SpaceX Government Contracts Under Review: A Closer Look

In early June, days after then-President Donald Trump suggested potentially severing ties with Elon Musk's companies, the Trump administration initiated a review of SpaceX's contracts with the federal government. The stated aim was to identify any potential waste within these multi-billion dollar agreements. However, government officials found that most of the contracts couldn't be terminated because they were deemed essential to the Department of Defense and NASA. This preliminary assessment highlights SpaceX's dominant position as a leading global rocket launcher and a major satellite internet provider. According to a White House official, the government contract review encompassed multiple companies holding substantial government contracts.

Background of Musk-Trump Relationship

Musk had previously been a close advisor to Trump, overseeing cost-cutting efforts within the Department of Government Efficiency (DOGE). But their relationship soured after the billionaire publicly criticized Trump's landmark tax and spending bill. On June 5, after Musk's social media attacks turned personal, Trump posted on “Truth Social” that the easiest way to save federal dollars would be to “terminate” government contracts with Musk's companies.

Details of the Review

An email reviewed by The Wall Street Journal revealed that a senior official at the General Services Administration (GSA) requested the Defense Department to complete a form containing all current contracts and other transactional agreements with SpaceX. The email, dated June 9, came from Josh Gruensbaum, commissioner of the GSA’s Federal Acquisition Service, who stated he intended to submit the data to the White House. According to a government official, Gruensbaum also made similar requests for SpaceX contract information to NASA and nearly six other federal agencies. These forms, dubbed “scorecards,” contained the value of the SpaceX contracts, and whether a competitor could accomplish the same work more efficiently.

Outcomes of the Review

After reviewing the data by the White House and officials from agencies including the Pentagon, SpaceX’s contracts were not terminated. Instead, the majority of the agreements were deemed critical to the missions of the Defense Department and NASA. One person indicated that some SpaceX contracts might remain under review. During the review period, SpaceX president Gwynne Shotwell held meetings with White House officials in recent weeks.

Musk's Dominance in Space

The Trump administration's difficulty in finding ways to reduce reliance on SpaceX underscores how dependent agencies have become on the company's cutting-edge technology. At least for now, the government has few alternatives for many rocket launches and low-Earth orbit satellite services – a situation that allows SpaceX (and its founder Musk) to continue occupying a prominent position in the space sector. The government has been aware of this situation for years, and the Trump administration review is the latest sign that policymakers are struggling to cope with this reality. SpaceX's dominance has also sparked discontent among industry competitors. Due to SpaceX’s technological and pricing advantages, government officials have expanded agency cooperation with the company, while also working to foster the rise of other space firms and by designing some contracts to incentivize competition. However, many competitors still face numerous hurdles in developing their own spacecraft and satellites and putting them into use.

Challenges Faced by Competitors

Multiple companies have faced delays and technical challenges in developing competing products to SpaceX. It’s common for engineers to experience setbacks in perfecting complex space hardware, and Musk’s company has recently encountered issues with a new spacecraft. SpaceX executives have expressed their strong belief in the importance of competition, with its rockets frequently launching satellites for rivals. At an investor event last November, Shotwell said that the company had won government contracts by providing the best price and efficient execution. Despite the feud between the president and Musk this year, SpaceX won more government contracts and continued to move forward with significant missions. In April, in a heavily publicized Pentagon contract, SpaceX won the most funding and launch missions – winning 28 national security flight missions, with the new agreement valued at $5.9 billion. In May, the company launched an upgraded GPS satellite for the U.S. Space Force. NASA plans to send a new group of astronauts to the International Space Station via SpaceX later this month. SpaceX’s Falcon rockets (relying on reusable boosters) have become a mainstay of government space missions. The company’s manned Dragon spacecraft is currently the only U.S. spacecraft certified to travel to and from the International Space Station. According to a prior report in The Wall Street Journal, Musk's threat to disable the manned Dragon spacecraft (which he later retracted) during his feud with Trump last month sparked concerns within NASA. NASA has long desired to have two distinct astronaut space station transport solutions. SpaceX’s business of providing high-speed internet to government agencies through its Starlink satellite constellation is also growing. The company’s Starshield division provides various national security satellite capabilities and a few years ago also secured a major classified agreement from an intelligence agency that operates U.S. spy satellites.