Air Force Leaders Fret As Another Satellite Maker Declares Bankruptcy

An intelsat Galaxy 7 satellite

INTELSAT

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An intelsat Galaxy 7 satellite

Service leaders are asking for Congressional help in shoring up the defense industrial base.

The self-congratulatory tone in Intelsat’s Wednesday press release — a restructuring “for long-term success” and “No change in our momentum, just enhanced resources to grow” — evaporated in paragraph four, which announced a Chapter 11 bankruptcy filing. It was the second major satellite company to declare bankruptcy amid the pandemic, a trend that worries the U.S. Air Force’s chief acquisitions executive.

Will Roper, the Air Force assistant secretary for acquisition, told reporters on Thursday that cash flow into aviation and space has “dried up significantly.” Space startups with strong commercial backing are essential to the Pentagon’s plans. But they’re also the sort of high-risk bets with long-term payoffs that look good when money is flush, less so when the world is teetering on the precipice of a global depression. 

Roper said he was particularly worried about startups that provide microelectronics for small satellites. The Air Force is speeding up contract awards to deliver cash to smaller companies, but he said that protecting the broader industrial base was more important than trying to save individual firms. “As we see the Chapter 11s, we are tracking them. But our concern as an acquisition enterprise has got to be industrial base help, not picking winners or losers with specific companies. It’s ensuring that we’re engaging to have a healthy industrial base on the other side.” 

Roper said the U.S. Air Force is pushing Congress to “engage us with additional resources” read that to mean, get more money to vulnerable companies, particularly ones that make parts for multiple programs. Exactly the form that engagement would take he did not say.

Roper also said the Air Force is worried that other nations might try to buy control of defense companies or sensitive sectors amid the pandemic. He described it as “an opportunity for predatorial tactics targeting IP that countries would not have access to otherwise. We are very mindful of that.”

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