Big space Raytheon shifts gears to compete in the new space market
Capitalism in space: Raytheon, a traditional big space contractor focused mostly on winning military contracts, has decided to shifts gears from what has in recent years been a failed effort to compete for major contracts direct from the military and instead offer its capabilities to other commercial space companies.
This decision was fueled largely by the approach of the military’s Space Development Agency (SDA) to commercial contracts.
SDA’s approach to buying satellites from multiple prime contractors under fixed-price contracts is “revolutionizing space acquisitions,” [Raytheon official David Broadbent] said. The agency has been a “huge disrupter,” he said.
“Let’s call it what it is,” Broadbent added. “Raytheon and many of our traditional defense primes were constructed around sole source classified cost-plus businesses, and five to seven-year acquisition cycles.” Those markets no longer exist, he said. “So we’ve had to take a very hard look at ourselves … and drive to a far more efficient model of producing capabilities.”
In other words, Raytheon has recognized that the government golden goose of unlimited cost-plus contracts is gone, and that the company’s over-priced habits under those contracts made it difficult for it to compete against new startups designed to be efficient, low-cost, and quick on their feet.
By marketing its available products directly to other satellite and rocket companies, Raytheon can avoid the long contract competitions of the government, and make sales more effectively. As it does this it will also have time to restructure the company itself, trimming it down and making it more efficient so that it can better compete for government contracts at a later time.
Raytheon’s change is the result of the SDA essentially accepting many of the recommendations put forth in my 2017 policy paper, Capitalism in Space (a free pdf download). Rather than have the military the designer and builder of a few big and expensive satellites (also very vulnerable to attack), it is now the customer buying constellations of many small and cheap satellites from many private companies. Such smallsat constellations are much more difficult to disable by hostile powers.
Readers!
Please consider supporting my work here at Behind the Black. Your support allows me the freedom and ability to analyze objectively the ongoing renaissance in space, as well as the cultural changes -- for good or ill -- that are happening across America. Fourteen years ago I wrote that SLS and Orion were a bad ideas, a waste of money, would be years behind schedule, and better replaced by commercial private enterprise. Only now does it appear that Washington might finally recognize this reality.
In 2020 when the world panicked over COVID I wrote that the panic was unnecessary, that the virus was apparently simply a variation of the flu, that masks were not simply pointless but if worn incorrectly were a health threat, that the lockdowns were a disaster and did nothing to stop the spread of COVID. Only in the past year have some of our so-called experts in the health field have begun to recognize these facts.
Your help allows me to do this kind of intelligent analysis. I take no advertising or sponsors, so my reporting isn't influenced by donations by established space or drug companies. Instead, I rely entirely on donations and subscriptions from my readers, which gives me the freedom to write what I think, unencumbered by outside influences.
You can support me either by giving a one-time contribution or a regular subscription. There are four ways of doing so:
1. Zelle: This is the only internet method that charges no fees. All you have to do is use the Zelle link at your internet bank and give my name and email address (zimmerman at nasw dot org). What you donate is what I get.
2. Patreon: Go to my website there and pick one of five monthly subscription amounts, or by making a one-time donation.
3. A Paypal Donation or subscription:
4. Donate by check, payable to Robert Zimmerman and mailed to
Behind The Black
c/o Robert Zimmerman
P.O.Box 1262
Cortaro, AZ 85652
You can also support me by buying one of my books, as noted in the boxes interspersed throughout the webpage or shown in the menu above.
Capitalism in space: Raytheon, a traditional big space contractor focused mostly on winning military contracts, has decided to shifts gears from what has in recent years been a failed effort to compete for major contracts direct from the military and instead offer its capabilities to other commercial space companies.
This decision was fueled largely by the approach of the military’s Space Development Agency (SDA) to commercial contracts.
SDA’s approach to buying satellites from multiple prime contractors under fixed-price contracts is “revolutionizing space acquisitions,” [Raytheon official David Broadbent] said. The agency has been a “huge disrupter,” he said.
“Let’s call it what it is,” Broadbent added. “Raytheon and many of our traditional defense primes were constructed around sole source classified cost-plus businesses, and five to seven-year acquisition cycles.” Those markets no longer exist, he said. “So we’ve had to take a very hard look at ourselves … and drive to a far more efficient model of producing capabilities.”
In other words, Raytheon has recognized that the government golden goose of unlimited cost-plus contracts is gone, and that the company’s over-priced habits under those contracts made it difficult for it to compete against new startups designed to be efficient, low-cost, and quick on their feet.
By marketing its available products directly to other satellite and rocket companies, Raytheon can avoid the long contract competitions of the government, and make sales more effectively. As it does this it will also have time to restructure the company itself, trimming it down and making it more efficient so that it can better compete for government contracts at a later time.
Raytheon’s change is the result of the SDA essentially accepting many of the recommendations put forth in my 2017 policy paper, Capitalism in Space (a free pdf download). Rather than have the military the designer and builder of a few big and expensive satellites (also very vulnerable to attack), it is now the customer buying constellations of many small and cheap satellites from many private companies. Such smallsat constellations are much more difficult to disable by hostile powers.
Readers!
Please consider supporting my work here at Behind the Black. Your support allows me the freedom and ability to analyze objectively the ongoing renaissance in space, as well as the cultural changes -- for good or ill -- that are happening across America. Fourteen years ago I wrote that SLS and Orion were a bad ideas, a waste of money, would be years behind schedule, and better replaced by commercial private enterprise. Only now does it appear that Washington might finally recognize this reality.
In 2020 when the world panicked over COVID I wrote that the panic was unnecessary, that the virus was apparently simply a variation of the flu, that masks were not simply pointless but if worn incorrectly were a health threat, that the lockdowns were a disaster and did nothing to stop the spread of COVID. Only in the past year have some of our so-called experts in the health field have begun to recognize these facts.
Your help allows me to do this kind of intelligent analysis. I take no advertising or sponsors, so my reporting isn't influenced by donations by established space or drug companies. Instead, I rely entirely on donations and subscriptions from my readers, which gives me the freedom to write what I think, unencumbered by outside influences.
You can support me either by giving a one-time contribution or a regular subscription. There are four ways of doing so:
1. Zelle: This is the only internet method that charges no fees. All you have to do is use the Zelle link at your internet bank and give my name and email address (zimmerman at nasw dot org). What you donate is what I get.
2. Patreon: Go to my website there and pick one of five monthly subscription amounts, or by making a one-time donation.
3. A Paypal Donation or subscription:
4. Donate by check, payable to Robert Zimmerman and mailed to
Behind The Black
c/o Robert Zimmerman
P.O.Box 1262
Cortaro, AZ 85652
You can also support me by buying one of my books, as noted in the boxes interspersed throughout the webpage or shown in the menu above.
This was already tried during the last military draw down, the “Sequester” two decades ago. DOD started pressuring their contractors to get away from Cost Plus to get lower prices that reflected procurement more like the consumer electronic market but neither the defense contractors nor the DOD could break through their institutional inertia. There’s literally no one at either place that knows how to do it. Imagine how much a Raytheon PC would cost (say $35-40K) The cost of the documentation configuration alone was something like 30-40% of the contract costs. Nobody wanted to shatter their rice bowls.
Just another thing to keep the managers busy.
Raytheon is hardly Big Space. They’re hardly a space prime contractor at all. They’re a big *defense* prime contractor in the weapons, radar, and avionics fields, but their space work has traditionally been in the form of sensors and electronics, not prime systems. It sounds like they’re just returning to form after acquiring a couple of startups.
pawn wrote: “There’s literally no one at either place that knows how to do it.”
Boeing does. *Most* of their big prime contracts are firm, fixed price: F-15EX Eagle, F/A-18E/F Super Hornet, EA-18G Growler, the C-17 Globemaster during most of its production run, AH-64E Longbow Apache, CH-47F Chinook, the A-10 wing, KC-46 Pegasus, CST-100 Starliner, JDAM, Laser JDAM, SDB, Harpoon II-U, SLAM ER, T-7 Red Tail, MQ-25 Stingray, and the last batch of TDRS satellites are, I believe, all firm, fixed price contracts. I think V-22 Osprey and the WGS satellites are too, but don’t quote me on those.
Most of those contracts make money — the portfolio certainly does — and with only a couple of exceptions, almost all of them are the best in the world at what they do.
It can be done, though not often by Raytheon, Lockheed Martin, Northrop Grumman, or the shipbuilders.
Large assets have their place…some ideas
https://www.wired.com/2015/02/strategic-defense-military-uses-moon-asteroid-resources-1983/