DoD's $200M United Launch Services contract for satellite deployment shows fair value, but limited competition raises concerns
Contract Overview
Contract Amount: $200,755,535 ($200.8M)
Contractor: United Launch Services, LLC
Awarding Agency: Department of Defense
Start Date: 2017-06-29
End Date: 2022-09-30
Contract Duration: 1,919 days
Daily Burn Rate: $104.6K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: IGF::OT::IGF LAUNCH SERVICES TO PUT A SATELLITE INTO ORBIT
Place of Performance
Location: CENTENNIAL, ARAPAHOE County, COLORADO, 80112
State: Colorado Government Spending
Plain-Language Summary
Department of Defense obligated $200.8 million to UNITED LAUNCH SERVICES, LLC for work described as: IGF::OT::IGF LAUNCH SERVICES TO PUT A SATELLITE INTO ORBIT Key points: 1. The contract's value appears reasonable when benchmarked against similar launch services, indicating a fair price for the services rendered. 2. Limited competition, with only two bidders, suggests potential for higher costs than a more robustly competed contract might yield. 3. The firm-fixed-price structure mitigates cost overrun risks for the government. 4. Performance is tied to successful satellite deployment, a critical but high-stakes metric. 5. This contract positions the DoD within the critical space launch sector, essential for national security and communication. 6. The duration of the contract (over 5 years) suggests a long-term need for these services.
Value Assessment
Rating: good
The total contract value of approximately $200.7 million for satellite launch services appears to be within a reasonable range when compared to industry benchmarks for similar missions. While specific per-unit costs are not detailed, the overall price reflects the complexity and high cost associated with placing payloads into orbit. The firm-fixed-price nature of the award provides cost certainty for the government, which is a positive indicator of value management.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit offers. However, the data shows only two bids were received. While competition was allowed, the low number of actual bidders suggests that the market for this specific type of launch service may be concentrated, potentially limiting the price discovery and competitive pressure that would typically be expected from a broader range of participants.
Taxpayer Impact: A limited number of bidders, even under full and open competition, can mean that taxpayers may not be receiving the most competitive pricing possible. This concentration in the market warrants attention to ensure future procurements maximize competition.
Public Impact
The primary beneficiaries are the Department of Defense and its components, which receive critical satellite deployment capabilities. Services delivered include the launch of satellites into orbit, supporting national security, intelligence, and communication needs. The geographic impact is primarily national, with launch operations likely occurring at designated spaceports. Workforce implications include support for highly skilled personnel in aerospace engineering, launch operations, and program management.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Concentration in the launch services market could lead to reduced competition and potentially higher long-term costs.
- Reliance on a limited number of providers for critical national security assets poses a strategic risk.
- The long contract duration might not fully capture advancements in launch technology that could offer cost savings.
Positive Signals
- The firm-fixed-price contract structure provides significant cost certainty for the government.
- Awarding to United Launch Services, LLC, a known entity in the space launch sector, suggests a degree of reliability.
- The contract supports essential national security capabilities, aligning with core government functions.
Sector Analysis
The space launch services sector is a highly specialized and capital-intensive industry dominated by a few major players. This contract falls within the broader aerospace and defense industry, which is characterized by long development cycles, significant R&D investment, and stringent regulatory requirements. Comparable spending benchmarks in this sector are often in the tens to hundreds of millions of dollars per launch, depending on the payload size, orbit, and launch vehicle.
Small Business Impact
The data indicates that small business participation was not a primary focus for this specific contract, as indicated by 'sb': false. There is no explicit small business set-aside. Subcontracting opportunities for small businesses may exist within the supply chain for United Launch Services, but they are not mandated by the contract structure itself. The impact on the small business ecosystem is likely minimal unless significant subcontracting occurs.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of the Air Force's program management and contracting offices. Accountability is driven by the firm-fixed-price terms and the successful delivery of the satellite launch service. Transparency is generally maintained through contract award databases and reporting requirements, though specific operational details may be sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.
Related Government Programs
- National Security Space Launch (NSSL)
- Space-Based Infrared System (SBIRS)
- Advanced Extremely High Frequency (AEHF)
- GPS III
Risk Flags
- Limited competition
- Potential for market concentration
- Reliance on established providers
Tags
defense, department-of-defense, department-of-the-air-force, united-launch-services-llc, definitive-contract, firm-fixed-price, full-and-open-competition, satellite-launch, aerospace, national-security, colorado, large-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $200.8 million to UNITED LAUNCH SERVICES, LLC. IGF::OT::IGF LAUNCH SERVICES TO PUT A SATELLITE INTO ORBIT
Who is the contractor on this award?
The obligated recipient is UNITED LAUNCH SERVICES, LLC.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Air Force).
What is the total obligated amount?
The obligated amount is $200.8 million.
What is the period of performance?
Start: 2017-06-29. End: 2022-09-30.
What is the track record of United Launch Services, LLC in fulfilling similar government contracts?
United Launch Services, LLC (ULS) has a significant history of supporting government launch missions, particularly for the Department of Defense and NASA. As a joint venture historically involving major aerospace companies, ULS has been a primary provider of launch services for national security payloads for many years. Their track record includes numerous successful launches using vehicles like the Atlas and Delta rocket families. While specific performance metrics for every contract are not publicly detailed, ULS is generally considered a reliable provider for complex and critical space missions. However, like any major contractor in this field, they have also experienced launch anomalies or delays in their long operational history, which are closely scrutinized by the government.
How does the pricing of this contract compare to other government satellite launch contracts awarded around the same period?
Benchmarking the pricing of this $200.7 million contract requires comparing it to similar government satellite launch contracts awarded between 2017 and 2022. Contracts for launching national security or scientific payloads can vary widely based on the specific launch vehicle, payload mass, target orbit, and launch provider. For context, other major government launch contracts during this period, such as those under the National Security Space Launch (NSSL) program, have seen awards ranging from approximately $100 million to over $300 million per mission, depending on the complexity. The firm-fixed-price nature of this award provides a degree of cost certainty. Given the limited number of bidders (two), the price appears fair but may not represent the absolute lowest cost achievable in a more competitive market.
What are the primary risks associated with this contract, and how are they being managed?
The primary risks associated with this satellite launch contract include technical failures during launch, schedule delays, and potential cost increases if not managed tightly (though mitigated by FFP). Technical risks are inherent in space launch operations, involving complex engineering and environmental factors. These are managed through rigorous testing, quality control, and the contractor's established launch procedures. Schedule delays can arise from technical issues, range availability, or geopolitical factors, impacting the deployment of critical assets. The government manages this through contract clauses requiring timely performance and potential penalties. Cost risks are largely borne by the contractor due to the firm-fixed-price structure, incentivizing efficient execution. The government's risk is primarily related to mission success and timely capability delivery.
How effective is the firm-fixed-price (FFP) contract type in ensuring value for money in the context of space launch services?
The firm-fixed-price (FFP) contract type is generally considered effective in ensuring value for money for the government in high-cost, complex procurements like space launch services, provided the scope is well-defined. FFP shifts most of the cost risk to the contractor, incentivizing them to control costs and perform efficiently to maximize their profit margin. This structure provides significant budget certainty for the government, as the final price is fixed regardless of the contractor's actual costs. For space launch, where technical risks are high, FFP encourages the contractor to invest in robust engineering and quality assurance to avoid costly failures. The primary challenge is ensuring the initial price negotiated is fair and competitive, which is influenced by the level of competition.
What is the historical spending trend for satellite launch services by the Department of Defense?
Historical spending by the Department of Defense (DoD) on satellite launch services has been substantial and has evolved significantly over the years. Initially, the DoD relied heavily on its own launch capabilities and later transitioned to procuring services from dedicated providers. Spending has been driven by the need to deploy and maintain a vast constellation of intelligence, communication, navigation, and missile-warning satellites. Major programs like the National Security Space Launch (NSSL) represent billions of dollars in investment over multi-year periods. Spending fluctuates based on the cadence of satellite replenishment and new program starts. The trend has been towards consolidating launch procurements and seeking greater efficiency, often through competitive contracts like the one awarded to United Launch Services, LLC, while also fostering domestic launch capabilities.
Industry Classification
NAICS: Transportation and Warehousing › Nonscheduled Air Transportation › Nonscheduled Chartered Freight Air Transportation
Product/Service Code: TRANSPORT, TRAVEL, RELOCATION › TRANSPORTATION OF THINGS
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 2
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: United Launch Alliance, L.L.C
Address: 9501 E PANORAMA CIR, CENTENNIAL, CO, 80112
Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $207,428,933
Exercised Options: $200,755,535
Current Obligation: $200,755,535
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Cost or Pricing Data: NO
Timeline
Start Date: 2017-06-29
Current End Date: 2022-09-30
Potential End Date: 2022-11-30 00:00:00
Last Modified: 2025-04-22
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