U.S. Air Force Shifts Gears on Future GPS Procurement Strategy

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COLORADO SPRINGS, Colo. – The U.S. Air Force plans to award multiple contracts worth up to $6 million this year for companies to demonstrate their ability to build the next batch of GPS 3 positioning, navigation and timing satellites.

The anticipated value of the contracts is a small fraction of the $100 million  to $200 million figure the service touted for the effort less than a year ago.

In an interview here at the 31st Space Symposium, Lt. Gen. Ellen Pawlikowski, military deputy to the assistant secretary of the Air Force for acquisition, said the lower dollar amount reflects a change in the service’s strategy for acquiring the next batch of GPS satellites. The strategy, in a nutshell, would shift up-front development costs from the government to industry, which would recover its investment by amortizing it across a large block buy of satellites, she said.

Currently Lockheed Martin Space Systems of Denver is under contract to build eight next-generation GPS 3 satellites, the first of which now is slated to launch in 2017. The contract includes options for up to four more satellites and the Air Force has told Congress it expects to execute options for at least two of those satellites.

The GPS 3 program is nearly two years behind schedule, owing largely to problems with the advanced navigation payload developed by Exelis Geospatial Systems of Rochester, New York. The delay has frustrated the Air Force, which in June said it planned to award up to two contracts in the $100 million to $200 million range to develop an alternative, with the proviso that Lockheed Martin and Exelis were ineligible to compete for the funding.

The service said at the time it would hold a competition in 2017 or 2018 for a fixed-price contract to build up to 22 follow-on navigation satellites, the first of which must be ready to launch in 2023.

Northrop Grumman Aerospace Systems and Boeing Space and Intelligence Systems were among the companies that responded last year to an Air Force request for information from  contractors interested in building the next batch of GPS satellites, including the navigation payload.

But on April 10, the Air Force unveiled a dramatically lower funding profile for the effort, saying it would award up to three contracts, each with a base value of $6 million each, plus options, to determine if “low-risk, high confidence sources exist” for the satellites. The initial phase of these contracts would last up to 38 months, the service said in a procurement notice.

The Air Force said it expects to issue a formal request for proposals for the competition in the fourth quarter of fiscal year 2015 and that contracts award could come as soon as the second quarter of fiscal year 2016.

Neither Lockheed Martin nor Exelis were singled out in the Air Force announcement as ineligible to compete for the funding.

During a second phase, the Air Force said it would hold a competition leading to the award a fixed-price production contract in 2018 for 22 GPS satellites. The service said the results of the first phase would inform the competition for the production award, and that its goal is to have the first of the new satellites on orbit by 2023.

“The strategy has changed as the situation has evolved,” Pawlikowski said.

Initially the Air Force planned to award the follow-on satellites to Lockheed Martin on a sole source basis, but Boeing, builder of the GPS 2F satellites now being launched, urged the service to go the competitive route. Under the new approach, the Air Force would make the investment necessary to develop a viable alternative to GPS 3.

But the Air Force has since shifted gears again, opting to award the $6 million contracts designed to give the  service a better understanding of industry’s current capabilities, Pawlikowski. “We want to make sure that these alternatives are real,” she said.

Assuming they are, the next phase of the effort would explore whether there is a business case for industry to invest in GPS payload development and recover those costs over a large production contract. Assuming there is, the service would then hold a competition for a large production contract whose value could approach $5 billion, she said.

In the April 10 announcement, the Air Force said the next batch of satellites must provide the current GPS 3 capabilities plus several upgrades, including a redesigned nuclear detonation detection system. The new satellites also must be compatible with the GPS 3 ground system, known as the Operational Control Segment, which has had its own issues.

Boeing of El Segundo, California, built the satellite platform and major payload components for the GPS 2F and has been reinvesting in its GPS technology in recent years. Boeing is one of three companies that received contracts in January 2013 to study how to improve the accuracy, coverage and efficiency of the GPS constellation using smaller satellites.

Northrop Grumman Aerospace of Redondo Beach, California, is a subcontractor on the GPS 3 program and has delivered deployable antennas for the first six satellites. The antennas are manufactured by Northrop Grumman’s Astro Aerospace division, which specializes in unique deployable antennas.