The Legal Gauntlet of Space Hardware

By John Gordon
Space Industry Attorney at Taft

Why is it sometimes easier to launch a rocket than to legally build its parts in a warehouse in Ohio?

Welcome to the world of space manufacturing law… where outdated rules, regulations, and compliance contradictions can stall innovation before ignition.

I recently negotiated a rocket manufacturing subcontract for an Other Transaction Authority (“OTA”) prime contract. OTAs are a peculiar type of prime government contract where the typical defense contracting rules (FAR and DFARS) don’t apply, and are governed solely by the prime contract itself.

While this is well known in the government contracting world, I could not fault the other side when they sent a first draft of the subcontract filled with DFARs clauses and no flow-downs (the rules to be passed down from the prime into the subcontract). I had to strip out the DFARS clauses on the first round, only to have those same irrelevant regulations re-inserted in the second draft.

This became a spot-on example of the legal confusion facing the space industry today: two startups, both cash-strapped, were wasting time on compliance frameworks built for billion-dollar defense contractors to build a rocket that didn’t exist yet.

Space hardware, engines, avionics, propellant systems, payload components, isn’t just hardware. It’s legally sensitive, strategically scrutinized, and buried in acronym-laced compliance: ITAR, EAR, DFARS, NFS, FAA, FCC, NOAA.

You may still be prototyping in a garage, but regulators already see you as part of national security infrastructure.

One of the biggest blind spots? Export control. Many founders assume they’re fine as long as they’re not shipping satellites abroad. But under ITAR, even discussing technical data with a non-U.S. citizen employee can trigger a “deemed export.”

That CAD file sent to a subcontractor in Poland? Possibly is a violation. Even well-meaning attempts to comply can go wrong, like those “U.S. citizens only” job posts on LinkedIn, which often violate federal law while trying to follow it.

Space hardware is not just hard to build, it is also a logistical nightmare to move. Moving space hardware isn’t like deploying software. It’s insurable, regulated, and sometimes suspicious cargo. Between ITAR restrictions, shipping insurance headaches, and the fact that most commercial carriers get nervous around things that say “rocket” on the box, many companies may have to get creative getting their goods to the launch site.

And getting it to the launch site is only the beginning. Next comes the FAA for launch, the FCC for spectrum, and NOAA if your payload images Earth. Each agency has its own forms, timelines, and demands, and none of them care that your spacecraft is the size of a loaf of bread or launching in two weeks.

In space, the barriers aren’t just physical, they’re regulatory. Understanding them early can be the difference between orbit and a missed opportunity.

If we want more capable, secure, and sustainable systems, the legal scaffolding around the factory floor must be as rigorous and thoughtful as the engineering happening inside.