Small Satellite Cost Benchmarks
Per-Unit Pricing Divergence in the SDA Transport Layer Program
Introduction
Small satellite unit costs ranging from $9.1 million to $21.5 million across recent U.S. government contracts reveal more than pricing variation—they expose competing industrial strategies as commercial satellite manufacturers challenge legacy aerospace primes’ market position. When the Space Development Agency began awarding contracts for its Transport Layer constellation in 2020, three manufacturers emerged as primary competitors: York Space Systems, a commercial-origin satellite builder based in Denver; Lockheed Martin, one of the world’s largest defense contractors; and Northrop Grumman, another major aerospace prime. The per-satellite costs these companies bid across successive contract tranches—Tranche 0 in 2020, Tranche 1 in 2022, and Tranche 2 in 2023—provide concrete benchmarks for understanding how manufacturing approaches, production scale, and industrial heritage shape satellite economics.
These cost differences reflect fundamental restructuring of the small satellite industrial base, where standardized commercial platforms compete against traditional bespoke aerospace engineering. The SDA’s multi-tranche procurement program, generating over $3 billion in contract awards, functions as a natural experiment in satellite pricing dynamics, offering rare public visibility into an industry where cost structures are typically proprietary. This analysis examines disclosed contract values to establish per-unit benchmarks, traces pricing evolution across successive tranches, and identifies the manufacturing strategies and volume economics that explain persistent cost divergence.
Tranche 0 and Tranche 1 Cost Benchmarks
The Space Development Agency’s Tranche 0 Transport Layer, awarded in 2020, established an initial per-satellite cost baseline of approximately $15 million. This benchmark reflected the agency’s intent to leverage commercial manufacturing approaches to reduce traditional satellite costs while maintaining government mission requirements. Two years later, the Tranche 1 Transport Layer (T1TL) awards revealed dramatic cost divergence between competitors.
