Trump Administration Reviews SpaceX Contracts Amid Strained Ties with Elon Musk
In a move that underscores the growing tensions between former U.S. President Donald Trump and tech billionaire Elon Musk, the Trump administration quietly launched a comprehensive review of the multibillion-dollar federal contracts awarded to SpaceX, Musk’s aerospace company.
The review began just days after Trump publicly floated the idea of terminating government contracts with Musk’s businesses, sparking widespread speculation about the political and financial motives behind the initiative.
According to individuals familiar with the matter, the stated goal of the review was to assess potential inefficiencies and waste within the existing agreements SpaceX holds with key government agencies, including the Department of Defense (DoD) and NASA.
However, internal assessments conducted during the early stages of the process revealed that the majority of these contracts were integral to the execution of critical national missions, making them difficult—if not impossible—to terminate.
Officials involved in the evaluation process acknowledged SpaceX’s global leadership in rocket launches and satellite internet services.
Its innovations and operational advantages have made it an essential partner for various federal operations, particularly in space exploration, defense communication, and satellite deployment.
The review was part of a broader audit that included several companies with substantial federal contracts, but it was SpaceX that received the most attention due to its dominant market position and Musk’s increasing political friction with the former president.
Elon Musk, who once served as an informal adviser to the Trump administration and led a government initiative focused on efficiency and cost-cutting, saw his relationship with Trump sour after criticizing several of the president’s key policies, particularly his tax and spending legislation.
Tensions escalated further on June 5, when Musk launched a series of public attacks on Trump via social media. In response, Trump posted on Truth Social, stating that the “easiest way to save federal money” would be to cancel contracts involving Musk’s companies.
Shortly after, on June 9, Josh Gruenbaum, head of the Federal Acquisition Service at the General Services Administration (GSA), sent an email to the Department of Defense requesting a comprehensive list of all current contracts and transaction agreements with SpaceX.
Sources told The Wall Street Journal that Gruenbaum intended to share this data with White House officials, and similar data collection efforts were launched at NASA and at least five other federal agencies.
The gathered information—organized into detailed “scorecards”—included the value of each contract and an assessment of whether comparable services could be sourced from other companies at lower costs.
Following this review, officials at the White House, Pentagon, and other agencies concluded that the vast majority of the contracts in question were mission-critical and could not be substituted or eliminated without jeopardizing national security interests or major space operations.
Despite this, insiders revealed that some contracts may still undergo further scrutiny, particularly as rival companies lobby for a more competitive and open procurement environment.
As the review progressed, SpaceX President Gwynne Shotwell reportedly held multiple meetings with White House officials to present the company’s position and emphasize the value it brings to U.S. government operations.
According to people familiar with these discussions, Shotwell reiterated that SpaceX delivers unparalleled cost-efficiency, speed, and performance, which justifies its continued dominance in federal contracts.
Still, the administration’s effort to reduce dependence on SpaceX revealed a sobering reality: the U.S. government currently has few viable alternatives for several types of launches and satellite services.
Many competitor companies—despite receiving encouragement and structured support from federal agencies—continue to grapple with technical delays and developmental hurdles, making them ill-equipped to fully replace SpaceX in the short term.
While some industry players have voiced concern over SpaceX’s outsized influence, federal officials maintain that contracts are awarded based on merit.
At an investor summit last November, Shotwell underscored this point, affirming that SpaceX wins contracts by consistently delivering “best-in-class execution and value.”
Despite the political friction, SpaceX’s contract momentum remains strong. In April, the company secured the largest share of a $5.9 billion national security launch agreement from the Pentagon, which includes 28 high-priority missions.
In May, SpaceX successfully launched an upgraded GPS satellite for the U.S. Space Force, and another crewed mission to the International Space Station (ISS) is scheduled for launch later this month.
The company’s Falcon rockets, known for their reusable booster technology, have become indispensable for U.S. space missions.
Furthermore, Crew Dragon, SpaceX’s flagship crew transport vehicle, remains the only American spacecraft currently certified to transport astronauts to and from the ISS.
The situation grew more tense last month when Musk—amid his dispute with Trump—threatened to retire Crew Dragon, though he later retracted the comment.
The move reportedly alarmed officials at NASA, which has long sought to ensure redundancy by having at least two independent U.S. systems for crewed spaceflight.
Beyond launch services, SpaceX is also deeply embedded in U.S. government communications. Its Starlink satellite network, widely known for providing global internet coverage, has become vital in both civilian and military contexts.
Its Starshield division, specifically focused on national security communications, has already secured classified contracts from U.S. intelligence agencies responsible for strategic and covert satellite operations.
As the review winds down, the consensus within federal circles is clear: SpaceX is indispensable for now. But the effort has nonetheless prompted important discussions about diversification, competition, and the long-term strategy of America’s space and defense programs.
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