government’s initiative to rein in contracting costs has the potential to make a positive difference for civil and national security space programs if the resulting reforms are accompanied by increases in skilled acquisition manpower and applied judiciously on a case-by-case basis.
U.S. President Barack Obama, in announcing his government-wide initiative March 4, said contracting costs have ballooned in recent years for reasons that include a proliferation of sole-source and cost-reimbursement contracts and increased outsourcing of services traditionally performed by government employees. He did not single out any agencies for wasteful spending or lax contract oversight, but NASA and the U.S. Department of Defense were prominently listed among those assigned to help the White House Office of Management and Budget identify bloated or unnecessary programs and come up with guidelines for choosing among different contracting vehicles.
Meanwhile, legislation introduced in the U.S. Senate is designed to bring weapon system costs under control by improving the Pentagon’s notoriously unreliable cost estimates and tightening scrutiny of programs that exceed their budgets. The Weapons Acquisition Reform Act of 2009, sponsored by Sens. Carl Levin (D-Mich.) and John McCain (R-Ariz.), also would strengthen preacquisition systems engineering and increase the use of prototypes in development programs to reduce technological risk.
Both reform initiatives apply to a broad range of federal contracting activities, which is appropriate – space programs have had their problems in recent years but they certainly are not alone in that respect. The proposed reforms will nonetheless ring familiar to anyone who has been involved with or studied government space acquisition – even if some of them are better received than others.
Few would argue, for example, that space programs wouldn’t benefit from independent cost estimates or more rigorous systems engineering during their early phases. Likely to be more controversial is any policy-based predisposition toward fixed-price contracts; government space programs, after all, tend to push the state of the art of technology.
This is especially true of the high-end satellites built for intelligence gathering. So specialized and complex are these systems that even competition – a pillar of U.S. capitalism that drives innovation – is not always feasible. Alden Munson,
deputy director of national intelligence for acquisition, has publicly argued in the last year that awarding sole-source contracts often is less costly than trying to cultivate competition in a market where none currently exists.
This doesn’t mean, however, that the government cannot do more fixed-price contracting for space systems, particularly as the commercial sector fields increasingly capable satellites for applications like communications and imaging. Even the Pentagon has begun to recognize this, as evidenced by its recent interest in commercially available radar and optical imaging satellites that have been launched in recent years. Fixed-price contracts have advantages for controlling government costs: They impose requirements discipline – so long as requirements are strictly tailored to commercially available capabilities – and discourage contractors from making unrealistically low bids.
That said, space program managers should be accorded a fair amount of discretion in determining which contracting vehicle is most appropriate. The reason is that government space systems often feature unique designs that in some cases fly only once.
The more important point is that for any reforms to have a chance to succeed the government must beef up its skilled space acquisition work force, not only among the ranks of those who write contracts but also those who will do the independent cost estimates and system engineering work called for in the Senate legislation. More personnel also will be needed to write system requirements that are financially and technically realistic and to scrutinize contractor bids, whether or not the contract in question is fixed-price or cost-plus.
There are things that can be done in the near term to address these additional staffing needs, such as relaxing the congressionally imposed manpower limits on federally funded research and development centers like the Aerospace Corp., which serves as the Pentagon’s repository of space expertise. But ultimately the government is going to have to staff up internally, which will require an investment of both time and resources; with a little patience, this could pay for itself many times over in the long run.