Industry executive: Defense Production Act small launch contracts should have been competed

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SmallSat Alliance Chairman Chuck Beames said DoD's decision to award contracts to six companies without a competition was a mistake.

WASHINGTON — The Defense Department caused an uproar when it announced on June 18 it had selected six small launch companies to receive contracts funded under the Defense Production Act, the head of a space industry group said July 22.

“I know there were a lot of complaints on Capitol Hill and within agencies,” said Chuck Beames, executive chairman of York Space Systems and chairman of the SmallSat Alliance, an industry group that represents space companies including several small launch providers.

“Many companies thought it was unfair, why them and why not us?” Beames said during an online event hosted by the Mitchell Institute.

For the small launch contracts, DoD had set aside $116 million appropriated for Defense Production Act Title 3 investments in key sectors of the defense industry financially impacted by the coronavirus pandemic.

The companies selected to receive contracts were Aevum, Astra, X-Bow, Rocket Lab, Space Vector and VOX Space. DoD canceled the contract awards on July 1. Assistant Secretary of the Air Force for Acquisition Will Roper said July 14 that the funds were redirected to other priorities such as small business loans.

Beames said he has no direct insight into what prompted DoD to withdraw the contracts but suspects it had to do with the inability to explain how those six companies were selected without an open competition.

Pentagon officials had said previously they considered the small launch sector as an important sector of the industry base and one of the most adversely impacted by the economic recession caused by the coronavirus pandemic.

“I don’t think pulling back the contracts was an indication at all that the government doesn’t think that the small launch market is important,” said Beames. “I think they messed up, and rather than further dig themselves into a hole they just pulled it all back and figured out how to reapportion it.”

What happened suggests that DoD “was not ready to do what needed to be done,” Beames said. In this case, what had to be done was award contracts quickly but also fairly under the rules of competition in government contracting.

“I don’t know what decision criteria were used to choose those six companies,” said Beames. “But clearly the ones that were not notified of an award were not happy.”

“A smarter approach would have been competition,” he said. “You can do a competition in weeks if you need to. The government has done that before.” DoD also should have reached out to industry groups and asked for advice, said Beames.

It does not appear that anything “nefarious” went on in the selection of those companies, he said. “It was just poor execution on the government’s part.”

Beames said one way DoD could help the small launch industry is by buying and launching small satellites to supplement existing networks of large “exquisite” satellites.

“If more small satellites are used you can justify small launches,” he said.