WASHINGTON — The Space Development Agency is buying 20 communications satellites for about $14 million apiece, and eight missile-warning satellites for about $43 million per unit.

These price points are unprecedented in Pentagon satellite programs and a sign that the military space market could be headed in a different direction, said Bill Gattle, president of space systems at L3Harris.

L3Harris and SpaceX each received contracts on Monday to build four missile warning satellites for the Space Development Agency. Lockheed Martin and York Space in August won contracts to each produce 10 data-relay satellites. All must be delivered two years from now.

Military satellites typically are made in onesies and twosies, take decades to develop and cost hundreds of millions of dollars each. The SDA constellations of cheaper mass-produced satellites are a “fundamental transformation” in how DoD buys space technology, Gattle told SpaceNews Oct. 6.

With SDA planning to buy hundreds more satellites in the coming years, “we’re all trying to figure out how to change the price point,” Gattle said.

DoD wants to build large constellations that cost less and also are reliable and deployed quickly, he said. “So all of us have really taken a hard look at how do we build these things? What drives the cost? Why do DoD exquisite systems cost so much?”

Gattle said L3Harris, like other companies, were caught off guard by the speed of SDA contracting. The company had planned to compete for the Transport Layer satellites that were awarded to Lockheed Martin and York Space, but it didn’t move quickly enough.

“I don’t think we were as ready as we needed to be. And therefore we didn’t win,” he said. When the Tracking Layer opportunity for missile-warning satellites came out, “we corrected ourselves.”

Defense contractors competing for SDA contracts won’t win if they do business the traditional away, said Gattle.

The space division of L3Harris, he said, brought in people from the airborne products side who produce in quantities to “have them teach us how to do space in the way airborne builds things.”

L3Harris does not make satellites in mass quantities like SpaceX does to support its Starlink broadband constellation, but it cuts cost by using commoditized components to make buses, Gattle said. “We can leverage that exact same supply chain that everyone else does.”

The Tracking Layer spacecraft have overhead persistent infrared (OPIR) sensors which are the most expensive part of the satellite. L3Harris develops its own sensors but its bid for the SDA program included proposals to use other companies’ sensors.

“We gave them options, they happened to choose the one with our payload,” said Gattle. The lesson is that companies have to be willing to team up with third-party suppliers even if they have the capabilities to do everything in-house.

SDA Director Derek Tournear has said the agency plans to use multiple suppliers so it doesn’t become “vendor-locked” like many Pentagon programs where there is no competition.

The Oct. 5 award for four satellites does no guarantee L3Harris or SpaceX will win future orders for Tracking Layer satellites, which could be hundreds if the program stays on course.

“In the past space was not like that,” said Gattle. “You built one or two satellites. And the extent of a big constellation would be five to seven.”

In the initial contract for four SDA satellites, “you’re not going to be making a lot of money,” he said. “It’s more about making the investment to make sure you’re ready for the next constellation.”

If DoD is going to commit to buying hundreds of satellites, “we are willing to heavily invest to be part of those future constellations,” he said. “But it is a risk. There are no guarantees that we win the next phase.”

Gattle said both the DoD and its contractors are in “learning mode” when it comes to space. “All of us are trying to figure out how to scale our business.”

Sandra Erwin writes about military space programs, policy, technology and the industry that supports this sector. She has covered the military, the Pentagon, Congress and the defense industry for nearly two decades as editor of NDIA’s National Defense...