Pentagon space arm awards $1.5 billion contract to Lockheed Martin and Northrop Grumman for communications satellites

The Pentagon’s Space Development Agency on Monday awarded $1.5 billion in contracts to Lockheed Martin and Northrop Grumman for prototype communications satellites.

SDA said the 72 satellites will be for the “Beta” variant of its Tranche 2 Transport Layer constellation, a network the U.S. military is building to provide encrypted communications through a fleet of hundreds of satellites – which it calls the Proliferated Warfighter Space Architecture.

Lockheed and Northrop will each build 36 of the prototype satellites, scheduled to begin launching by September 2026. Lockheed’s contract is worth $816 million, and Northrop’s is worth $733 million. An SDA spokesperson told CNBC that the agency received six proposals for the contract.

The Pentagon is increasingly ambitious in space, seeing a need to keep up with China’s growing capabilities in a domain that has widespread ramifications for national security efforts back on Earth. The Space Force has especially seen its budget grow, with $30 billion requested for fiscal year 2024. Much of that funding goes to both defense contractors and space companies providing products and service to the military.

The first satellites of SDA’s system launched in April. Those “Tranche 0” satellites were the first effort to demonstrate the feasibility of SDA’s network.

In addition to communications, the SDA network aims to provide the U.S. military with features such as missile warning and tracking capabilities. SDA’s network falls under the Space Force’s contribution to the Department of Defense’s Joint All-Domain Command and Control – a project to create a unified network across its military branches.

SDA has previously awarded contracts to build and operate satellites in its fleet to York Space, SpaceX, Lockheed Martin, Northrop Grumman, and L3Harris.