DoD's $9.5B United Launch Services contract for space launch services awarded without competition

Contract Overview

Contract Amount: $9,499,338,751 ($9.5B)

Contractor: United Launch Services, LLC

Awarding Agency: Department of Defense

Start Date: 2013-06-26

End Date: 2022-12-02

Contract Duration: 3,446 days

Daily Burn Rate: $2.8M/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: IGF::CT::IGF EELV FY13 + PHASE I BUY

Place of Performance

Location: CENTENNIAL, ARAPAHOE County, COLORADO, 80112

State: Colorado Government Spending

Plain-Language Summary

Department of Defense obligated $9.50 billion to UNITED LAUNCH SERVICES, LLC for work described as: IGF::CT::IGF EELV FY13 + PHASE I BUY Key points: 1. Significant investment in space launch capabilities, highlighting national security priorities. 2. Sole-source award suggests limited market options or strategic partnerships for critical services. 3. Long contract duration indicates a sustained need for reliable launch infrastructure. 4. Cost-plus contract type may incentivize contractor efficiency but requires robust oversight. 5. Focus on space launch is crucial for maintaining technological advantage and national security. 6. Geographic concentration in Colorado for launch operations.

Value Assessment

Rating: questionable

The total value of $9.5 billion over a period of approximately 9.5 years represents a substantial investment. Without competitive bidding, it is difficult to benchmark the value for money. The cost-plus incentive fee structure necessitates careful monitoring to ensure costs are controlled and performance incentives are aligned with government objectives. Comparisons to similar large-scale space launch contracts are limited due to the specialized nature of the services and the sole-source award.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This approach is typically justified when only one responsible source can provide the required services, often due to unique capabilities, proprietary technology, or urgent national security needs. The lack of competition limits the government's ability to leverage market forces to drive down prices and ensure the most cost-effective solution.

Taxpayer Impact: The absence of competition means taxpayers may not be receiving the best possible price for these critical space launch services. Without competing offers, there is a reduced incentive for the contractor to minimize costs, potentially leading to higher overall expenditures.

Public Impact

The primary beneficiaries are the Department of Defense and other government agencies requiring reliable access to space for national security and intelligence missions. Services delivered include the provision of launch vehicles, launch operations, and associated support for placing satellites and other payloads into orbit. The geographic impact is concentrated in Colorado, where United Launch Services operates its launch facilities. Workforce implications include employment for highly skilled engineers, technicians, and support staff involved in space launch operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and reduced innovation.
Cost-plus contract type can lead to cost overruns if not managed diligently.
Long-term sole-source awards can create vendor lock-in and reduce future flexibility.

Positive Signals

Ensures continuity of critical space launch capabilities for national security.
Potential for strong performance due to established relationship and specialized expertise.
Cost-plus incentive fee structure can align contractor performance with government goals.

Sector Analysis

The space launch sector is a highly specialized and capital-intensive industry dominated by a few key players. This contract falls within the broader aerospace and defense sector, which is critical for national security and technological advancement. The market is characterized by high barriers to entry, significant R&D investment, and stringent regulatory requirements. Government contracts are a major source of revenue for companies in this space, often driven by defense and intelligence needs.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Given the nature of large-scale space launch services, it is unlikely that small businesses would be primary contractors. However, there may be opportunities for small businesses to participate as subcontractors to United Launch Services, contributing specialized components or services. The extent of small business subcontracting would need further investigation.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor compliance with contract terms, cost control, and performance standards. The cost-plus incentive fee structure necessitates rigorous financial oversight to validate costs and ensure incentive targets are met. Transparency may be limited due to the sole-source nature and national security implications, but Inspector General reviews would likely apply to financial aspects.

Related Government Programs

National Security Space Launch (NSSL) Program
Space Force Launch Services
NASA Launch Services Program
Commercial Satellite Launch Services

Risk Flags

Sole-source award lacks competitive pricing pressure.
Cost-plus contract type carries inherent risk of cost overruns.
Long-term duration may limit future flexibility and innovation.
High dollar value requires stringent financial oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $9.50 billion to UNITED LAUNCH SERVICES, LLC. IGF::CT::IGF EELV FY13 + PHASE I BUY

Who is the contractor on this award?

The obligated recipient is UNITED LAUNCH SERVICES, LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $9.50 billion.

What is the period of performance?

Start: 2013-06-26. End: 2022-12-02.

What is the track record of United Launch Services in fulfilling government launch contracts?

United Launch Services (ULS), a joint venture between Boeing and Lockheed Martin, has a long and established history of successfully launching U.S. government payloads. They have been a primary provider for critical national security and scientific missions for decades. Their track record includes numerous successful launches for the Department of Defense, NASA, and other agencies, demonstrating a high degree of reliability and technical expertise in the complex field of space launch. This extensive experience likely contributed to their selection for this sole-source contract, ensuring a known and trusted entity would continue to provide these vital services.

How does the pricing structure of this cost-plus incentive fee contract compare to industry standards for similar services?

Cost-plus incentive fee (CPIF) contracts are common in complex, high-risk programs where cost and performance targets are difficult to define precisely upfront. In a CPIF contract, the final profit is adjusted based on the contractor's performance against target costs and performance objectives. While CPIF can incentivize efficiency, it also carries the risk of cost overruns if not managed meticulously. Benchmarking the specific pricing for this contract against industry standards is challenging due to its sole-source nature and the unique, high-stakes requirements of national security space launches. However, the government's oversight and negotiation would aim to ensure that the incentive structure drives value and that the final costs are reasonable given the achieved performance.

What are the primary risks associated with a sole-source award of this magnitude for space launch services?

The primary risks associated with a sole-source award of this magnitude include a lack of price competition, potentially leading to higher costs for taxpayers. There's also a risk of reduced innovation, as the contractor may face less pressure to develop more cost-effective or advanced solutions compared to a competitive environment. Furthermore, a long-term sole-source contract can create vendor lock-in, making it difficult for the government to switch providers or adopt new technologies in the future. Dependence on a single provider also increases vulnerability if that provider experiences operational issues or financial instability.

How does this contract contribute to the overall effectiveness and readiness of U.S. national security space capabilities?

This contract is fundamental to the effectiveness and readiness of U.S. national security space capabilities. It ensures the reliable and timely launch of critical satellites and payloads necessary for intelligence gathering, communications, navigation, missile warning, and other vital defense functions. By securing dedicated launch services through a long-term agreement, the Department of Defense can maintain a consistent and predictable cadence of space access, which is essential for modern military operations and strategic deterrence. The continuity provided by this contract helps mitigate risks associated with launch failures and ensures that the U.S. maintains its technological edge in the space domain.

What has been the historical spending trend for similar space launch services by the Department of Defense?

Historical spending on space launch services by the Department of Defense has been substantial and has evolved over time with technological advancements and changing geopolitical landscapes. Prior to the current contract, significant investments were made through various programs and contracts to ensure access to space. The transition from older expendable launch vehicles to more modern, potentially reusable systems, and the increasing reliance on space-based assets for military operations, have driven consistent, high-value spending in this sector. The trend reflects a growing strategic importance placed on space capabilities, necessitating ongoing, significant budgetary allocations for launch services.

Are there any specific performance metrics or milestones tied to the incentive fee structure in this contract?

While the specific performance metrics and milestones are not detailed in the provided data, cost-plus incentive fee (CPIF) contracts inherently tie a portion of the contractor's profit to achieving pre-defined targets. For space launch services, these metrics typically include factors such as launch success rate, on-time launch performance, adherence to mission objectives (e.g., achieving precise orbit), and potentially cost savings achieved below target. The incentive fee structure is designed to reward the contractor for exceeding expectations in these areas, thereby aligning their financial interests with the government's goals for mission success and cost efficiency. Robust oversight is crucial to ensure these metrics are well-defined, measurable, and appropriately incentivized.

Industry Classification

NAICS: Transportation and Warehousing › Nonscheduled Air Transportation › Nonscheduled Chartered Freight Air Transportation

Product/Service Code: TRANSPORT, TRAVEL, RELOCATION › TRANSPORTATION OF THINGS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: United Launch Alliance, L.L.C

Address: 9501 E PANORAMA CIR, CENTENNIAL, CO, 80112

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $9,953,892,653

Exercised Options: $9,953,892,653

Current Obligation: $9,499,338,751

Actual Outlays: $18,833,194

Subaward Activity

Number of Subawards: 660

Total Subaward Amount: $159,698,334

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline