Balancing commercial space services and military sovereignty: Benefits, risks and dependencies

2.1. Outsourcing in military operations

Outsourcing in military operations refers to the transfer of tasks or functions traditionally carried out by the state’s armed forces to private actors (Avant 2008). Although it is often portrayed as a phenomenon of the late-20th century, its historical roots are much older. In antiquity and the Middle Ages, mercenary companies were a common supplement to rulers’ limited forces, and in the early modern period, corporations such as the British East India Company maintained private armies with quasi-sovereign authority (Thomson 1994). The rise of national armies reduced the visibility of such arrangements, yet outsourcing never disappeared. Even during the Cold War, while mass conscription armies dominated, states relied on contractors for niche technical functions and logistics support (Cusumano 2022). The end of the Cold War created ground for a renewed wave of outsourcing. Several trends converged. Western militaries downsized significantly as the perceived need for mass armies diminished with the collapse of the Soviet Union (Singer 2008). Many states abolished conscription, shifting to professional but smaller forces. At the same time, neoliberal economic reforms encouraged governments to privatise services previously considered core state responsibilities, including parts of defence (Krahmann 2010). This development coincided with an increase in crisis management operations, which demanded operational presence abroad despite reduced force structures. Outsourcing became the mechanism that reconciled shrinking militaries with growing missions (Cusumano 2022).

The literature identifies several motivations for outsourcing. Functional considerations are prominent. Militaries often lack the in-house expertise required for rapidly evolving technologies, and contractors can supply skills and capacity that cannot be generated internally (Singer 2008). The political dimension is also essential, as outsourcing reduces the domestic visibility of military operations and lowers the risk of politically costly casualties (Cusumano 2022). Ideological factors also matter: The ascendancy of market-based governance in the 1980s and 1990s legitimised privatisation in the security sector (Krahmann 2010). To these must be added the broader shift in the security environment after 1991. With no peer adversary on the horizon, governments assumed they could take greater risks in reducing their force structures, while still meeting diverse operational commitments through external support.

The benefits of outsourcing are frequently emphasised in both scholarship and practice. Outsourcing is said to deliver cost efficiency by allowing militaries to pay only for the services they need, while companies distribute development and operational expenses across a broader client base. It promises flexibility, enabling armed forces to adjust their capacity rapidly to meet surging operational demands without committing to permanent increases in workforce or infrastructure (Cusumano 2022). Companies may possess forms of expertise and professional competence that are absent within the armed forces’ own personnel (Häyhtiö and Mattila 2022). Another benefit lies in innovation: The private sector often develops new technologies more quickly and outsourcing allows militaries to tap into these innovations (Singer 2008).

However, the drawbacks are equally important. Loss of control is frequently cited: Militaries that rely on private firms cannot fully dictate how or when services are provided (Singer 2008; Cusumano 2022). Underlying these risks is a structural divergence between the logics of the public and private sectors: while public authorities are mandated to ensure states’ safety and security, private companies fundamentally prioritise profit-making. Profit-maximisation may lead companies to withdraw from providing unprofitable services, even when they are vital for the states, underscoring the need for parallel public provision (Gurtuna 2013). Although Corporate Social Responsibility (CSR) frameworks, such as stakeholder theory and Carroll’s CSR pyramid, suggest that firms may act ethically and take societal impacts into account, responsible conduct is not systematically rewarded by the market (Crane et al. 2008). Competition therefore offers no assurance that providers will prioritise societal or security interests over commercial ones. The possibility of contract termination or reduced service availability represents risks when essential capabilities rely on commercial providers. Outsourcing adds further risks by complicating command relationships and creating uncertainties in the conduct of warfare (Cusumano 2022). At a more normative level, outsourcing blurs the distinction between civilian and military roles (Singer 2008). More fundamentally, privatisation does not simply reduce state control over the use of force but redistributes it among state and non-state actors, and sustained reliance on external providers may gradually erode the state’s own capabilities (Avant 2008).

Together, these dynamics have shaped what scholars now describe as commercial military service providers, a global sector spanning logistics providers, information technology companies, intelligence firms, private security companies and increasingly high-technology enterprises (Singer 2008). What distinguishes the current phase from earlier eras is the expansion of outsourcing into domains once considered inherently sovereign. Intelligence, cyber defence and space-based services are now widely available on commercial markets and integrated into military operations. This shift underscores a broader transformation in the relationship between states and markets: Some armed forces are no longer self-sufficient organisations but depend in critical ways on private companies whose interests, capacities and vulnerabilities may shape the course of conflict as much as states’ actions (Cusumano 2022).

2.2. The evolution of space activities

From the very beginning, space has been both a technological frontier and a military domain (Bowen 2022). The launch of Sputnik in 1957 was not only a scientific breakthrough but also a strategic signal from the Soviet Union. This initiated an era in which space became both a symbol of prestige and an arena for great-power competition. The United States and the Soviet Union incorporated satellites into their nuclear arsenals, using them for reconnaissance, early warning, navigation and secure communications (Sheehan 2007). By the late 1960s, satellites had become indispensable for strategic stability. Reconnaissance systems enabled verification of arms control agreements, early warning satellites provided detection of missile launches, while military satellite communications allowed global command-and-control, making space a key element of nuclear deterrence (McDougall 1997). Space also gradually started to shape conventional operations during the 1991 Gulf War, when Coalition forces relied heavily on satellite-based navigation, communications and imagery to conduct precision strikes and rapid manoeuvre (United States Space Command 1992). Space was no longer confined to the strategic background but had become an operational enabler of battlefield dominance.

The end of the Cold War transformed the development of space activities. With the collapse of the Soviet Union, defence budgets contracted and the urgency of maintaining prominent state-owned constellations diminished. At the same time, technological advances in microelectronics, satellite miniaturisation and launch services lowered barriers to entry for private actors (Bousedra 2023). Commercial ventures began to offer services in telecommunications, broadcasting and Earth observation. Companies are shifting from roles as contractors for state programmes to independent service providers offering capabilities to both governments and civilian customers (Bousedra 2023).

During the 2000s, the rise of so-called New Space accelerated commercialisation. Venture capital, ambitious entrepreneurs and new business models challenged traditional state dominance (Denis et al. 2020). Companies developed reusable rockets, pioneered constellations of small satellites, and developed business models built around mass production and rapid deployment (Bousedra 2023). Costs fell dramatically, enabling rapid scaling and more frequent launches (Peperkamp and Bolder 2024). Civil space programmes moved in the same direction. NASA relies on SpaceX to carry astronauts and supplies to the International Space Station (Langeland et al. 2026). An agency that had designed, owned and operated its own systems became a customer buying a service. The military transition examined in this article follows the same logic in a domain where the consequences of losing control are more severe. Militaries benefited from this wave of innovation, gaining access to high-resolution imagery, global broadband communications and advanced analytics without funding large-scale sovereign programmes. Militaries increasingly turned to these offerings to fill gaps in their own capabilities, particularly in areas where national resources were limited or outdated. For smaller states, purchasing services from commercial providers was often the only feasible way to access advanced space functions (Peperkamp and Bolder 2024).

A central characteristic of modern space activity is its dual-use nature. Most satellites today serve customers across different sectors simultaneously. A single satellite constellation may deliver broadband internet to households, support humanitarian organisations in disaster zones, and facilitate secure command-and-control for armed forces in active conflict (Moltz 2024). The dual-use nature offers advantages such as economies of scale and widespread availability. However, it also introduces risks. The blurred boundary between civilian and military use complicates the legal status of satellites. If commercial satellites directly support combat operations, they may be considered lawful military objectives, even if their disruption may affect a large number of civilian users worldwide (Beard et al. 2024). The prevailing view among experts is that commercial satellites supporting military operations constitute lawful military objectives under international law; however, there remains considerable uncertainty regarding which forms of attack would meet the requirements of military necessity and proportionality (Kim et al. 2025). Satellites are exposed to cyber intrusions, jamming, spoofing and potentially kinetic attacks (Weeden and Samson 2024). The war in Ukraine illustrated these risks and possibilities. Commercial communication services enabled Ukrainian resilience, while commercial imagery made Russian troop movements visible to a global audience (Gurantz 2024). At the same time, cyber operations targeted commercial constellations, and disputes over service provision highlighted the influence of corporate decisions on military outcomes (Abels 2024).

Overall, the trajectory of space activities reflects a shift from Cold War-era state monopolies to a 21st-century environment where commercial actors play a dominant role (Figure 2). Armed forces are now only one customer group within a global market for space services, competing with other users. Space capabilities are no longer scarce sovereign resources but widely available commodities, though access can still be contested. The dual-use nature of satellites blurs the line between civilian and military uses, creating risks of escalation and legal ambiguity. Reliance on commercial services integrates companies into the fabric of national security, making them active participants in international conflicts.

Fig. 2:

4.1. Benefits and drawbacks of outsourcing

Building on the drivers and risks of military outsourcing set out in Section 2—the functional, political and ideological motives, and the risks of dependency, control and legitimacy—the following sections examine how these dynamics manifest specifically in the space domain. Availability of commercial services varies across functions, but many services are widely available. For example, high-resolution imagery and synthetic aperture radar data can now be purchased from the market, providing tactical insight in near real-time (Cunniffe et al. 2023). Commercial communications constellations offer broadband services that are often more extensive than national systems (Wong et al. 2023). For armed forces, this access to advanced capabilities translates into improved situational awareness and operational flexibility. Commercial capabilities can be accessed more quickly through service provision than through the procurement processes associated with the armed forces’ own systems (Cunniffe et al. 2023). The use of commercial space services also enhances resilience by making it more challenging to disrupt space-based capabilities (Wong et al. 2023). Commercial systems also provide redundancy for the armed forces’ own systems, reducing their dependence on any single system (Cunniffe et al. 2023). On the other hand, there are no commercial missile warning services available (Cunniffe et al. 2023), while commercial positioning, navigation and timing services remain minimal (Wong et al. 2023).

Driven by market pressures and unencumbered by slow procurement procedures, companies often provide capabilities that are technologically 5–10 years ahead of military systems, as traditional military procurement programmes may take a decade from design to deployment (Cunniffe et al. 2023). This agility allows them to adapt rapidly to technological advances and customer needs. Interviewees noted that commercial companies can innovate and deploy new technologies more quickly than state-led programmes. A considerable amount of capital flows through companies and is directed towards research and development. Some capabilities emerge unexpectedly, without specific demand from the armed forces. The emergence of large constellations of small satellites, capable, for example, of providing near-continuous imagery of any location on Earth, was cited as evidence of the private sector’s dynamism. Respondents attributed a part of this to how capital is raised: private ventures can fund development incrementally and absorb the risk of failure, whereas a sovereign programme must commit a large appropriation in advance.

Scalability is another advantage identified in both the literature and the interviews. Rather than maintaining permanent excess capacity, armed forces can purchase additional imagery or communications capacity to meet temporary surges in demand (Cunniffe et al. 2023), an application of the general principle that contractors allow states to expand capacity in wartime without sustaining large standing forces in peacetime (Singer 2008). Interviewees noted that this flexibility is difficult to achieve with sovereign constellations but qualified it in an important way. Surge capacity, they argued, is not a property of the market but a product of contractual preparation: unreserved capacity disappears as demand rises, whereas capacity secured in advance remains available. Where capacity cannot serve every customer, a small state’s forces may simply be outbid. This sharpens the literature’s caution that profit-oriented providers cannot be expected to hold surplus capacity (Astorino-Courtois et al. 2018). It also reflects a more general feature of purchased security: influence follows purchasing power (Avant 2008).

Cost featured prominently in both sources, though with different emphases. By procuring services rather than building sovereign constellations, militaries share costs with other users (Wong et al. 2023), and interviewees stressed that this reduces the burden of high investment while still giving access to high-quality data. Interviewees also mentioned that developing large sovereign constellations would be prohibitively expensive for most states. Commercial systems do not always match the performance of purpose-built military ones, but often meet requirements adequately at lower cost (Cunniffe et al. 2023). However, cost advantages cannot be regarded as an unequivocal benefit, as costs can vary across situations and functions (Yonekura et al. 2022). Some interviewees pointed out that life-cycle costs are not necessarily lower but redistributed differently compared with sovereign systems. In this context, concerns were also raised about potential hidden expenses in service pricing. Integration into military systems is not often included in prices. Moreover, some services are purchased at so-called spot prices, meaning that costs fluctuate with demand. If the armed forces have not secured fixed-price agreements or reserved specific capacity in advance, the price of services may rise sharply under exceptional circumstances. Detailed information on price volatility and capacity allocation is rarely publicly available, as such data are commercially sensitive; literature and interviews, nevertheless, suggest that variation can be significant. Altogether, the economics of shared infrastructure still make space outsourcing an attractive option even for larger militaries that possess sovereign capabilities.

Interoperability and data sharing were raised from different angles in the literature and the interviews. Because no single state owns commercial services, they can provide a neutral platform for multinational operations. Images purchased from commercial providers, for example, can be shared more easily among allies than those from a sovereign system subject to national security restrictions (Gurantz 2024). In addition, commercial data can more readily be used within the armed forces themselves, for instance, in exercises or training, because it is not subject to the same security classification constraints (Cunniffe et al. 2023). Interviewees approached the question through standards: because commercial providers build to established commercial standards, their services are more likely to be compatible with those of allies. Standardisation also has a second consequence that the literature does not emphasise, since services built to common standards are more readily substituted for one another, leaving the buyer less tightly bound to any single provider.

At the same time, reliance on commercial providers carries serious risks. The most fundamental concern is loss of control. The first layer of fragility concerns market dynamics. The sustainability of commercial availability depends not only on technological maturity and demand but also on the long-term viability of providers. High-profile bankruptcies and consolidations, such as OneWeb’s restructuring, the collapse of several launch start-ups, and the volatility in the smallsat and Earth-observation markets, demonstrate that commercial availability may be fragile, particularly in sectors with high upfront capital expenditure and uncertain revenue models (Yonekura et al. 2022). This is not limited to bankruptcies but also includes changes in service availability and service types. Both public-sector and industry representatives emphasised that the interests of armed forces and companies differ, which can create disadvantages or risks for the military. Although this divergence also carries risks for providers, including reputational exposure, political entanglement and restrictive security requirements, the present analysis focuses on the implications for the armed forces. Interviewees argued that businesses are inherently opportunistic and will allocate scarce resources where profits are most significant, leaving the military as merely one customer among many. This concern reflects a recurrent theme in the literature on corporate responsibility, where profit-driven motives may diverge from governmental necessities in general (Carroll 1991) and, more specifically, in the space sector (Gurtuna 2013). However, the interviewees saw capacity constraints more critically than the literature did. In crises, commercial providers may face capacity constraints and competing demand, leading them to prioritise larger or strategically more significant customers, leaving smaller armed forces exposed despite existing contracts, a dynamic that interviewees explicitly compared with the reallocation of critical supplies and services observed during the COVID-19 pandemic. The exposure persists despite contractual commitments because contracts are structurally limited. No agreement can anticipate every contingency, and where a contract is silent, discretion falls to whoever holds residual rights of control over the asset (Hart and Moore 1990). Nor does a binding contract preclude breach: a party will not perform where the gain from non-performance exceeds the damages payable (Posner 1986). While monetary damages may restore losses in ordinary commercial relationships, they cannot compensate for the loss of a military operation or strategic opportunity.

Another layer of fragility is political. Contracts cannot be separated from the regulatory environments in which companies operate. Export controls, sanctions or government orders may override agreements, restricting service delivery even when technical capacity exists (Wong et al. 2023). Respondents considered foreign providers vulnerable to the foreign policy constraints of their governments. Even robust contracts could be overridden by political directives. This is not a matter of states disregarding legal obligations: export controls, sanctions and national security exemptions are themselves instruments of law, and it is through them that contractual commitments are lawfully set aside. This observation complements the argument in the literature that outsourcing introduces dependencies not only on firms but also on the states in which they are incorporated. The geopolitical alignment of a provider’s home country can therefore directly affect whether services are available in wartime. A recurrent theme among the interviewees was favouring domestic providers to mitigate risks of service loss. Domestic firms are less likely to be affected by foreign political decisions, and under national space law, they may even be obliged to supply data to authorities during emergencies. Interviewees also described the instruments through which states can shape provider behaviour, and the limits of each. Regulation constrains what firms may do, but it reaches only providers within the state’s jurisdiction, which is much of what makes domestic provision attractive; pressed too far, however, it may drive a firm to relocate, in which case the state surrenders the very control it sought to exercise. Interviewees also cautioned that nationality is a legal category rather than a description of where a provider’s capital, ownership or data routing actually reside.

Technical vulnerabilities are also pronounced. A recent study demonstrates that GEO-satellite links may carry sensitive military data unencrypted, because organisations face certain disincentives to encryption, like capacity and cost penalties (Zhang et al. 2025). Also, more broadly, commercial satellites may not be hardened to the same extent as military systems (Wong et al. 2023). They are susceptible to jamming, spoofing and cyber intrusions, and in the future, they may also face kinetic threats. The war in Ukraine has already demonstrated how adversaries target commercial communication systems (Connell 2023). Interviewees added two observations. Commercial systems are often not explicitly designed for security-critical use, and attempting to harden dual-use technology for military purposes was described as the least satisfactory solution, yielding compromises that serve neither purpose well. At the same time, respondents pointed to the Ukraine War as evidence that commercial providers can adapt their systems rapidly once operational demands become clear.

Legal and normative ambiguities compound these risks. The vast number of dual-use satellites makes targeting dilemmas far more acute than in areas where civilian and military roles are easier to distinguish (Steer and Stephens 2021). Dual-use satellites can be interpreted as military targets in many cases, and such an interpretation not only endangers the satellites themselves but also the companies and personnel operating them. Interviewees extended this concern from systems to people. Employees of firms supporting an armed conflict may face online harassment and intimidation, and respondents considered the risk of becoming a target of cyber and information operations to rise markedly in a crisis.

The interviews did more than corroborate the literature. While they confirmed the broad pattern of benefits and risks identified in existing research, they also introduced considerations the literature addresses only obliquely. One concerns the breadth rather than the depth of capability. Respondents emphasised that outsourcing gives armed forces access to a range of different services that would be impractical to develop in-house for financial or personnel reasons, particularly for a smaller state. This capability of diversification is distinct from the redundancy and resilience the literature emphasises, which concern having several sources for the same capability. Redundancy protects against the failure of a given service; diversification extends the range of services available to all. Two further considerations concern drawbacks. The first is the erosion of expertise. That sustained outsourcing can degrade a state’s own in-house expertise is anticipated in the outsourcing literature (Avant 2008); what the interviews specified was the form this takes. Respondents warned that reliance on commercial services gradually depletes competence in space operations, procurement and system integration, and weakens the armed forces’ position as a purchaser: without internal expertise, a military cannot specify what it needs or recognise when a provider is steering it towards services that suit the provider’s business model. Dependence thus erodes the competence required to manage dependence. The second is capacity: providers may prioritise larger clients or lack the operational scale to meet demand in a crisis. That providers respond more readily to larger consumers is recognised in the literature (Avant 2008); the interviews located this in crisis conditions specifically, where capacity cannot serve every customer and allocation becomes openly competitive.

The benefits and drawbacks of commercial space services are summarised in Table 2.

4.2. The framework for balancing commercial and sovereign systems

Based on the findings of this study, the choice between commercial space services and military-owned space systems should not be treated as a binary decision but as a balancing of operational advantages against risks. What distinguishes this balancing from conventional commercial risk management is that the risks are neither priceable nor independent: they concentrate at the moment of crisis, when political directives and export controls can override contractual guarantees, and their materialisation is measured in operational failure rather than in financial loss. This balance can be structured around two factors: mission criticality and the degree of control.

Mission criticality is treated here as a decision criterion applied where commercial provision already exists. It refers to the extent to which a function is indispensable to military operations, forming a continuum defined by the severity and immediacy of the consequences if a capability were degraded, denied or lost. Some functions are existential, meaning that their loss would prevent mission accomplishment, while others primarily enhance efficiency, situational awareness or operational flexibility. As mission criticality increases, tolerance for uncertainty regarding access, service continuity and service prioritisation decreases accordingly. It sets the acceptable level of risk, as higher criticality amplifies the consequences of contractual, political and technical vulnerabilities, strengthening the case for sovereign control or robust mitigation measures.

The degree of control captures the cumulative vulnerabilities created by reliance on commercial providers. It is not limited to contractual arrangements but spans political, technical and normative dimensions. Contractual guarantees may be overridden by political decisions in the provider’s home state; technically, commercial systems may be more exposed to interference; and normatively, the dual-use nature of commercial satellites introduces legal ambiguity. The degree of control also encompasses the armed forces’ ability to influence service prioritisation during crises, shape system development in line with military requirements, and ensure reliable integration into command-and-control systems. While carefully structured contracts and partnerships can mitigate some of these limitations, they cannot fully replicate the level of control in sovereign systems. Significantly, control is also shaped by institutional competence: even formally available services may become inaccessible under competitive pressure, and low-level in-house expertise further constrains the armed forces’ ability to influence prioritisation, integration and long-term system development. Control is therefore a function of institutional capability as much as of contractual guarantees, which is why formally equivalent contracts can yield very different degrees of actual control.

The framework does not determine whether commercial services should or should not be used in specific missions. Instead, it shifts the focus from the mere availability of commercial space services to their operational usability under varying strategic and operational conditions. The framework is non-prescriptive: it serves as an analytical tool that categorises alternative arrangements based on mission criticality and control, supporting military planning by structuring trade-offs, clarifying the implications of different choices and enabling informed strategic judgement.

Figure 3 presents this framework. The horizontal axis represents mission criticality, while the vertical axis represents the degree of control. The framework provides a tool for evaluating how to balance commercial and sovereign solutions where availability exists. The commercial space services do not constitute a uniform category; their substitutability, criticality and acceptable risk levels vary across mission areas and may change between peacetime and wartime. Interviewees also emphasised that the importance of commercial services varies depending on circumstances and a state’s sovereign capabilities. For many smaller states, sovereign or even hybrid solutions may be structurally constrained, leaving commercial services as the only feasible option despite the dependencies they entail.

Fig. 3:

By assessing mission criticality and the degree of control, the framework produces three configurations:

• Predominantly commercial configurations emerge when mission criticality is low, and dependencies are manageable. The loss or disruption of a capability would not decisively affect mission outcomes, and risks can be addressed mainly through market mechanisms such as competition, provider diversification and standard contractual arrangements. Residual risks remain operationally tolerable.

• Hybrid configurations arise when mission criticality is higher, or dependencies are more pronounced, but not to the extent that complete sovereign control is required. Here, commercial services complement a retained sovereign capability, allowing armed forces to benefit from market advantages while simultaneously preserving required autonomy.

• Sovereign configurations are warranted when mission criticality is high and overlapping dependencies significantly constrain military control. In such cases, consequences of disruption, denial, loss of operational security or prioritisation are unacceptable, and commercial arrangements cannot provide sufficient assurance, even with extensive mitigation measures.

Resource constraints determine which configurations are attainable, not which are acceptable. The choice between commercial and hybrid arrangements does not turn on the advantages of commercial provision, since a hybrid retains them, but on whether a sovereign component justifies its cost in funding, personnel and institutional attention. Where criticality is low it does not, and a predominantly commercial arrangement is proportionate rather than merely affordable.

It is important to note that ‘sovereign capability’ should not always be equated with national ownership. Many states rely on foreign systems—such as global navigation satellite systems (GNSS)—for mission-critical functions. What matters in this context is not who operates the system, but who can guarantee integrity, continuity and prioritisation under crisis conditions. For smaller states in particular, sovereign capability may therefore consist of assured access through multinational frameworks that provide a level of control functionally comparable to national ownership. Reliance on multinational arrangements should not be interpreted as a diminished preference for sovereignty. Rather, it reflects structural constraints that make fully national space capabilities unattainable in practice, even when strategic autonomy remains a core objective.

As noted in the ‘Introduction’, the framework supplies the rationale that the DoD strategy (U.S. Department of Defense 2024) presupposes by providing a conceptual foundation for the balance the strategy seeks across mission areas. While the DoD framework categorises space missions into similar categories (government primary, hybrid and commercial primary), the mission criticality and degree of control dimensions provide an explanatory rationale for why such differentiation is necessary. In particular, the framework clarifies how varying levels of mission importance and retained control shape acceptable degrees of commercial integration. The interviews supported the framework and, in several respects, sharpened it: they specified the conditions under which commercial provision holds, and identified considerations the literature addresses only obliquely.