Tight budgets and a dearth of big new development projects are dominant industry themes these days, but there are still opportunities, especially for companies with low-cost ideas for augmenting existing capabilities.

Harris Government Communications Systems, for example, has seen its space business grow at a 30 percent clip the past three years, and Bill Gattle says there are plenty of new opportunities in the pipeline. Formerly the vice president of Harris’ Aerospace Systems business unit, Gattle now runs the National Systems business unit, which includes most of the parent company’s space business, both government and commercial.

The signature product in Gattle’s portfolio traditionally has been the large mesh reflector antennas that unfurl like an umbrella and are used on satellites for missions including government and commercial communications and intelligence gathering. The company is building the last of five sets of mesh antennas for the U.S. Navy’s Mobile User Objective System (MUOS) satellite constellation, which began launching last year.

In recent years the action has shifted toward smaller Ka-band antennas and to the AppStar hosted payload platform, which is at the heart of Iridium Communications’ Aireon commercial airline navigation joint venture with Nav Canada. Gattle says the AppStar box, originally developed to support communications between the international space station and NASA’s Tracking and Data Relay Satellites, is finding a market with defense and intelligence customers.

Gattle spoke recently with SpaceNews Editor Warren Ferster.

You’ve said 50 percent of your space business these days, including government work, is done under fixed-price versus cost-plus contracts. How did you get to that mix?

Over the years we’ve seen a movement of the market to do things differently. If you went back 10 years, we were dominated by cost-plus or cost-reimbursable contracts. What we saw was we had to move to doing something with a risk model shifted more to industry and that affordability was a big deal. So we began moving our mix and taking on fixed-price contracting and the first instantiation of that was in the reflector world, which was our mainstay product, something we knew how to do. When we did that we found out there’s a huge learning curve, and by that I mean there’s some lost money because we didn’t fully understand the commercial model. But your business practices change, they improve, they become more streamlined and you get basically a business that can operate in both the cost-reimbursable and fixed-price contracting worlds.

Don’t the prime contractors typically impose fixed-price arrangements on their subcontractors?

The large primes have a business to run and they’re moving their risk around. If they can find a supply chain that will take things fixed price, they can lower their overall risk. We saw that on the MUOS contract, we saw it in the Wideband Global Satcom contract. It pushes more risk to the supply chain. That is not uncommon, but that will set us up for learning about how much risk to take on, whether we’re talking about going through a prime or doing it directly with the government.

What was the source of difficulty on the MUOS contract? 

There was a big requirement called passive intermodulation that caused cost growth. Passive intermodulation is an electrical charge that builds up on any device where there is intermittent contact. So as you put more radio frequency power on an antenna, that charge can build up. Any place that there’s intermittent metal contact it can cause interference to the signal. At this point we understand that, we’ve worked through it.

Given your experience with mesh reflectors, why didn’t you 

anticipate this?

The difference is the frequency. This is UHF. When you have high frequency like we have traditionally dealt with it’s very directional. UHF will wrap around places and go places behind the antenna and actually light it up. I use the comparison of when you’re approaching a rock concert, you hear the bass frequency long before you hear the treble or the high frequencies. The bass frequency’s going everywhere. You have to be very directional on the speakers to hear the high frequencies when people are singing. It’s the same way in our reflector factory. When we’re shooting radio frequency energy at the reflector, if it’s high frequency it only hits the reflector. When it’s UHF it goes everywhere. To get the noise environment quiet, to where you’re only getting UHF on the reflector, is a challenge.

Is MUOS ultimately going to be a profitable program for you?

The whole program was not a profitable program for Harris Corp. The last unit was built for the contract value that we bid. So we did come down the learning curve; we actually were able to apply commercial practices over time and we did eventually hit the cost point on the last unit.

So this could pay off if the MUOS program goes beyond the five satellites ordered by the Navy?

Yes. And that’s what we’re hoping.

What are your other major programs right now? 

We’ve cleared the factory of a lot of the previous work but Mexsat is currently in our factory; we’re building the 22-meter unfurlable antenna. That will keep going for a little while. We are backfilling with the higher frequency market — Inmarsat’s coming through. Those are not at the same cost — they’re not unfurlables — but the factory’s being maintained with the more solid dish or gimbal dish antennas right now.

Does that represent a significant change?

Five years ago, mesh reflectors were probably 80 percent of the spacecraft work in terms of total revenue. That’s now flipped to where our payload business is now 70 to 80 percent of our business. So we’ve seen a basic shift of our market from structures to payload. At this point in time, we have more than 100 of these AppStar-based payloads in production or on order.

Assuming 81 of those are for the Iridium Next satellites, who are the other customers? 

I can’t give you a lot of details but we’ve been able to bring high-value upgrades to existing platforms for other customers. These upgrades were for the most part opportunity creation where we brought the idea; they weren’t being asked for. That has allowed us to provide more value from those assets that we spend a lot of money on as a nation. It’s low price but high value.

Is the intelligence community doing more fixed-price contracting?

They’re looking for different affordable ways of meeting their mission needs. Their mission needs have not changed. They’re just looking for people to think about the problem differently and come up with a more affordable solution. We’re seeing them really respond to our offers to do missions for a fixed price. Anything that looks like production is going to move toward fixed price. The ones that will remain cost reimbursable are those where they have to do some up-front development.

What are your thoughts on disaggregation? 

I firmly believe disaggregation is real, both in the Defense Department and the intel community. It does not mean that you will not have exquisite systems — they’re always going to be needed — but you will need an augmentation that’s disaggregated. The world’s a different place and disaggregation provides many benefits; our customers are constantly communicating that and we have some contracts in the intel world that would say they’re already starting that. There are things you can do that can leverage commercial technologies or in our case an AppStar that allow you to get incremental value upgrades without a huge investment. That’s what we’re targeting.

About 40 percent of your space business is commercial. Is that the mix you want? 

I’d like to see a slight shift up on the commercial. I would also like to see a little more international business. We don’t have any under contract today. It’s really Ka-band that we’re trying to get, even for deployables. We’ve built a very cost-effective small deployable Ka-band system and we’re bidding that out right now on several programs. We have solids as well as mesh.

What hosted payload opportunities are you seeing that align with your capabilities?

There are three categories: one is communications augmentation; the second area is tracking of things, whether you’re tracking boats or planes or anything you want to track from space; and the last one is Earth observing, where we would buy the sensor and integrate it into our AppStar chassis.

Warren Ferster is the Editor-in-Chief of SpaceNews and is responsible for all the news and editorial coverage in the weekly newspaper, the spacenews.com Web site and variety of specialty publications such as show dailies. He manages a staff of seven reporters...