agency (DISA), to the Department of the Air Force’s Working Capital Fund.
Under DISA, the Commercial Satellite Communications Office (CSCO) used the WCF to purchase satellite communication services. But now, the CSCO office resides within the Space Force and the funding authority has been moved into the Department of the Air Force’s WCF under an account called the Enterprise Space Activity Group (ESAG) under CSCO’s management.
Like the DISA fund before it, CSCO will use the Space Force Working Capital Fund to buy commercial satellite communications. However, it’s largely expected that other space capabilities will be acquired through the fund in the years to come.
“There’s a number of different space missions that can benefit from commercial services,” said Maj Gen (Ret) Roger Teague, Founding Partner at Elara Nova. “The Space Force could have on-demand access to commercial launch providers to rapidly reconstitute a constellation with small satellites. Another example would be space domain awareness: where you could have a subscription-based access to a commercial database for tracking, characterization and anomaly detection of space-based objects in geosynchronous orbit.”
However, the working capital fund does not come without its limitations.
One drawback is that a working capital fund is limited to the year of execution, so commercial companies cannot rely on guaranteed year-over-year income which they then can use to reinvest in their commercially-provided service. This challenge begets a second drawback, in that funding may not always be available to continue delivering a service the military has come to rely on.
The FAR Foundation and Other Financial Pathways
Acquisition is built on a legislative foundation known as the Federal Acquisition Regulations (FAR), which lays out how the government can legally buy or acquire a product or service. But even within the FAR, there are flexible pathways for acquisition like Other Transaction Authority (OTAs).
“An OTA is a contracting mechanism for anything outside FAR Part 12 and FAR Part 15,” Dickey said. “The FAR Part 15 provides guidance for buying bespoke military equipment, like an aircraft carrier or a stealth fighter that is not a commercial product. But if there is a commercial market for a product, like a black Suburban the government might use, then the FAR Part 12 allows you to buy that Suburban off the commercial market. But even that might come with limitations, and that’s why OTA’s are an ‘everything else’ option.”
OTAs offer a contracting mechanism that gives the government broad discretion to negotiate the terms and conditions of a purchase with the contractor. It also provides a direct pathway to involving more non-traditional contractors in the defense industrial base, those who may not have all of the unique accounting and compliance mechanisms in place for traditional defense contracting.
Now, the working capital fund, like OTAs, presents another option for the government to acquire a product or service from the commercial market. Flexible pathways for acquisition are particularly important when buying commercial services, because the government’s motives for buying a service are inherently different compared to buying a product.
“The U.S. government’s approach to buying services and products is driven by acquisition strategies that intend to drive certain outcomes,” Teague said. “Buying a service is typically based on the availability of people and time, whereas products are often based on certain deliverables and specifications. Acquisition officials can use time and materials or a cost reimbursable contract mechanism for acquiring service, whereas product acquisition is more typically aligned under a firm fixed price or delivery-order contract. So, service-oriented acquisitions need to have more flexible funding options available.”
The Acquisition Transformation Strategy
The Space Force Working Capital Fund also comes at a time when acquisition reform measures are being implemented across the government. Toward this end, Secretary Hegseth unveiled a five-point Acquisition Transformation Strategy that aims to overhaul the acquisitions process:
- Rebuild the Defense Industrial Base
- Empower the Acquisition Workforce
- Maximize Acquisition Flexibility
- Develop High Performance Systems
- Improve Effective Lifecycle Risk Management
One element of the broader reform effort is also renaming the title of acquisition officials, who were previously known as Portfolio Executive Officers. Now, they will go by ‘Portfolio Acquisition Executives.’
For General Teague, this is not just a simple renaming but reflects the broader changes happening in the acquisition community as capabilities and requirements evolve.
“The Portfolio Acquisition Executive title emphasizes the fact that they are fielding a portfolio of capabilities designed to satisfy requirements across a particular mission area. There are a number of different traits that portfolio acquisition executives should be considering as they field a capability in response to a threat. But the Acquisition Transformation Strategy is going to provide a lot of flexibility and empower those PAE’s to make those decisions and trades within their programs and portfolios.”
Broader Acquisition Reform Efforts
Now, how effectively the Acquisition Transformation Strategy may be implemented will ultimately come down to Congress. But even there, other acquisition reform measures are being considered in the Senate with The FORGED Act and in the House with The SPEED Act, both of which are also aiming to overhaul how the military acquires capabilities.
“The Acquisition Transformation Strategy is not a decision that the Department of War can unilaterally make because Congress appropriates the money,” Dickey said. “Now, there’s a reason to be optimistic about Congress expanding the guardrails for the acquirers within the authorization and the appropriations processes. But Congress typically likes to have a lot of control over how that money is spent, so it will take a whole-of-government approach to actualize this strategy.”
With more flexible acquisition pathways like the OTAs and the Space Force Working Capital Fund, the government is exploring a variety of ways to empower their PAEs across the Department of War.
“The working capital fund is an important step, but it is still only a tiny step in this broader transformation strategy,” Dickey said. “There are many reforms that the acquisition workforce and Congress have been wanting to make over the years, many of which have been outlined in the Acquisition Transformation Strategy. What the Secretary is trying to do is provide those program acquisition executives with the ability and accountability to make informed risk decisions and not be bound by layers of policy and rules.”
For both traditional and nontraditional companies that are looking to contract with the government, Elara Nova is evolving to meet their needs in both understanding the evolving regulatory environment and unlocking financial resources to deliver capabilities the warfighter needs. That’s why Elara Nova has stood up the new Elara Nova Capital Advisory Services (ENCAS) to help companies and businesses navigate these challenges.
“ENCAS is designed to bridge the gap between innovation and the capital markets,” Teague said. “ENCAS is not just a financial consultancy; it’s a mission-aligned capital catalyst that helps stakeholders across the space enterprise to deploy their capital with confidence and in a risk-adjusted manner. Whether it’s capital structuring, infrastructure or technical due diligence expertise, strategic advice for growth, or even policy and compliance insight, ENCAS is prepared to help industry navigate the regulatory domain that space companies operate within.”
Elara Nova is a global consultancy and professional services firm focused on helping businesses and government agencies maximize the strategic advantages of the space and aeronautics domain. Learn more at https://elaranova.com/.
Episode 32: Space Force Working Capital Fund to Facilitate Flexible Funding for Commercial Services
The Elara Edge Podcast
Host: Scott King
SME: Maj Gen (Ret) Roger Teague, Founding Partner at Elara Nova (RT)
Mike Dickey, Founding Partner at Elara Nova (MD)
00:02 – 01:18
Space Systems Command recently announced that the United States Space Force will have access to a working capital fund to buy commercial space services on-demand. But the fund, which is authorized to hold up to $1.2 billion in a given fiscal year, is not actually new money appropriated by Congress to the Space Force. Rather, it presents another flexible funding option to move money around in response to emerging mission requirements.
The timing of the announcement also coincides with the Acquisition Transformation Strategy, an initiative recently unveiled by Secretary of War Pete Hegseth. Together, these actions represent how the Space Force, and the Department of War at large, is actively reforming how it acquires commercial services from industry partners.
Welcome to The Elara Edge! Today’s topic is the Space Force’s access to a working capital fund and how it relates to the broader acquisition reforms for the Department of War moving forward. Joining us are two of Elara Nova’s Founding Partners.
Retired Major General Roger Teague is the former Director of Space Programs for the United States Air Force, where he directed the development and acquisition of space programs for Air Force major commands.
Sir, welcome to the show!
01:19 – 01:19
(RT) Thank you. Great to be with you.
01:20 – 01:29
It’s great to have you.
And then we also have Mike Dickey, the former chief architect for Air Force Space Command and the United States Space Force. Mike, welcome back.
01:30 – 01:33
(MD) Thank you, Scott. It’s always a pleasure to be on The Edge.
01:33 – 01:44
So the Space Force is now authorized to access just over $1 billion in flexible funding through a working capital fund.
But let’s start with the basics here: what is a working capital fund?
01:44 – 04:04
(MD)Yeah, let me take a shot at that, Scott. And I think we need to take a little step back and talk about a couple different things about money in the Department of War. There’s a process by which the Congress appropriates dollars that the military services and the Department can spend and they put that in certain accounts, and specifically call out where the government can spend that money.
There’s a separate process that involves: what are the avenues by which the Department of War disperses money to get the services and the products that they want? And that distinction is important here when you’re talking about working capital funds.
So on the appropriations process, that’s a long process. So the services start thinking about their budget two years before the year that they’re going to need that money. And it goes through, puts and takes at the Department level, puts and takes the Office of Management and Budget. Then it goes to Congress. And Congress gets the ultimate decision and the authority of how much money and in what accounts it goes to do the things that they’re appropriating that money for.
So you don’t have a lot of flexibility in any given year to move money around. But things change. And so especially in the area of like, logistics and buying fuel for the Navy and for aircraft or in the case of what we’re going to talk about buying communications capacity for the entire Department.
Those things really fluctuate year to year. So there is this concept of the working capital fund that allows you some flexibility within the year of execution to take money that was maybe appropriated for something else and move it to the working capital fund to meet emergent requirements. And it’s usually, again, like in this logistics type of business where prices are fluctuating year to year.
And so it’s not new money. The services have to decide to take money from something else and then put it into the working capital fund so it becomes accessible. So a working capital fund is almost like it’s got aspects of a checking account and a debit card. So the account is there, but there’s no money in it unless somebody that needs a service puts money into that and then they can use that vehicle to go buy the service.
So it’s an important distinction that the billion dollar working capital fund is not a new appropriation from the Congress. It is the authority to use a flexible avenue to spend money that’s been appropriated for something else.
04:05 – 04:09
And Mike, what are the advantages of using a working capital fund?
04:10 – 06:02
(MD)Yeah, the advantages are that you get some flexibility in the year of execution. Normally when the Congress appropriates money and you want to move money from one thing into another thing, you have to go back and ask permission at pretty small dollar levels and so that process can take months. It can not get approved.
The working capital fund gives you that again, the billion dollars. So up to $1 billion we will allow to be put into that vehicle to be spent. So there’s even a limit on the working capital fund. Again, the common misperception is that it is not new money.
The Space Force did not get $1 billion of new money to spend through that working capital fund. It just creates that avenue to spend and that working capital fund, while new to the Space Force, is not new to the Department. The Defense Information [Systems] Agency had this fund for years and years and years that we were buying satellite communication through. Once the Space Force stood up and got legs under it, that’s been moved over to the Space Force and allowed also to use not just for satellite communications, but for some other services that they might buy too.
It’s always about services and we can get into that too. What I’ll say about that is the working capital fund accesses services from companies that already have those services available. So satellite communications is a good example. We buy 80% of the communications that are needed for the Department through commercial providers that are supplying those services across the globe.
And so the working capital fund will prescreen a set of companies that have services that the Department is likely to need and those sort of sit astride that working capital fund and then as an army brigade or a carrier strike group or an Air Force expeditionary wing is going forward and needs a surge in capacity, they can take some of their money that might have gone towards paving a parking lot at the base and put it into working capital fund and buy that capacity as they move, as they move forward.
06:03 – 07:01
(RT) Scott, if I could, I would also add, I think from a big picture perspective, the working capital fund really gives operational agility. It really enables faster acquisition, especially now as the Department seeks to acquire, I know we’re going to talk a little bit more about Secretary Hegseth’s mandate and acquisition reform. But I really do believe that this is a great tool to be able to accelerate acquisition.
And I think another great feature is that you can buy in bulk, and you got a centralized management function that’s able to buy services. Comm is a great example of that, that you’re able to have a centralized focus, but yet buy a large quantity of services and or capability.
And the other thing that I think that’s a real advantage is that the services that are typically acquired under a working capital fund’s construct are paid for by the actual users. They’ve got skin in the game, and there’s good alignment, if you will, between the acquirer and the actual operator or user.
07:01 – 07:06
And what about disadvantages? Are there any risks or challenges that need to be considered?
07:06 – 08:01
(MD)Well one limitation of a working capital fund, it is, sort of year of execution. So it’s not a long-term contract like a lot of companies would like to get a five-year contract to help provide services, provide products, whatever it might be. This is sort of a year of execution. So in fiscal year 2026, which is the year we’re in now, if a Combatant Commander or that army brigade puts money into that pot, they can buy those services for the rest of the year. And then they got to start that process over again in the following year.
So and it’s not buying things, right? It’s like buying services that already exist. So it’s not a path for companies to build new products, build new satellites, those types of things that you normally think about.
It is certainly by selling the services, they can then reinvest in the back side of the infrastructure and help make those products more, services more valuable. But it’s really providing a service in the year of execution for that operational agility that Roger talked about.
08:01 – 08:29
(RT) Yeah, I would add one more in that it’s related to one of the advantages, that it also presents a disadvantage and or a risk in that it’s dependent on customer funding. And if the customer reduces their usage of a particular service, that fund may shrink, which may ultimately affect service continuity throughout the enterprise or as they had planned it, as an organization may have planned that. So it’s something that the acquisition organizations certainly have to be cognizant of.
08:29 – 08:43
Now much of the government’s acquisition protocols can be traced back to the Federal Acquisition Regulation, otherwise known as FAR.
What influence does the FAR have when it comes to understanding how the government buys a commercial product or a service?
08:44 – 09:45
(MD)Yeah, I’ll say that there’s a couple of big chapters in the FAR that come to play here. The FAR Part 15 is buying bespoke military equipment – an aircraft carrier is something that’s not a commercial product, right? A fighter, a stealth fighter is not a commercial product.
But if there is a commercial market for things, the government has a lot of black Suburbans, right? Those are basically commercial products. And so a different chapter of the FAR applies [here], which is FAR Part 12, which is buying a commercial product or commercial services, and that is basically you don’t get to decide a whole lot.
You can say you want the black ones. But other than that, you’re buying a commercial product and you can do that in a much quicker way with less onerous cost accounting and all that kind of thing. Because there’s obviously a commercial market you can look up mSRP on those black suburbans.
So the FAR Part 12 allows [you] to go buy those things off the commercial market when a commercial product can largely satisfy with a little bit of tweaking, perhaps, around the edges of military function.
09:46 – 10:50
(RT) The government really approaches buying services and products very differently. First it’s driven by acquisition strategies. The intended product or service lifecycle. How long am I going to be doing it? And then ultimately, what is the performance and its associated metrics? What outcomes am I looking to achieve with a particular product and or service?
A service is really people and time-based. And products are really deliverable and spec-based. And so there’s some real core distinctions that I think it’s important to be mindful of as we look at that and acquisition officials are very attuned to as they consider their acquisition strategy.
A lot of times, you’ll see contract types especially associated with service acquisitions for time and materials or some type of cost reimbursable construct, whereas, more often a product acquisition, now is more typically aligned under a firm fixed price or delivery order based construct, versus the other flexible way, if you will, more flexible, maybe, service-oriented acquisitions.
10:51 – 11:14
And then there are other, somewhat flexible ways the Department of War can use money appropriated to them by Congress, and I’d like to compare and contrast some of those options with the working capital fund.
We’ll start with operations and maintenance funds, otherwise known as O&M, and then OTAs, Other Transaction Authority. So can you describe the relationship between how a working capital fund is either alike or different from those other two options?
11:15 – 13:05
(MD)The O&M funds and an OTA are sort of a little bit apples and oranges.
So the Operations and Maintenance is what we call a color of money. It’s a category of money that is appropriated by Congress to do just that: operations and maintenance on a daily or weekly basis and that money is good for a year.
So if you’re fixing up the base, if you’re flying hours for your jets, those types of things are built into the Operations and Maintenance account. In space, it’s the operations of the squadrons that are actually flying the satellites. So that’s a color of money.
Again, an OTA is kind of like what we talked about in the working capital fund discussion is a pathway to buy things from the industry. So Other Transaction Authority means it’s outside. We mentioned FAR Part 12 and 15 – those are specific authorities. The Other Transaction Authority is sort of “and everything else,” right? So it’s a path through the contracting world. That allows you to be much more flexible in the terms and conditions negotiation with the contractor and there are some important eligibility requirements to fit into an other transaction.
One is: are you a non-traditional contractor or do you have a non-traditional supplier as part of that contract? Because those nontraditional suppliers don’t have a certified cost and accounting systems that the Defense Department normally wants, and all the other trappings that come with working with the government. It’s a pathway to get to a non-traditional supplier base, and I think we’ll probably talk about that when we talk about acquisition transformation.
The other way and this is important in this day and age is in Other Transaction Authority – you can be eligible for that if you also if you cost-share with the government. So in a world where we have hundreds of billions of dollars coming into this base world from the private capital markets – an Other Transaction Authority is a good way to tap into those sources of capital so the government isn’t footing the entire bill for a product or service. What did I miss, Roger?
13:06 – 13:50
(RT) No, I think that’s excellent, Mike. The thing I would footstomp is the fact that OTAs are contract mechanisms. They’re not funding sources. As we talked about working capital funds and O&M and whatnot ever, an OTA is a contracts mechanism.
And, while the really the working capital funds obviously are financial structures, OTAs represent external acquisition pathways to get work done. You see them typically utilized by DIU, SpaceWERX and AFWERX, non-traditional vendor kind of arrangements, is really the most often use case that I think is in service today. But it does give the flexibility for non-FAR based contracting, especially for R&D and prototyping, which is very, very helpful.
13:51 – 14:10
Earlier Mike, you emphasized that working capital funds are designed specifically with commercial services in mind.
And General Teague, you’ve been on The Elara Edge in the past to discuss the Commercial Augmentation Space Reserve, or CASR, which is also designed to enable the government to leverage commercial services. Can elaborate on how CASR relates to this conversation?
14:11 – 15:02
(RT) Yeah, and I maybe footstomp like I just did for, really what I described for the working capital fund and the difference between that and the OTA. In that CASR, again, it’s a strategic reserve concept. It’s not a financial mechanism.
Where the working capital fund – it’s operational, it’s transactional. CASR is really contingency based and it’s policy driven. CASR really intends to establish a framework to leverage commercial space capabilities, during national security or emergency needs it’s very similar to the Air Force’s Civil Reserve Air Fleet. And its intent is to provide access to strategic capabilities, whether it be in certainly for space, but it would be for launch or satellite constellations or capabilities and or data services, during crises or surge demand times.
15:03 – 15:26
Now, the Space Force’s access to a working capital fund is actually through The Department of the Air Force Working Capital Fund, which will account for space services through an Enterprise Space Activity Group.
So I have a two part question here:
One: what does the Enterprise Space Activity Group mean?
And two: what is the relationship between The Department of the Air Force Working Capital Fund and the Space Force’s access to it?
15:27 – 16:22
(MD)So, there is only one working capital fund. It is the working capital fund under the Department of the Air Force. So the Air Force can access it and the Space Force can access it under specific limitations and those limitations are established in these activity groups.
So that’s basically the checking account, or the debit card account as we talked about earlier. So the Enterprise Space Activity Group is the account underneath The Department of the Air Force’s Working Capital Fund that the Space Force gets to sort of have control of and that’s where the limit of $1 billion has been put on that Enterprise Space Activity Group.
So, that account, that activity group, is where the Space Force will buy things like communications, like they’re starting to do with, tactical surveillance, reconnaissance and tracking, kind of activities. Other things have been allowed underneath that activity group, but it’s all part of one working capital fund that the Department of the Air Force controls.
16:23 – 16:46
(RT) I’m excited about it, Scott. Only because ESAG, or the Enterprise Space Activity Group, it’s managed under the Commercial Space Office, there at SSC.
So you’re getting alignment there of commercial space services, obviously with the warfighter and allied needs, using working capital fund mechanisms to help streamline procurement. You’re really getting after the fight tonight challenge and I’m excited about it. I think it’s a great step forward.
16:47 – 17:07
(MD)They’re creating a toolkit, really, of access to these companies. So in the Commercial Space Office, you’ll have access through this working capital and the Enterprise Space Activity Group, you also have the CASR activity that Roger just spoke of. So they’re putting together this set of tools within that toolbox to rapidly go out to grab commercial services when we need them most.
17:08 – 17:32
As the director of the Commercial Space Office, Colonel Tim Trimaillo recently called the working capital fund, “an important milestone in integrating commercial capabilities into the architecture.”
We’ve discussed the need for an integrated space architecture on the show before. But Mike, can you recap for our audience what we mean by ‘integrated space architecture’ and why is the working capital fund would be an important milestone toward this end?
17:33 – 18:24
(MD)The future architecture that the Space Force is headed toward is, what they call a hybrid architecture, a resilient architecture, you know, has diversity involved in it.
And that diversity comes from a variety of spacecraft and capabilities in a variety of different orbits, coming from a variety of different suppliers, coming from both bespoke military systems and commercial services and products that can be bought off the market that have dual-use applications.
So the Commercial Space Office allows access to that commercial side of a hybrid architecture and that office works alongside all the program executive officers at Space Systems Command to make sure that the commercial activity comes in alongside the military bespoke activity to to provide the combat effectiveness and resilience of the hybrid architecture.
18:25 – 18:39
(RT) I would just add that’s where that utilization of the working capital, the Space Force’s working capital fund. It’s a major enabler of that vision. It’s going to allow very rapid, flexible acquisition of commercial services that plug directly into the national security space enterprise.
18:40 – 18:52
The Commercial Satellite Communications Office will be the first program that’s authorized to use funds from the working capital fund. So why is satellite communications an appropriate starting point? And what other capabilities can the working capital fund be used for?
18:53 – 19:43
(MD)This really comes from the history of the working capital fund. So the Commercial Satellite Communications Office has existed for a long time. And it existed, as I mentioned earlier, as part of the Defense Information Systems Agency, DISA, and when the Space Force stood up, that office was moved to the Space Force and so they have the workforce, the contracts, the relationships with all these prescreened vendors and the onboarding of new prescreened vendors. They have that legacy, that history. They know how to run that machine very, very well and so that just basically came in whole to the Space Force to do that.
Now they have been given some expanded authorities to move beyond commercial satellite communications into some of the areas we’ve talked about: space domain awareness, tactical surveillance, reconnaissance, tracking. So those are sort of more nascent mission areas. But the system, the machine is the same.
19:44 – 21:13
(RT) Scott, I think that there’s a number of different missions and or capabilities or services that are required and are needed on a recurring service based or modular kind of commercial capability.
And this applies to a number of different space mission areas, to include communications. But take for instance, launch, launch services. You could have on-demand access to commercial launch providers for small satellites for rapid reconstitution. There’s a tactical unit that needs a responsive launch to deploy a particular sensor or capability in a constellation after a threat event has occurred or in advance of maybe, ISR providing indications or warning that an event may be about to occur. You could certainly use an asset that way.
Another example would be like space domain awareness. If I had a subscription-based access to a commercial tracking and characterization, anomaly detection, there’s any number of different ideas there regarding space domain awareness. But the Space Force would have access to a commercial provider to continue to monitor adversary satellite maneuvers as an example, in geosynchronous orbit or geostationary orbit.
And, you know, make sure that it’s just another set of eyes and ears, paying attention to what’s going on and fulfilling domain requirements. So I do think that there’s a lot of different missions that commercials can contribute to on a regular basis.
21:14 – 21:27
This brings us to the second part of our conversation, and that is the recently announced changes from the Secretary of War Pete Hegseth, who last month unveiled the Acquisition Transformation Strategy.
Can you speak to some of the objectives the Secretary has laid out in this document?
21:28 – 23:06
(MD)You know, the Acquisition Transformation Strategy is all of like 39 pages and we commend it to your nighttime reading table. But it’s based on five big points and I’ll just quickly paraphrase each of those, and then we can kind of dig into the details.
The first one is to rebuild a defense industrial base. So this is having access to more suppliers providing products and services into the Department. It’s about private capital, participating in that industrial base.
The second one is elevating and empowering the acquisition workforce. So kind of making some fundamental changes and we can talk about what that workforce looks – like having longer tours, being portfolio-focused instead of program-focused. And really to get away from the incentives and sometimes the disincentives for these program managers, to sort of fall back on being compliance-based instead of taking informed risk decisions.
The next one is to maximize flexibility. So this is kind of about all the regulations that are piled on top of the law and so the first move there was to eliminate the JCIDs requirements process that’s already underway. So things like that maximize the flexibility.
Then to do rigorous enterprise, technical and execution excellence. This has a lot to do with sort of digital transformation, being able to do digital engineering and simulation and live virtual constructive training.
And then the last one is lifecycle risk management. So in the lifecycle of a system, does the military have the organic capability to do repairs in the field? Do we really have insight into the supply chain and any risks there?
So those are kind of the five big things. Probably the most interesting to talk about might be the first couple, which is about the industrial base and the acquisition workforce.
23:07 – 24:33
(RT) Yeah, I think it’s a really important point and it’s going to provide a lot of flexibility to former PEOs and or SPD’s, as we were back in the day.
Even so, the PEOs took an important step to be able to control, and make decisions and trades within their programs, among their programs. I think the Secretary’s memo was being very deliberate in calling them Portfolio Acquisition Executives to emphasize the fact that they are fielding a portfolio of capabilities and those capabilities are designed to satisfy a particular mission area.
And so there are a number of different trades that Portfolio Acquisition Executives should be considering, as they field capability in response to any threat.
I think it’s great. It empowers the acquisition executives and the team and certainly speeds decision-making and it demands accountability, not only within the government but also from industry.
And ultimately, this is all about speed – driving capability, shrinking acquisition timelines literally from years to months or even weeks. And I think it’s much, much needed, and complemented by a number of other initiatives that are in work right now, are really helping to take the foot off the brake, and the hands off the steering wheel and letting Portfolio Acquisition Executives really take control of and drive delivery of capability.
24:34 – 25:00
(MD)And just to tie this conversation to what we’ve been talking about as part of that portfolio of responsibility there’s an objective of the portfolio – of the missile warning portfolio or the satcom portfolio. And if that can be satisfied by commercial, those portfolio executives have the option to go to the commercial markets and buy this too, which is different. Really, the PEOs have really been focused on the bespoke military sorts of requirements. So this adds that arrow into the quiver as well.
25:01 – 25:39
(RT) I think that’s a terrific point, Mike. And one other one that I was really happy to see, likewise was, if you will, reducing the bureaucracy and really reforming the Foreign Military Sales, and requirements process.
As you talked about the requirements, but being able to get after some FMS cases, in real and meaningful ways, I think especially as nation blocs like NATO, for example, look to field commercial capabilities, and or our friends in the Far East, likewise are looking to do the same. Hopefully we will have the ability to be able to be responsive and offer commercial systems and capabilities, much, much more rapidly.
25:40 – 26:20
And, Sir, you said that some of these acquisition reforms really place an emphasis on speed. I’d like to tie that to what’s known as Moore’s Law, which more or less states that technology becomes more and more powerful with every iteration, particularly as costs and size decrease.
But it seems space technologies in particular have traditionally had long acquisition timelines, which meant that by the time the government gets a certain capability up on-orbit, that capability might be outdated already – simply because the technology here on Earth continues to advance that much faster.
So my question for you is: how does this reform effort, and that emphasis on speed, factor into the Space Force’s acquisition needs?
26:21 – 27:32
(RT) Well, it just reinforces and underscores the exact construct that you just outlined there, Scott, in that you’re trying to take advantage of Moore’s Law. You’re trying to continually resupply and keep current the most capable systems that you can on-orbit.
We don’t need to be reliant on 286 and 386 computer technology that may be fielded in some of today’s systems. And I use that as a reference point, but it’s illustrative of the challenge that a lot of time space programs field, because the satellites are so well built, they often live well beyond their design life by a decade or more.
And so you’re, if you will, stuck in a system that’s performing against a performance baseline that was designed to maybe 10 or 20 years ago, be unable to take advantage of the capabilities that exist today. And so, as Mike alluded to earlier, you’ve got acquisition executives who now are going to be able to focus on portfolios and field updated capabilities, current capabilities, much, much faster, much more consistently aligned with their objectives and ultimately the warfighter needs.
27:33 – 27:40
Now, broadly speaking, how should industry, and particularly the commercial space industry, be thinking about these reform efforts?
27:41 – 28:36
(MD) I think the most important thing that individual companies can do is to try to understand the military problem that their product or service solves.
And if they can understand the terminology of the day or pain points and those types of things to really understand what the military is trying to achieve and where they’re having trouble achieving it. It will allow the companies then to use again some private capital, perhaps their own internal research and development funds, to present solutions to the government and then the government with OTAs and all these other pathways we’re talking about, could rapidly say, ‘Yes, that’s not perfect, but it’s 80 or 90% of the way there. I love it, I want some of that.’
And to move forward in purchasing those products and services. So really understanding their government customer and the military problem that is trying to be solved is the best thing a company can do to get its product and services across the line, if you will.
28:37 – 29:49
(RT) I took away a couple of additional thoughts there, and Secretary Hegseth’s memo was blunt. It basically said “Giddy up.” He said, move faster and invest more or we might just do it for you.
They’re trying to drive speed. They’re trying to drive scalability. And so it’s a call to action, I think by certainly within the space industry to upgrade your production lines, your digital workflows, your plans for modular architectures, you’re wholly embracing commercial capabilities and standards, which gives way to offering commercial off the shelf solutions, any number of different, opportunities with regard to commercial – you don’t always have to wait for the bellwether program of record that lasts a couple of decades, because ultimately, in the end and I mentioned this before, I think that the Department is ultimately trying to drive accountability, not only speed, but accountability.
And that these Portfolio Acquisition Executives, they should be demanding customers. They should be demanding buyers and expect industry to deliver and give the nation the kinds of capability it needs, at the price point that it expects, with transparent cost structures, and on delivery timelines that the acquisition community as a whole agrees to.
29:50 – 31:52
(MD)And so part of my training as an engineer is to figure out why the glass is half empty instead of half full. So let me offer a counterpoint here. Just a caution in this transformation strategy. And that is that this is not, unilaterally a decision that the Department of War can make.
Congress appropriates the money. Congress likes to have a lot of control over how that money is spent. So whether Congress will have to sort of buy into this and provide some expanded guardrails, if you will, among the authorization and the appropriations process.
I think there’s a reason to be optimistic about that. There’s actually both in the Senate and in the House, there are proposed space acquisition reform legislation, on the table for this, this year. And so we’ll see how that falls out. And this transformation itself will need some funding, right? They’re talking about training and advanced digital tools and use of AI. So that will also need some funding. So it’s going to take a sort of an all-of-government sort of approach here to be able to actualize this strategy. I certainly hope that happens, but we’ll need to, kind of work the details.
And the other thing I’ll say is, we got to this sort of onerous compliance-based process because every time there’s a slip in a program, then, ‘Okay, well, there’s probably three new policy things we can put in place to make sure that slip doesn’t happen again.’ And it just builds and builds and builds.
What the Secretary is trying to do is provide those portfolio acquisition executives the ability to make informed risk decisions and sometimes those decisions are going to be wrong. And you have to be able to live with that and move on without then just piling back more and more bureaucracy to try to limit the decision space of that executive.
Like to Roger’s point, we want those folks to be accountable when they make great decisions. We want to reward them. When they make bad decisions. If it was really a bad decision, then, well, we’ll be accountable in that way too. But usually those are professional acquirers and professional military men and women, and they’re going to make decisions that what’s the information at the time was the right decision and then we just deal with it from there.
31:53 – 32:17
That brings this conversation full circle, as we’ve kind of discussed two broad changes. One was the introduction of the Space Force’s access to a working capital fund. And then two: the Acquisition Transformation Strategy that Secretary Hegseth recently unveiled. But I’d like to draw a thread between the two of them.
What parallels do you see between the Space Force’s access to a working capital fund and the Acquisition Transformation Strategy?
32:18 – 33:04
(MD) I believe the working capital fund, as important as it is and as useful as it is. It is a tiny step in this broader transformation strategy, right?
There are so many things that the acquisition workforce has been hoping would happen over many years and that Congress has been wanting to happen over many years. That working capital fund is a little step, an important step, and there are a lot more steps to take and many of those have been outlined in the Acquisition Transformation Strategy.
Many more are in the legislation that’s pending on the Hill. So, it’s all part of a broader focus on expanding the industrial base that we have available to us, taking advantage of the speed and agility of dual-use and commercial activities and making those apply to military problems that we have and we’ve got many.
33:05 – 33:20
Now, Elara Nova has also continued to evolve. As two of the founding partners at the strategic advisory firm, can you share some of the recent developments going on behind the scenes?
How is Elara Nova prepared to connect what exists in industry today and where the government wants to go in the future?
33:21 – 34:43
(RT) Scott, I can take a shot at that. And I think maybe you’re referring or tying us back into particularly the Elara Nova Capital Advisory Services, our newly launched, strategic finance and investment advisory team.
We stood it up at the beginning of the year, and it’s designed to bridge the gap between really space innovation, and the capital markets, whether it’s capital structuring, support for startups or, if you will, the prime contractors or even government-aligned ventures, providing strategic advice for growth and venture capitalists or infrastructure or technical due diligence expertise, even policy and compliance insight to help navigate the regulatory domain and, if you will, the environment that space companies operate within.
Elara Nova really is positioned well, we’re just not a financial consultancy. It’s really a mission-aligned capital catalyst, so to speak. That allows us to help stakeholders across the space enterprise, help them deploy their capital with confidence.
And they can do so in a risk-adjusted manner, and do so with confidence, because all of this, as Mike has alluded to comes together in a nexus of knowledge that ultimately allows us to raise all boats, from a space perspective, and continue to grow the enterprise in a real and positive way and make a real difference.
34:44 – 35:19
(MD)Yeah, well said Roger, I think we just sit at this exciting place, as you suggest, at this nexus between who are the people with the problems? And in our case it’s typically the space security, national security, and broader than just space now with aeronautics and adjacent cyber type of activities.
Those customers with the industrial base that can solve those problems with the capital markets that can provide the fuel basically to solve those problems back to those customers. So, having that be a really dynamic and sharing ecosystem is what we are trying to do as a company and I think we’ve found some success.
35:20 – 36:01
This has been an episode of The Elara Edge. As a strategic advisory firm, Elara Nova is the trusted guiding partner that builds tailored teams to illuminate unseen opportunities and deliver impact across every domain.
With the trusted insight to your decisive edge, Elara Nova is your source for expertise and guidance in cross-domain security.
If you liked what you heard today, please subscribe to our channel and leave us a rating. Music for this podcast was created by Patrick Watkins of PW Audio. This episode was edited and produced by Regia Multimedia Services. I’m your host, Scott King, and join us next time at the Elara Edge.
Episode 2: Revolutionizing Missile Warning with the Proliferated Warfighter Space Architecture
The Elara Edge: Expert Insights on Space Security
00:00 – 01:22
In response to rapidly evolving threats from near-peer adversaries like Russia and China, the Space Development Agency was founded in early 2019 to disrupt the acquisition process for the Department of Defense. Now, just a few short years later, the SDA is making headlines.
Earlier this spring, the SDA launched its initial round of satellites for its Proliferated Warfighter Space Architecture – or PWSA – with the intention of modernizing the missile warning architecture watching over our nation. The SDA followed this up with a second successful launch in September of 2023, with one final launch for its Tranche 0 satellites slated for sometime later this year. Not only do these launches demonstrate the changing dynamics of the space domain, but they provide a glimpse into how the Space Force and the Space Development Agency is seeking to revolutionize its procurement process to meet the pacing threat.
Welcome to The Elara Edge: Expert Insights on Space Security. I’m your host – Scott King – and today I’m speaking with Mike Dickey, founding partner of Elara Nova and the Former Chief Architect of the United States Space Force.
Sir, it’s great to have you on The Elara Edge with me today. So before we get started on the SDA’s procurement process for its Proliferated Warfighter Space Architecture – PWSA – can you tell me about the DOD’s traditional approach to a space architecture for the missile warning mission?
01:23 – 02:14
We were kind of the only game in space. It wasn’t contested like we talk about now. So that was how missile warning was done. What we typically would do is we’d send a satellite into geosynchronous orbit, which is this unique orbit where the period of the orbit exactly matches a day on the Earth so it looks like it’s parked overhead.
So when you have one satellite that you can park over one area and put a missile warning sensor on it, then you get access to that area all the time and you only have to have one satellite to do the job. And we could just load tons and tons of capability and launch it to the place that was most efficient, so that’s the word I would use for the traditional approach. It was always built around efficiency.
So that’s cost-efficient. Turns out we’ll talk about is not very militarily effective. But that’s really the traditional approach is: be very efficient, don’t launch very many satellites, park them in a place where you don’t need very many and go from there.
02:14 – 02:26
So you mentioned the traditional approach is no longer militarily effective? Can you elaborate on how the modern threat has evolved to the point where we even have to re-think how we develop our missile warning architecture?
02:26 – 04:34
Two things have kind of fundamentally changed that causes us to rethink the missile warning architecture. Russia and China who are more on a…almost on a peer status who are building and testing a wide range of technologies and systems that can disrupt or destroy our space assets.
So when I talk about everything being so efficient and I could just sit over a point on the globe with one satellite, now I’ve created a huge amount of fragility in that architecture. That one satellite goes away and now my capability goes away for that region.
But the contested space with near-pear adversaries is part of change number one. Change number two is those same countries are building missiles that are very different and exploit the technical limitations of the traditional architecture I was talking about.
So the traditional missile threat is a ballistic missile. It’s like football when a quarterback throws a pass, the instant that ball comes out of the quarterback’s hand, you know what direction it’s headed. You know what speed it’s headed, you know what angle the quarterback threw the ball at. And so you can do a little high school algebra and you know where the ball’s going.
Same thing with ballistic missiles. As soon as the rocket burns out in the first minute or two after launch, you know where that rocket is headed and you know what time it’s going to get there. But now the missiles that Russia and China are building are these hypersonic maneuvering missiles. So when they maneuver it, all the math breaks down and you can’t predict anymore. So you have to basically keep custody of the missile the entire time it’s flying.
And then the other thing that those missiles do is they fly very low, much closer to the Earth than a ballistic missile which goes into space and then just falls back out of space. Hypersonic missiles stay in the atmosphere, and it’s harder to see – they’re much dimmer. So when the nearest space-based asset is looking for heat, these missiles are much dimmer.
And so it’s harder when you’re in those geosynchronous orbits, way far away from the Earth to see those missiles. So those two things really changed the game and caused us to re-think in the 2018, 19, 20 period how to redo the missile warning architecture and that kind of gives rise then to the Space Development Agency and the Proliferated Warfighter Space Architecture.
04:35 – 04:42
And then so, how does the Space Development Agency view PWSA as a modern solution that can meet this evolving missile threat?
04:43 – 06:22
It’s pretty disruptive because it breaks this traditional efficiency model and tries to get something that’s more militarily effective, like I said, so that’s why Warfighter is an important part of the title. But there’s two things that really underpin what they’re trying to do and the first one is: come closer to the Earth.
When a satellite is closer to the Earth it only sees a little piece of the Earth as it flies by and it’s only overhead for ten or so minutes, as opposed to this – it’s overhead 24 hours a day, 7 days a week, 365 days a year. But your two orders of magnitude closer to the planet.
And so when you’re closer to the fight, whether that be missiles or communications for forces on the ground and telling airplanes and missiles where to go and those kinds of things. It’s faster, and in some cases easier, to do that when you’re closer to the Earth which requires you then to proliferate to be able to see the areas you want to see because the satellites are moving relative to any point on Earth.
The other thing that PWSA tries to do is implement more of this technology refresh. So do things on fast cycles, do spiral development. You know your iPhone 15’s coming out – they didn’t wait until they knew what everything on the iPhone 15 was going to be and then build it, right?
We had an iPhone one through 14 and bit by bit, those capabilities grew and grew over time. So there’s two kinds of disruptive things – going on traditional by getting close to the Earth and use fast technology refresh cycles.
In the traditional model, those missile warning satellites, we launch them and fifteen, twenty years they’d be in orbit. So you’d never get an opportunity to refresh the technology on those satellites. Now, PWSA allows us to do that every two or three or four years.
06:23 – 06:32
That certainly seems to be a pretty ambitious and even innovative approach. So what are the advantages that the Space Development Agency sees in fielding the missile warning architecture this way?
06:33 – 08:03
The Department of Defense created an agency to be this sort of disruptive influence on the traditional – Space Development Agency – it is now part of the Space Force after the Space Force stood up. And they’re just now getting to the point where they’re launching some satellites on orbit. And so they use this term the “tranches” and this is the spiral development. Tranche zero, which is what they’re just now launching.
Then as they move up in tranches: Tranche one will add some additional capability and might start to give us some regional persistence so you can design a constellation, so more times than not it’s over an area on the planet that you’re interested in.
Tranche two then is the first time you build out this proliferation enough with hundreds of satellites so you can get global coverage. You can see and communicate anywhere on the globe.
In communications, for instance, you might not have all the bandwidth you want, missile warning, you might not be as sensitive as you’d like to be. So then subsequent tranches after tranche two just as that spiral development, the iPhone 11, 12, 13 that get better and better.
ou know, the other important part of the PWSA is that what we’re doing at each individual satellite is making it radically simpler. So we’re two orders of magnitude closer to the Earth.
We’re only expecting those satellites to last for two, three years so those satellites can be built with cheaper parts, less testing. So the price of these individual node goes down and that’s critical because now I’m not building one, I’m building two hundred.
08:04 – 08:28
Both of the SDA’s launches to date have included satellites for Tracking and Data Transport purposes. How do these different satellite “layers” as the SDA is calling them, kind of work together in this architecture, and then on a further note, how do they relate to the broader purpose of developing capability for the DOD’s Joint All Domain Command and Control – or JADC2?
08:29 – 09:22
So now I have to start connecting these satellites to each other so they can talk to each other and know when a missile is passing underneath, for instance.
And they have to – at some point bring all that data to the ground which kind of ties in the other thing that the PWSA is doing is building a transport layer, which is this sort of network in space, because when a satellite is, say, over the Pacific Ocean, in the INDO-PACOM Theater, you know we don’t have ground stations in the INDO-PACOM theater.
So that data has to get into a network and then come back to the U.S. through other means. So we’re pushing a lot of complexity off of the individual satellites, lease satellites to be simpler and cheaper. But the whole architecture becomes complex in different ways and so the ability to step through tranche zero, tranche one, tranche two allows this kind of stepwise approach too, to making sure all those other complexities are taken care of.
09:23 – 09:35
The SDA is soliciting support for PWSA across a number of manufacturers and a number of industry partners. What advantage is SDA trying to leverage by broadening its pool of partners from the commercial sector?
09:36 – 10:54
One of the fundamentals that the Space Development Agency pushes into everything they’re doing is this constant, continuous innovation and I think the primary advantage of having multiple players in the space is you get – it incentivizes continuous innovation.
So everybody wants to try to one up the next guy because another contract’s coming in a couple of years and I’d like to get the benefit of that if I’m company A and so that spirit of innovation and competition does a couple of things, one – in the technology and in the capabilities that each of these teams might bring.
But then also in keeping each other honest in the price point, right? I mean, the price competition is really important. Like I mentioned, we’re not building one anymore. We’re building a couple of hundred and so you better be able to control cost or this thing gets basically untenable. And so, cost control is as important, maybe more important than the technology, because we can’t control cost, we can’t afford it, and we’ll have to go back to the traditional and more fragile way of doing things.
So a secondary advantage is any failure, a part that’s bad or something like that in any one line, in any one production line doesn’t affect the other one and so if there is some kind of problem like that, you’ve got some built in resilience as well.
10:55 – 11:08
Then so what’s in it for the industry partner? Why should a commercial company – whether a legacy partner for the DOD or even a commercial space startup – be interested in partnering with the SDA on the Proliferated Warfighter Space Architecture or a program like it?
11:09 – 11:59
You know, once you get onto a program like this – the government is a pretty good customer. It hangs around for a long time.
Now, this idea of continuous innovation and continuously re-competing each tranche adds a little bit of stress to that. But once the government is one of your customers, they’re pretty good customers. They pay on time, right? The credit’s good. And there’s a demand for technology that’s beyond the commercial marketplace and so it just ups the game of the companies, too, that are having to solve harder problems and then just being part of that “bigger than us” mission too is I think something that’s a good motivator.
But we’re going to do this. We’ve done the traditional method for sixty years, we’re going to do this for the next sixty years and so having that as a revenue stream if you’re a commercial company, is pretty good for your shareholders.
12:00 – 12:18
I’d like to circle back to the first part of our conversation – when we were discussing strategic deterrence against the traditional threat. With that in mind – as the threat has evolved, so it seems our missile warning architecture is evolving – so why is maintaining strategic deterrence in the space domain such a critical component to the DOD’s broader mission?
12:19 – 13:55
You know, in the Cold War days, both the U.S. and the Soviet Union had satellites to do this job, to do missile warning. And it was seen to be – we had treaties – you are not to touch the other countries monitoring satellites because if they don’t know what you’re doing they’re going to make assumptions and those assumptions could very well be wrong and that could create a very bad day. This, again, is transparency, basically.
We know what you’re doing and you probably know what we’re doing, right? And let’s use that to calm the temperature. And because if people start guessing and start making assumptions, you know, that’s when strategic deterrence breaks down.
The key thing is that there’s still a long way to go here. Tranche zero in the PWSA is testing out some of these simpler nodes and seeing to the very first order can we start to connect these things together and make them all work. But it is a hard problem.
We’ve got pretty great capability now. Unfortunately it’s fragile, but it took us sixty years to get here and so this won’t happen overnight. We won’t have, you know, immediate success overnight and so I think we all need to have patience and give this some time to see it mature and to see some of the spirals happening.
And then we’ll have to make some decisions. But I hope that it all works and we stay on the straight path. But that typically doesn’t happen, right? We’ll learn something. We’ll have to pivot in some other way. But this country is pretty good at innovating and overcoming tough challenges. So I’m confident in the long term.
13:56 – 14:15
You represent a consulting firm that is made up of a team of experts with decades of experience within national security space – but also in industry – how can Elara Nova bridge this gap between industry partners looking to participate in a program like this and the DOD in their search for developing this capability from the commercial sector?
14:16 – 15:28
I think the biggest thing that we can provide is education. You know, these kinds of conversations with what – where did this come from?
What happened to what the world we knew if we were building in the traditional environment, all the organizations have changed, all the ways that they’re approaching solving national security problems in space has changed. And so, the the talent pool that Elara Nova has to bring to any of our customers are the people who were there at the transition – were there thinking up how to move from traditional and efficient and fragile to something more militarily effective, that we can we can deter and we can win at scale against a peer adversary.
So just understanding all those organizations how everything got rewired in the space world and national security space world is something we were all a part of. And we can not only bring that to the people who want to participate in things like the PWSA and a whole bunch of other things that are going on in national security space.
But we can also on the international front, there’s a lot of interest in other countries who are – ‘how do I also become a part of this?’
15:29 – 15:55
If you’re interested in learning more about the SDA’s approach to revolutionizing our missile warning architecture, visit our Insights page at www.elaranova.com.
This has been an episode of The Elara Edge: Expert Insights on Space Security. As a global consultancy and professional services firm focused on helping businesses and government agencies maximize the strategic advantages of the space domain, Elara Nova is your source for expertise and guidance in space security.
If you liked what you heard today, please subscribe to our channel and leave us a rating. This episode was edited and produced by Regia Multimedia Services. I’m your host, Scott King, and join us next time at The Elara Edge.