SDA Director Derek Tournear speaking at MilSat Symposium on Oct. 23. 

The commercial sector’s employment of firm, fixed price contracts — notably the approach of SpaceX founder and Trump insider Elon Musk — looks to upset the apple cart of DoD acquisition come January. Space Development Agency (SDA) Director Derek Tournear suggested on Tuesday that most Pentagon systems could employ the firm, fixed price contracts approach that SDA has.

The rapid timeline of SpaceX’s Falcon 9 rocket, first launched in 2010, helped spur lawmakers, led by Sen. John McCain, R-Ariz., to revamp DoD acquisition in 2015, reforms which led to Middle Tier of Acquisition and Other Transaction Authority (OTA) for rapid prototyping and fielding. A longtime military advocate and gadfly of top DoD weapons officials, McCain chaired the Senate Armed Services Committee from 2015 until his death in 2018.

“I don’t think that everything in the Department of Defense should be acquired on this [SDA] model — using firm, fixed price contracts which allow us to move at scale as rapidly as possible and proliferation of hundreds and hundreds [of systems],” Tournear told a Mitchell Institute of Aerospace Studies’ virtual forum on Tuesday.

“There is a timeframe, just like in World War II where you had the Liberty ships — the proliferated model — to get the capabilities out as rapidly as possible, and you had the Manhattan Project that took the time, did things properly, pushed the edge to get the best technology available at the time fielded,” he said. “You’re going to have those two models now, even in space. You’re going to have models that have to be very exquisite capabilities to give you that edge on the enemy that you need, but then our model — which I think the majority of the Department of Defense capabilities could be employed by proliferation and getting things out at scale.”

SDA’s firm, fixed price acquisition strategy includes fielding optically-linked satellites in two-year “tranches,” as opposed to the 10 to 15 year cost-plus DoD contract development timelines.

The Manhattan Project’s atomic bombs took less than three years to develop, build, and use from June 1942 until August 1945, while the U.S.’ 2,710 World War II Liberty cargo ships sometimes took just days to build.

DoD’s “R-1 [research and development portfolio] and fixed price issues are linked,” said one analyst.  “It is all about commercial R&D dominating R&D since the 1980s and the way commercial conducts their R&D.  The result of that vast amount of private investment has left DoD behind, but the Pentagon hasn’t internalized what happened and continues with processes that assume it and the Big 5 [defense contractors] are still leading the world.  They are not.  The cost plus contracting, PPBE/JCIDS model that takes 8 years to start anything and 10-15 years in development is dead everywhere in the world except at DoD and some of our allies where they have emulated our broken system.”

“The private sector has done R&D on a time-based fixed price basis or in the venture market on a fixed series of incremental funding raises,” the analyst said.  “Successfully meeting milestones and objectives means more money. Missing your target means going out of business and the failure of the startup. DoD can’t figure out or leverage that market yet or emulate its processes, but if they don’t soon the billions of dollars in VC [venture capital] investment in defense will come crashing down… There still will be some R-1 that DoD will need to invest in where the private sector will not put money in due to the risks but that probably is less than we think.”

Tranche 1 Schedule Slip

During Tuesday’s virtual Mitchell forum, Tournear also said that SDA plans to launch its first Tranche 1 satellites over 10 months beginning next March or April, about six months behind schedule. Tranche 1 is to feature the first operational military satellites in the SDA Proliferated Warfighter Space Architecture effort. Contracts for the Tranche 1, Transport Layer are York Space Systems, Lockheed Martin, and Northrop Grumman, while L3Harris Technologies is developing missile tracking satellites for the SDA Tranche 1, Tracking Layer.

SDA wanted to begin Tranche 1 launches in September, but launch provider delays, vendor problems with building the satellites’  optical communication terminals, and production and National Security Agency certification issues with encryption devices led to the schedule slippage.

This story was first published by Defense Daily