Buy Versus Build: Will New Commercial Space Strategies Shift DoD Decisions?

“Exploit what we have, buy what we can, build what we must.”

While this has been the message of U.S. Space Force leadership over the past few years, many agree that it hasn’t necessarily been the practice. Two new strategies released this spring — the Department of Defense Commercial Space Integration Strategy and the Space Force Commercial Space Strategy — formalize policy goals to integrate commercial solutions into the national security space architecture.

These strategies lay out priorities, approaches, and lines of effort to integrating commercial capabilities and identify specific mission areas that are prime for greater commercial integration. Against the backdrop of China and Russia increasing their space and counterspace capabilities, the DoD strategy recognizes “there is risk in not integrating commercial solutions and failing to capitalize on the commercial sector’s technological innovation and speed.”

Via Satellite spoke to a number of commercial space leaders and analysts about the strategy, who all agree that the strategies are a positive start, but they are closely watching implementation to see if incentives for program offices change, and what levels of funding are committed.

“This is the first time that you have a written strategy that talks about what is now national policy to leverage commercial first,” says Rebecca Cowen-Hirsch, senior vice president of Government Policy & Strategy at Viasat. “You've heard the leadership mantra for years about how important commercial is. This is the very first time that there is a strategy for purposeful integration. That in and of itself is notable.”

Commercial leaders commended both the DoD and the Space Force for listening to the commercial industry and incorporating that feedback into these policies, and say these policies are consistent with leadership’s message over the past few years.

Daniel Gizinski, Comtech chief strategy officer, says it's a good sign that messaging is moving into actual policy.

“One of the things that both the Space Force and broader DoD have done exceptionally well is trial ideas with industry,” he says. “A lot of what you see in those policies is a consensus position that results from a very collaborative discussion. These policies formalize things that we've been talking about for the last couple of years.”

Opportunities for Commercial

It is far from a new idea for the DoD to leverage commercial capabilities. Satellite communications and launch are capabilities where the DoD purchases commercial services, but the businesses that offer them also have robust commercial offerings.

Under the traditional legacy space approach, the government owns and operates the U.S. military’s space capabilities. While many of these capabilities are contracted out to companies, the distinction is that there is not a commercial use case for these capabilities and they are custom-built for the military.

Commercial, the DoD strategy defines, refers to companies that produce solutions for commercial markets where the companies bear the investment risk and responsibility and operate with commercial market incentives.

The DoD strategy says certain mission areas like command and control (C2) and missile warning are and will remain government-primary mission areas.

The Space Force strategy put out a demand signal to the industry that the priority missions for new commercial integration are tactical surveillance, reconnaissance, and tracking (TacSRT); space-based environmental monitoring (SBEM); PNT; and space access, mobility, and logistics (SAML).

Space Force is also targeting continued integration for mature missions like satcom, launch, and space domain awareness (SDA).

Cowen-Hirsch comments that the definition of commercial in the strategies is significant because it differentiates companies where the government is one of many customers from the defense industrial base. She says that while satellite communications has been predominantly commercial for a generation, it’s still done on an ad hoc basis from an acquisition standpoint.

She points to the opportunity for satcom where the Space Force says it looks to improve resilience by integrating proliferated commercial networks into hybrid architectures.

The strategy “clearly demonstrates in word and in deed that the government is intending to use multiple operators and not just have a singular solution, singular orbit, or all government or one commercial operator — but be able to leverage the best of breed,” Cowen-Hirsch says. “We intend to be an essential element of that and leveraging not only our existing programmatic representation, but looking forward to make-versus-buy decisions going forward.”

A Legacy Acquisition Culture

While leveraging commercial is not a new idea, commercial leaders say the ingrained acquisition culture presents roadblocks, and the strategies at this stage do not identify incentives for program managers who make buy-versus-build decisions to take more risks on buying commercial.

“Layers in the bureaucracy are not rewarded for doing this,” says Charles Beames, chairman of York Space Systems and co-founder and chairman of the SmallSat Alliance industry group. “Bureaucracies exist for a very important reason to keep a steady state. But that means when you want to enact change, it's very difficult because it's designed to resist change.”

Beames previously worked in acquisitions, and was formerly the principal director of Space & Intelligence Systems in the Pentagon, where he oversaw the execution of a $90 billion annual acquisition budget focusing on remote sensing, communications, and space launch.

He says that while the Space Development Agency (SDA) has been successful in shaking up acquisitions and going faster, the agency started from a clean sheet. Space Force Space Systems Command (SSC), formerly Space and Missile Systems Center (SMC), has an acquisition culture built over many years to handle billions of dollars of acquisitions.

“The reason why the SDA was able to go so quickly is because they didn't exist before, they didn't have to change,” he says. “Whereas SMC, now SSC, is an organization that's been around for a long, long time. It has an institutional memory and culture that is very difficult to change. It is changing — I would just say not fast enough to meet the Chinese threat.”

The strategies themselves acknowledge this challenge, referencing “internal structural and cultural barriers related to a historic overreliance on exquisite government systems.”

Rory Welch, vice president of International Government and Space at Intelsat, says program officers often express interest in buying commercial, but it's difficult to break in and make progress because of incentives in the system. “The government has a tendency to buy systems that they have designed to their requirements,” he says.

Welch points to a successful example of integration, the Commercial Integration Cell of the Combined Space Operations Center (CSpOC), which is focused on commercial and military integration and collaboration operationally. Intelsat was a founding member and has participated in pre-crisis planning and war games, along with information-sharing.

But today, years after it was established, the Integration Cell is still under a Cooperative Research and Development Agreement (CRADA), with no dedicated funding. Welch hopes the integration strategy will push further.

“There are a lot of structural and procedural issues that have prevented the government from figuring out what the right mechanism is for integrating commercial space operators into an organization like CIC,” Welch says. “Under a CRADA, there's no resources going back and forth, there's no commitment. We've made it work — but it's been very constraining in terms of what the CIC could be. We’re cautiously optimistic that these things will change.”

Signs of Change

Commercial leaders stress that while these strategies say the right things, they are closely watching how the strategies will be implemented.

“You could have the greatest strategy in the world, but if you don’t have the resources to execute on it, it's going to be problematic,” says Tony Frazier, LeoLabs CEO.

LeoLabs works with the Space Force in a number of areas like the Space Force Commercial Space Office and the SDA’s TAP Lab to demonstrate its space domain awareness capabilities, with the goal of being able to compete for programs of record.

Frazier says he expects to see the Space Force evaluate what portfolios of capability can be moved to commercial versus government-owned systems. He describes that a similar process took place when he was with Maxar, working with the National Reconnaissance Office (NRO), that resulted in the 10-year commitment for optical imagery under the Electro-Optical Commercial Layer (EOCL) contract.

“We should be able to evaluate every mission that falls under those eight categories and determine which ones commercial could provide a capability that meets the mission requirements and is cost effective for the taxpayer,” Frazier says. “That analysis needs to occur now across each of these mission areas. That should result in a clear business case to award programs that are enduring.”

Cowen-Hirsch points out that there is no tangible funding dedicated to commercial integration in the fiscal year 2025 President’s Budget or the Program Objectives Memorandum (POM).

“Budget is important. I was a little surprised that there wasn't at least an indicator on the Services’ budget submissions,” she says. “We’ll see how they correct that going forward to ensure that there is sufficient resource to do what they say — to intentionally test and train and integrate well left of crisis.”

Beames says one indicator that these strategies have made an impact is if Pentagon leadership says no to a milestone decision to start a new 10-year development program for a government-owned system for not taking into account commercial.

He pointed to the example of Frank Kendall when he was the DoD’s top acquisition official. In 2012, Kendall stopped a plan to purchase 50 rocket cores from United Launch Alliance and set aside 14 missions for competition, which opened the door for SpaceX to begin to compete for military launch contracts.

“We need that same sort of moment in satellite, in ground,” Beames says. Someone needs to say: “‘Stop the train. I'm not going to approve this.’”

A First Step

These strategies represent the first step in a bigger shift at the Department of Defense and Space Force, says Brian Bone, principal director of the Commercial Space Futures Office at The Aerospace Corporation, who previously worked in space acquisition for the Air Force.

Aerospace’s Commercial Space Futures Office is dedicated to helping government customers take advantage of commercial capabilities.

These policies “are an important stake in the ground that is meant to get the motor started in how the DoD is getting out in front of the problem of speed, affordability, and resilience, and how commercial plays a role in that,” he says. “I think the Department recognizes that the space innovation base is moving at a speed that if the government had to do it themselves, they wouldn't be able to match.”

Bone says it's a positive sign that this focus on integration is coming before a crisis, to avoid a situation like an intelligence analyst in the field using their own credit card to buy a commercial image in a crisis because they can’t purchase it any other way.

“What is most encouraging is that at all levels in the DoD there’s enthusiasm,” he says. “There's a real willingness and a recognition that we've got to do something, we can't wait any longer. We're going to make this change. It cannot wait until a crisis.”

Frazier echoes the need to move quickly in order to respond to the threats at hand.

“The threats are very current and real. Everyone in the industry and government has a sense of urgency to go from the vision of the strategy to implementation,” Frazier says. “Space is becoming more congested and more contested. We’d love to see an equal sense of urgency in the execution of the strategy so that the warfighter can take advantage of all the capability that is online today.” VS