Air Force turns to nontraditional contracting for space technology projects

WASHINGTON — The Air Force just over a year ago formed a Space Enterprise Consortium to expedite the development and prototyping of satellites, ground systems, space sensors and other technologies that U.S. adversaries are advancing at a rapid pace.

Air Force Secretary Heather Wilson hailed the SpPEC as a successful business model that cuts red tape considerably compared to traditional defense contracting. The consortium so far has started 34 projects worth about $110 million and has been authorized to fund nearly $400 million in additional projects over the next four years.

“The initial ceiling for SpEC was $100 million but was increased to $500 million in order to address the emphasis and demand for other transactions agreements to support prototyping efforts,” Air Force Capt. Benjamin Leaf, the SpEC program manager, told SpaceNews in a recent interview.

“We are changing space acquisitions in multiple ways,” Leaf said. The consortium does not follow the arcane defense acquisition regulations and issues solicitations in a simpler format. SpEC requires traditional defense contractors to work with nontraditional vendors, he said. “This allows for teaming and understanding innovative capabilities.”

Of the 218 companies that have joined the consortium to date, about 25 percent are established Pentagon contractors and and 75 percent are commercial space vendors and startups that rarely have worked with the government. Large defense contractors are expected to either fund one-third of the cost of a project, or otherwise ensure there is “significant participation from a nontraditional entity,” Leaf said. “Almost all our awards have nontraditional participation” either as prime or subcontractors.

“The government is trying to become less prescriptive of engineering needs and focusing more on solving the operational problem within a cost and schedule constraint,” Leaf said. The average timeline from solicitation to award has been roughly 90 to 110 days.

To compete for contracts, bidders have to pay a membership fee to join the consortium — organized as a nonprofit venture managed by a private contractor ATI. As the consortium manager, ATI is responsible for registering companies. It puts on webinars and conferences for member companies and government officials to share information. ATI also manages contracts on behalf of the government, and charges a percentage of the cost to cover expenses, but is not allowed to make a profit.

Leaf said projects planned for fiscal year 2019 include space situational awareness, navigational user equipment, space weather sensors, software processing and a potential requirement from the U.S. Army.

Air Force seeks new pool of vendors

The Air Force Space and Missile Systems Center, which oversees the consortium, wants to increase the use of commercial space technology in military projects, Leaf said. “The gap between the traditional defense vendor pool and the innovative technologies offered by nontraditional vendors is steadily shrinking, with SpEC being a strong avenue in that progress.”

When the Pentagon decided that space should be treated as a domain of war, it became apparent that the traditional procurement methods would not fit the bill for many of the military’s emerging needs, Leaf said. “It starts with the acquisition process,” he said. “The current process has been slow not only in the contractual manner in which projects are awarded but also in execution, with long time frames to deliver capabilities.”

To attract commercial vendors that typically would not seek government work, the SpEC uses cost-sharing agreements known as Other Transactions Authority (OTA) that have for years been common practice at NASA and the Defense Advanced Research Projects Agency.

The Pentagon in April approved the $500 million spending ceiling for SpEC. That money is not like regular DoD funding, Leaf explained. The $500 million is the “total prototype throughput of the agreement” over five years. “We have four years remaining before we have to re-compete the consortium manager contract.” Each prototype project is counted as a “contract modification” in the agreement with ATI.

Decisions on what projects to take on are driven by requests from DoD and Air Force leaders. “I have my ear to the ground as far as requirements or mission areas that need specific prototyping efforts,” said Leaf. “Sometimes folks come to me. It’s a two-way conversation.”

A group of military officials and ATI contractors review the requests. “We study what these programs are trying to do and what we can legally do under SpEC as a prototyping effort,” he explained. “Then we generate a solicitation.” The first round is a request for white papers from interested bidders. Next are more detailed proposals with cost information.

Over the past year, the SpEC has awarded prototyping contracts for micro-satellites, missile tracking sensors, hosted payload interface units, ground-control and data processing software for the Space Based Infrared missile warning system, protected tactical satellite communications and cyber secure software. Leaf said upcoming competitions will focus on many of these same areas. New projects will address space situational awareness and a ground component for a low-Earth orbit constellation that DARPA is developing for future military use.

Startups pursuing government work

In response to government interest in space startups and in using nontraditional contracting, the consulting firm Deloitte recently sponsored a mentoring program known as Space 2.0 Accelerator. Six companies that collectively have received more than $60 million in private capital were selected for a seven-week program that wrapped up in December, run by the tech incubator Dcode. The idea was to teach companies about contracting methods like OTA, and to give government agencies a taste of what’s available in the private sector. “We’ve seen private investment in space technology skyrocket in recent years,” said Meagan Metzger, CEO of Dcode.
The six space ventures selected were Infinite Composites Technologies, Kepler Communications, Metamaterial Technologies Inc., RBC Signals, Slingshot Aerospace and tacit.io. The companies met with representatives from the Air Force, Army, Coast Guard, NASA and the National Oceanic and Atmospheric Administration.
Nate Ashton, director of Dcode accelerator programs, said many startups struggle to break into the government market. “Space is where cyber was 20 years ago in terms of government awareness of the state of technology,” Ashton said. A lot of companies stay away from defense contracts but eventually realize they need the work. “Government at the end of the day spends more than anyone else on the space business.”

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