Boeing, Lockheed, ULA corner the government-funded space market. SpaceX moving up
WASHINGTON — Attracting new players to compete for national security and civil space contracts has been a longtime goal of the Congress, the Pentagon and NASA. But as the numbers show, only a handful of contractors command the bulk of federal dollars spent on space programs.
The U.S. government invested $83 billion in space platforms and hypersonic technologies between fiscal years 2011 and 2017, according to Govini’s new report, Space Platforms & Hypersonic Technologies Taxonomy. Lockheed Martin, United Launch Alliance — a joint venture between Lockheed Martin and Boeing — and Boeing captured more than half of all contract obligations, Govini estimated. SpaceX took the fourth spot in 2017, leading the trend of “new space” companies that are moving to compete for government contracts.
ULA is the big winner based on how much its market share has increased over the six years. Govini calculated ULA’s average obligation value per contract went from $10.1 million in 2011 to $23.6 million in 2017 and grabbed 49 percent of the total launch market. “ULA leveraged its presence in the medium-lift market subsegment to capture $14.6 billion in federal unclassified contracts from FY-11 through FY-17,” the study noted. “This growth in market share made it the top vendor in our analysis.”
Looking at the top 15 space contractors, little fluctuation occurred over the past six years. Three companies dropped out: Iridium, Johns Hopkins Applied Physics Laboratory and General Dynamics. Newcomers to the top 15 include Raytheon, Harris and United Technologies. UT became a top-15 vendor 2017 selling booster technology for NASA’s Space Launch System. Raytheon moved into the top 15 by winning hypersonic vehicle development contracts.
Within the top five, from 2011 to 2017, ULA surpassed Boeing and became the top overall vendor. Lockheed Martin diversified its space science and national security satellite-focused portfolio with NASA contracts for the Orion spacecraft program. SpaceX rose to the top five by successfully developing technologies for International Space Station resupply mission and the commercial crew program.
Govini analyst Robert Meteer told SpaceNews that ISS resupply and commercial crew transportation are “areas with immense growth potential and applicability to other space markets.” Overall government spending on space and hypersonic technologies went up by 6 percent a year over the six-year period and projections of continued growth are attracting new vendors. Despite the overwhelming dominance of a few large contractors, there is a “proliferation of private companies in space which is a sign that barriers to entry are starting to decline,” he said. ‘We’re starting to see new entrants in launch and small satellites.”
Meteer said Govini decided to combine spending on space and hypersonics as hypersonic vehicles are an area of increasing importance both for the military and for space research. The technology enables both extremely fast missiles and future space exploration. Despite its high profile, hypersonic technology has a relatively small footprint in unclassified contract obligations — with $1.5 billion from 2011 to 2017, or 1.8 percent of the total federal spending in these areas. DoD keeps much of its investments in hypersonic in its classified budget.
Former NASA astronaut and Air Force fighter pilot Terry Virts said the data shows “there may be creative and non-traditional opportunities for partnerships between the Department of Defense and the private sector.” In the introduction to the Govini report, Virts noted that Blue Origin’s New Shepherd hypersonic vehicle will fly a suborbital trajectory with only a few minutes of weightlessness, which makes this vehicle a potential candidate to be a “testing platform for the DoD.”
NASA’s commercial crew program to ferry astronauts to and from the International Space Station may end up with excess capacity. Virts said this could give the DoD a “potentially innovative capability for space-based missions that would not exist had the military had to develop it on its own.”
In an interview with SpaceNews, Virts said the space sector is undergoing enormous change and it’s still unclear how the unprecedented level of private investments will reshape the industry. Govini’s study of federal spending is an interesting backward look, and only one piece of the puzzle, he said. Privately funded companies like Jeff Bezos’ Blue Origin are becoming important players but there is scant information about its finances. “It would be useful to get the full picture,” said Virts. He predicts SpaceX gradually will make inroads into ULA’s market share, and this analysis seven years from now might look completely different.
Some bits and pieces of what is happening with private funding for space companies: Bryce Space & Technology estimated start-up space ventures have attracted investments of over $18.4 billion since 2000. “More start-up space companies reported investment in 2017 than in any other year,” said a Bryce report. The total number of start-up space companies reporting new funding in 2017 (73) broke the 2015 record (65) and increased by one-third over the 2016 total (55).
The venture capital firm Space Angels reported that the space industry is on pace for over $4 billion in investment for the second year in a row. The United States continues to lead in private space industry investment, with over $7 billion since 2009.