SpaceX's $1.8-Billion Contract With Pentagon: Is Elon Musk Playing A Role In US National Security?

SpaceX, a privately-held designer and manufacturer of rockets, is more than just a NASA contractor.

The Elon Musk-led company is gaining ground as a major defense contractor, strengthening its ties with military and intelligence agencies, according to the Wall Street Journal.

The Hawthorne, California-based company — which successfully launched 96 rockets in 2023 — entered a classified contract with the U.S. government in 2021 worth $1.8 billion.

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The agency that took the contract remains undisclosed. However, it's not the first time SpaceX signed a contract with the U.S.

In September, the Pentagon signed a $70 million contract with the company's secretive Starshield arm. Starshield provides communication services from SpaceX's Starlink internet network for "national security purposes."

The company's Starlink arm functions as a satellite internet constellation, providing service around the globe.

The classified contracts raise the pressure for Musk, whose extensive public appearances are routinely a cause for controversy. As a major contractor for the Department of Defense, Musk reportedly holds a national security clearance. 

SpaceX had also held contracts with the National Reconnaissance Office, for the use of its satellite technologies. The office is an agency of the Department of Defense. It develops and operates reconnaissance satellites for national security.

The relationship between SpaceX and military forces also exceeds U.S. territory.

Israel recently approved the Starlink service for use in the Gaza Strip.

And, at the onset of Russia’s attempted invasion of Ukraine in early 2022, SpaceX provided thousands of Starlink kits to Ukraine. The effort was meant to help Ukraine’s forces maintain communication channels.

However, Ukraine’s military intelligence has since criticized Musk, citing use of Starlink terminals by Russian troops.

Musk insists Russian troops aren’t using Starlink.

Musk's biography also reveals that he restricted Starlink access for submarine drone plans against Russian vessels in Crimea, citing the possibility of escalating the conflict between the two countries. 

Its condition as a private company makes it difficult for retail investors to gain exposure to SpaceX. The company can't be included in Aerospace and Defense ETFs. Among the major ETFs for these sectors are the iShares US Aerospace & Defense ETF (BATS:ITA), Invesco Aerospace & Defense ETF (NYSE:PPA) and SPDR S&P Aerospace & Defense ETF (NYSE:XAR).

SpaceX’s $180 billion valuation puts it above defense and aerospace contractors like Boeing and Lockheed Martin.

SpaceX and NASA are currently planning the Artemis Mission, which looks to put astronauts on the moon once again.

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