The Department of the Air Force is reevaluating its approach to building a next-generation military satellite network, putting a hold on funding for a major satellite procurement planned for fiscal year 2026. The decision could pave the way for the use of SpaceX’s Starshield satellites as a lower-cost alternative for its low Earth orbit (LEO) communication and missile-tracking constellation.
This reassessment affects the Proliferated Warfighter Space Architecture (PWSA), a key U.S. Space Force initiative managed by the Space Development Agency (SDA). The program is designed to field hundreds of interconnected satellites in LEO to enable secure communications and missile defense capabilities. A planned procurement of up to 140 satellites for Transport Layer Tranche 3—originally scheduled for 2026 deployment in 2028—is now under review.
Chief of Space Operations Gen. Chance Saltzman confirmed the shift during a June 26 hearing before the Senate Appropriations Defense Subcommittee. “We’re conducting an analysis of alternatives,” Saltzman said, explaining that the military is exploring commercial options to meet future data transport requirements.
The reassessment signals a potential pivot to SpaceX’s Starshield platform, a military variant of its commercial Starlink satellite network. According to defense sources, the Pentagon is considering replacing the PWSA’s Tranche 3 satellites with 480 Starshield satellites under a new initiative dubbed “Milnet.” These satellites would utilize optical laser links for secure inter-satellite communication and would be operated directly by SpaceX under contract with the National Reconnaissance Office.
While the first two tranches of PWSA satellites remain on track and fully funded, the uncertainty surrounding Tranche 3 has raised alarm among lawmakers and industry stakeholders. Sen. Chris Coons (D-Del.) voiced concerns about over-reliance on a single provider. “No competition, no open architecture, no leveraging of a dynamic space ecosystem,” Coons warned during the hearing. “This is a massive and important contract.”
The Department of the Air Force maintains that no final decisions have been made. Air Force Secretary nominee Troy Meink emphasized that the future of Milnet and the potential shift away from competitive procurement are still under deliberation. “We are still evaluating how best to structure this capability,” he said.
Industry representatives warn that canceling the PWSA’s Tranche 3 could have ripple effects across the defense space sector. Several manufacturers have invested heavily in infrastructure and workforce to support the SDA’s regular, competitive satellite procurements, which have been seen as a reliable long-term market.
The SDA currently has a $5 billion budget for 2026 and has marketed the PWSA as essential to ensuring U.S. space dominance through a resilient, distributed satellite network. However, discussions around potentially merging Milnet with the PWSA Transport Layer raise questions about redundancy and the future of innovation in defense satellite manufacturing.
Analysts say the proposed consolidation could improve operational efficiency but might also reduce competition and limit technological diversity—two principles that have underpinned recent Pentagon procurement strategy.
As the Air Force weighs its options, the decision will likely shape not only the future of military satellite communications but also the broader trajectory of the U.S. space industrial base.