"Star Wars" is back, and it will mean big money for American defense contractors.

Nearly four decades ago, President Ronald Reagan first proposed the Strategic Defense Initiative, a.k.a. "Star Wars", to protect the American homeland from attack by foreign missiles. Four decades later, the U.S. Space Force is building its latest version of Star Wars, a system of surveillance satellites comprising a "tracking layer" to detect missile launches paired with a "space transport layer" to relay information on those launches back to Earth.

So far, four separate companies have won pieces of the contracts to build this system.

Earth surrounded by an image representing an Internet satellite network

Image source: Getty Images.

Star Wars in two parts

In October last year, the Pentagon's Space Development Agency (or SDA, which is joining the Space Force in 2022) hired SpaceX and L3Harris (LHX 0.06%) to build four Wide Field of View (WFOV) satellites apiece for the system's tracking layer.

Separately, Lockheed Martin (LMT 0.06%) and privately held York Space Systems were contracted to build 10 transport layer satellites each. In part on the strength of these contracts, both Lockheed and York have announced plans to build new factories to mass produce small satellites for the military.

Once more with feeling

This year the SDA is ready to take the system to the next level, announcing a Request for Proposals to expand the transport layer of its missile defense system seven-fold under "Tranche 1" of the project.

As SpaceNews.com reported last month, SDA is putting up for grabs contracts to build 144 "relatively small, mass-producible space vehicles" spread across six orbital planes (although it's accepting bids for just two orbital planes at this time). This layer will relay information on missile launches detected by the tracking layer, and also perform broad "battle management applications" for warfighters on the ground, says SDA. At full strength, the transport layer is expected to provide coverage to 99% of Earth's surface at any given moment, and 95% of the surface will be covered by at least two satellites simultaneously. 

SpaceNews notes the SDA is looking to hire "multiple vendors" on these contracts, and that each of SpaceX, L3Harris, Lockheed Martin, and York Space are expected to bid -- with the potential for Airbus, Northrop Grumman, and Raytheon to bid as well.

The timeline

Bids are due by Oct. 8, and SDA anticipates awarding contracts in January 2022. Upon receiving an award, winners will be expected to begin launching satellites by 2024. (One quirk has crept in since the contracts were first announced: the SDA will be taking bids to build 126 satellites initially, and 18 later on, instead of all 144 in one go. As SpaceNews explained, this reallotment will better align the mass of the satellites to be launched with the rocket capacity of the companies that will put the satellites in orbit.)

Viewed in the context of other government space projects, this is a rapid timeline for development and deployment -- basically three years from concept to starting deployment. In contrast, NASA's James Webb Space Telescope project, for example, has been under development since 1996 -- and still isn't in orbit 25 years later! 

The price

So congratulations are in order: The Pentagon has begun delivering on its promise to accelerate the rate at which it develops and puts payloads in the sky. Perhaps even more impressive, though, is the price tag attached to this project.

Recall that the Pentagon ponied up approximately $294 million for the first 20 "Tranche 0" transport satellites last year -- $14.7 million per satellite. Well, as the project scales up, SpaceIntelReport.com reports that building 144 more satellites will cost only $2 billion more, or less than $14 million apiece to blanket the Earth with satellite coverage for military communications. 

Why small satellites are a big opportunity

In doing so, the Pentagon will also pose potential adversaries a serious logistical challenge. Henceforth, even nations with anti-satellite capabilities face the reality that, in a future conflict, shooting down one American military satellite will solve less than 1% of their problem.

And this, in a nutshell, is why I believe that small satellites and small satellite launchers have an important role to play in both industry and defense going forward. Small-sats already are attractive because of their low cost to manufacture and low cost to launch aboard small rockets from Rocket Lab (RKLB -0.24%) or Virgin Orbit (or large rockets from SpaceX, deploying entire constellations simultaneously). And now we see that constellations of small satellites provide a redundancy function that makes them harder for adversaries, or for terrorists or hackers, to disrupt -- because whenever one satellite is incapacitated, another can simply take its place until a replacement can be launched.

Add in the accelerating speed of manufacture and launch, and it seems to me that space is becoming a much safer place to do business.