Fixing the space acquisition process was on the lips and minds of prime contractors, subcontractors and U.S. Air Force brass attending the 22nd National Space Symposium here April 3-6, but beyond that there is a lot about which the three camps disagree.
During public sessions, most of the talk — using “incremental development,” “spiral block” approaches and other buzz phrases — focused on reining in costly and delayed government space programs and building a foundation for change.
But in more-private briefings, cracks emerged in the wall of solidarity.
Prime contractors say military leaders are long on pet phrases but short on details about what they really want to fix in space asset acquisition and development. As an example of a phrase that holds little meaning for industry, they noted the oft-used term “operationally responsive space.”
Air Force space officials said it means they want a space program that will produce quick-launching, fast-acting satellites that can provide theater combat commanders more capability when they need it, as opposed to when they can get it.
“We want smaller, lighter, more capable,” said Air Force Lt. Gen. Frank Klotz, acting commander of Air Force Space Command. The idea , he said during a symposium briefing, is to give the theater commanders the effects they need “at a particular period.”
But space industry executives — especially those from the large prime contractors — said they’re uncertain what is involved in such a system, and they are lost when it comes to how exactly to develop and build such a system.
“I mean, what does that really mean — operationally responsive space?” asked one industry program manager. “What do they really want?”
There are even deeper fissures developing between the primes and their lower-tier suppliers.
The lower-tier contractors are shouldering the blame for many of the problems with expensive space programs, such as the National Polar-orbiting Operational Environmental Satellite System, or NPOESS. Northrop Grumman Space Technology of Redondo Beach, Calif., is the NPOESS prime contractor, but Raytheon Space and Airborne Systems of El Segundo, Calif., is taking much of the blame for the program’s cost growth due to problems it is having with one of the satellite system’s instruments.
Air Force and other government officials have said that some of the work by subcontractors has been substandard, thanks in large part to a lack of oversight by the prime contractors , the Air Force or other customers.
Subcontractor executives said that is oversimplifying the problem.
Often, they said at the conference here, the prime contractors force them to underbid contracts because that is the only way to get the business, with the primes promising to recoup the money later in the contract or in later work.
Also, subcontractor executives said, the prime contractors force their suppliers to take fixed-price contracts instead of the cost-plus deals the primes get. Much of the space work involves cutting-edge technology development that can run into unforeseen problems. Cost-plus agreements make it easier to recoup some of those costs.
Fixed-price contracts are exactly that: The subcontractors get only a certain price for their work, and if the job costs more than the pay, they have to take the loss .
Subcontractor executives said the prime contractors don’t trust them to give them cost-plus deals.
“They think we’ll try to nickel-and-dime them,” one industry official said.
Prime-contractor executives here countered that some of the suppliers have simply failed to perform as promised. Government demands to get tougher when it comes to meeting cost projections and deadlines have forced the main contractors to tighten their control on all the work, including that of the subcontractors.
In the meantime, the subcontractors say they pay the price to stay in the space contract race.
“It’s getting to the point that we can’t afford to stay in space,” said the executive. “We can’t afford to keep losing money.”
A Space Foundation white paper released during the symposium, “The National Security Space Industrial Base, Understanding and Addressing Concerns at the Sub-Prime Contractor Level,” says that within five years, half of the subcontractors could exit the space business or cease to exist at all.
That’s disconcerting in an industry where subcontractors account for about 80 percent of the work, the report says.
“The health of the space industrial base is not an option,” said Jay DeFrank, report author and executive director of research and analysis for the foundation. “It is essential.”
Without any chance to turn a profit on many space programs, DeFrank said during a symposium briefing, the subcontractors have no ability to upgrade their plants, improve their processes or retain the work force. What is needed first, he said, is a detailed study to quantify how bad the problem is.
Air Force Space Command is taking a more pragmatic approach. Maj. Gen. Mark Shackelford, Space Command director of plans and requirements, said the service is considering putting Air Force personnel back in manufacturing plants, as it did a few decades ago, to better oversee how the contractors are doing their jobs and to learn more about the industry side.
The Air Force brass has made it clear that subcontractor profit concerns are secondary. “Our priority,” Shackelford said, “is mission assurance.”
