| 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: The Pentagon turns up the heat on defense contractors, space acquisition hits an inflection point and space plays a supporting role in the Venezuela operation.
If someone forwarded you this edition, sign up to receive it directly in your inbox every Tuesday. And we're eager to hear your feedback and suggestions. You can hit reply to let me know directly or DM me on Signal @SandraErwin.43. | | | | | | Defense primes face new pressure as Trump signals spending surge
The opening days of 2026 have marked a consequential start for defense and aerospace, with the Trump administration signaling it plans to lean harder on the Pentagon's buying power — and on contractor behavior.
The White House last week issued an executive order aimed at curbing stock buybacks by underperforming defense contractors. The move puts public pressure on companies to steer more cash toward production capacity and hiring, and points to a more interventionist posture on defense procurement.
The "Prioritizing the Warfighter in Defense Contracting" executive order directs the Defense Department to scrutinize delivery timelines and investment in manufacturing, and to bake those assessments into future awards and incentives. It is an unusually explicit attempt to link capital allocation decisions to Pentagon favor.
Defense Secretary Pete Hegseth has reinforced the message on his "Arsenal of Freedom" tour, spotlighting manufacturers that are scaling production and adding workers — including commercial space firms — as models for the industrial base the department wants to reward.
On Monday Hegseth visited Lockheed Martin and SpaceX. He stopped on Friday at Rocket Lab's Long Beach, California, facility. The company, which is expanding its military and intelligence portfolio, was highlighted as the kind of entrant the Pentagon wants more of.
"Washington plays games with lobbyists and accountants and bureaucrats. It plays games to block out new contestants, new competitors," Hegseth said. He added that while he has "nothing against prime contractors," he stressed that he wants them delivering ships, fighters, tankers and submarines. The expectation, he said, is competition on speed and cost. Too often, "we're waiting for exquisite systems that are incredible, but I'm going to get it in 2033 when the fight is over. We need them today."
Market reaction
Markets initially took the executive order as a negative. Shares of major contractors including Lockheed Martin, Northrop Grumman and RTX slid after Trump criticized shareholder payouts and slow delivery timelines. The stocks later rebounded after the president floated a $1.5 trillion defense budget — a number investors read as potentially overwhelming any constraints on buybacks and dividends.
Analysts have cautioned that provisions tying capital returns to performance may be legally ambiguous and difficult to enforce, raising the prospect of court challenges or delayed implementation. Trade groups such as the Aerospace Industries Association welcomed the focus on faster delivery and a stronger industrial base, while warning that stable demand signals and clear requirements — not just payout limits — are what ultimately drive long-term investment.
On Capitol Hill, the order has drawn bipartisan interest, with some lawmakers backing its goals and others arguing legislation would be needed to give it staying power beyond an executive directive. Several analysts say the near-term effect may be more reputational than transformative, unless the policy shows up in contract terms and statute. A key test will be whether DoD uses its market power selectively — and whether primes decide compliance is easier than resistance.
Trump's $1.5 trillion figure raised eyebrows. Analysts at William Blair said, "In our view, a $500 billion defense budget increase is unlikely. Instead, it seems like the starting point in a negotiation."
At Morgan Stanley, aerospace analysts struck a more bullish tone. "We view this budget development positively for Defense, outweighing possible headwinds from capital return restrictions," the investment bank said.
In brief: The administration is pairing sharper rhetoric on contractor performance with eye-popping spending signals. For defense and space companies, the direction is clear — move faster, build more, hire sooner — even if the legal and budgetary endgame is still coming into focus.
| | | | | | Space acquisition faces test year
The U.S. Space Force enters 2026 under pressure to turn long-promised acquisition reforms into results. For the space and defense industry, the coming year is shaping up as a test of whether the government can translate rhetoric about speed and commercial integration into durable programs of record.
At the center of the shift is a reworking of how the Space Force buys capability. Secretary of the Air Force Troy Meink has described the push as a "generational opportunity" to improve acquisition, and 2026 is when those changes are expected to start showing up in how programs are organized and funded.
One potentially consequential move is away from platform-centric programs toward mission portfolios. Rather than managing missile warning satellites, ground systems or electronic warfare payloads as separate line items, the Space Force plans to group them into integrated capability packages, with portfolio acquisition executives holding more authority to set requirements and move money. The service last week designated its initial tranche of mission areas — including space access and space-based sensing and targeting — that will fall under that model.
Space programs have long been hampered by rigid requirements, duplicative efforts and limited ability to trade cost, schedule and performance across systems meant to work together. Portfolio management is intended to give acquisition leaders more flexibility and shorten the gap between operational needs and buying decisions. Both Meink and acting service acquisition executive Maj. Gen. Stephen Purdy have stressed the shift is not meant to add layers or dramatically upend structures that already lean toward a portfolio view.
Industry watching
What industry will be watching in 2026 is whether requirements loosen enough to allow the Pentagon to adopt commercial systems without expensive customization. Guidance released in November emphasizes capability delivery over endless prototyping, but history has left companies skeptical.
The Space Force benefits from what Purdy has called an "embarrassment of riches" in commercial space offerings. Imaging, radio-frequency sensing, data transport and autonomy tools are no longer speculative. The unresolved question is whether the Pentagon makes them programs of record or keeps them confined to pilot efforts.
An inflection point is the Small Business Innovation Research program and its follow-on vehicles, which have been a critical bridge from prototype to operations for space companies. The lapse in SBIR authorization heading into 2026 has injected uncertainty into a pipeline that venture investors increasingly treat as a signal of government commitment. Purdy has warned that losing that feeder would undercut the very dual-use ecosystem the Pentagon says it wants to leverage.
Layered on top is the perennial budget problem. Continuing resolutions and shutdown threats do more than slow Pentagon execution; they strain smaller commercial firms that depend on predictable cash flow. Unreliable budgets, executives argue, make it harder for industry to deliver on the speed the military now demands.
The Golden Dome missile defense program will be seen as an early proving ground for the Pentagon's acquisition reforms and whether leaders are serious about pulling commercial technology into national security programs faster. If it devolves into bespoke designs and long development cycles, it will reinforce industry skepticism that reform has real teeth.
That tension was underscored by Claire Leon, former director of the Space Force's Space Systems Integration Office who wrote in SpaceNews last week: "There has been a seismic shift under Maj. Gen. Stephen Purdy, in elevating the expectations for acquisition professionals to embrace commercially developed capabilities for military purposes versus developing bespoke systems. Although the shift is not new, this is more than just lip service. Today, there is a clear direction to adopt proven commercial capabilities with minimum modifications."
NDAA language
Meanwhile, lawmakers will be watching closely as the Pentagon begins implementing acquisition provisions signed into law Dec. 18 in the National Defense Authorization Act. The FY2026 NDAA advances one of the most sweeping rewrites of Pentagon acquisition policy in decades, reflecting bipartisan frustration with slow timelines, cost overruns and programs that stall between development and production.
The NDAA directs the Pentagon to formalize portfolio-level acquisition executives overseeing families of systems, expand multiyear procurement authorities to give industry more predictable demand signals, and strengthen the legal preference for buying commercial products and services.
For industry, 2026 will be the year to see if those statutory changes — and the Space Force's own reforms — finally shift behavior.
| | | | | | | FROM SPACENEWS |  | | Join us in DC on Wednesday, Jan. 21: The U.S. Space Force of 2040 will operate in a far more contested, congested, and fast-moving domain than the Guardians of today — one where space control, speed and resiliency will define U.S. military advantage. The next installment in our series with Johns Hopkins University will examine what the Space Force must become to succeed against growing threats. SpaceNews' Sandra Erwin will sit down with Space Force Gen. Shawn Bratton following a panel discussion with leaders from Vantor, K2 Space and JHU APL. Register now. | | | | | | Space plays supporting role in Venezuela operation
In the wake of the recent U.S. operation in Venezuela that resulted in the capture of President Nicolás Maduro and his wife, defense officials noted that space capabilities were part of routine joint-force integration rather than something novel.
During a Jan. 3 briefing, Air Force Gen. Dan Caine, chairman of the Joint Chiefs of Staff, said space-based assets "supported the operation," underscoring how satellite capabilities — from positioning, navigation and timing to secure communications and intelligence collection — are embedded into virtually every modern U.S. military mission.
Space systems, Caine suggested, were one element of a layered joint force that included air, cyber and other effects designed to "create a pathway" overhead as forces approached Venezuelan airspace.
Defense Secretary Pete Hegseth commented on the role of space Jan. 9 in a speech at Rocket Lab in Long Beach.
"On that mission in Venezuela, there's a lot of things we can't talk about … but a lot of the things we can't talk about were enabled by capabilities like companies like this, that provide decisive advantages for the United States of America. These include the signals you provide that save a soldier's life, the intel that guides a precision strike that saves a soldier's life."
Satellite-enabled capabilities
The operation, Caine said, was a highly coordinated strike and rapid assault by elite units supported by more than 150 aircraft and integrated effects, including space and cyber, to neutralize air defenses and seize key targets around Caracas.
Though the Pentagon has avoided naming specific space systems involved, imaging satellites almost certainly played a central enabling role, consistent with the way U.S. forces plan and execute complex, time-sensitive missions. High-resolution electro-optical and synthetic aperture radar satellites form the backbone of U.S. satellite intelligence, surveillance and reconnaissance, delivering persistent awareness of terrain, infrastructure and movements — particularly valuable in dense urban environments like Caracas. Satellites can collect imagery without overflight rights, offering planners the flexibility to monitor activity in politically sensitive or denied airspace.
Synthetic aperture radar (SAR) sensors provide all-weather, day-night coverage, while optical systems support detailed mapping, route planning and confirmation of specific activities before and during operations. Combined with other space-based and airborne ISR, these imagery sources feed into command-and-control networks that help commanders maintain situational awareness and make decisions.
Experts note that elite special operations forces tend to leverage the most advanced national ISR assets during sensitive missions. "The tier-one units get the exquisite imagery and all that stuff," said Luke Fischer, co-founder and CEO of commercial geospatial firm SkyFi and a former U.S. special operations officer. At the same time, he said, military planners often use a layered approach that blends national and commercial capabilities to fill coverage gaps.
| | | | | | SpaceNews' latest national security coverage
| | | | |
No comments:
Post a Comment