Earlier this month, the Unites States Space Force’s (USSF) Space Systems Command (SSC) announced it had awarded three National Security Space Launch (NSSL) Phase 3 Lane 2 contracts. The winners of the $13.7 billion firm fixed-price indefinite- delivery indefinite-quantity (IDIQ) contracts were SpaceX ($5.9 billion), United Launch Alliance (ULA) ($5.4 billion), and Blue Origin ($2.4 billion). The contract period is through 2029 and anticipates 54 missions.
SSC also announced earlier this month that it has assigned the first nine missions for FY25 with seven of those launches ($845.8 million) being awarded to SpaceX and two launches ($427.6 million) being awarded to United Launch Alliance. Three of the seven missions SpaceX will undertake are for the National Reconnaissance Organization (NRO) and four will be for the USSF. The two launches planned for ULA are both for the USSF with one supporting the Next Generation Overhead Persistent Infrared GEO missile-warning satellite and one supporting the GPS III Follow-on mission.
The reason the majority of the missions are awarded to SpaceX and ULA is because their vehicles have been proven and certified. Blue Origin’s New Glenn rocket has only flown once and has yet to receive certification. While SpaceX has dominated this market, the new contract affirms the Department of Defense’s (DOD) strategy to expand its launch industrial base through competition by naming three primary launch providers.
While the first lane of Phase 3 focuses on commercial-like missions with less risk, the second lane of the Phase 3 program begins to focus on more critical payloads that can be sent directly to geostationary orbit (GEO) that will support requirements surrounding secure communications and missile warning systems – missions that require increased security standards. Lane 2 awards also require the ability to be able to launch from both the Eastern and the Western Ranges. In keeping with the theme of competition, Space Force also announced that Rocket Lab’s Neutron rocket and Stoke Space’s Nova rocket would both be joining Blue Origin, SpaceX, and ULA as participants in Lane 1 launches.
The budget submitted by President Biden for FY25 in March of 2024 called for seven NSSL launches and four Space Development Agency (SDA) launches. The individual appropriations bills passed by the House and Senate appropriations committees support the two-lane strategy and the Senate contains language that is supportive of the process and encourages DOD to make awards to more than one company in an effort to spur competition in the launch markets. The continuing resolution funds NSSL at $3.9 billion in FY25 which is just under the $4 billion this enterprise received in FY24.
Of course, we have not seen President Trump’s FY26 budget request which will be responsible for funding both the initial preparation and the launches envisioned by Lane 2 in the next two years.
In a recent interview, General Saltzman, the Chief of Space Operations said that he believes the Space Force requires $10 billion additional funding in the near term to augment its nearly $30 billion budget. “Just doing 3 or 4 percent inflation increases doesn’t buy us new capability,” Saltzman said in late March. While FY25 has not been a particularly good budget year for the Space Force, the procurement funds have been sufficient to keep the NSSL moving forward. As Lane 2 comes online, payloads become more complex, and requirements for space increase, a budget that is held flat will not support the capability the National Security strategy envisions, and the warfighter of the near future will demand.
The new launch strategy envisioned by the two-lane strategy has allowed DOD to use parallel tracks to increase launches, encourage competition, and reduce the cost of launches. It is a procurement strategy that could be explored for other technically complex procurements with small production runs. One that comes to mind is shipbuilding. The shipbuilding industrial base in the United States has been struggling (not enough military ships being funded and it’s not competitive with overseas builders for commercial shipbuilding) and, while shipbuilding and satellite construction and launch are very different, there are enough similarities that lessons could be learned particularly as the Navy explores the introduction of more autonomous vehicles to the fleet.
The year-long CR, while unprecedented in DOD budgeting, comes at a time when there was a projected dip in NSSL funding and as a result, we don’t see the operational tempo or launch schedule in jeopardy until FY27 at which point there is an almost half a billion increase in anticipated budget authority. Given President Trump’s statement earlier this month that defense spending would be “in the vicinity of” $1 trillion, we don’t believe there will be reductions to the NSSL budget in FY26. This has been an area of success that continues to produce results for DOD.