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.
On Christmas Eve 1968 three Americans became the first humans to visit another world. What they did to celebrate was unexpected and profound, and will be remembered throughout all human history. Genesis: the Story of Apollo 8, Robert Zimmerman's classic history of humanity's first journey to another world, tells that story, and it is now available as both an ebook and an audiobook, both with a foreword by Valerie Anders and a new introduction by Robert Zimmerman.
The print edition can be purchased at Amazon. from any other book seller, or direct from my ebook publisher, ebookit.
The ebook is available everywhere for $5.99 (before discount) at amazon, or direct from my ebook publisher, ebookit. If you buy it from ebookit you don't support the big tech companies and the author gets a bigger cut much sooner.
The audiobook is also available at all these vendors, and is also free with a 30-day trial membership to Audible.
"Not simply about one mission, [Genesis] is also the history of America's quest for the moon... Zimmerman has done a masterful job of tying disparate events together into a solid account of one of America's greatest human triumphs."--San Antonio Express-News
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.
On Christmas Eve 1968 three Americans became the first humans to visit another world. What they did to celebrate was unexpected and profound, and will be remembered throughout all human history. Genesis: the Story of Apollo 8, Robert Zimmerman's classic history of humanity's first journey to another world, tells that story, and it is now available as both an ebook and an audiobook, both with a foreword by Valerie Anders and a new introduction by Robert Zimmerman.
The print edition can be purchased at Amazon. from any other book seller, or direct from my ebook publisher, ebookit. The ebook is available everywhere for $5.99 (before discount) at amazon, or direct from my ebook publisher, ebookit. If you buy it from ebookit you don't support the big tech companies and the author gets a bigger cut much sooner.
The audiobook is also available at all these vendors, and is also free with a 30-day trial membership to Audible.
"Not simply about one mission, [Genesis] is also the history of America's quest for the moon... Zimmerman has done a masterful job of tying disparate events together into a solid account of one of America's greatest human triumphs."--San Antonio Express-News
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/