DoD's $88.3M Satellite Launch Contract with SpaceX Faces Scrutiny Over Value and Competition
Contract Overview
Contract Amount: $88,318,974 ($88.3M)
Contractor: Space Exploration Technologies Corp.
Awarding Agency: Department of Defense
Start Date: 2017-03-14
End Date: 2020-08-30
Contract Duration: 1,265 days
Daily Burn Rate: $69.8K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: IGF::OT::IGF LAUNCH SERVICES TO PUT A SATELLITE INTO ORBIT
Place of Performance
Location: HAWTHORNE, LOS ANGELES County, CALIFORNIA, 90250
Plain-Language Summary
Department of Defense obligated $88.3 million to SPACE EXPLORATION TECHNOLOGIES CORP. for work described as: IGF::OT::IGF LAUNCH SERVICES TO PUT A SATELLITE INTO ORBIT Key points: 1. The contract awarded to SpaceX for satellite launch services represents a significant investment in space capabilities. 2. Competition for launch services is increasing, with multiple providers vying for government contracts. 3. Potential risks include reliance on a single provider for critical missions and evolving launch technologies. 4. The IT and Defense sectors are heavily involved in space-related procurements.
Value Assessment
Rating: questionable
The contract's value of $88.3 million for launch services needs further assessment against market rates for similar missions. Benchmarking against other government and commercial launch contracts is crucial to determine if the price reflects fair market value.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, suggesting a competitive bidding process. However, the specific pricing mechanisms and the number of bids received are critical to understanding the price discovery achieved.
Taxpayer Impact: The significant expenditure on this contract directly impacts taxpayer funds allocated to national defense and space exploration initiatives.
Public Impact
Taxpayers are funding critical satellite deployment for national security or scientific purposes. The contract supports the growing commercial space industry and its role in government services. Successful execution of the launch is vital for the agency's mission objectives.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for cost overruns if launch windows shift or technical issues arise.
- Dependence on a single contractor for a critical service.
- Market volatility in the launch services sector.
Positive Signals
- Leverages a leading private sector provider in space exploration.
- Supports a key component of national defense infrastructure.
- Firm fixed price contract provides cost certainty.
Sector Analysis
This contract falls within the Defense sector, specifically related to IT and advanced technology for space operations. Spending benchmarks in this area are highly variable due to the specialized nature of launch services and the rapid pace of technological advancement.
Small Business Impact
The data does not indicate any specific involvement or benefit to small businesses in this particular contract. Further analysis would be needed to determine if subcontracting opportunities were made available.
Oversight & Accountability
Oversight by the Department of the Air Force is essential to ensure the contractor meets all performance requirements and delivery schedules. Regular reporting and performance reviews are key accountability mechanisms.
Related Government Programs
- Nonscheduled Chartered Freight Air Transportation
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- High contract value.
- Potential for single-source dependency.
- Complexity of space launch services.
- Evolving technology landscape.
Tags
nonscheduled-chartered-freight-air-trans, department-of-defense, ca, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $88.3 million to SPACE EXPLORATION TECHNOLOGIES CORP.. IGF::OT::IGF LAUNCH SERVICES TO PUT A SATELLITE INTO ORBIT
Who is the contractor on this award?
The obligated recipient is SPACE EXPLORATION TECHNOLOGIES CORP..
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 $88.3 million.
What is the period of performance?
Start: 2017-03-14. End: 2020-08-30.
What was the basis for selecting Space Exploration Technologies Corp. given the full and open competition, and how did the final price compare to other bids?
While awarded under full and open competition, the specific rationale for selecting SpaceX and a detailed comparison of its bid against competitors are not provided in the summary data. Understanding the evaluation criteria and the range of bids received is crucial for assessing the value obtained. This information would typically be found in the contract award documentation and agency procurement files.
What are the specific risks associated with relying on a single provider for satellite launch services, especially for critical national security missions?
Reliance on a single provider creates significant risk. If SpaceX faces technical issues, production delays, or unforeseen operational challenges, it could jeopardize critical national security missions requiring timely satellite deployment. This dependence also limits the government's leverage in future negotiations and could stifle innovation if alternative providers are not actively cultivated.
How does the $88.3 million cost compare to industry benchmarks for similar satellite launch missions, and what factors justify this price point?
Benchmarking this $88.3 million cost requires detailed comparison with similar firm-fixed-price contracts for launching comparable satellite payloads into similar orbits. Factors influencing the price include the satellite's mass, the required orbit, launch vehicle capabilities, and the specific terms of service. Without access to detailed market research or a breakdown of SpaceX's costs, it's difficult to definitively assess if this represents a fair market price.
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: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 2
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: 1 ROCKET RD, HAWTHORNE, CA, 90250
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $88,318,974
Exercised Options: $88,318,974
Current Obligation: $88,318,974
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2017-03-14
Current End Date: 2020-08-30
Potential End Date: 2020-08-30 00:00:00
Last Modified: 2021-02-27
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