The United States has been unchallenged in space for decades. This is due to the leading role of the US government which has the largest space budget in the world at more than $30 billion, accounting for roughly half of the global space spending. In recent years however, the Pentagon has been looking to innovations from the commercial sector to re-shape and transform its capabilities as space becomes a more contested environment due to growing threats from Russia and China.

Lower cost, more resilient and agile small low-Earth-orbit (LEO) satellites are increasingly viewed as complementary to traditional large geosynchronous GEO satellites for DoD missions. Aerospace giant Boeing’s recent announcement to acquire small-satellite maker, Millennium Space Systems, is another indication that innovation from New Space is re-shaping future military investments.

The US government’s interest in commercial space is further supported by the Trump administration, which re-established the National Space Council last year to accelerate commercial development and maintain American dominance in space. Moreover, President Trump has recently proposed the creation of Space Force, a new branch of the US military dedicated to fighting wars in space by 2020. This proposal requires approval from Congress and is estimated to cost more than $8 billion over 5 years.

In this note, we discuss projects and areas of focus for two organizations in the DoD that are leading the way in new technology adoption from the commercial sector.  

First, the Pentagon launched the Defense Innovation Unit Experimental (DIUx), headquartered in the Silicon Valley, in 2015 to accelerate commercial innovation by providing non-dilutive capital (pilot contracts) to start-ups to solve a host of national defense problems. Key areas of focus for DIUx include: 1) Autonomy - drones, robotics, counter-drones – in the air and underwater; 2) Space -  launch, analytics on satellite data, space situational awareness; 3) Artificial Intelligence/Machine Learning (AI/ML) - decision making, autonomy applications, automation of cyber; 4) Human Systems - wearables on soldiers that provide real-time biometrics and situational awareness in combat, etc.; and 5) IT - catch-all for cyber security, networking, agile software development, big data and analytics.

The other DoD organization leading the space revolution is DARPA, the Defense Advanced Research Projects Agency, created in 1957 after the Soviet Union’s launch of Sputnik satellite to maintain the technological superiority of the US military. DARPA undertakes projects that create lasting and revolutionary change. It is known for inventing and developing technologies that we cannot imagine living without such as the internet and GPS.  

DARPA currently has multiple projects in space to disrupt the status quo, leveraging the tremendous momentum and investments from the private sector.  While DIUx is more focused on solving DoD’s immediate problems, DARPA works on longer-term and more futuristic technology for the military.

Below are key areas of space technology disruption, according to Fred Kennedy, the director of DARPA’s Tactical Technology Office from a recent interview with Aviation Week.

• Small Satellites: DARPA launched a project last year called Blackjack with the goal of developing a LEO constellation to provide global persistent coverage for military operations. This project set out to prove that there are cheaper and more nimble alternatives to traditional military satellites, laying a path for the military to transition from huge and costly satellites in GEO that takes years to develop and launch to rapidly deployable, lower cost smaller satellites more resilient to electronic or kinetic attacks. The agency is scheduled to award $117.5 million in contracts over three phases to two to eight bus and payload suppliers, with the first awards expected shortly. The goal is to leverage commercial development from the mega LEO constellations like OneWeb and SpaceX, then use the mass-produced bus at the end of this production line. The bus should be cheap and reliable at one or two million each and can accommodate a wide range of military payload and sensors without redesign.
• Payloads/Sensors: The same mass production concept for payload enabling applications from global surveillance, communications to early missile warning and more. GEO is a discovered orbit and contested environment with a handful of exquisite satellites that can be considered as high value targets, while smallsat DoD assets can hide in plain sight in commercial buses as a node in a network of hundreds or thousands of a smallsat constellation. The idea is to demonstrate that smallsats in meshed networks with “good enough” payloads in LEO can perform military missions, augment existing programs, and potentially perform as well or better than currently deployed exquisite space systems. There will be additional contract awards down the road for autonomy hardware and software, launch services, ground systems and constellation flight operations, according to DARPA’s solicitation. 
• Small Launch Vehicles: The cost of satellite launches has declined significantly since SpaceX and the introduction of more competition entering the market over the last five years. The DoD still sees a significant bottleneck in the launch market to replenish a smallsat constellation in the event mission critical satellites are disabled or shot down by an adversary. DARPA sees an opportunity to support the development of the Small Launch market; it has received indication from over 50 companies for its Launch Challenge. It expects low double digits entrants by the end of next year for the Challenge. The goal is to demonstrate flexible and responsive launch capabilities at short notice (within a few days) with no prior knowledge of the payload, destination orbit or launch site, and to do it not just once but twice in a matter of days. Ride share is not an optimal military solution as they might have to wait for the primary payload or end up going to an orbit they don’t want. 
• Space Traffic Management: Space is getting increasingly over-crowded. Operators, regulators and governments require better space situational awareness to avoid collision. The current space traffic management system operated by the US Air Force is inadequate and not well-suited for future LEO mega-constellations. DARPA views this as a less urgent DoD problem and believes the mega-constellations are highly motivated to keep track of everything and do their own space traffic management to avoid or minimize regulation. We think this is positive news for commercial space traffic management companies.  
• Autonomous Vehicles and Robots: DARPA is also spurring the development of technologies needed to create the first fully autonomous vehicles with the DARPA Grand Challenge. The DARPA Robotics Challenge aimed to develop semi-autonomous ground robots that could do complex tasks in dangerous environments. The Robotics Challenge also sought to make robotic software and systems development more accessible. Finally, DARPA is looking to disrupt decades of DoD investment in stealth aircraft and weapons by developing hypersonic technologies.

Why is this relevant to New Space entrepreneurs, venture capitalists and aerospace corporates? This is important because every DoD mission area in space is expected to be recapitalized over the next five to ten years. This means huge investments in next-generation mission critical satellites for weather, communications, intelligence, missile warning, navigation, and etc. While DARPA wants to build this capacity in the US, it is open to proposals from non-US companies. We see this shift in military strategy, in conjunction with significant commercial development, drive transformation of the entire space ecosystem in the coming decade. Stay tuned.