SpaceX is building a spy satellite network for the US government, and the price tag keeps climbing. The company’s Starshield division has been tapped to develop MILNET, a classified military communications constellation that will put roughly 480 satellites into low-Earth orbit, equipped with inter-satellite laser links and encryption designed to keep adversaries locked out.

The core contract with the National Reconnaissance Office was originally valued at $1.8B when signed in 2021, though the deal wasn’t made public until 2024. Additional funding has since pushed the total commitment north of $2B, with a $277M budget request for fiscal year 2026 and a separate $57M contract awarded in April 2026 specifically for demonstrating satellite-to-satellite communications using the Link-182 standard.

What MILNET actually is

MILNET borrows heavily from the technology SpaceX developed for its commercial Starlink constellation, but with a fundamentally different mission: providing resilient, high-bandwidth data relay for the US military and intelligence community.

The architecture relies on mesh networking in low-Earth orbit. Instead of routing sensitive data through ground stations that can be jammed, hacked, or physically destroyed, the satellites talk directly to each other using laser links. If one node goes down, traffic reroutes through the mesh.

The network integrates with US missile defense programs, including the initiative known as Golden Dome.

Starshield itself was formally unveiled in December 2022 as SpaceX’s dedicated government and military offering.

The government-owned, contractor-operated model

MILNET follows a government-owned, contractor-operated model. SpaceX builds and launches the satellites, but the US government retains ownership of the constellation and the data flowing through it.

The $57M Link-182 demonstration contract, scheduled for completion by April 2027, is a proof-of-concept for the inter-satellite crosslink technology. Link-182 is a DoD standard for secure satellite-to-satellite communication.

What this means for investors

SpaceX remains private, so you can’t buy the stock on any exchange.

The $277M FY2026 budget request signals ongoing funding beyond the initial contract. Traditional defense primes like Lockheed Martin and Northrop Grumman have historically dominated military satellite programs. SpaceX’s ability to win a contract of this magnitude, leveraging commercial technology and its launch economics, puts pressure on incumbents in this sector.

Because so much of MILNET is classified, investors and analysts have limited visibility into timelines, technical milestones, and potential cost overruns.