Non-traditional contractors are pushing to get a leg-up against massive primes that have dominated the defense industry for decades, and the director of the Space Development Agency says he wants to be an enthusiastic partner.
SDA has been a leader in bringing in non-traditional contractors as primes for its Proliferated Warfighter Space Architecture, the series of satellites it’s launching for data transport and missile warning/missile tracking. The test series -- Tranche 0 -- began launching last year, while the first operational series -- Tranche 1 -- will come online later next year.
Tranche 2 Transport Layer-Alpha and -Beta and Tranche 2 Tracking Layer contracts have been awarded, and SDA released a request for the Gamma variant of the Transport Layer in March.
In an interview, SDA Director Derek Tournear described the contractor makeup as “a good mix” of traditional primes and new entrants into Defense Department work. He said bringing in new companies, along with continued partnership with the traditional primes, is vital to the agency’s goals in changing the acquisition landscape for space programs.
“Our position as the constructive disruptor, to really show the department how things can be done differently, means . . . not only that we in the government execute differently but all of our primes need to execute and think differently as well,” Tournear said.
“The non-traditionals from the start think and act differently from a traditional prime,” he added.
SDA has plans to launch dozens of satellites into low-Earth orbit on schedules lasting about three years from contract award to launch -- a relatively quick timeframe not often heard of within DOD bureaucracy.
In some ways, Tournear said, smaller or non-traditional businesses are more easily able to meet these schedules. While contractors like Lockheed Martin or Northrop Grumman have been successful in competing for SDA contracts, some of the other awardees have more experience with tight schedules and fixed-fee contracts.
“They do not have all of the infrastructure and processes in place that a typical DOD prime has accumulated over the years to deal with the cost-plus models,” Tournear said. “They’re much leaner when it comes to that.”
Those businesses, like Sierra Space, Rocket Lab and York Space Systems, have done more commercial work, which Tournear said is often done with firm, fixed-price contracts and short timelines. These acquisition strategies work because they focus on mature technology that is ready for delivery, as opposed to many of the cost-plus-incentive-fee contracts that are pervasive across DOD to develop new capabilities.
Expanding the industrial base
SDA’s approach of multiple contracts that follow a more commercial model has been a boon for some of the non-traditional companies, some business executives told Inside Defense. Since the businesses know another contract will open in a few years or even months, they can hope to compete again, even if they lose out on their first bids.
“There’s only so much capacity in our industry, and it’s really challenging to grow capacity when all the work is going to just a few players,” said Richard French, Rocket Lab senior director of business development and strategy for space systems.
SDA has offered Rocket Lab the company’s first opportunity as a prime contractor for the Tranche 2 Transport Layer-Beta satellites, French said. The company will build 18 satellites for $515 million. Lockheed and Northrop are also building Beta variant satellites with Lockheed building 36 for $816 million and Northrop building 36 for $733 million.
Growing that capacity with new entrants “helps not only SDA,” Tournear said, “but it helps the entire marketplace by making it more competitive.”
Capability, speed and price are key tenets of SDA’s acquisition strategy, which York Space Systems CEO Dirk Wallinger said matched the mission he founded the company with about a decade ago.
“Our core ethos and what we’re based around is having amazing capabilities delivered at a schedule never before seen and then, obviously, a price point never before seen,” Wallinger said.
York was one of the first primes selected for the PWSA as it joined Lockheed Martin for the Tranche 0 Transport Layer with each company building 10 of the demonstration satellites. SDA awarded York $94 million for the satellites and awarded Lockheed $187.5 million.
York’s satellites were used to demonstrate the Link 16 tactical datalink system can be routed beyond line-of-sight through the SDA satellites, the first time the system used satellites for assured connectivity.
York is also building 62 of the Tranche 2 Transport Layer-Alpha satellites for $617 million. Northrop is building another 38 for $732 million, and those satellites will be placed in two orbital planes.
Sierra Space, which spun-off from Sierra Nevada Corp. in 2021, will make 18 space vehicles for the Tranche 2 Tracking Layer. L3Harris and Lockheed will also make satellites for the program with costs up to $919 million and $890 million, respectively, while Sierra’s award caps out at $740 million.
“They were looking for speed in their acquisition,” Erik Daehler, vice president of orbital missions and services at Sierra, said. “A smaller company like ours has the ability to pivot and make decisions quickly.”
The day SDA awarded Sierra Space the contract, Daehler said he moved 85 employees from different units to staff the program. He attributes the flexibility to move employees like that to the company's commercial background and size.
Navigating bureaucracy
Meanwhile, Daehler said smaller companies can seek to address specific problems brought by the Defense Department without needing to sell existing or legacy ideas. They can also be nimbler and pivot ideas.
“We can look at the problem with an entirely new set of lenses,” he said. “We’re not encumbered by the way that we’ve built before or with an existing production line or a program of record that we’re trying to protect. We can come in and say, ‘What is the mission problem that you’re trying to solve?’ and solve it in the most efficient way possible.”
There are, of course, some challenges when working with a non-traditional prime, Tournear said. Many of those are related to the bureaucracy that is needed for a government program. Getting reports in the right format and to the level of detail requested is a significant hurdle.
“The government, understandably, isn’t allowed to just buy things commercially like you or I would,” Wallinger said.
Still, navigating the red tape shouldn’t be the focus, he added.
“If you’re doing it more affordably and more quickly, that’s the part that matters,” Wallinger said.
Tournear agrees, hoping to influence the Pentagon to understand that innovative practices with an expanding industrial base is going to require change.
“We have to accept that that’s not the level of insight that we’re going to get,” he said.
Building ‘bench strength’
The new primes are also learning the process as they become more established with DOD acquisitions.
Sierra is aiming to speed up the learning process, Daehler said, by building up its “bench strength” and hiring employees who have worked in or adjacent to DOD programs before.
“We don’t have the same bench strength and heritage understanding of some of these missions, so we have to bring in that extra talent,” he said.
Daehler himself came to Sierra after years with Lockheed Martin.
Along with acquisition experience, Daehler brought with him a rolodex of contacts, as he believes connections are key to maintaining DOD partnerships. His team has personal relationships with the customer, but he said the company still needs to build those relationships, which will in turn build trust.
“The best way to build organizational trust is to deliver on your commitments,” Daehler said. “So, we’re being careful and methodical about the programs we go after -- we’re not bidding on too many -- and then we’re making sure we hit all our milestones on all of our commitments.”
Rocket Lab will need to prove itself on Tranche 2 if it hopes to win more contracts. Unlike the traditional competitors, the company doesn’t have a track record as a prime, either good or bad.
The company has done payload integration and spacecraft-level integration and testing, French said, but now it has to select subcontractors and teammates to make the program a success.
“This is a new challenge for us,” French said. “We’re doing some of the things we’ve done before in terms of designing and building a satellite that does a challenging mission, but now we’re operating at the prime level.”