The Impact of the Top 3 Strategic Imperatives on the US Department of Defense (DoD) Satellite Industry

Geopolitical Chaos

• Why

  • Countries are reasserting sovereignty and border security to help stabilize their economies.
  • Nations are acquiring advanced military capabilities, including satellite-based communications and surveillance, to help them deal with political uncertainty.
• Frost Perspective
  • The United States maintains extensive satellite capabilities, both government owned and commercial leasing, to help monitor geopolitical trends.
  • DoD spending for space-based assets and satellite systems cooperation with regional allies is expected to increase significantly.

Internal Challenges

• Why

  • The DoD is having some difficulty coordinating and consolidating satellite programs and operations.
  • Space-based communications and surveillance are becoming even more essential, with a variety of organizations involved in development and funding.
• Frost Perspective
  • Joint oversight is important, but national-level organizations sometimes do not meet all the requirements of edge users.
  • The need for ground moving target indicators (GMTIs) will result in more space asset tasking and control by tactical users.

Transformative Mega Trends

• Why

  • Civilian satellites in orbit are increasing and providing launch, ground control, navigation, communications, and on-orbit services.
  • Governments often purchase these technologies for military operations as well.
• Frost Perspective
  • The US Space Force is seeking to partner with civilian satellite firms to develop on-orbit refueling and improve maneuverability and latency.
  • The Space Force is seeking to partner with commercial firms to share satellite launch facilities.

Purpose and Overview

• This research provides an overview of the US DoD satellite programs and contracting activity. The 2025 budget request for satellite programs is about $20.12 billion. Contract activity includes newly announced awards for calendar year (CY) 2023 and limited CY 2024 activity.
• Frost & Sullivan projects that the total DoD satellite spending will have a compound annual growth rate (CAGR) of 3.9% through 2029. RDT&E is the largest spending component request, with 57 programs totaling $12.62 billion, or 62.7%, of the total for 2025.
• The Air Force/Space Force department has the largest share of the 2025 request, with a total budget request of $17.95 billion, or 89.3%, of the total for 2025. The largest segment area is sensors, with $6.3 billion, or 30%, of the total for 2025.

Market Segmentation

US DoD Satellite Market

Communications

Communications satellites include both enterprise-wide and tactical programs and required terminals. Government-owned and commercial communications satellites are used for a variety of DoD administrative command and control functions.

Ground Systems

Satellite ground systems include control systems, tracking sensors, operational activities, testing and data analysis, security and defense, planning and tasking, ground architectures, and maintenance and logistics functions.

Launch

Satellite launch programs include facilities owned by both government and commercial companies. Space launch operations, launch vehicles, engines, and space lift range systems are part of this segment.

Multipurpose

Multipurpose includes technology that is common to many types of satellite programs. Examples are general space science research, component development, rapid prototypes, and technology integration.

Navigation

Global positioning system (GPS) satellites and receivers are included in the navigation segment.

Sensors

Sensors include electro-optical/inferred (EO/IR) and radar systems for situational awareness.

Growth Drivers

•  The DoD intends to implement a Commercial Augmentation Space Reserve, similar to the existing Civil Reserve Air Fleet. This organization would manage the augmentation of civilian satellite assets during surge operations and wartime. The Commercial Space Integration program is already underway to ensure that satellite assets currently used by the DoD are more interoperable. To drive the market, more commercial investment by the DoD is expected to advance on-orbit services and security.
• Resilient satellite networks are necessary to build the Joint All- Domain Command and Control (JADC2) network. The Space Development Agency has a project called Proliferated Warfighter Space Architecture, which will include a constellation of low earth orbit (LEO) satellites that can be accessed by tactical users at the edge of the battlefield. The JADC2 imperative is a major driver for DoD satellite growth.

Growth Restraints

• The deployment of jam-resistant military (M)-code signals for GPS satellites has experienced some delays, which can restrain essential satellite receiver programs. Accurate and uninterrupted GPS position, navigation, and timing (PNT) information is essential for warfighters in electronic warfare-contested signal environments. Additional market participants are working to improve M-code systems.
• The number of new satellites of all types and from all countries is increasing. The number of dead satellites and space junk in orbit is on the rise as well. The crowded space environment can potentially restrain US military satellite growth because the high level of on-orbit activity and the costs of ground control and surveillance go up rapidly. These increased costs can limit the amount of money available for actual space-based military capabilities.