DoD Awards $36.6M Contract to SpaceX for Freight Air Transportation, Ending March 2028
Contract Overview
Contract Amount: $36,600,000 ($36.6M)
Contractor: Space Exploration Technologies Corp.
Awarding Agency: Department of Defense
Start Date: 2023-08-12
End Date: 2028-03-31
Contract Duration: 1,693 days
Daily Burn Rate: $21.6K/day
Competition Type: FULL AND OPEN COMPETITION
Pricing Type: FIRM FIXED PRICE
Sector: Transportation
Official Description: AWARD FEE INCENTIVE FOR PERIOD 4
Place of Performance
Location: HAWTHORNE, LOS ANGELES County, CALIFORNIA, 90250
Plain-Language Summary
Department of Defense obligated $36.6 million to SPACE EXPLORATION TECHNOLOGIES CORP. for work described as: AWARD FEE INCENTIVE FOR PERIOD 4 Key points: 1. Significant contract value awarded to a single provider. 2. SpaceX is a major player in aerospace and launch services. 3. Potential risks include reliance on a single provider for critical transport. 4. Transportation sector contract with implications for logistics and supply chain.
Value Assessment
Rating: fair
The contract value of $36.6M over approximately 5 years suggests a moderate annual spend. Benchmarking against similar freight air transportation contracts is difficult without more specific service details, but the value appears reasonable for specialized services.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating a competitive bidding process. This method generally promotes price discovery and potentially better value for the government.
Taxpayer Impact: The competitive award process aims to ensure taxpayer funds are used efficiently for necessary transportation services.
Public Impact
Ensures critical cargo movement for Department of Defense operations. Supports advanced aerospace capabilities and national security objectives. Potential for innovation in logistics and rapid deployment of assets.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Reliance on a single vendor for a critical service.
- Potential for cost overruns if performance incentives are heavily utilized.
- Limited visibility into the specific performance metrics driving the award fee.
Positive Signals
- Award to a leading aerospace company with proven capabilities.
- Competitive award process suggests potential for good value.
- Long-term contract provides stability for critical logistics.
Sector Analysis
This contract falls within the transportation sector, specifically air freight. Spending in this area is crucial for military logistics and rapid deployment. Benchmarks are difficult without knowing the specific routes and cargo types, but large-scale government contracts often involve significant sums.
Small Business Impact
The awardee, SpaceX, is a large corporation, not a small business. There is no indication of subcontracting opportunities for small businesses within this specific award notice.
Oversight & Accountability
The contract is a delivery order under a larger agreement, suggesting existing oversight mechanisms. The award fee structure implies performance monitoring, but detailed oversight reports are not publicly available.
Related Government Programs
- Nonscheduled Chartered Freight Air Transportation
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- Single-source reliance for critical transport.
- Potential for performance-related cost increases via award fees.
- Limited public data on specific performance metrics.
- Dependence on a rapidly evolving and specialized industry.
Tags
nonscheduled-chartered-freight-air-trans, department-of-defense, ca, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $36.6 million to SPACE EXPLORATION TECHNOLOGIES CORP.. AWARD FEE INCENTIVE FOR PERIOD 4
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 $36.6 million.
What is the period of performance?
Start: 2023-08-12. End: 2028-03-31.
What specific performance metrics are tied to the award fee incentive, and how do they ensure mission effectiveness?
The award fee incentive is designed to motivate the contractor to exceed minimum performance requirements. Specific metrics likely include on-time delivery, cargo condition, adherence to flight plans, and potentially responsiveness to urgent mission needs. The Department of Defense would monitor these metrics against pre-defined targets to determine the fee amount, ensuring that taxpayer money is spent on services that demonstrably contribute to mission success and operational readiness.
What are the contingency plans if SpaceX faces operational disruptions or capacity limitations impacting delivery schedules?
Given the critical nature of defense logistics, contingency plans are essential. These would likely involve pre-identified alternative carriers or modes of transport, potentially including other government-contracted freight services or commercial options. The contract may also include clauses for penalties or reduced fees for missed deadlines, incentivizing the contractor to maintain robust operational continuity and have backup solutions in place.
How does this contract align with broader DoD strategies for supply chain resilience and diversification?
This contract, while awarded competitively, represents a significant investment in a single provider for a specialized service. DoD strategies often emphasize supply chain resilience through diversification. While SpaceX offers unique capabilities, reliance on one entity for a substantial portion of freight needs could be a point of review. Future contracting strategies might explore options to ensure redundancy and broader market participation to mitigate single-source risks.
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
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: $36,600,000
Exercised Options: $36,600,000
Current Obligation: $36,600,000
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: FA881120D0002
IDV Type: IDC
Timeline
Start Date: 2023-08-12
Current End Date: 2028-03-31
Potential End Date: 2028-03-31 00:00:00
Last Modified: 2025-11-07
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