By Chris Forrester
Chris Quilty (Co-CEO, Quilty Space), and a very well-known industry consultant and adviser, delivered a fascinating Keynote for delegates at the Silicon Valley Space Week’s MilSat Symposium on October 30. He was introduced by Silvano Payne, publisher of SatNews, who thanked Quilty for standing in for a speaker who was not able to attend because of the US Government’s shutdown. Chris Forrester reports.
And while Quilty might not be in an Army or Navy uniform, his knowledge of the military and commercial segments of the satellite industry made him more than well-qualified to address the ‘Dual Use’ conundrum.
He reminded delegates that on November 7 the US Secretary of Defense/War Pete Hegseth would be holding a special meeting to discuss major defense acquisition reform. “We’ve never heard that before,” said Quilty. “Evidently this is all about speed, and getting things done.”
Quilty rhetorically asked, “What is dual use? Is GPS dual use, for example? One might argue that it is not dual use, but when one sees how GPS is being used in Ukraine and I think it is dual use.”
“How about Play Station2? Is that dual use? Everyone might smile but because of the processors on board the device the Japanese Trade Ministry in 2000 listed it as a dual use product and placed all sorts of restrictions on access to it.”
He told delegates that semi-conductors in the recent past had been declared as restricted products. “Today, it is almost ‘back to the future’ because there’s now talk of restrictions being placed on some products.”
Quilty advised that – in the US – there are two core definitions for dual use: the US Munitions List which is administered by the State Department and is specifically designed to cover items that are military including missiles, rockets and their associated items. Then there’s the Commerce Control List, which is administered by the Dept. of Commerce, and covers commercial products which have a potential dual use but are not inherently defense related. These are the two restrictions which government imposes on industry.
“Historically, if your product was on a Control List then this wasn’t a good thing. Investors certainly would not like it given that it would mean restrictions n what you could do with your product. Indeed, there are many new businesses which would include in their slide deck when making a pitch that their product was ‘dual use’. But today’s situation is somewhat different, the world is on fire and we have conflicts around the world. Defense spending is on the rise, and it is difficult to keep track of the major government activity around the planet. Only this week Germany announced plans to build its own $9.5 billion secure LEO constellation, and this is in addition to IRIS2.”
He said that ‘Defense Tech’, not something that was categorised a few years ago, is now a major segment. Space and Defense is ‘hot’ and the reality is that investors are actively pursuing businesses that have dual use in their portfolio. The appeal is obvious: having government involved is a solid positive, and in many ways is a source of free capital and a considerable level of stability that is hard to find in the market place.
“Last year, for the first time ever, we saw the Dept. of Defense as well as the Space Force both issuing their commercial space strategies. The DoD made it clear that they wanted to lean on the commercial sector. One application that was made clear would remain under government control, and that was GPS. However, there have been a slew of commercial investments in Position, Navigation & Timing (PNT) products, including Iridium only last week. In other words, even though a product might seem to be walled off, there are commercial opportunities.”
Recent commercial developments have included commercial launch programs, commercial crew, Moon missions, and now the Space Development Agency which has brought in dozens of commercial businesses.
The Trump administration has come in like a whirlwind, and whacked many programs and upset people in the process. The message is clear, that the administration wants to shift from government-driven programs to more commercial. “But if NASA is not building weather satellites, then who is?”
Quilty said the new rationale was to boost speed, but also to tap into the speed of new innovation. “Tanks and cold steel products are being moved aside in favour of new technology. Drone warfare and cyber/electronic warfare is where US adversaries are moving. The other reason for change is that government is no longer the key source of technology development.”
He added that VC investment in the space-related and defense sector is also booming. US government investment in the Golden Dome might end up being billions of dollars, but this would prompt far more cash coming from private investors in related activity.
Quilty said the logic for dual use was inescapable. “It is dual use or die. Government does not have the cash to do everything on its own. It is a marriage of convenience. We are also changing from a government-dependent spending model to commercial supply. And the herd is moving very quickly. The risk profile is also changing. Government used to be the safe place where you could depend on the long-term view. Now, commercial companies are investing in alternate solutions. Will Golden Dome work, who knows! But I do know that the spin off commercial benefits, from dual use, will be tangible. I am a fan of Golden Dome.”
