The president may consider tightening federal oversight of Elon Musk's businesses, despite the significant reliance of the Pentagon and NASA on them, complicating the termination of Musk's contracts.
Following a contentious exchange between President Trump and Musk, Trump suggested on social media that he might terminate Musk's federal contracts to save billions in the budget, expressing surprise that President Biden had not already done so.
However, ending these contracts is not straightforward, as the Pentagon and NASA depend heavily on SpaceX for rocket launches and communications services. The president has options to increase regulatory scrutiny of Musk's operations, reversing the regulatory easing that benefited Musk's companies during Trump's previous administration.
Experts note that the Trump administration could selectively ramp up oversight, which could complicate Musk's business dealings. Additionally, Trump could suspend Musk's security clearance, impacting his role at SpaceX, which holds substantial Pentagon contracts.
Investigations into Musk's compliance with federal security clearance requirements have already been underway, and the administration could also slow down new contracts for SpaceX, potentially redirecting work to competitors like Blue Origin or United Launch Alliance.
Despite the potential for increased scrutiny, substantial financial commitments to SpaceX have already been made, including contracts for missions to the International Space Station and lunar exploration. SpaceX's services are also critical for key defense initiatives, such as the Pentagon's Golden Dome missile defense program.
SpaceX has secured nearly $18 billion in federal contracts over the past decade, with significant amounts awarded in the current fiscal year, making it one of the largest federal contractors. Experts warn that terminating SpaceX's contracts could severely hinder U.S. capabilities in space.
NASA's press secretary indicated that contracts with SpaceX are unlikely to be canceled, emphasizing the agency's commitment to achieving the President's vision for space exploration.
While Trump may have flexibility in regulating Musk's various companies, the unique capabilities of SpaceX make it difficult for NASA to find alternatives. Other contractors, such as Boeing and Northrop Grumman, have faced challenges that hinder their ability to fulfill NASA's needs.
Termination of Musk's contracts could also involve substantial fees, making it financially impractical. Musk appears to be aware of this leverage, as he initially threatened to halt flights to the space station but later retracted that statement.