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DeepSpace: A critical juncture for SpaceX, Blue Origin, ULA, other players

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This is a free preview of DeepSpace, Teslarati’s new member-only weekly newsletter. Each week, I’ll be taking a deep-dive into the most exciting developments in commercial space, from satellites and rockets to everything in between. Sign up for Teslarati’s newsletters here to receive a preview of our membership program.

A high-pressure competition between all four major US launch providers – SpaceX, ULA, Blue Origin, and Orbital ATK (now NGIS) – is about to head into its most critical stage, a period of 60 days allotted for interested parties to submit their completed proposals. According to the US Air Force (USAF), the final request for proposals (RFP) could come as early as March 29th, giving the four aforementioned companies until May 28th to complete their proposals.

All things considered, the growing pressure and some of the USAF’s strategy behind the program – known as Launch Service Procurement (LSP) Phase 2 – has raised significant questions that remain largely unanswered and lead to a few mild bouts of strife or unhappiness from contract competitors. Most notably, Blue Origin – having just won a USAF development contract worth $500M – has repeatedly requested that the USAF and Department of Defense (DoD) delay the RFP and contract awards until 2021, according to Space News’ Sandra Erwin. Meanwhile, a lack of clarification from the USAF means that it’s unclear whether the strategy behind launch contract awards (LSP) will end up contradicting or undermining a partially connected development program known as Launch Service Agreements (LSA) that saw the USAF award ~$2B to three providers (excluding SpaceX) between 2018 and 2024.

Battle of the Acronyms: LSP vs. LSA

  • Recently rebranded by the US military as the National Security Space Launch (NSSL) program, LSP Phase 1 and 2 and LSA are the latest major procurement initiatives begun under the Evolved Expendable Launch Vehicle (EELV) program, spun up in the 1990s to provide a firmer foundation for the commercial launch of military spacecraft after the 1986 Shuttle Challenger disaster pushed most satellites off of the platform.
  • Phase 2 of the EELV program has been ongoing for several years and will culminate with the procurement of 25+ launch contracts (LSP) from two providers no earlier than 2020. The USAF’s Launch Service Agreements are also a major strategic feature of Phase 2, nominally seeing the military branch contribute major funding to assist in the development of three separate launch vehicles (New Glenn, Vulcan, and Omega) with the intention of ultimately certifying those rockets for EELV (now NSSL) launches.
    • LSA also saw the USAF award several tens of millions to SpaceX, Blue Origin, and Aerojet Rocketdyne to develop capabilities centered around advanced, new rocket engines (BE-4, AR-1, and Raptor), but the latest phase of LSA is valued at least several times higher than its earlier engine-specific awards.
    • Oddly, the purpose of LSA was – at least on the cover – to effectively ensure that the Air Force had multiple (more than two) providers and thus preserve a healthy, competitive military launch market. A senior leader specifically stated that “the goal of [LSA] is to make sure [the US military has] a competitive industrial base.”
      • Aside from an initial $181M awarded to Blue Origin, ULA, and Orbital ATK (now Northrop Grumman Innovation Systems, NGIS) in 2018 and 2019, the remaining funding – up to $320M for Blue Origin’s New Glenn, $610M for NGIS’ Omega, and $785M for ULA’s Vulcan –  would be dispersed to each provider between 2020 and 2024.
      • However, an odd and controversial bit of language behind the coming five-year launch services procurement (LSP) initiative would completely cut off funding to LSA awardees in the event that they fail to be awarded launches from the latest LSP.
      • Additionally, the LSP awards are strictly meant – apparently very intentionally – to be distrubuted among two launch providers, despite a minimum at least four being able (SpaceX) or required (ULA, Blue, NGIS) to enter a bid.
      • In other words, this guarantees that either one or two of the three LSA awardees would have the vast majority of their supposedly awarded development funding cut off after FY2020, four years early.
  • Despite continued protests from a number of stakeholders, the USAF has refused to budge from its decision to simultaneously A) create a duopoly, B) defeat the purpose of LSA awards, and C) mass-award ~25 launch contracts to two providers in 2020, anywhere from 12-24 months prior to the planned inaugural launches of all three LSA-funded rockets.
    • Without cost-sharing development funds from the USAF and a chance of winning more than a handful of US military launch contracts between now and the late 2020s, it can be all but guaranteed that an LSA funding cutoff will either indefinitely pause or slow to a crawl a given provider’s development of their proposed launch vehicle.

A rocket and a hard place

  • This sticky situation thus offers up a few potential ways that this badly-designed (or entirely dishonest) military launch development and procurement strategy will end up by the end of 2020. One way or another, the current strategy as it stands will end up providing two (or one, given that SpaceX will not receive LSA funding) companies with several years of development funding and at least five years of bountiful, guaranteed launch contracts.
    • The four providers and two LSP slots available offer a set range of possible alternate realities, limited by political barriers that would, say, almost invariably prevent the USAF from severely harming ULA by cutting off the vast majority of the company’s only real source of income for 5+ years.
  1. ULA and SpaceX win: This maintains the status quo, wholly invalidating the point of using LSA funds to ensure “a competitive industrial base.” NGIS likely cancels/freezes all Omega development with no chance of competing in commercial markets. Blue Origin owner Jeff Bezos could significantly delay New Glenn’s readiness for military missions if he fails to invest an additional $500M in infrastructure. Likeliest result: a marginally competitive duopoly.
  2. ULA wins, SpaceX loses: Having just certified Falcon 9 – and nearly Falcon Heavy – for high-value military launches and awarded SpaceX a total of 10 launch contracts (9 yet to be completed), the USAF could effectively spit in SpaceX’s face and award ULA and Blue Origin or NGIS LSP’s 25+ launch contracts.
  • It’s hard to exaggerate just how much of a slight this would be perceived as by SpaceX and its executives, CEO Elon Musk in particular. The USAF would be risking the creation of a major political enemy, one which has already demonstrated a willingness to take the federal government to court and win. The USAF/DoD would effectively be hedging their bets against an assumption that SpaceX’s nine present military launch contracts will sate the company and ensure that SpaceX indefinitely remains a certified EELV/NSSL provider.
    • In this eventuality, either Blue Origin or NGIS would lose LSA funding and the prospect of almost any military launch contracts until the late 2020s. For NGIS, this would likely kill Omega.
  • At the end of the day, it’s sadly conceivable that the USAF/DoD may end up awarding LSP contracts to ULA (effectively a politically-forced hand) and NGIS, the latter assuring Omega’s survival. The military would thus be assuming that the political fallout created with SpaceX and Blue Origin would not be enough to severely harm their relationships, while also assuming that their much stronger commercial prospects and independent funding sources would ensure that each provider remains certified and willing to compete for future NSSL/EELV launches.

Regardless of what happens, the contradictory ways the USAF/DoD have structured their LSA and LSP programs seems bizarrely intent on creating major headaches and potential problems where that could easily be avoided with extraordinarily simple changes, namely removing the inexplicable cap and  allowing three or more companies to win some of the ~25 LSP launch contracts).


Mission Updates

  • The second launch of Falcon Heavy – the rocket’s commercial debut – is still scheduled to occur as early as April 7th.
  • After Falcon Heavy, Cargo Dragon’s CRS-17 resupply mission is firmly scheduled for April (April 25th), while the first dedicated Starlink launch is now NET May 2019.

Photo of the Week:

SpaceX CEO Elon Musk offered a glimpse of a 1650 Kelvin (2500ºF/1400ºC) test of Starship’s metallic heat shield, simulating mid-range temperatures such a shield’s windward side might experience during an orbital-velocity reentry.(c. Elon Musk/SpaceX)

Eric Ralph is Teslarati's senior spaceflight reporter and has been covering the industry in some capacity for almost half a decade, largely spurred in 2016 by a trip to Mexico to watch Elon Musk reveal SpaceX's plans for Mars in person. Aside from spreading interest and excitement about spaceflight far and wide, his primary goal is to cover humanity's ongoing efforts to expand beyond Earth to the Moon, Mars, and elsewhere.

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SpaceX just launched its secret Starfall saucer again

SpaceX launched its Starfall capsule again on Bandwagon-5, this time listed openly beside rideshare customers.

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An artist’s illustration of a SpaceX Starfall capsule reentering Earth’s atmosphere. (Image: SpaceX)
An artist’s illustration of a SpaceX Starfall capsule reentering Earth’s atmosphere. (Image: SpaceX)

SpaceX launched its Starfall reentry capsule for the second time on Tuesday morning, flying it as the payload of the Bandwagon-5 rideshare mission. Falcon 9 lifted off from Space Launch Complex 40 in Florida at 7:04 a.m. ET with 32 payloads, and the first stage booster, on its 19th flight, landed on the droneship A Shortfall of Gravitas about nine minutes later.

Starfall was scheduled to separate last, 2 hours and 48 minutes after liftoff. The final customer satellite on SpaceX’s mission timeline comes off the upper stage about an hour and nine minutes in, which left a long gap before the capsule was due to be released alone. SpaceX later posted that the payload deployment sequence is complete. At liftoff, the company said Starfall “enables affordable, routine access to a microgravity environment, providing unique opportunities for on-orbit manufacturing, scientific research, and testing.”

As Teslarati reported before the first Starfall flight, SpaceX made no public announcement about the vehicle then, and nearly everything known came from FAA and FCC filings. This time Starfall is an item name on the official mission page, listed beside paying rideshare customers. SpaceX has still not said what, if anything, is aboard this Starfall, Spaceflight Now noted.

The FAA’s environmental assessment from May describes a disk about 10.2 feet wide and 2.5 feet tall that weighs roughly 4,600 pounds and can bring 2,200 pounds of payload back to Earth.

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Interestingly, the same rocket also carries a competitor’s hardware. Varda Space Industries launched its W-Series 7 capsule on Bandwagon-5, a spacecraft about three times smaller than Starfall that will test whether microgravity can improve the solubility of a cancer drug called Protac. It is Varda’s ninth reentry capsule, and W-8 and W-9 launched earlier this month on Transporter-18. SpaceX has been Varda’s launch provider since the company’s first Falcon 9 rideshare contract in 2021.

SpaceX has not published where or how this Starfall will come down. The preview we ran in June described a recovery from the Pacific Ocean, and the company has not said whether this flight follows the same plan. The launch also arrives hours before SpaceX posts its third quarter results after the market closes, a report we previewed earlier this week.

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Elon Musk

Elon Musk will give ‘every kid in America’ a SpaceX share in 2027

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Credit: Grok Imagine

Elon Musk said he is planning to give “every one of his SpaceX shares to every kid in America” in 2027, stating that “this will be the first of many.”

SpaceX went public earlier this year, and its stock price has been relatively stable since leveling off shortly after its IPO. Based on its current price, it’s a gift of just over $10 billion to children across the United States.

It appears to be closely related to President Donald Trump’s bank accounts for children, which were set up earlier this year as Trump Accounts.

Just hours earlier, Anthropic had announced the establishment of its Anthropic Public Benefit Fund, “a new wholly-owned entity dedicated entirely to public benefit.” Musk responded by stating he recommended “giving the shares directly to the public,” and that he would be doing it that way.

Just a little bit later, Musk said children across the U.S. would be getting a share from him:

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There are roughly 70 million children, meaning someone under the age of 18, in the United States, according to the Federal Interagency Forum on Child and Family Statistics. Musk’s ownership of SpaceX stock shows he has around 849 million Class A shares of SpaceX stock, according to filings with the SEC.

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Investor's Corner

SpaceX’s biggest earnings test yet lands Tuesday, and Tesla shareholders should be watching

SpaceX reports earnings Tuesday as Wall Street watches AI spending, Starlink growth and Tesla merger

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SpaceX reports third quarter results after the market closes Tuesday, with a webcast at 4:30 p.m. ET streamed on X, and Tesla follows a day later. Bloomberg consensus, cited by Pepperstone, calls for revenue of $12.89 billion, adjusted EBITDA of $6.62 billion and adjusted EPS near $0.15. That would be about 65% growth from the second quarter and SpaceX’s first profitable quarter since its IPO. Analysts expect roughly $6.4 billion from AI and $4.9 billion from Starlink, which is projected to reach 14.3 million consumer subscribers. Capital spending is forecast at $19.6 billion, leaving free cash flow near negative $11.6 billion.

The numbers matter because SpaceX has spent months trying to win over a skeptical market. It priced its record IPO at $135, spiked to $225.64, then sank near $105 in early August. Friday’s close of $146.03 sits about 28% below the June high. The Q2 report beat on revenue at $7.8 billion and put Starlink at 12 million subscribers, but $18.4 billion of capex hurt the stock. Since then SpaceX reached orbit on Starship Flight 14 with 26 Starlink V3 satellites, agreed to buy 800 MHz spectrum for about $8 billion as part of its Starlink Mobile push, and signed a fourth compute hosting deal in four months worth roughly $13 billion a year from December. Management is targeting more than 2 gigawatts of compute by year end and a $100 billion annualized revenue run rate. Evercore ISI, which raised its target to $275, said the quarter may be judged more on those targets than the reported figures

All of this sits under the Tesla merger question. Barclays analyst Dan Levy expects an all stock deal in which SpaceX buys Tesla at a premium, using reference values of $2.1 trillion and $1.5 trillion, and said an announcement would need to come by late October or early November to be voted on at Tesla’s December 6 annual meeting. Barclays estimates Musk would hold about 37% of the combined company and 56% of the votes. Musk said in July that combining companies cannot be discussed on an earnings call, but an investor question asking when SpaceX will merge with Tesla is sitting on SpaceX’s Q&A platform, and Teslarati has tracked how the Roadster demo revived the talk.

If a deal happens, Tuesday’s result would effectively set the price Tesla holders would receive. Their shares would convert into SpaceX stock, along with exposure to a company with a heavy investment on AI, while Tesla itself expects 2026 capex above $25 billion. A strong quarter and calmer spending would make that exchange easier to sell. Another round of heavy capex and a falling stock would make it harder.

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