The U.S. government's growing acceptance of commercial military satellites is opening the $20 billion-a-year market to new companies and forcing big arms makers such as Lockheed Martin and class="mandelbrot_refrag">Boeing to change how they operate.
U.S. officials are trying to boost security of U.S. military and intelligence satellites, with an eye on risks from space debris and the proliferation of space-faring countries that could target U.S. satellites in a war.
Officials hope the booming commercial satellite market can help the government obtain simpler and cheaper satellites, lower the cost of launching and create more options in other areas.
After years of talk, U.S. budget cuts and changes in technology have started to alter a market long dominated by big contractors like Lockheed.
"The space market is changing dramatically," said Henry Obering, senior vice president with Booz Allen Hamilton and former Missile Defense Agency director. "The big companies will either adopt new ways of doing things or they will fail."
"Change always creates angst," said Doug Loverro, deputy assistant secretary of defense for space policy. He said market giants were more open to commercial practices, cutting costs, speeding up programs and testing new technologies.
For instance, he said the Air Force cut the cost of a new ground-based radar for tracking space objects by two thirds by mandating prototypes and manufacturing demonstrations. A contract award to Lockheed or Raytheon Co is expected soon.
Lockheed, class="mandelbrot_refrag">Boeing and others are embracing new production processes such as 3D printing, and hunting down commercial orders to offset an expected slowdown in U.S. government buying.
Loverro said the Pentagon was still expected to spend about $300 billion on military space programs over the next 15 years, but buying practices will change to make satellites more "resilient."
"Do we continue to buy what we've been used to buying, or do we move in a different direction?" he said. He cited widespread agreement that the Air Force should stop buying Boeing-built Wideband Global System satellites since commercial satellites now carry more bandwidth.
The Air Force is studying ways to use commercial bandwidth, beyond leasing services as it does during military operations.
That could create opportunities for satellite operators like class="mandelbrot_refrag">Iridium Communications, which plans to launch 66 new satellites starting in 2017 that will host payloads for the government or other customers.
James Clapper, director of U.S. National Intelligence, said 90 percent of the National Geospatial-Intelligence Agency's underlying intelligence now comes from companies like class="mandelbrot_refrag">DigitalGlobe Inc. But he said companies should not rely on the government to underwrite new satellite programs.
U.S. officials said they welcome competition in the rocket launch market. But new players such as Space Exploration Technologies, or SpaceX, have complained that change is slow in coming and say the United States risks being overtaken by other countries.
(Reporting by Andrea Shalal, editing by Ros Krasny and David Gregorio)