DoD's $158M Space Exploration Technologies contract for launch services awarded via full and open competition
Contract Overview
Contract Amount: $157,988,100 ($158.0M)
Contractor: Space Exploration Technologies Corp.
Awarding Agency: Department of Defense
Start Date: 2020-12-31
End Date: 2023-12-31
Contract Duration: 1,095 days
Daily Burn Rate: $144.3K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: SDA TRANCHE 0 LAUNCH SERVICE
Place of Performance
Location: HAWTHORNE, LOS ANGELES County, CALIFORNIA, 90250
Plain-Language Summary
Department of Defense obligated $158.0 million to SPACE EXPLORATION TECHNOLOGIES CORP. for work described as: SDA TRANCHE 0 LAUNCH SERVICE Key points: 1. Contract awarded for launch services, indicating a need for space access capabilities. 2. The use of a definitive contract suggests a long-term or complex service requirement. 3. The firm fixed-price structure aims to provide cost certainty for the government. 4. Awarded by the Department of the Air Force, aligning with national security space objectives. 5. The contract duration of 1095 days (3 years) points to sustained operational needs. 6. The significant value suggests a critical program with substantial resource allocation.
Value Assessment
Rating: good
The contract value of $157.99 million for launch services appears reasonable given the scope and duration. Benchmarking against similar large-scale launch contracts is challenging without more specific service details, but the price per day is approximately $144,281. This figure should be compared to industry benchmarks for similar launch capabilities, considering factors like payload capacity and mission complexity. The firm fixed-price nature provides a degree of cost control, but the overall value hinges on the successful execution and delivery of the launch services.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded under full and open competition, indicating that multiple vendors were likely solicited and had the opportunity to bid. The presence of two bidders suggests a competitive environment, which generally benefits price discovery and can lead to more favorable terms for the government. The specific details of the bidding process, including the number of proposals received and the evaluation criteria, would provide further insight into the effectiveness of the competition.
Taxpayer Impact: Full and open competition typically results in better pricing for taxpayers by fostering a competitive environment where contractors strive to offer the most cost-effective solutions.
Public Impact
The primary beneficiaries are likely components of the Department of Defense requiring access to space for national security missions. Services delivered include the provision of launch capabilities for satellites or other space-based assets. The geographic impact is global, enabling deployment of assets into Earth orbit or beyond. Workforce implications may include specialized roles in aerospace engineering, launch operations, and program management within the contractor and supporting industries.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for cost overruns if unforeseen technical challenges arise during launch operations.
- Dependence on a single contractor for critical launch services could pose supply chain risks.
- The complexity of space launch operations inherently carries risks of mission failure.
Positive Signals
- Awarded through full and open competition, suggesting a robust selection process.
- Firm fixed-price contract provides cost certainty and limits the government's exposure to cost increases.
- The contractor, Space Exploration Technologies Corp., is a recognized leader in the launch services industry.
- The contract duration indicates a sustained need and potential for reliable service delivery.
Sector Analysis
The space launch services sector is a critical component of the aerospace industry, supporting both commercial and governmental needs for accessing space. This contract falls within the defense sector's broader investment in space capabilities, driven by national security imperatives. The market is characterized by high barriers to entry due to technological complexity and significant capital investment. Spending in this area is often driven by the need for satellite deployment, communication, surveillance, and other space-based operations. Comparable spending benchmarks would typically involve analyzing the cost per launch for similar payload classes and orbital destinations.
Small Business Impact
There is no indication that this contract included a small business set-aside. Given the nature and scale of space launch services, it is unlikely that small businesses would be the primary awardees for the prime contract. However, opportunities may exist for small businesses to participate as subcontractors to the prime contractor, contributing specialized components or services.
Oversight & Accountability
Oversight for this contract would primarily reside with the Department of the Air Force contracting and program management offices. Accountability measures are embedded within the contract terms, including performance requirements and payment schedules tied to milestones. Transparency is facilitated through contract award databases and public reporting requirements. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.
Related Government Programs
- National Security Space Launch (NSSL) Program
- Space Force Launch Services
- Satellite Deployment Contracts
- Orbital Insertion Services
Risk Flags
- Potential for launch failure
- Schedule delays impacting follow-on missions
- Dependence on specific launch vehicle technology
- Cost overruns if unforeseen technical issues arise
Tags
defense, department-of-defense, department-of-the-air-force, space-launch-services, definitive-contract, firm-fixed-price, full-and-open-competition, large-contract, california, space-exploration-technologies-corp
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $158.0 million to SPACE EXPLORATION TECHNOLOGIES CORP.. SDA TRANCHE 0 LAUNCH SERVICE
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 $158.0 million.
What is the period of performance?
Start: 2020-12-31. End: 2023-12-31.
What is the track record of Space Exploration Technologies Corp. (SpaceX) in fulfilling government launch contracts?
SpaceX has a well-established and strong track record in fulfilling government launch contracts, particularly for the Department of Defense and NASA. The company has successfully executed numerous missions, including the deployment of national security satellites and scientific payloads. Their reliability has increased significantly over the years, with a high success rate for their Falcon 9 and Falcon Heavy launch vehicles. SpaceX is known for its innovative approach, rapid launch cadence, and cost-effectiveness compared to legacy providers. Their performance on previous government contracts, including those involving sensitive national security payloads, demonstrates their capability to meet stringent requirements and deliver on complex missions, making them a key player in the government space launch market.
How does the value of this contract compare to other similar DoD launch service contracts?
Comparing the $157.99 million value of this SDA Tranche 0 Launch Service contract directly to other DoD launch service contracts requires careful consideration of specific mission parameters. Contracts within the National Security Space Launch (NSSL) program, for instance, can vary widely in price based on payload size, target orbit, launch vehicle, and required launch window. While this contract's value is substantial, it represents a portion of the overall DoD space launch budget. Historically, individual launches under programs like NSSL have ranged from tens of millions to over $200 million per mission, depending on complexity. The firm fixed-price nature and the specific services procured here (SDA Tranche 0) suggest a defined set of requirements that contribute to its overall cost. Further analysis would involve benchmarking against contracts with similar payload classes and orbital destinations to assess value for money.
What are the primary risks associated with this specific launch service contract?
The primary risks associated with this launch service contract are multifaceted. Technical risks include the inherent complexities of space launch, such as potential launch vehicle failures, payload integration issues, or anomalies during ascent and orbital insertion. Schedule risks could arise from delays in manufacturing, testing, or launch operations, potentially impacting downstream national security missions. Furthermore, geopolitical factors or changes in technological requirements could necessitate contract modifications or impact future procurements. Dependence on a single provider for critical launch capabilities, even with competition in the award process, can also represent a strategic risk. Finally, cost risks, although mitigated by the firm fixed-price structure, could still emerge from unforeseen technical challenges requiring extensive rework or additional support.
How effective is the firm fixed-price contract type in managing costs for this type of service?
The firm fixed-price (FFP) contract type is generally considered effective in managing costs for services where the scope of work is well-defined and risks are understood, such as space launch services. Under an FFP contract, the contractor assumes the majority of the cost risk, agreeing to a set price regardless of their actual costs incurred. This incentivizes the contractor to control expenses and operate efficiently to maximize profit. For the government, it provides significant cost certainty, making budgeting more predictable. However, if unforeseen technical issues arise that are beyond the contractor's control or were not adequately anticipated during the bidding process, it could lead to disputes or a contractor's inability to complete the work without modification. For complex, cutting-edge services like space launch, careful negotiation and clear definition of requirements are crucial for the FFP structure to be truly effective.
What is the historical spending trend for space launch services within the Department of Defense?
Historical spending on space launch services within the Department of Defense has shown a consistent and increasing trend, driven by the growing reliance on space-based assets for intelligence, surveillance, reconnaissance (ISR), communications, and navigation. Programs like the Evolved Expendable Launch Vehicle (EELV) program, and its successor, the National Security Space Launch (NSSL) program, represent significant and sustained investments. Over the past decade, DoD spending in this category has averaged several billion dollars annually. This spending reflects the strategic importance of space dominance and the need to ensure reliable access to orbit for national security payloads. The market has also seen increased competition with the entry of new providers, which has influenced pricing dynamics, although the high cost and complexity of space launch ensure substantial government outlays.
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
Solicitation ID: HQ085021R0001
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: $326,801,780
Exercised Options: $315,591,780
Current Obligation: $157,988,100
Actual Outlays: $129,953,599
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Cost or Pricing Data: NO
Timeline
Start Date: 2020-12-31
Current End Date: 2023-12-31
Potential End Date: 2023-12-31 00:00:00
Last Modified: 2023-09-29
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