This series, Space in Focus, explores key space trends, challenges, and policy issues that will confront the next administration as well as offers recommendations for how to navigate them.
The Tale of Two Policies
In the early 1980s, Space Services Inc. of the United States developed the world’s first privately funded rocket, the Conestoga 1. It successfully flew a single time in September 1982 delivering forty gallons of water into space. Less than nine months later, President Ronald Reagan issued National Security Decision Directive (NSDD) 94, “Commercialization of Expendable Launch Vehicles,” which stated that, “[t]he U.S. Government fully endorses and will facilitate the commercialization of U.S. Expendable Launch Vehicles (ELVs).”
Reagan’s policy became law in 1984 under the Commercial Space Launch Act (CSLA) and, despite initial resistance from NASA and the Department of Defense (DOD), over the course of the next several years, the commercial launch market sputtered into existence. By 1998, less than 15 years after the policy was put into place, the number of commercial launches outnumbered government launches for the first time. And, thanks to the industry-enabling efforts by the U.S. Air Force under the Evolved Expendable Launch Vehicle Program, and NASA under its Commercial Cargo Program, there hasn’t been a single government rocket launched for the last decade save for the NASA Space Launch System’s Artemis I test flight in 2022
Not only did the policy succeed in turning space launch over to the commercial world, but it also helped build one of the strongest sectors of today’s space economy, with tens of billions of private investments across a hundred-plus companies, the return of world launch to the United States, and a massive reduction in how much the government pays for launch. It is difficult not to marvel at commercial launch policy’s success.
The same year that Congress passed the CSLA, it also passed the Land Remote Sensing Commercialization Act, an attempt to commercialize NASA’s Landsat System. Its failure led to it being recast as the Land Remote Sensing Policy Act of 1992. While three companies were formed in the wake of that bill, Orbimage, Space Imaging, and Worldview Imaging, none of them could find commercial success due, in part, to the lack of a sufficient market, but, just as importantly, to the resistance of the U.S. government to embrace the firms.
After a decade of struggle to find acceptance within the government, President George W. Bush issued National Security Policy Directive (NSPD) 27, “U.S. Commercial Remote Sensing Policy.” With wording similar to NSDD-94, NSPD-27 had as its stated goal “. . . to advance and protect U.S. national security and foreign policy interests by maintaining the nation’s leadership in remote sensing space activities.” It further stated that the U.S. government should “Rely to the maximum practical extent on U.S. commercial remote sensing space capabilities for filling imagery and geospatial needs for military, intelligence, foreign policy, homeland security, and civil users” and told the executive branch to, “[f]ocus United States Government remote sensing space systems on meeting needs that can not be effectively, affordably, and reliably satisfied by commercial providers.”
Yet, despite efforts in response to NSPD-27 by both the National Geospatial-Intelligence Agency and the National Reconnaissance Office to create a predictable funding stream for commercial remote sensing companies, the industry has faltered for the last two decades with multiple mergers, bankruptcies, and falling valuations. Not only is the industry struggling financially, but a recent study by CSIS showed the United States straining or failing to “[maintain] the nation’s leadership in remote sensing space activities” envisaged in NSPD-27. While impressive advances have been made, in comparison to space launch policy, it is difficult not to label commercial remote sensing policy a near-complete failure.
Making Sense of Commercial Space Outcomes
One could look at the marked difference in the success of these two policies and conclude the differences stemmed solely from varied market dynamics or differentiated business decisions, but such a conclusion would not be correct. Critical to the starkly different results is how the government approached the two different industries.
In the case of launch, despite initial trepidation, the U.S. government eventually embraced commercial launch and instituted two critical actions:
- First, the U.S. government studiously avoided competing with the commercial launch sector in their internal investment decisions, eschewing to the maximum extent possible the development of government-owned launch capabilities except for the most fundamental and noncommercial national security or space exploration needs (Notably the development of the Delta II rocket after the Challenger shuttle accident).
- Second, they signaled to the industry at every turn that the shift to commercial launch was fundamental and irrevocable and would be backed by billion-dollar launch contracts, thereby igniting private investment that continues today.
Meanwhile, on the remote sensing side, the government inhibited the ability of remote sensing companies to compete with the rest of the world through highly restrictive licensing provisions, allocated only a very small percentage of their multibillion-dollar imagery budget to commercial providers, and continued to build government-owned systems that directly competed with commercial firms. Even today, while the licensing restrictions have mostly been eliminated, limited spending and direct competition continue.
Commercial Space Hesitancy
While the evaluation presented above is focused on launch and commercial remote sensing, similar dynamics apply to much of the rest of the way the U.S. government has approached commercial space. There are a host of mature, well-developed commercial space services from satellite tracking, telemetry, and control (TT&C) to space domain awareness (SDA) capabilities, to military-relevant low Earth orbit commercial wideband communications that are either equal in capability or, just as often, outperform U.S. systems. Yet the United States continues to invest billions of dollars per year in replicating and competing with these services rather than aggressively adapting and adopting them for national security use.
For example, in the TT&C realm, the commercial world hosts hundreds of modern tracking and telemetry stations versus the few dozens of Apollo-era sites still maintained by the U.S. Space Force. Yet the Space Force recently issued contracts worth over a billion dollars to upgrade and build new sites rather than incorporate these commercial alternatives. Unlike the case for remote sensing, these TT&C providers have a firm commercial business. However, one cannot but wonder what better use U.S. government dollars could be put to, not to mention the resilience gained by distributing TT&C services across dozens of providers if they simply would embrace these companies.
Similarly, modern SDA capabilities from companies like ExoAnalytics, LeoLabs, COMSPOC, and others routinely outperform the Space Force’s own surveillance networks, especially in areas of analytics and data fusion. But the Space Force has been exceptionally slow to adopt these services, and the highly limited budget dollars committed means that the companies themselves can barely sustain themselves much less grow or, more importantly, continue to innovate in a way that leads to even better capabilities for the United States to exploit in the future.
These conclusions are not idle speculation nor simple anecdotes. A recent report by the DOD’s own Defense Science Board found that the “Government is wary of the commercial services’ long-term reliability. . .” and was “hesitant to cede control over missions it views as inherently governmental.” In the same study, industry reported that “government buying practices are suboptimal” and that “Industry’s potential is sometimes poorly understood by government.”
None of this would be a cause for action if these were recent developments. However, the issue has existed for decades despite the issuance of repeated space policies all directing the use of commercial capabilities. And while great fanfare accompanied this year’s release of departmental and service-level strategies on how and when to integrate commercial space capabilities, progress remains stalled, and commercial space reality continues to fall short of commercial space possibility.
Changing the Dynamic
As budgets shrink and the timeline of potential hostile actions advances, it is clear that greater utilization of commercial space capabilities is mandatory for the national security space community in general and both the National Reconnaissance Office and the U.S. Space Force in particular. Leaders must resist the bureaucratic urge to continue to field government-developed and owned capabilities that compete directly with the commercial firms they have been directed to support, keeping them to the side as mere augmentation rather than robustly integrated elements of a hybrid national space warfighting infrastructure. Not only does that approach diminish the effectiveness of what the U.S. government could do with the dollars it could free up, but it also prevents the beneficial expansion of this robust technology sector which could outperform any of the United States’ peer adversaries if simply given the opportunity.
Private investments are near record highs in space and related technology fields such as cloud computing and artificial intelligence, providing unprecedented opportunities to gain from commercial space in ways that would have previously been unimaginable. The contrasted results from launch and remote sensing suggest that future administrations must firmly monitor agencies’ decision-making when determining what they must own rather than what they should buy from the commercial world. While pockets of positive momentum have occurred, they have fallen far short of both policy mandates and stated intent.
The Commercial Space Imperative
Over at least the last three presidential administrations, and amid innumerable urgings by Congress, along with multiple internal DOD and U.S. Space Force reports, the call to use commercial space capabilities has grown more intense. It is universally accepted that using commercial space capabilities is one of the most important steps the United States can take if it hopes to meet and defeat the challenges posed by near-peer states against its national security space infrastructure.
The lessons of the commercial space launch business are instructive as to what can happen when the government truly embraces a policy of commercialization. In its most recent stock offering, SpaceX was reported to have reached a market value of $210 billion placing it just below McDonalds and nearly 50 percent higher than either Lockheed Martin or Raytheon in market capitalization. This valuation in turn has allowed SpaceX to turn their industrial might into a robust worldwide communication network of Starlink satellites, to support NASA in its quest to return to the Moon in this decade, to launch and catch the largest rocket ever developed, and to possibly allow the United States to reach Mars well before it otherwise could. While it may be unlikely that other firms will reach those lofty heights, it is clear that commercial space companies, once enabled by the right application of government dollars and strategies could be the single most important driving force in maintaining U.S. leadership in space which, at the end of the day, is the true commercial space imperative.
Douglas Loverro is the former Deputy Assistant Secretary of Defense for Space Policy. Stephen Kitay is the former Deputy Assistant Secretary of Defense for Space Policy. Mandy Vaughn is the CEO of GXO Inc.
