DoD awards $68.4M satellite telecommunications contract to SpaceX for 2-year period
Contract Overview
Contract Amount: $68,438,130 ($68.4M)
Contractor: Space Exploration Technologies Corp.
Awarding Agency: Department of Defense
Start Date: 2023-08-31
End Date: 2025-08-31
Contract Duration: 731 days
Daily Burn Rate: $93.6K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Other
Official Description: BEST EFFORT SUBSCRIPTION
Place of Performance
Location: FORT GEORGE G MEADE, ANNE ARUNDEL County, MARYLAND, 20755
State: Maryland Government Spending
Plain-Language Summary
Department of Defense obligated $68.4 million to SPACE EXPLORATION TECHNOLOGIES CORP. for work described as: BEST EFFORT SUBSCRIPTION Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. Fixed-price contract type aims to control costs and provide predictability. 3. The contract duration of 731 days (2 years) aligns with typical service periods. 4. Awarded by the Defense Information Systems Agency, indicating a focus on critical communication infrastructure. 5. The specific Product Service Code (PSC) 517410 points to a specialized telecommunications service.
Value Assessment
Rating: good
Benchmarking per-unit costs for satellite telecommunications services is complex due to varying bandwidth, data rates, and service level agreements. However, the firm fixed-price nature of this contract provides cost certainty for the government. Given the provider is SpaceX, known for its competitive pricing in the launch services sector, this award may represent good value, assuming the service meets all technical requirements. Further analysis would require detailed service specifications and comparison to other satellite service providers.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit a bid. The number of bidders is not specified, but this method generally fosters price discovery and encourages competitive pricing. The agency's decision to use this procurement approach suggests confidence in the market's ability to provide suitable solutions.
Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it is expected to drive down prices through market forces, ensuring the government obtains services at the best possible value.
Public Impact
The Department of Defense benefits from enhanced satellite telecommunications capabilities. This contract supports critical communication needs for military operations and personnel. The services are likely to have a national geographic impact, supporting global military presence. The contract may indirectly support jobs within the aerospace and telecommunications sectors.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for vendor lock-in if service is highly specialized and difficult to switch.
- Dependence on a single provider for critical communication infrastructure carries inherent risks.
- Geopolitical factors could impact satellite service availability and reliability.
Positive Signals
- Award to a known innovator in the space sector may lead to advanced capabilities.
- Firm fixed-price contract provides cost control and budget predictability.
- Competition suggests a robust market for these services.
Sector Analysis
The satellite telecommunications market is a rapidly evolving sector driven by technological advancements and increasing demand for global connectivity. This contract falls within the broader telecommunications industry, specifically focusing on satellite-based solutions which are crucial for areas lacking terrestrial infrastructure or requiring resilient communication. The market includes established players and newer entrants like SpaceX, which has disrupted traditional models. Spending in this area is significant as governments and commercial entities rely on satellite networks for data, voice, and video transmission.
Small Business Impact
There is no indication that this contract included a small business set-aside. Given the nature of satellite telecommunications and the primary awardee, it is unlikely that significant subcontracting opportunities for small businesses will be mandated. However, the broader ecosystem supporting SpaceX may involve small businesses in various capacities.
Oversight & Accountability
The contract is subject to standard federal procurement oversight. The Defense Contract Management Agency (DCMA) likely oversees contract performance. Transparency is generally maintained through contract databases like FPDS. The Inspector General for the Department of Defense would have jurisdiction over any potential fraud, waste, or abuse related to this award.
Related Government Programs
- DoD Satellite Communications
- Defense Information Systems Agency Contracts
- Space-Based Telecommunications Services
- National Security Space Programs
Risk Flags
- Potential reliance on a single provider for critical infrastructure.
- Service availability and performance could be impacted by geopolitical events or space debris.
- Cybersecurity risks associated with satellite communication networks.
Tags
defense, department-of-defense, space-exploration-technologies-corp, spacex, satellite-telecommunications, defense-information-systems-agency, maryland, firm-fixed-price, full-and-open-competition, delivery-order, information-technology, communications
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $68.4 million to SPACE EXPLORATION TECHNOLOGIES CORP.. BEST EFFORT SUBSCRIPTION
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 (Defense Information Systems Agency).
What is the total obligated amount?
The obligated amount is $68.4 million.
What is the period of performance?
Start: 2023-08-31. End: 2025-08-31.
What is the specific nature of the satellite telecommunications services being procured?
The provided data indicates the contract is for 'Satellite Telecommunications' under PSC 517410. While the exact services are not detailed, this typically encompasses the provision of bandwidth, data transmission, and potentially related ground support or network management services via satellite. Given the awardee, it likely involves SpaceX's Starlink or similar satellite constellation services, which are designed to provide high-speed, low-latency internet and communication capabilities. These services are critical for military operations, enabling secure and reliable communication in remote or contested environments where traditional terrestrial networks may be unavailable or vulnerable.
How does the awarded amount of $68.4 million compare to similar satellite telecommunications contracts?
Comparing this $68.4 million award requires context on the duration and scope of services. For a two-year contract, this equates to approximately $34.2 million per year. Satellite telecommunications contracts can vary widely in price based on bandwidth, service level agreements (SLAs), geographic coverage, and the specific technology used. Large-scale government procurements for global satellite bandwidth can run into hundreds of millions of dollars annually. SpaceX's entry has been noted for potentially lowering costs. Without specific details on the service parameters (e.g., number of terminals, data volume, required uptime), a precise benchmark is difficult, but the price appears within a reasonable range for dedicated satellite services for a major agency over two years.
What are the key performance indicators (KPIs) or service level agreements (SLAs) associated with this contract?
The provided data does not specify the Key Performance Indicators (KPIs) or Service Level Agreements (SLAs) for this contract. However, for satellite telecommunications services, typical KPIs would likely include metrics such as uptime/availability (e.g., 99.9%), latency (maximum acceptable delay), throughput (guaranteed minimum data rates for download and upload), and potentially jitter. The Defense Information Systems Agency (DISA) would establish these requirements to ensure the services meet the operational needs of the Department of Defense, particularly concerning reliability and performance in potentially challenging environments.
What is SpaceX's track record with the Department of Defense for similar telecommunications services?
SpaceX has a growing track record with the Department of Defense, primarily known for its launch services. However, its Starlink satellite internet service has seen increasing adoption by the DoD for tactical communications in various operational theaters, demonstrating its capability to provide rapid deployment and high-performance connectivity. While this specific contract is for telecommunications services rather than launches, the DoD's willingness to award it suggests confidence in SpaceX's ability to deliver reliable satellite communication solutions, building on prior operational experiences and potentially other smaller-scale service agreements.
What is the historical spending trend for satellite telecommunications by the Defense Information Systems Agency?
Historical spending data for satellite telecommunications by DISA would reveal trends in reliance on satellite services. DISA has consistently managed and procured a wide range of communication services for the DoD. Spending in this area has likely increased over time due to the growing demand for secure, mobile, and resilient communications, especially in support of global operations and modernization efforts. The rise of commercial satellite constellations, including those from companies like SpaceX, has also influenced procurement strategies, potentially leading to more competitive pricing and diverse service options compared to traditional, dedicated military satellite systems.
Industry Classification
NAICS: Information › Satellite Telecommunications › Satellite Telecommunications
Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › IT AND TELECOM - NETWORK
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY
Solicitation ID: HC101322R0005
Offers Received: 1
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: $70,247,300
Exercised Options: $68,438,130
Current Obligation: $68,438,130
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: HC101323D9000
IDV Type: IDC
Timeline
Start Date: 2023-08-31
Current End Date: 2025-08-31
Potential End Date: 2025-08-31 00:00:00
Last Modified: 2024-08-29
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