Winning a $130 million contract in May 2008 to build at least 18 second-generation data messaging satellites for Orbcomm Inc. was a huge coup for Sierra Nevada Corp., the Sparks, Nev.-based defense electronics firm that was fresh off its acquisition of Microsat Systems.

Seven months later, Sierra Nevada added Poway, Calif.-based SpaceDev to its space porfolio. In April, Sierra Nevada stood up a Space Systems group in Louisville, Colo., with former SpaceDev Chief Executive Mark Sirangelo at the helm.

With a new manufacturing facility up and running in Louisville, Sierra Nevada Space Systems is poised to start building its first Orbcomm satellites this fall.

The company is also working on a number of projects for the U.S. Defense Department (DoD). While the Pentagon’s cancellation of the multibillion-dollar Transformational Satellite communications system meant a lost opportunity for Sierra Nevada’s component business, Sirangelo expects the move to result in a net gain for the company as the Air Force orders more Advanced Extremely High Frequency satellites. Sierra Nevada builds all the gimbals for those craft.

Sirangelo spoke recently with Space News Editor Warren Ferster and Deputy Editor Brian Berger.

Sierra Nevada’s space revenue grew by more than 50 percent between 2007 and 2008, not including SpaceDev revenue. To what do you attribute that increase?

Our Orbcomm work kicked off last year and that’s a multihundred-million-dollar contract, so that helped push the numbers up. We also had really good business on the space-related manufacturing side. Between Iraq and Afghanistan and everything else going on, there’s been an increased awareness of the use of space and we’re beneficiaries of that.

Is that mainly on the GPS side of the business, or is the small satellite side benefiting as well?

Both. We are actually, we think, the largest small satellite manufacturer in the world right now.

Bigger than Surrey Satellite Technology Ltd.?

In terms of backlog. They’ve built a bunch of satellites historically. But we currently have a 20-satellite backlog and if all existing options are exercised and current negotiations are completed that will increase to over 50. Eighteen of those are Orbcomm and we anticipate a second order of 30. We also have a U.S. government satellite order that’s not public. We’re starting to see greater acceptance of the use of small satellites.

For operational missions or just for experiments?

It’s evolving very much like unmanned aerial vehicles where for a while people didn’t know what to do with them and then all of a sudden you’ve got a couple missions starting to work out and suddenly you can’t build enough of them. We’re seeing that same type of pattern. For a long time, people had a lot of reasons they didn’t want to use small satellites. They weren’t powerful enough, they couldn’t host a big enough instrument, etc. But with the costs going down, the power going up, the instruments getting smaller and the need growing greater, the number of people who have come to us as a result of the work that we’re doing has probably tripled.

Has the operationally responsive space (ORS) movement lost some steam?

No. I think people are trying to understand what to do with it. It can’t be everything to all people. It is sort of like when small laptops came out and we thought they were going to take over the world. But you need both. You need the Google servers and the small laptops. I think we’re seeing that in space, too, with much more definition in terms of the missions small satellites can do. It’s becoming much more real.

All of the big ticket items in the DoD’s satellite fleet recapitalization effort are now under contract. What are the opportunities in this environment for a company like yours?

We’re sort of bullish on it because when you start factoring in an unwillingness or an inability to build the larger constellations and you combine that with a greater need for data, what’s the solution? The solution is smaller, more versatile, less costly systems. Where people might not have talked to us if they had all the money in the world five years ago, they are talking to us now.

Have you heard back from DoD on the unsolicited bid you submitted earlier this year for electro-optical imaging satellites?

We don’t have a contract to actually build one yet, but we did break through to get a study contract, which is delivering its results in December of this year.

The U.S. Senate has proposed legislation directing DoD to start a prototyping competition with the ultimate goal of building half-meter-resolution imaging satellites for $100 million a copy. Is the technology available to do that?

Yes, and we’ve been talking to people in Washington about this opportunity. Oddly enough, because people are so used to spending so much money on this stuff, when we come in with a price, we often get the response back, “you can’t possibly do it for that price.” So our answer is, sort of glibly, “well, we’ll double the price and still do it if that makes you feel better.” We’re delivering 18 satellites for Orbcomm for roughly $130 million, or somewhere between $6 million and $7 million a satellite. And that’s on the first set, when we’re still amortizing the cost of infrastructure. Those are numbers that are getting people’s attention. If we could repurpose satellite five off the line to go do one of these imaging missions, suddenly we’ve got a cost structure that’s very different from what people expect. And it can be done. Clearly there’s a lot of work to be done and we have actually lined up a few partners to go in on that bid with us if it shows up. We’ve been working to try to get an appropriation for it. But it’s possible with what we have today, which is sort of the eye-opening thing when we show it to people.

What do you need partners for?

We don’t build payloads; we partner with those who do. We recently won an ORS contract to build a next-generation satellite bus called the Multi Mission Space Vehicle (MMSV). The purpose of that bus is to quickly accommodate different kinds of payloads without requiring a redesign. The critical design review is coming up at the end of September.

The ORS office doesn’t have enough money for its first operational satellite, ORS-1, so isn’t the funding for your effort in doubt?

From what we can see, there is going to be funding in 2010. We’re not certain about it, but we’ve been told there will be money, and we’re working toward delivering a critical design review-level design for the bus and then eventually for the payload so that it will be ready to go to the next level.

How is the broader economy affecting the commercial side of your business?

The downside is that some entrepreneurs probably aren’t going to get funding to go do what they want for a while. The upside is that because people are now looking at the cost structures, shorter horizons, different kinds of ways of doing things, there’s actually a greater focus on what we can do as an alternative. So it’s a net plus for us. I’m not sure it is for everybody.

What opportunities are you seeing at NASA?

NASA has allocated $50 million for a commercial crew development effort and we are bidding as a prime to deliver a runway-landing, lifting-body vehicle called Dream Chaser we’ve been working on for several years. It’s a six-passenger vehicle based on the HL-20 concept NASA originally developed for the space station.

Proposals are due Sept. 22 with awards expected in November.

That’s not a lot of money for a human spaceflight capability.

It’s not, but we’re hoping this takes the same path as NASA’s cargo program, which went from an early stage study to a larger funded study to what is now a $3.5 billion contract to deliver cargo to the station. With the Augustine committee report that’s coming out, at least the preliminary views that we’ve all seen, there’s been a lot more emphasis on commercial. We think the message will get through to NASA that says that there is a certain segment of space that could be done as a commercial fixed-price basis, a pay-per-flight basis. NASA is currently buying seats from the Russians on a per-seat basis. If a similar capacity could be built up in the U.S., we would keep those jobs and revenues here instead of sending them overseas. So NASA is in its early phases and we think hopefully this is a sign of where they want to go in the future.

Is Sierra Nevada big enough to take the lead on a manned spacecraft development effort?

We’re a different company than we were a few years ago with SpaceDev. We’ve now got several hundred people in our group who are focused on space, so the idea that we could build a space vehicle is really a practical idea. Just to be clear, we’re talking about building the spacecraft and using existing launch systems to launch it, such as an Atlas, a Delta, a Space Exploration Technologies’ Falcon or something of that nature. Our interest is the vehicle itself, which we’ve been working on for three years under a non-funded Space Act Agreement with NASA. We’ve invested millions of dollars of our money into doing it.

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