Following the public separation between Elon Musk and US President Donald Trump, the administration investigated potential avenues to terminate contracts with Musk-owned SpaceX, but ultimately determined that such actions were unfeasible, according to a report.
In response to Musk’s personal criticisms of Trump regarding the ‘One Big Beautiful Bill’, Trump indicated that he might reduce subsidies to Musk’s enterprises, including SpaceX and Tesla. Over the years, the US government has allocated several billion dollars in contracts, subsidies, and tax incentives to Musk’s companies, particularly SpaceX.
Shortly after Trump’s remarks, a senior official within the administration commenced a review of government contracts with SpaceX to assess the feasibility of cancellation, as reported by the Wall Street Journal.
Nevertheless, the review found that both the Department of Defense and NASA are significantly reliant on SpaceX for various functions, including military communications and satellite launches, making it impossible to cancel contracts with the company, according to the newspaper.
As per the most recent publicly available data, ongoing US government contracts with SpaceX amount to approximately $18 billion. This figure excludes the funds that SpaceX or other Musk-owned companies have received in subsidies or tax credits from current or previous contracts. Public estimates suggest that around 30-40 percent of SpaceX’s annual revenue is derived from the US government, primarily from services provided to NASA, military, and intelligence agencies.
The Trump administration acknowledges the excessive dependence on Musk.
The Journal reported that the review of Musk’s contracts, spearheaded by Josh Gruenbaum from the General Services Administration (GSA), requested the Defense Department, NASA, and about six other federal agencies to complete a spreadsheet detailing all their existing contracts with SpaceX and other transaction agreements, according to the newspaper.
The spreadsheet also inquired whether a competitor could fulfill the tasks assigned to SpaceX, the report indicated.
Upon receiving this information, the Trump administration recognized that it could not terminate contracts with SpaceX.
To begin with, SpaceX was engaged in some of the most essential tasks for the US military, NASA, and intelligence agencies such as the National Reconnaissance Office (NRO). This type of work must not be interrupted or halted.
Furthermore, even if the Trump administration had opted for a temporary disruption in pursuit of a long-term solution or as a form of punishment towards Trump, they would have encountered limited alternatives. In most instances, the technology and launch capabilities of SpaceX are simply unparalleled. There are very few, if any, companies that can perform the tasks that SpaceX undertakes — especially at the scale that SpaceX operates.
