From the Chair

Dear Readers,

Welcome to the inaugural issue of The Vanguard. As we launch this publication, the aerospace, defense, and national security sectors are at an inflection point; commercial space is maturing into a robust, competitive ecosystem, while traditional defense programs face evolving threats and budget pressures.

In this edition, our Featured Insight offers our outlook on the litigation trends shaping 2026 in the commercial space industry. These risks are not abstract; they directly impact financing, operations, and strategic partnerships for our clients. At Nelson Mullins, we are proud to stand at the forefront, advising on notable transactions, regulatory strategy, and dispute resolution matters.

We hope The Vanguard becomes a trusted resource for timely analysis and practical guidance.

Please feel free to reach out with feedback or to discuss how we can support your team.

Best regards,

Jeffrey H. Perry
Partner and Chair, Aerospace, Defense, & National Security Practice
Nelson Mullins Riley & Scarborough LLP
Atlanta, GA | Washington, D.C.

Featured Insight

Space Industry Litigation Trends for 2026

As 2026 unfolds, the commercial space industry continues its explosive growth, with reusable launch systems achieving routine operations, megaconstellations expanding global connectivity, in-orbit servicing becoming operational, and early demonstrations of space resource utilization on the horizon. Private capital, government partnerships, and international collaborations are accelerating this progress, but they are also amplifying legal risks. Litigation is no longer an outlier—it is an integral part of the risk landscape.

From our vantage point advising aerospace and defense clients on transactions, financings, regulatory compliance, and disputes, we anticipate several key litigation trends for 2026. These reflect the maturing intersection of rapid innovation, regulatory evolution, and competitive intensity.

1. Regulatory and Licensing Disputes Delays in FAA launch and reentry licensing, compounded by environmental reviews under NEPA, remain a flashpoint. High-cadence operators continue to challenge perceived regulatory bottlenecks. Specific examples illustrate the trend: Conservation groups have repeatedly sued the FAA over environmental assessments for SpaceX’s Starship operations at Boca Chica, Texas. Although a federal judge dismissed a major challenge in September 2025, finding the FAA had adequately addressed wildlife and habitat concerns, similar actions are likely to persist as launch rates climb and new sites come online. Additionally, the Department of Commerce’s efforts to develop authorization frameworks for novel activities (e.g., in-orbit refueling and debris removal) could invite pre-enforcement challenges and disputes over agency jurisdiction.

2. Government Contract Bid Protests NASA and DoD space programs (e.g., Commercial Lunar Payload Services, National Security Space Launch, and satellite procurements) continue to generate fierce competition. Bid protests at the Government Accountability Office (GAO) and Court of Federal Claims remain common. Recent cases underscore the stakes: In 2025, Viasat reached a tentative resolution with the Air Force in a prolonged protest over a Space Development Agency contract award, highlighting scrutiny of evaluation criteria and national security considerations. With GAO reporting steady protest volumes in fiscal year 2025 (approximately 1,688 filings), 2026 will likely see continued challenges as new entrants contest awards to established primes.

3. Intellectual Property and Trade Secret Disputes Reusable propulsion, advanced satellite bus designs, and autonomous systems are driving a surge in patent filings (as well as infringement claims). Trade secret misappropriation allegations, often tied to employee mobility in a talent-scarce market, are also rising. Export control disputes under ITAR and EAR add complexity to cross-border collaborations. While specific high-profile space IP lawsuits have been limited in recent years, the broader trend of enforcement challenges in extraterritorial settings (e.g., patents on technologies used in orbit) is gaining attention. As companies increasingly deploy proprietary systems beyond Earth’s jurisdiction, 2026 may see novel claims testing the territorial limits of IP protection.

4. Environmental and Orbital Sustainability Litigation Launch site impacts and orbital debris concerns continue to fuel claims. Environmental groups target coastal launch facilities, while growing congestion raises questions of responsibility for conjunctions and debris generation. The dismissed 2025 Boca Chica litigation demonstrates judicial deference to FAA processes in some instances, but new actions tied to debris mitigation non-compliance (under FCC and emerging international guidelines) are probable. No liability claims for in-space collisions have yet succeeded, but near-misses involving large constellations could change that in 2026.

5. Space Resource Utilization and Mining Asteroid and lunar resource extraction is transitioning from concept to demonstration missions. Companies pursuing water ice, rare metals, and regolith processing face unresolved questions under the Outer Space Treaty and national laws (e.g., the 2015 U.S. Commercial Space Launch Competitiveness Act). While no extraction has yet occurred at scale, 2025 saw intensified debate over the Artemis Accords and national licensing regimes. Potential disputes in 2026 could involve challenges to resource claims, interference with other missions, or international objections to unilateral activities. Early movers may face preemptive litigation testing whether extracted resources can be owned and commercialized without violating the Treaty’s non-appropriation principle.

6. Antitrust and Competition Scrutiny Consolidation in launch services and satellite broadband is drawing regulatory attention. Dominant players in reusable launch (e.g., SpaceX’s market power in certain orbits) and megaconstellations (e.g., Starlink’s global footprint) raise concerns about market foreclosure, pricing power, and access to essential infrastructure like spectrum and orbital slots. Although no major antitrust enforcement actions targeted the space sector in 2024–2025, broader merger reviews and the competitive dynamics of government contracting signal rising risk. Potential 2026 flashpoints include challenges to vertical integration, exclusive dealing arrangements, or spectrum allocations perceived as favoring incumbents. International competition authorities may also examine cross-border effects.

7. Labor and Employment Challenges Rapid workforce expansion has spotlighted labor issues. SpaceX’s ongoing constitutional challenge to the National Labor Relations Board (filed in 2024 and advancing through appeals in 2025) exemplifies broader questions about agency authority in highly technical, national-security-sensitive industries. Disputes over non-competes, workplace safety in test facilities, and collective bargaining rights are likely to increase.

Looking Ahead The 2026 litigation landscape will test the industry’s ability to balance ambition with accountability. Companies that integrate legal risk management into strategic planning (from robust IP portfolios and compliance programs to proactive regulatory engagement) will gain a competitive edge.

At Nelson Mullins, our Aerospace, Defense, & National Security Practice remains deeply engaged in these issues, guiding clients through transactions, disputes, and policy advocacy in this transformative sector.

Jeffrey H. Perry advises leading aerospace and defense companies on corporate transactions, financings, and strategic matters from Nelson Mullins’ Atlanta and Washington, D.C. offices.

Regulatory & Policy Updates

• FY 2026 NDAA Enacted: Signed into law on December 18, 2025 (P.L. 119-60), the Act authorizes approximately $925 billion in defense spending. Broad provisions include a 4.5% pay raise for service members, increased funding for munitions replenishment and shipbuilding, acquisition reforms to streamline prototyping and Other Transaction Authority (OTA) usage, enhanced Pacific Deterrence Initiative resources, and new restrictions on procurement involving certain foreign adversaries. Space-specific elements feature boosted support for proliferated LEO constellations, resilient missile warning/tracking systems, and commercial augmentation of positioning, navigation, and timing (PNT) capabilities.

• Outbound Investment Regime Expansion: Treasury issued clarifying FAQs in December 2025 on exemptions (e.g., publicly traded securities, certain financial services). The FY 2026 NDAA’s COINS Act establishes a statutory framework for the Outbound Investment Security Program, directing new regulations to broaden covered sectors (including hypersonics, supercomputing, AI, quantum, and semiconductors), expand “countries of concern,” and implement notification requirements, self-disclosures, and potential divestment penalties; increasing compliance burdens for U.S. persons investing in sensitive foreign technologies.

• Executive Order on Ensuring American Space Superiority (Signed Dec. 18, 2025): President Trump issued an EO establishing an “America First” space policy, directing a return to the Moon by 2028, initial permanent lunar outpost elements by 2030, deployment of nuclear reactors on the lunar surface and in orbit, enhanced capabilities to detect and counter threats to U.S. space assets, and private sector innovation via launch infrastructure upgrades and a commercial pathway to replace the ISS by 2030. Department of Commerce provisions focus on acquisition reforms preferring commercial solutions, flexible authorities (e.g., OTAs, Space Act Agreements), and spectrum leadership.

• CMMC 2.0 Implementation Accelerates: The Department of Defense’s final Cybersecurity Maturity Model Certification rule, published in late 2025, begins phased rollout in 2026. Contractors handling Controlled Unclassified Information (CUI) face mandatory Level 2 assessments (with third-party validation for higher-risk programs), impacting bid eligibility on most new DoD solicitations.

• Export Control Developments: Recent Bureau of Industry and Security (BIS) and Directorate of Defense Trade Controls (DDTC) guidance tightens controls on emerging technologies, including advanced semiconductors, quantum computing components, and certain AI models with dual-use potential. Voluntary disclosure incentives remain emphasized amid heightened enforcement.

• FAA Aviation and UAS Advancements: New rules expected to become effective January 2026 expand beyond-visual-line-of-sight (BVLOS) operations for unmanned aircraft systems under risk-based waivers, while updated airworthiness standards for advanced air mobility (e.g., eVTOL) vehicles support integration into national airspace.

• CFIUS and Supply Chain Security Focus: Treasury Department proposed regulations broaden mandatory filings for foreign investments in critical technologies, sensitive personal data, and real estate near military installations—heightening scrutiny for aerospace and defense transactions.

Recent Case Law & Enforcement Highlights

• Supreme Court Declines Review in Percipient.ai Bid Protest (Jan. 2026): The U.S. Supreme Court denied certiorari in Percipient.ai’s challenge to the Court of Federal Claims’ dismissal of its protest against a DoD AI contract award, leaving intact narrow “interested party” standing requirements for protesters not in the competitive range.

• GAO FY 2025 Bid Protest Statistics (Dec. 2025 Report): Total filings decreased 6% to 1,688 (continuing a longer-term decline), with merits decisions at a historic low. However, the “effectiveness rate” (protesters obtaining relief through sustains or voluntary agency corrective action) held steady at 52%, meaning relief in over half of all cases. GAO sustained 53 protests (14% of merits decisions), with the most common grounds: unreasonable technical evaluations, unreasonable cost/price evaluations, and unreasonable proposal rejections.

• FCA Settlement for Alleged Cybersecurity Non-Compliance (2025 Trend): DOJ continued aggressive enforcement of cybersecurity requirements under the False Claims Act, resolving multiple cases in 2025—including settlements with defense contractors and entities like Georgia Tech for misrepresented compliance with DFARS clauses.

• Defense Contractor FCA Resolution (Dec. 2025): A contractor agreed to pay over $800,000 to resolve allegations of submitting false claims related to government contracts, underscoring ongoing supply chain and performance scrutiny in defense programs.

• CMMC Phased Enforcement Begins: Following the September 2025 final rule, DoD initiated Phase 1 rollout in late 2025, requiring contractor self-assessments, affirmations, and (for higher levels) third-party validations; non-compliance now risks contract ineligibility.

• ITAR/EAR Voluntary Disclosure Emphasis: DDTC and BIS maintained focus on proactive disclosures in 2025, treating timely voluntary self-disclosures as key mitigators in enforcement actions, particularly for employee mobility and technical data violations in aerospace/defense.

• CFIUS-Ordered Divestiture (Jan. 2026): The President ordered divestiture of a U.S. digital chip business acquired by foreign entities following CFIUS review, highlighting continuing national security risks in sensitive technology transactions.

Innovation Spotlights

• Advanced Air Mobility Takes Flight: The FAA continues to advance powered-lift aircraft rules and type certifications for eVTOL vehicles in early 2026, with companies like Joby Aviation and Archer progressing toward commercial operations. These developments promise urban air mobility transformation but introduce complex regulatory, safety, and infrastructure challenges. Nelson Mullins is advising clients on FAA compliance, financing structures, and partnership agreements in this rapidly evolving sector.

• Autonomous Systems and Replicator Initiative: DoD’s Replicator program is accelerating deployment of thousands of attritable autonomous systems (drones, swarms) across domains in 2026, emphasizing AI integration and rapid prototyping under OTA authorities. Hypersonics testing also advances with recent successful flights by industry primes. These initiatives raise novel questions around ethics, export controls, and supply chain security.

• Resilient Positioning, Navigation, and Timing (PNT): Building on FY 2026 NDAA directives, DoD and commercial partners are expanding alternative PNT solutions (e.g., LEO-based augmentation, inertial/optical systems) to counter GPS jamming threats. This push enhances national security resilience while creating opportunities—and compliance obligations—for contractors integrating commercial tech into defense architectures.

• Commercial Lunar Resource Demonstrations: NASA’s CLPS program prepares for multiple 2026 landings, with Intuitive Machines and Astrobotic testing in-situ resource utilization (ISRU) technologies like regolith processing and water extraction. These missions serve as precursors to the resource utilization and international treaty risks discussed in our Featured Insight.
   

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  Contact Us Jeffrey H. Perry | jeffrey.perry@nelsonmullins.com | (404) 322-6000 (Atlanta, GA) | (202) 689-2800 (Washington, D.C.)

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