WASHINGTON — The Pentagon earlier this month walked back on an earlier decision to award Defense Production Act contracts to six small launch companies. The about-face sends “mixed signals” to an industry that has been financially devastated by the virus-induced economic crisis, Mandy Vaughn, president of VOX Space, said July 28.
VOX Space was one of the six companies that were notified in June that they would collectively receive $116 million in contracts to launch small satellites for the U.S. government. The other five were Aevum, Astra, X-Bow, Rocket Lab and Space Vector. DoD cancelled the contracts and the funds were redirected to other programs. According to multiple sources, DoD withdrew the awards due to widespread complaints about the process for selecting those six companies.
Vaughn said notifying companies of contract awards and immediately rescinding them shows “a little bit of discombobulation” and sends a message to the industry that DoD does not consider it a priority.
DoD has used Defense Production Act Title 3 funds to invest in sectors of the defense industry that have been financially impacted by the coronavirus pandemic.
Vaughn spoke on a virtual event hosted by the Center for Strategic and International Studies for the rollout of a report by the Defense Innovation Unit, the Air Force Research Laboratory and the U.S. Space Force on the state of the space industrial base.
Officials said during the CSIS forum that as a result of the COVID-19 pandemic, many space companies have lost their sources of private funding and that, unless the government steps in, many firms that develop critical technologies will go out of business.
Vaughn said the Pentagon’s large prime contractors are weathering the storm but that should not be viewed as an indication of the health of the entire industry.
“In many ways it can seem like things are fine on the surface,” she said. However, “if you peel the onion back into some critical sectors of the industry, maybe all is not so rosy.”
One of the recommendations in the DIU report is for the government to support the space industry by becoming a steady customer.
Vaughn said the “call for action in the report is quite healthy” and highlights the need to “delineate and define what is the role of government as we’re moving forward and looking at the state of the space industry.”
DoD’s role as a customer is “really critical,” she said, because it provides the industry an element of stability. “Trying to more aggressively define what is good customer when you’re in the middle of a crisis without completely distorting the market is, I think, an area of immediate concern.”
One of the lessons from the coronavirus crisis and DoD’s use of stimulus funding is the need for “clarity on the process,” Vaughn said. For example, she said, DoD moved quickly to push funding to suppliers and agencies, but it wasn’t always clear how those authorities were supposed to be used. “I think an element of immediate action and consideration is some clarity on processes.”