The U.S. government continues to increase federal investment in space, not for exploration but rather as a defense strategy, and this continued investment provides significant opportunities for commercial entities to partner with the federal government on space projects. I am. On April 2, 2024, the Department of Defense (“DoD”) announced the first-ever Commercial Space Integration Strategy (“DoD Strategy”), and just days later, on April 8, 2024, the U.S. Space Force Space Strategy (“Space Force Strategy”) (together, the “Strategy”). The strategy is complementary and formalizes the U.S. government's commitment to “making commercial solutions an integral part of the national security space architecture, not just a complement.” This strategy includes several important points for both commercial space and satellite companies and traditional government contractors engaged in space-related activities. The main points are:
Retire legacy solutions and deploy commercial solutions
The strategy states that the government will move away from “traditional practices,” which include procuring bespoke, DoD-specific capabilities, and instead rely heavily on procuring commercial solutions. The resulting contract (and “other contracts”, which presumably means other trade contracts) should be less burdensome (In other words, with fewer requirements than traditional nonprofit government contracts).However, despite the rhetoric of rationalization, commercial enterprises do not have commercial consumer.there will be important The procurement of these commercial solutions is subject to conditions such as (among other things) “cyber, data, and supply chain security requirements that commercial entities must meet in order to work with the Department.” Commercial companies should carefully consider each specific opportunity before signing on the dotted line.
Corporate customers may have to take a backseat
Unless you're paying close attention, there's a sentence in the Pentagon's strategy that's easy to miss. “If appropriate, the contract allows for the department's requirements and capability needs to be prioritized over those of other commercial customers in certain circumstances.” Commercial entities new to selling to the federal government can click here You need to be careful. This sentence foretells that the resulting DoD contracts and orders may be “rated” under the Defense Production Act (DPA). Once the DPA is activated, commercial entities enforcing the order are required to prioritize that order over all other orders, whether commercial or federal. In other words, whether corporate customers like it or not, the U.S. government can jump to the forefront. The regulations implementing the DPA are somewhat complex and must be addressed immediately (depending on the use of the rating, the order requires a response within 10 or 15 days). Under certain circumstances, failure to comply with these regulations is a federal crime. Commercial organizations seeking contracts in this area (pun intended) must be aware of these requirements.
Government intends to protect commercial space solutions.
This is interesting. The Government intends to use a variety of approaches to reduce risk for commercial space operators as necessary to support national security space operations. This includes (1) providing best practices and norms for conduct in space, (2) sharing threat information, and (3) providing economic protection (such as commercial insurance, commercial war risk insurance, and insurance provided by the U.S. government). , and compensation). and (4)[i]In appropriate circumstances, use military force to protect and defend commercial property. ” Thus, while deals with governments may be subject to more conditions, they may also come with certain benefits not customary in commercial contracts, such as mandatory protection of commercial assets in orbit. It will be important for commercial organizations to ensure that these government benefits are provided explicitly under the terms of each contract.
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As the federal government continues to increase its focus on the space sector, contract opportunities are expected to increase. The recently announced strategy is a subtle acknowledgment of the space industry's efforts to address the frustratingly opaque government operating contracting process and demonstrates the government's eagerness to take advantage of the speed and innovation that commercial solutions offer. ing. In the ongoing 'build or buy' debate, the strategy signals the government's desire to commit more resources to purchasing commercial services across a range of space-based sectors.
That said, satellite and space companies considering these opportunities should be aware of the risks involved. If you have questions about strategy, our commercial products and services and space and satellite teams are here to help.
