DoD's $140M contract for satellite bus development and launch, with a 1-year operational commitment

Contract Overview

Contract Amount: $14,000,000 ($14.0M)

Contractor: K2 Space Corporation

Awarding Agency: Department of Defense

Start Date: 2024-12-18

End Date: 2026-12-17

Contract Duration: 729 days

Daily Burn Rate: $19.2K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: R&D

Official Description: COMPLETING THE FIRST MEGA CLASS SATELLITE BUS, DESIGNING AND BUILDING DAF PAYLOAD INTERFACES, INTEGRATING THOSE PAYLOADS ONTO THE BUS, LAUNCHING THE COMPLETED SATELLITE, AND OPERATING THE SATELLITE FOR A MINIMUM OF 1 YEAR AFTER LAUNCH

Place of Performance

Location: TORRANCE, LOS ANGELES County, CALIFORNIA, 90502

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $14.0 million to K2 SPACE CORPORATION for work described as: COMPLETING THE FIRST MEGA CLASS SATELLITE BUS, DESIGNING AND BUILDING DAF PAYLOAD INTERFACES, INTEGRATING THOSE PAYLOADS ONTO THE BUS, LAUNCHING THE COMPLETED SATELLITE, AND OPERATING THE SATELLITE FOR A MINIMUM OF 1 YEAR AFTER LAUNCH Key points: 1. The contract focuses on a critical phase of satellite development, from bus completion to initial operation. 2. This award represents a significant investment in advanced satellite capabilities for the Department of Defense. 3. The fixed-price nature of the contract shifts performance risk to the contractor, K2 Space Corporation. 4. The duration of 729 days suggests a complex integration and testing process. 5. The contract's scope includes payload integration and launch, indicating a comprehensive approach to satellite deployment. 6. The exclusion of sources clause warrants further investigation into the rationale for limited competition.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific details on the satellite's capabilities and comparable projects. The $140 million figure covers a comprehensive lifecycle from design to initial operation, which may represent reasonable value if the technology is cutting-edge and the operational period is met. However, the 'exclusion of sources' competition type raises concerns about whether the government secured the best possible price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES.' This indicates that while the initial intent may have been full and open competition, certain sources were excluded, leading to a more limited field of bidders. The specific reasons for this exclusion are not provided but could relate to specialized capabilities, prior performance, or security requirements. The limited competition may have impacted the government's ability to achieve the most competitive pricing.

Taxpayer Impact: The exclusion of sources limits the potential for competitive pressure, which could result in higher costs for taxpayers compared to a truly full and open competition.

Public Impact

The Department of Defense will benefit from enhanced satellite capabilities for national security and defense operations. The contract will deliver a completed satellite bus, integrated payloads, launch services, and one year of post-launch operations. The geographic impact is primarily national, supporting defense infrastructure, though the satellite's operational reach could be global. The contract may stimulate innovation and job creation within the aerospace and defense sectors, particularly in specialized engineering and manufacturing roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 'exclusion of sources' clause limits transparency and potentially reduces competitive pricing, raising concerns about value for taxpayer money.
Lack of detailed technical specifications makes it difficult to assess the true cost-effectiveness of the satellite system.
The long duration and complex scope increase the risk of cost overruns or schedule delays, despite the fixed-price nature.

Positive Signals

The firm-fixed-price contract structure incentivizes contractor efficiency and cost control.
The comprehensive scope, including launch and initial operations, suggests a streamlined acquisition process for a critical capability.
K2 Space Corporation's involvement indicates a reliance on specialized expertise for advanced satellite development.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on advanced physical and engineering sciences related to satellite technology. The aerospace and defense industry is characterized by high R&D investment, long development cycles, and significant government procurement. Comparable spending benchmarks would typically involve other large-scale satellite development and launch programs, which often run into hundreds of millions or even billions of dollars depending on complexity and mission requirements.

Small Business Impact

The contract data indicates that small business participation is not a primary focus, as the 'small business set-aside' field is false. There is no explicit mention of subcontracting requirements for small businesses. This suggests that the prime contractor, K2 Space Corporation, is expected to handle the majority of the work, potentially limiting opportunities for small businesses in this specific contract unless they are direct suppliers or partners to K2 Space.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Air Force, a component of the Department of Defense. Mechanisms would include contract performance reviews, milestone tracking, and financial audits. Transparency is facilitated through contract award databases, but specific operational details and oversight reports may be classified due to national security implications. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse.

Related Government Programs

Space-Based Defense Systems
Satellite Manufacturing and Launch Services
Department of Defense Research and Development Programs
Advanced Technology Development Contracts

Risk Flags

Limited Competition
Lack of Detailed Technical Specifications
Potential for Cost Overruns (inherent in complex R&D)
Reliance on Specialized Contractor Capabilities

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.0 million to K2 SPACE CORPORATION. COMPLETING THE FIRST MEGA CLASS SATELLITE BUS, DESIGNING AND BUILDING DAF PAYLOAD INTERFACES, INTEGRATING THOSE PAYLOADS ONTO THE BUS, LAUNCHING THE COMPLETED SATELLITE, AND OPERATING THE SATELLITE FOR A MINIMUM OF 1 YEAR AFTER LAUNCH

Who is the contractor on this award?

The obligated recipient is K2 SPACE CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $14.0 million.

What is the period of performance?

Start: 2024-12-18. End: 2026-12-17.

What specific capabilities will the satellite bus and integrated payloads provide to the Department of Defense?

The provided data indicates the contract covers 'COMPLETING THE FIRST MEGA CLASS SATELLITE BUS, DESIGNING AND BUILDING DAF PAYLOAD INTERFACES, INTEGRATING THOSE PAYLOADS ONTO THE BUS, LAUNCHING THE COMPLETED SATELLITE, AND OPERATING THE SATELLITE FOR A MINIMUM OF 1 YEAR AFTER LAUNCH.' While 'mega class' suggests a large and potentially advanced satellite, the specific mission objectives, sensor types, or communication capabilities of the integrated payloads are not detailed. This information is crucial for understanding the strategic value and operational impact of the satellite system. Without these specifics, it's difficult to fully assess the necessity and effectiveness of the $140 million investment beyond the general enhancement of DoD's space-based assets.

What is the rationale behind the 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' award type, and how did it impact pricing?

The 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' award type suggests that the government initially intended to solicit bids from all responsible sources but subsequently excluded certain potential bidders. The reasons for exclusion are not specified in the provided data but could stem from unique technological requirements, security clearances, or prior performance issues with specific companies. This limited competition inherently reduces the pool of potential offerors, which can diminish price discovery and potentially lead to higher costs for the government compared to a truly unrestricted full and open competition. The impact on pricing is therefore likely negative, although the exclusion might have been deemed necessary to secure specialized capabilities or ensure program success.

How does the $140 million cost compare to similar satellite development and launch contracts?

Directly comparing the $140 million cost is difficult without knowing the specific technical specifications, size ('mega class'), and mission scope of the satellite. However, large-scale satellite development, integration, and launch contracts for defense applications can range significantly. For instance, complex intelligence, surveillance, and reconnaissance (ISR) satellites or advanced communication constellations can cost hundreds of millions to billions of dollars. Simpler, smaller satellites might cost tens of millions. The $140 million for a 'mega class' bus, payload integration, launch, and a year of operation suggests a substantial, but potentially reasonable, investment if the satellite incorporates cutting-edge technology or fulfills a critical, high-demand mission. Further benchmarking would require detailed technical and performance data.

What are the key performance indicators (KPIs) and success metrics for this contract, particularly for the 1-year operational period?

The contract specifies operating the satellite for a minimum of 1 year after launch. Key performance indicators would likely revolve around satellite availability (uptime), operational readiness, data throughput or quality (depending on payload function), maneuverability, and adherence to orbital parameters. Success metrics would be tied to the achievement of the satellite's intended mission objectives, such as providing timely intelligence, enabling secure communications, or supporting navigation. The firm-fixed-price nature implies that K2 Space Corporation bears the financial risk if these operational KPIs are not met, potentially leading to penalties or reduced final payment, although the specifics of such clauses are not detailed here.

What is K2 Space Corporation's track record with large-scale, complex satellite development contracts for the DoD?

Information regarding K2 Space Corporation's specific track record with large-scale, complex satellite development contracts for the DoD is not provided in the data. To assess this, one would need to examine their past performance on similar government contracts, including their success in meeting cost, schedule, and performance requirements. A review of contract databases, past performance questionnaires, and potentially classified performance records would be necessary to evaluate their experience with 'mega class' satellite buses, payload integration, and launch services. Their ability to successfully execute this $140 million contract is contingent on their demonstrated capabilities and reliability in handling such demanding projects.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology)

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1355 SEPULVEDA BLVD, TORRANCE, CA, 90501

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $30,000,000

Exercised Options: $18,000,000

Current Obligation: $14,000,000

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: PRODUCTS OR SERVICES PURSUANT TO FAR 12.102(F)

Cost or Pricing Data: YES

Timeline