US military adopts Silicon Valley-style approach to satellite procurement

The US military is changing how it buys satellites, aiming for faster production, lower costs, and more competition. The Space Development Agency (SDA) now uses a model inspired by commercial real estate firms, moving away from the Pentagon's old approach of expensive, custom-built systems.

Under this new strategy, 150 satellites for the Proliferated Warfighter Space Architecture (PWSA) are already in production. Launches are set to begin in early 2026, with Northrop Grumman leading the build and Starfish Space handling disposal services.

The SDA's method relies on competitive bidding and tight timelines, similar to Silicon Valley's fast-moving tech sector. By opening contracts to both traditional defence firms and newer commercial players, the agency has attracted a mix of companies. Established names like Lockheed Martin, Northrop Grumman, L3Harris, and Boeing now share space with startups such as York Space and Rocket Lab.

This shift comes after years of the Pentagon favouring small batches of high-cost, bespoke satellites. That approach left factories struggling to maintain steady production and retain skilled workers between contracts. Larger defence firms could absorb these inefficiencies, but newer companies—under pressure to deliver returns to investors—found it harder to survive.

The new model also encourages firms to sell to commercial customers alongside government contracts. This dual-market strategy helps ensure a return on investment, though not all military satellite technologies have an obvious commercial use. Still, competition reduces the risk of mission failure if one contractor underperforms.

The Space Force is now considering whether to adopt the SDA's procurement approach for other satellite projects. If successful, the model could reshape how the military buys space technology in the long term.

The SDA's 150 satellites will start launching in 2026, marking a test for this faster, more competitive procurement strategy. Factories and investors gain more certainty under the new system, while the Pentagon benefits from lower costs and a wider pool of suppliers. The approach could soon extend beyond the PWSA, influencing future military satellite programmes.