Closing Bell - Manifest Space: Space as a Warfighting Domain with Boeing Space Intelligence & Weapon Systems Vice President & General Manager 4/23/24

Episode Date: April 23, 2024

As geopolitical tensions have soared this week, the role of space as a warfighting domain becomes ever-more critical. A key topic at the Space Symposium, Boeing’s Space Intelligence & Weapon System Vice President and General Manager Kay Sears sits down with Morgan Brennan to discuss space exploration and rising demand for national security in the final frontier.

As geopolitical tensions have soared and Congress greenlights supplemental national security spending for Israel, Ukraine and others, it casts a light on the ever more critical role of space as a warfighting domain. When you talk about missile detection and missile defense, space plays a role. It's been in focus amid strikes by Iran and Israel and was a key topic earlier this month at the Space Symposium. That's where I sat down with Kay Sears, Vice President and General Manager of Boeing's Space Intelligence and Weapons Systems business, overseeing a portfolio spanning everything from space exploration to missiles and munitions, even underwater vehicles. Sears believes the U.S. Space Force and space community overall faces two challenges, being ready to fight

or defend assets from threats and continuing to ensure space provides quote the ultimate high ground since the domain is increasingly the enabler for air sea and land operations she says lessons are being learned from current conflicts like the war in ukraine and creating resilience is key missile warning was a was a geostationary capability but now we're starting to put assets into the Middle Earth orbit and the Low Earth orbit so that we have missile warning capability in all three orbits. There's different threats that might go after one of those domains or another, but if we

have all three, then we have a depth to that mission. And Boeing in particular is working on missile warning capability through our Millennium subsidiary. They are really a small SAP provider. They have a hot production line, which those production lines, when you're talking about the need to get more into space in order to protect space, those production lines are critical. Missile tracking has been a big focus of the Space Force and broader Defense Department, with a number of contracts and programs underway.

Boeing will report earnings this week, and then, within its defense, space and security business, the focus will turn to a long-delayed, high-profile civil space program. NASA's commercial crew, as Boeing prepares to send astronauts to the International Space Station for the first time with its Starliner capsule. We are ready now. and it feels different. It was the right decision. It probably signals that safety and quality culture that we just talked about. But we're super excited.

The astronauts are excited. On this episode, Sears discusses space across all of its markets, national security, civil and commercial. I'm Morgan Brennan, and this is Manifest Space. Joining me here at Space Symposium, Kay Sears of Boeing. She is Vice President and General Manager of Space Intelligence and Weapons Systems. It's great to speak with you again. I can't believe it's been a year since the last time you and I were actually on stage having a discussion here at Space Symposium. Yeah, I'm excited for this next step, right? Yeah,

and you have some stuff afoot at Boeing, so I think maybe the place we can start with is what we should be watching for out of your piece of the portfolio at Boeing here in 2024. I think we talked maybe a little bit about this last time, but when I took on the portfolio at Boeing, because it went beyond space and included weapons and intelligence, it has really given me a different perspective. Because if we're going to go into battle, then we really have to understand that multi-domain integration. And that's what this portfolio has enabled me to do, along with a couple of the other divisions within Boeing. So we're really thinking holistically about that, those mission threads that we can pull across the domains

to really deliver those effects. So our strategy at Boeing has become more about global reach, global strike, and stringing together those capabilities. So that's probably the biggest change since the last time we talked, is just this real emphasis on multi-domain and the ability to connect capability. So how does space fit into that? Space is probably the most critical element, and mainly because it's the high ground.

So there's two real challenges for the space force and the space community. One is we have to be ready to fight in space, so defending our space assets, because there's threats in space now, and peer competitors. But then we also have to continue to provide space as the ultimate high ground for our air domain and our sea domain and our land domain. And those services have really started to really understand what space brings to the fight and the fact that as we get, let's just take Indo-PACOM as a region, as we move closer to an adversary's location, some of the ways that they might fight have to change,

and space becomes the enabler at that point in time. And, of course, that also raises the point that space and so much tied to space critical infrastructure, we've seen it with Ukraine when Russia invaded, we've seen it in the Middle East as you see that conflict playing out right now, is that space is really that first domain or infrastructure tied to space that is impacted when a move is made. So I guess it raises the question as well as how do you protect it.

Right. And we are learning so much about the Ukraine war in terms of jamming and how some of our systems are performing. We're taking all of those lessons learned and really understanding that. And the way that we protect in space is through what we call resiliency. And there's different ways of getting at resilience, but multi-orbit capability is probably the single most important thing we can do to create resilience. So think about missile warning. Missile warning was a geostationary capability, but now we're starting to put assets into the middle earth orbit and the Low Earth orbit so that we have missile warning capability in all three orbits. There's different threats that

might go after one of those domains or another, but if we have all three, then we have a depth to that mission. And Boeing in particular is working on missile warning capability through our Millennium subsidiary. They are really a small sat provider. They have a hot production line, which those production lines, when you're talking about the need to get more into space in order to protect space, those production lines are critical. You don't want to shut them down. You want to keep feeding them with new capabilities, new payloads. So Millennium Space and their focus on missile warning and missile track is really helping drive resiliency into that mission as an example.

And of course, there are a couple of competitions tied to this type of capability that I think Boeing is bidding on right now as well. So I guess, how does it speak to this opportunity from a business standpoint, from a capability standpoint, as those competitions play out? It really starts with a deep understanding of the threat, because as we look at the capabilities of Boeing and what we know we can do and what we can deliver, we want to be very targeted in our investment. We want to spend our IRAD in the smartest ways possible so that we're actually addressing that threat. And one thing that has really changed, too, in the last year since we talked is the ability to share threat data with our allies, really build that picture of the threat.

The Space Force and the DOD have been very good at keeping industry included in that, less so on the operational side, on the war gaming side. But back to your question, I think targeted investment, understanding the threat has enabled us to focus our energy on what's really going to make a technological difference. And that's where we've invested. And that's where when it comes to competition, I feel like we have an advantage. Are we moving fast enough as a country in terms of getting some of these new capabilities deployed for these battles of the future, conflicts of the future? We are not. And this goes to being on a wartime footing.

I don't know how to explain it, but we are not on a wartime footing. We do not have a wartime budget. We do not have a wartime acquisition process. And so it just boggles my mind. How do we get there? How do we get on a wartime footing? We've heard here at the show, 2026, 2027, very, very important dates. We're going to go to war with what we have and what we can make in that short time frame. So we need everyone to be on a wartime footing. And I think that includes the acquisition community. It includes our allies. It includes industry. It really, we just can't fall back on process and procedures and things like that. It's not going to get us there. Can you move more quickly at Boeing as well? Yes, we can move more quickly and we're having that dialogue. Hot production lines, again,

is another example. Don't let those shut down. Let's talk about how do we iterate on that production line. How do we make open systems a reality so that we can plug and play new capability? But those production lines are some of the most important assets that we have right now because we can continue to produce, whether it's small sats, whether it's medium sats, things like our WGS at Millennium Space, they have a Cicero bus that is plug and play, two unit, mission payload. So we could insert that. Those are some of the ways we know we can go faster.

The 80% solution, the good enough, looking at requirements, peeling those back to what's absolutely necessary. And something I think you would really appreciate, which is what is the right question to ask industry? Is it, hey, here's a set of requirements, or is it you tell us what you can do in six months, 12 months, 18 months? We know how to go fast. I think we're asking industry the wrong question.

Well, I know one of the questions that's sort of circulating in the investor community right now is that with all the focus on the commercial side of the business at Boeing, safety, production, succession now factoring into the business more broadly, how is it impacting the defense and space business? Is it impacting the defense and space business? So we're one Boeing. That safety and quality culture is built into all of Boeing, the defense side as well as the commercial side. Those processes and procedures are inherent in everything that we do regardless of the product that we're building so as we encounter a situation like we are on the commercial side it just makes us all double down on what we know is the right way to do things and that can be that starts with

transparency both transparency from our engineering and quality staff, what are they seeing, what do they think needs to be changed, and it continues with transparency to our regulators and the people who are going to oversee us and obviously hold us to that quality standard. So in the defense side of the house, as in the commercial side of the house, we're one Boeing when it comes to safety and quality. Okay. Starliner, it's a big year. Starliner is poised for its first crewed mission as early as the beginning of May. Walk me through it and what does this mean in terms of the opportunity now for Starliner

beyond perhaps those six contracted missions with NASA? Yes. May the 6th. Why don't you come? Love to have you. We're extremely excited. I would just, linking maybe back to your last question, Starliner, as you know, last year, we had to make a pretty difficult decision on Starliner, which was, are we really ready? And we made the decision that we were not. There were things we still needed to focus on to really create that safe and high quality product that's gonna carry our astronauts up to the ISS. So we delayed our Starliner launch.

We are ready now. And it feels different, it was the right decision. It probably signals that safety and quality culture that we just talked about. But we're super excited. The astronauts are excited. Our vehicle is a little bit different than the other vehicle, the competitor. And so we're excited for them to test ours out. This is very much of a test flight.

And we're going to be testing a whole bunch of things and learning on this flight with our astronauts. And then we look for that cadence that you mentioned, which is the next five missions following our CERT flight. So super excited. I think what's beyond that really depends on how the industry develops in low Earth orbit, whether some of the commercial destinations emerge and become a reality. We're going to be in the transportation business to LEO, and so we're kind of watching that market to see how it develops. That's interesting. There's been a little bit of a narrative shift within the media in, I'd say, the last couple of weeks, last couple of months,

that perhaps Starliner isn't going to be the big business opportunity it was once believed to be, maybe in part because of the timing and the fact that it's taken longer than expected. Is that the right way to be thinking about it or no? I think there's an element of business case to be made, but I don't think it's really a Boeing business case. I think it's a business case for the LEO market. I think it's NASA's assumption that the LEO destination market was going to develop, that there was commercial demand to do things in LEO. We are certainly hopeful that that is going to come about. I think it's happening slower than NASA thought it would happen. So like a commercial ISS would be a great example.

We've been managing the ISS for over 30 years. It's been a wonderful scientific and exploration asset in space. The future, according to NASA, is a commercial version of that, right? And those companies have to build that case to deploy a commercial ISS. And then we're ready to take astronauts and people and scientists there. So I don't think it's necessarily a Boeing business case to be made. I think it really is the LEO destination and the commercialization of LEO. Do those business cases hold? Is there

enough demand to really commercialize that area? All right. There's always so much I could speak with you about. Your portfolio is fascinating. We're going to leave the conversation there for now. Kay Sears of Boeing, thank you so much for joining me. Thank you. That does it for this episode of Manifest Space. Make sure you never miss a launch by following us wherever you get your podcasts and by watching our coverage on Closing Bell Overtime. I'm Morgan Brennan.