No one sells more goods and services to the government than Lockheed Martin (NYSE: LMT) and Boeing (NYSE: BA). These two aerospace giants are the Nos. 1 and 2 biggest contractors to the federal government, respectively -- and to the Pentagon and NASA -- according to a 2016 report by the U.S. General Services Administration (GSA). And yet, when it comes to space contracting, these two behemoths now have a new rival.
No, I'm not talking about SpaceX. I'm talking about Virgin Orbit.
VOX Space's Cosmic Girl Boeing 747 fires satellites into orbit from the air. Image source: Virgin Orbit.
Virgin? You mean that airline run by the guy with the funny beard?
Yes, that's the one. The guy's name is Sir Richard Branson, and to date, he's founded some five dozen various "Virgin" companies. Most relevantly, in addition to Virgin Airlines (which he sold to Alaska Air last year, by the way), Branson has set up space tourism company Virgin Galactic, and also its recently separated-out subsidiary Virgin Orbit, which aims to deploy satellites by using airplanes to fire rockets into orbit. It's this latter subsidiary that I want to talk about here.
Last month, Virgin Orbit announced that the U.S. Department of Defense (DoD) has contracted with Virgin Orbit to run a "Space Test Program" for it. Virgin will fly a specially modified Boeing 747 dubbed "Cosmic Girl" to 35,000 feet, and there fire off disposable "LauncherOne" rockets to carry "technology demonstration satellites" into orbit. Flights are to begin sometime in 2019 under the aegis of the DoD's Defense Innovation Unit Experimental department (DIUx).
What is DIUx?
DIUx can best be thought of as a venture capital arm of the Pentagon. Tasked with solving a specific problem, DIUx enters into "pilot contracts for commercial innovation" with private companies -- and it has a particular focus on signing up "nontraditional or small businesses" like Virgin (as opposed to traditional megadefense contractors like Lockheed and Boeing). Companies that come up with workable solutions can then "easily enter into follow-on contracts" with the Pentagon for production of their solutions.
Seeking to take advantage of this program, Virgin is setting up a dedicated subsidiary to work with DIUx and other DoD departments on this and other military work. The new Virgin subsidiary will be called VOX Space (presumably short for Virgin Orbit eXperimental). Operating out of California, VOX Space already has its own mission statement: to "provide responsive, affordable launches to the national security community of the USA & its allies."