Ross Wilkers

MARKET ANALYSIS

Space market opportunities look ready for takeoff

Buzz about an eventual future “Space Force” over the past year and President Trump’s signing of an executive order Tuesday to create a “Space Command” all did one thing -- elevate the conversation about the role of space in both military and civilian sectors.

The president can create Space Command but Congress would have to sign off on a sixth military branch focused on space. Regardless of how that plays out, however, government contractors and their leaders sound fairly certain that their customers’ prioritization of this domain is clear even if the long-term organizational structure is somewhat uncertain.

As longtime intelligence agency veteran-turned SSL executive Rob Zitz told me two months ago, that discussion of a Space Force or other new organizational structure shows how the country’s senior leaders are “focused on space and focused on what needs to happen in space to make sure that we stay safe as a people.”

Merger-and-acquisition activity in 2018 included major moves by companies to invest in their space businesses. Companies also were forming partnerships, starting new business lines and repositioning themselves for space-related opportunities.

In essence, they are positioning for an increased reliance by defense and civil agencies on the private sector to regain the United States’ clear ownership of the space domain.

“There’s a growing awareness of exposure in that space environment,” KBR CEO Stuart Bradie said. “Those strategies are being formed, which is great because it allows you to help shape the conversation in some way.”

One way this is playing out is through industry consortiums that businesses such as KBR, SSL and other players participate in to foster more dialogue between the commercial and government sectors. Bradie said agencies will increasingly “rely heavily on the contracting community” for space innovations and ideas.

Dave Wajsgras, president of Raytheon’s IIS government services business, said he feels “strongly that we will get to the right model” in terms of what the government’s space organization will look like.

“The one very important thing that came out of this whole conversation was to raise the visibility of the importance of the space domain,” Wajsgras told me. “Between the Air Force, intelligence agencies, folks on the Hill and in the executive branch… [industry] knew the importance of the space domain not only from a defense and security standpoint, but more broadly from the economic health of the United States. “That hasn’t really been front-of-mind for folks that are not part of this industry.”

As Wajsgras and Bradie both pointed out, not just defense but many aspects of daily citizen life like GPS navigation, weather forecasting and communications rely on some kind of access of space.

On the business front, KBR has made a trio of acquisitions to build an entirely new government services business -- KBRwyle -- over the past three years that includes a heavy space footprint with defense agencies and civilian counterparts such as NASA.

The NASA business is considered a franchise for KBRwyle that includes support for astronaut training and human health performance work.

KBR is certainly not the only major company to make space a strategic priority. Northrop Grumman’s acquisition of Orbital ATK in June was centered on space opportunities. These include nearly every aspect of in-orbit platforms, ranging from satellites to propulsion rockets and other parts in between.

L3 Technologies also has grown its space presence through M&A before the October announcement of its megamerger with Harris Corp., while Parsons Corp. also significantly added market share in its deal for Polaris Alpha.

Maxar Technologies -- SSL's parent company -- has casted itself as a “new space economy” player in the market since its launch in the fall of last year. Raytheon’s intelligence, information and services business led by Wajsgras has focused much of its efforts on the ground control and support aspects of space.

But with that increased activity and reliance on the private sector in the space domain, how much pressure does that put on industry to deliver?

“I think it’s an opportunity… you have to live up to that expectation and make sure you are recruiting and retaining the best talent,” Bradie said.

About the Author

Ross Wilkers is a senior staff writer for Washington Technology. He can be reached at rwilkers@washingtontechnology.com. Follow him on Twitter: @rosswilkers. Also find and connect with him on LinkedIn.

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