EL SEGUNDO, Calif. -- At Space Systems Command, the art of contracting is every bit as much “rocket science” as designing and launching the space systems themselves.
“Contracting is very complex,” said Natalie Riedel, SSC director of contracting. “Starting with the requirements to become a contracting officer - it takes on average about seven years to train an unlimited contracting officer. And that’s by design: contracting is inherently governmental, so we cannot outsource this. This is not a function where we can bring in contractors to supplement the team.”
“We’re buying space systems that are delivered directly into space operations, and they’re very complex systems,” Riedel said. “We must fully understand the requirement, fully understand what we’re buying before we can write the contract. Contracting is also constantly changing and evolving. Just when we think we’ve got it and we know it all, regulations and authorities change.
Years ago, space acquisitions mainly revolved around a few large “Prime” defense companies, but recent years have seen revolutionary changes in technology, business models, and partnerships.
Launch costs have dramatically reduced, aided in part by the ability to launch multiple payloads at once with ridesharing programs. Government space programs - once solely the domain of the United States and Russia - are springing up all over the globe, creating new collaboration opportunities with international allies.
Military-specific, very expensive and very large “exquisite” satellites in higher orbits, built to last a decade or more, are giving way to commercial buses and proliferated Low Earth Orbit (pLEO) constellations that are launched in tranches every few months with new technological improvements included in every iteration.
Small businesses, new to government contracting processes, are quickly learning that not only is the U.S. Space Force willing to work with them, it is eager to do so.
“We don’t have just one or two providers in the space ecosystem,” Riedel said. “Oftentimes, in our market research, we’ll have 15 or 20 potential providers, which is fantastic, and they’ve used their own capital, their own funding to get up to a level to bring us this technology that demonstrates the maturity of the system.”
“The idea that the government is going to fund a requirement from Day One of the concept all the way through fielding is antiquated,” Riedel said. “We are getting away from big behemoth programs that don’t deliver capability for decades and moving to a smaller minimum viable product (MVP) and a more iterative approach to acquiring systems.”
“We’re in unprecedented times right now,” Riedel said. “Prior to the early 2000s, the government wrote general requirements, money was thrown at a contractor, and some varying level of capability came in on the back end. Throughout the 2000s, up until the mid-2010s, the government would define requirements to the ‘T’, but the lengthy acquisition processes slowed us down.”
“When OTAs (Other Transaction Authority) were expanded in 2016, the government drove contractors to produce MVPs and prototypes on shorter timelines,” Riedel said. “This also allowed new entrants to join the space industrial base and bring new and fresh ideas. This has changed the way we, the U.S. government, does business.”
Alphabet Soup
When it comes to doing business with the government, commercial space industry companies can face a bewildering list of acronyms: SBIR, STTR, STRATFI, TACFI, IDIQ, and OTA.
Fortunately, SSC’s Front Door, SSC’s Commercial Space Office (COMSO), SpaceWERX, AFWERX, the Space Enterprise Consortium (SpEC), and other entities are available to help guide companies through the process. Multiple funding mechanisms mean even a small company has opportunities to help warfighters get the innovative technology they need.
Typically, the process starts with a prototype and once that passes, a company moves into the demonstration phase and then on to the actual fielding of the capability, Riedel said. SSC’s Program Executive Offices (PEOs), as well as COMSO, sponsor industry days and reverse industry days to connect with commercial space vendors and find out what the market has to offer, or to present “challenges” or specific problem sets to see which companies have the solutions.
USSF Capt. Andrew Ermitano, SpaceWERX Ventures military deputy, said SpaceWERX has shifted its investment strategy to focus more on delivering the specific, mission-driven solutions that SSC’s PEOs are after.
“We have two main roles in the ecosystem,” Ermitano said. “The first part is discovery – how many new entrants are we finding in the commercial space industry? At the same time, we also have our responsibility to the PEOs who are looking for specific ways to fill their capability gaps, such as TacRS (Tactically Responsive Space) in support of Space Safari and Assured Access to Space (AATS.)
Sharpening the focus has not limited the number of companies entering the space ecosystem. In fact, it has significantly broadened competition, Ermitano said. Since Oct. 1, 2023, SpaceWERX awarded 562 contracts to 416 unique companies totaling $673 million.
When looking at which companies to invest in, SpaceWERX takes into account the technical merits and feasibility of the product but also considers commercial potential, Ermitano said. If a technology also has commercial applications, that makes it easier to sustain than just a purpose-built technology for a solely military application. By investing in dual-use technology, the rest of society benefits as well.
Small Business Innovation Research (SBIR) programs are also known as “America’s Seed Fund,” Riedel said. Focused on companies with fewer than 500 employees, SBIR grants are focused on early-stage technology funding. Phase I awards go up to $180K, and a Phase II can go as high as $1.9 million. Phase III—the final stage in the program—focuses on the commercialization phase. Funding comes directly from the program offices rather than from the SBIR program or private sector capital.
Small Business Technology Transfers (STTR) are designed to foster technology transfer through cooperative research and development between small businesses and research institutions. STTRs have the added requirement that the small business partner with a college/university or Federally Funded Research and Development Center (FFRDC).
“The goal is to inject some of that funding into these new companies and get them from concept development to the actual production of their idea,” Riedel said. “To get a SBIR award is not easy; it’s extremely competitive. You must have a good idea, and you must have some data proving that one, we need it, and two, you can actually develop and deliver it.”
“Companies that win a SBIR or STTR must prove throughout that they are meeting the milestones and are making progress towards achieving the capabilities and proving that they can mature those capabilities and scale them for use,” Riedel added.
Since 2023, SpaceWerx has awarded 918 SBIR/STTR contracts valued at $1.03 billion to more than 510 different companies.
Strategic Funding Increase (STRATFI) and Tactical Funding Increase (TACFI) programs are available to companies that have completed a SBIR Phase II. These mechanisms bring together government funding, as well as private investor funding and are designed to help bridge the “Valley of Death,” Riedel said.
“A big gap often happens after Phase II and very, very few companies are picked up for a Phase III, because Phase III is 100% funded by a government program office,” Riedel said. “In order to get from Phase II to an actual operational system in Phase III, there may need to be something in between.”
Of the two programs, TACFI is the smaller: $375,000 to $2 million, with a shorter period of performance, typically 24 months. STRATFI is larger—$3 million to $15 million—and could go as long as 48 months.
Other Transaction Authorities (OTAs) were designed to provide a more flexible contracting structure to enable non-traditional defense contractor participation.
OTAs can be for research, prototyping, or production. The OTAs managed by SSC’s Space Enterprise Consortium (SpEC) are focused on prototypes. These prototypes can include systems, subsystems, components, materials, methodology, technology, or processes. At least one non-traditional defense contractor or nonprofit research organization must participate to a significant extent in the prototype project, or at least 1/3 of the total cost of the project must come from funds other than the federal government.
SpEC has 650 member companies, of which 68 percent are non-traditional defense contractors. Since its inception in 2017, SpEC has made 140 awards of a total negotiated value of $4.5 billion.
The U.S. Department of Defense (DoD) Quick Start funding is another rapid-acquisition program; It allows the DoD to start the engineering and design process for new programs without waiting for the annual budget approval process and allows the DoD to shift up to $100 million annually from existing service budgets to fund these programs.
SSC last year awarded four of these agreements to produce design concepts for Lite Evolving Augmented Proliferation, part of the Resilient Global Positioning System (R-GPS) program. The awards, granted under SpEC’s OTA, will produce eight R-GPS satellites.
After receiving a recommendation for an additional proliferated fleet of small GPS satellites, the USSF recognized that they required updated resilient GPS technologies and tasked SSC with the R-GPS effort, said Adrian Torres, SSC SpEC program manager.
Following the project request, R-GPS was selected for the “Quick Start” authority, allowing the project to move into solicitation, Torres said. As a high-priority project requiring substantial participation from mission-ready commercial innovators, SSC needed a rapid contracting vehicle that had access to a large membership network inclusive of small, non-traditional defense contractors (NTDCs). The SpEC OTA was selected by SSC to construct agile contracts for R-GPS.
Understanding the government’s desire to quickly engage as many innovators as possible, the SpEC team executed an in-person Industry Day in Los Angeles, just four days after the “Quick Start” authority was signed. R-GPS moved from solicitation to award in just 71 work days. After evaluation, SSC selected Astranis, L3 Harris, and Sierra Space as the prime awardees, one of which is an NTDC. The primes are supported by 16 NTDC sub-contractors, which is five times the average of non-traditional participation.
“Innovative contract awarding mechanisms, like SpEC, are what is needed to stay ahead of the competition in today’s race for space superiority,” Torres said. “Maj. Gen. Purdy (tri-hatted Military Deputy, Acting Assistant Secretary of the Air Force, and Service Acquisition Executive for Space within the Office of the Assistant Secretary of the Air Force for Space Acquisition and Integration) has stated, ‘R-GPS timelines are the new norm. Beat those timelines.’ SpEC is setting the pace for the future, transforming space acquisition with unprecedented speed and agility and delivering space capabilities at the speed of need.”
Indefinite Delivery / Indefinite Quantity (IDIQ) contracts are popular for their flexibility, Riedel said.
“IDIQs are intended for when we know essentially what we’re going to buy, but we are just not sure how much or when,” Riedel explained. At SSC, “it’s essentially a vehicle where we can have an award to multiple contractors. We have our competition, we award to qualified contractors, and then we compete all of the delivery orders. We can do it on a rolling basis, we can do it on a yearly basis, we can even add contractors to it later—we call that on-boarding.”
These contracts require more resources to manage due to the multiple vendors, but they allow for continued competition, Riedel said.
“We could announce a requirement to have a minimum amount of a viable product delivered in 18 months and award it to two vendors,” Riedel posed. “If one delivers and the other doesn’t, we can open the competition back up. Then we may have four or five different vendors to choose from for the next round. The multiple-award IDIQ allows us to have on-going competitions as requirements are developed and matured through to the end.”
One recent example of an IDIQ is the Proliferated Low Earth Orbit contract for satellite-based services. In 2023, DISA (Defense Information Systems Agency), on behalf of SSC, awarded 16 vendors IDIQ contracts; the award ceiling was initially set at $900 million but increased a year later to $13 billion and 20 vendors.
SSC now manages the contract, which could cover a range of areas, including high-speed broadband, synthetic aperture radar imaging, space domain awareness, and alternative positioning, navigation, and timing.
Clare Hopper, chief of SSC’s Commercial Satellite Communications office said the pLEO contract is ground-breaking for SSC because the services provided are new.
“It’s the first-of-its-kind contract that aggregates demand across the DoD and enables our office to monitor trends so that we can enter into better pricing over time,” Hopper said.
“The IDIQ vehicle is very flexible for our mission because we support a range of transactions,” said Hopper said. “The structure of the IDIQ lets us action requirements really efficiently when funding materializes – compared to a general fee-type contract where you have to really have your requirements understood up front with a sufficient level of detail. That structure is just an enabler for efficiency.”
“Competition seems to be the ‘secret sauce’ to a lot of the advances we’ve had in the last five years,” Riedel shared. “Instead of just two or three major primes doing all the work and the industry stagnating somewhat, there are many smaller companies stepping up and advancing technology and capabilities so that they can have a shot at landing government contracts.”
“The goal is not to lock ourselves into a sole-source relationship with one vendor through all the production and then to sustain it,” Riedel said. “I think that’s a thing of the past. We’re doing things smarter and maintaining competition, especially in the sustainment piece.”
A version of this article appeared in the September 2025 issue of Milsat Magazine.