How to Achieve Government Efficiency in Space
Four years ago, in the flurry of activity during Donald Trump’s transition into the White House, an innocuous decision was made by the incoming President. This decision revealed his instincts as a successful businessman, and it emphasized the value of competition as a lever to secure a more efficient supply chain at the best value for the customer.
At the time, the military’s vaunted F-35 fighter program was facing the usual overruns that routinely plague complex weapon systems. With practically no background in defense on either side – acquisition or operations – Trump directed the program to quickly devise a second source program to use as negotiating leverage. The rest is history – today there is competition in that sector, to the benefit of the taxpayer, the warfighter, and our allies. The F-35 program itself is the better for it, encouraging better pricing that will bolster Congressional support for the procurement of more sixth generation fighters.
This same instinct of rewarding efficiency, common to any successful business leader, must be elevated to be a core component of the Space Force’s identity. Especially as the President credited with creating both the Space Force and NASA’s Artemis mission returns for his second term.
CEOs and economists know that the threat of competition is what keeps businesses lean and efficient. Maintaining healthy competition among competent suppliers drives innovation, thereby increasing value to a company’s shareholders and customers. Vertical integration can sometimes reduce transactional bureaucracy, but when continuous competition is foremost in business planning, a culture of efficiency endures. This of course requires hard work and even harder thinking, especially if a sector has devolved into a monopoly serving a monopsony – a market with one supplier serving only one buyer.
The government retains the mindset that industry consolidation will lead to greater efficiencies, which will benefit the customer. However, history has shown that it does not, and it never has. It only leads to greater market capture in the monopsony by a single company, with the ultimate customers – the taxpayers and warfighter – paying more for decreasing efficiencies and less innovation.
The government’s current acquisition system for space needs a generational overhaul. To define system requirements and award a contract typically spans well over two years, meanwhile today’s space systems and services are readily available and made from off-the-shelf componentry. How can we pivot to continuous competition quickly, without further bloating the Space Force with even more bureaucratic processes? Simple: assess only two factors as award criteria in a competition: performance against mission and cost.
If a proposed solution, both in technical performance and schedule, meets the requirements defined in the RFP, then it passes the first criterion. From those which pass the first criterion, the government awards a fixed price contract to the lowest cost solution, and pays for it only upon delivery. Prime contractors must bear the burden of risk and do so under fixed price contracts. If only one bidder successfully passes the first criterion for a fixed price contract, performance specifications should be reconsidered to ensure more bidders may enter the competition. If any supplier fails to deliver, they must not get paid. Space procurement should no longer be any different than most other commercial transactions. This new administration, hellbent on efficiency, should no longer consider reimbursing a company that cannot deliver on its commitments.
At the same time, there must also be a continuous approach, where streamlined methods are developed to promote fairness while avoiding vendor lock, a pitfall that emerged from vertical consolidation in the 1990s, most egregiously in the fighter jet and rocket sectors.
Eighty percent of the other service’s budgets are for personnel, operations and maintenance, not the acquisition of systems and services. The Space Force is the complete opposite, where only 20 percent is for personnel and operations. The other 80 percent is programmed for the acquisition of systems and services and must be continuously competed.
Continuous competition also prevents staleness at all levels, ensuring a continuous reevaluation of what does and does not work. This not only includes the product or service being acquired, but also the government’s plans and strategies that might bring them to market. A key cause of the stale nature of traditional primes is not a lack of innovative people, but because the government does not reward innovation in their RFPs.
A culture of continuous competition would also encourage private capital to investigate alternative solutions while rewarding new, optimized partnerships and technological innovations. It naturally dispenses of inefficiencies and retires obsolete capabilities, while the government forms new offices and agencies just to identify them.
Finally, and most importantly, a competitive culture will reinforce a mindset essential to countering the cunning and ambitious threats in space. A key part of that mindset involves training our Guardians to think, act, and win like champions, and to unleash the private sector and its superior technology to secure our space future against peer competitors like China.
The key to lasting efficiency in government space acquisitions is not a clickbait headline of program cuts, though those can be helpful and in many instances are long overdue. Rather, enduring efficiency in the space domain will come from creating a permanent culture of continuous competition that rewards efficiency and delivery over political or bureaucratic backscratching.
Philosopher George Santayana famously observed that “those who don’t learn from history are doomed to repeat it.” We must never again convince ourselves that consolidation around a single supplier, like we did with fighters and rockets, will lead to efficiencies. We cannot forget lessons of that era which we paid for in the decades that followed. Instead, we must do the hard work to ensure continuous competition becomes a normal part of Space Force culture. If we do, we will not only make space more efficient today but also guarantee a path for a prosperous future, rather than a mess that a president will have to dig our country out of.
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