Astronomy Prints 🌌: Military Space: Industry should brace for a chaotic fiscal year

By Sandra Erwin

Welcome to this week's edition of SpaceNews' Military Space, your source for the latest developments at the intersection of space and national security. In this week's edition: With space funding in flux, contractors brace for a chaotic fiscal year

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Chairman of the Joint Chiefs of Staff Gen. Dan Caine, Secretary of Defense Pete Hegseth and Chief Financial Officer Bryn MacDonnell testify in front of the House Appropriations Committee's subcommittee on defense June 10. Credit: DoD

Defense budget maze leaves contractors guessing

The Pentagon's funding picture for fiscal 2026 resembles a jigsaw puzzle with half the pieces missing, creating headaches for defense contractors trying to plan their next moves, according to a new report from the National Security Space Association.

The non-profit industry group has words of caution for companies that do business with the Pentagon, warning that the current fiscal environment demands heightened caution and adaptability. With top-line figures in flux and key details still unreleased, defense firms — including those in the space sector — are facing what NSSA calls "a complex and evolving budget landscape."

At the heart of the uncertainty is the administration's push to realign spending priorities, including a $150 billion one-time increase for the Pentagon via the "One Big Beautiful" Reconciliation Bill. While the House has passed its version, which includes $25 billion for the Golden Dome missile defense system, the Senate has yet to finalize its stance, and industry groups remain wary of potential changes.
If the bill fails, the Pentagon's fiscal 2026 budget would effectively stay at current levels, dealing a blow to new program starts and multiyear projects.
The Department of Defense has yet to conduct a formal budget rollout. The administration released a so-called "skinny budget" in May, outlining discretionary spending caps but withholding detailed program justifications until the reconciliation bill clears Congress — possibly not until July.
The uncertainty is disrupting the planning cycles of defense contractors, whose business models rely on predictability. They want to know which programs are funded, when funds will be released and how multi-year contracts will be structured.

Reprogramming and restructuring: The NSSA report highlights another looming challenge: fund realignment. While some degree of reprogramming — moving money between accounts with congressional approval — is routine, the Trump administration has signaled it may pursue less conventional paths to shift resources without adhering strictly to congressional oversight mechanisms.

"How Congress will respond to these potential alternatives remains an open question," the NSSA said.

In parallel, Secretary of Defense Pete Hegseth has asked the services to identify $50 billion in savings from lower-priority programs. What will be cut and what might replace those programs is unclear.

"Substantial ambiguity remains regarding the precise nature of these cuts and subsequent reallocation processes," NSSA noted. For smaller contractors, particularly in the space sector, that lack of clarity can be an existential threat.

Appropriators move ahead: Despite the information gaps, the House Appropriations Committee last week approved its version of the fiscal 2026 defense spending bill. But the bill's line items reflect only partial information due to the absence of a full DoD budget submission.

"This has been the most confused budget release we've ever seen," analysts at investment bank TD Cowen wrote in a recent note to investors. They now expect Congress to resort to a full-year continuing resolution for fiscal year 2026 — a temporary funding measure that would preserve current spending levels.

Lawmakers on both sides support space budget boost

Lawmakers on Capitol Hill are coalescing around the idea that the U.S. Space Force needs more funding.

A draft fiscal 2026 defense spending bill approved by the House Appropriations Committee last week would raise the Space Force's budget to nearly $29 billion, a $2.7 billion increase over the Trump administration's preliminary budget outline.

Lawmakers say the move signals a bipartisan consensus that the U.S. is underinvesting in space capabilities at a time of growing threats from nations like China and Russia.

Rep. Jeff Crank (R-Colo.), a member of the House Armed Services Committee, called the funding increase a necessary course correction. "We ought to be putting the foot on the gas when it comes to funding for space right now," Crank said last week at the Hudson Institute.

Rep. George Whitesides (D-Calif.), expressed similar concerns during an online event hosted by SpaceNews. "There is bipartisan consensus that cutting the Space Force is a bad idea," Whitesides said. "Our national security enterprise depends so deeply on space technologies."

Lawmakers also voiced opposition to proposed cuts to commercial space programs, such as National Reconnaissance Office contracts for commercial satellite imagery. Crank called those cuts "not a good idea."

Golden Dome sparks partisan debate

Despite broad support for military space initiatives, Golden Dome has drawn a more mixed response.

The plan has been championed by the Trump administration and incorporated into a broader House reconciliation bill that passed the House but still awaits Senate action. Golden Dome proponents envision deploying hundreds of satellites to detect and intercept missile threats in orbit. Supporters say the system would enhance homeland defense. Critics, largely on the Democratic side, warn it could destabilize strategic deterrence and escalate tensions with peer rivals such as China and Russia.

Crank and Rep. Dale Strong (R-Ala.) have launched a House Golden Dome Caucus to promote the concept and drum up support across chambers. "The president wants Golden Dome deployed in three years. To do that, he's going to need strong support from Congress," Crank said. He acknowledged that getting Democrats on board will be a challenge.

Democratic critics, including Rep. Seth Moulton (D-Mass.), have raised alarms that the program could lead to a new arms race and divert resources from more proven missile defense technologies.
Whitesides added to the skepticism, questioning whether lawmakers have been adequately briefed on the program's technical scope. "We don't really know what it is yet, to be perfectly honest," he said. "There are a bunch of ideas circulating around. We have not been briefed in any level of high detail."

Lawmakers from both parties are pressing the Defense Department for greater transparency. During a House Appropriations defense subcommittee hearing last week, Chairman Ken Calvert (R-Calif.) asked Hegseth to clarify the program's objectives and requirements. Hegseth responded that details would be shared in classified briefings but declined to elaborate publicly.

The House Appropriations Committee, in its report accompanying the fiscal 2026 defense bill, warned that DoD has yet to "provide information on what exactly [Golden Dome] entails and how it intends to implement" it. The committee called for realistic cost estimates, technical risk assessments and a clear architectural vision.
"We all want to make sure that the homeland is protected," Whitesides said. "We also need to think about the strategic implications … How does this play out at a strategic level, with our peer competitors?"

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