COLORADO SPRINGS, Colo. — With the military space business situation in flux, industry is scrambling to understand not just how to keep profits up, but to stave off an influx of new competitors.

From the high-profile issues of space launch down to the analysis of space-based intelligence, this year's National Space Symposium featured an undercurrent of understanding that the changing world environment, coupled with flat budgets, means industry needs to modify longstanding practices and attack challenges in new ways.

Or as one industry executive put it: "We either need to figure out how to play, or we won't survive."

The changing space industrial base landscape is very much on the mind of Gen. John Hyten, head of Air Force Space Command. He told reporters at the show that with industry moving development of technology in house rather than outsourcing it, the government could lose sight of weak spots in the industrial base.

"The concern is the industry is completely reshaping itself," Hyten said. "As we go through that change, my concern is we don't have as good an insight into that as well because it's really driven by industry, and will there come a point when, because we weren't watching it closely, missed a certain critical capability that we have to have in the industry."

Changes in hardware are obvious. The United Launch Alliance, challenged for the first time by SpaceX's Falcon 9 design, unveiled its Vulcan launch vehicle at the show — a forward thinking design that has reusability and a high-tech second stage baked in.

Companies such as Lockheed Martin acknowledge that they will have to fight to keep big contracts like GPS that they may have otherwise been able to safely control. And large satellite programs face the specter of disaggregation, breaking off various sensors to smaller platforms.

Lesser noticed, but just as important, are the changes on the software and services side, said Mike Blades, an analyst with Frost & Sullivan.

"The areas I see a lot of change is in the geospatial services," Blades said. "The government seems to be slowly but surely allowing companies to sell more imagery at higher resolutions. This eliminates some need for countries who aspire, or think they need to, put their own imaging satellites into space."

"It's much easier, and a better business case, for the companies that already do it to provide imagery to countries requesting it, especially if it's for not-threatening purposes such as environmental issues."

Bill Gattle, vice president and general manager of National Systems with Harris Corp., sees the market stratifying into three groups.

In the first, he said, are companies that see who look around at flat budgets and growing competition and decide to bhunker down and protect what they have. Asked about those who don't want to change, Gattle didn't doesn't mince words: "The people who are going to die will stay in the sensor universe."

The second group, which Gattle puts Harris in, includes traditional firms that are investing heavily in new technologies or creating different business models. He pointed out that his firm set records for internal research and development R&D spending last year, and emphasized that the government now wants costs laid out as full-up programs, including life-cycle costs and ground stations, rather than just specific pieces of technology.

"It's not sufficient to sell equipment anymore," he said. "That's not the model long term. So the equipment suppliers are trying to figure out where to move."

The third group is what Gattle called "the wild west" — the firms from outside the traditional military industry that who are coming in with new ideas. Fueled by the availability of public data, these companies can give the government customer similar information to the classic defense players, only without the costly overhead of developing new sensors.

Blades noted that those kinds of technologies, whether developed by legacy companies or upstart outsiders, simply did not exist a few years ago. Now, they can provide the data "at a fraction of the cost of traditional imaging satellites."

And while many of those new companies will flare out and die, Gattle said, those that who position themselves as "information providers" may remain, a new market force on the classic defense firms.

Eric Webster, vice president and director for environmental intelligence geospatial systems with Exelis, agreed that the new companies are able to be more agile than the legacy primes.

"You can have three guys in a garage who are really smart with analytics pull data and get somebody a cool product that Exelis, Lockheed or Northrop would do with 100 people, potentially," he said.

And while he noted that the need for there is always going to be a need for some sensor manufacturing will remain — someone needs to collect the data being used, after all — he too sees data analysis as the future of the market.

He pointed to programs such as the Waze application, which uses publicly sourced data to provide traffic updates to users, as a model companies could look towards. Exelis' Helios system, for example, takes weather information from 18,000 cameras all over the US and fuses them together to provide automated updates to ground conditions.

Hyten acknowledged the changing world of analytical software, noting he has a team at Space and Missile Systems Command looking into how to take advantage of new companies that are emerging.

The new software being developed, he said, provides a "very interesting dynamic."

And it's not just the Air Force that is interested. During a keynote at the symposium, Robert Cardillo, head of the National Geospatial-Intelligence Agency, said his agency was in the middle of a "seismic shift," one driven in part by the emergence of publicly available data and the technology to analyze it.

Cardillo said his team must "leverage the unclassified world far more than we ever have before," and announced a program called GEOINT Pathfinder, which will attempt to answer intelligence questions using only unclassified data, commercial information technology and flexible contracts that would allow new technology to be exploited quickly.

Email: amehta@defensenews.com

About Aaron Mehta

Aaron Mehta was deputy editor and senior Pentagon correspondent for Defense News, covering policy, strategy and acquisition at the highest levels of the Defense Department and its international partners.

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