The Air Force’s insight into space launch contractor performance could decline as it pursues competition in the Evolved Expendable Launch Vehicle (EELV) program, according to a recent Government Accountability Office (GAO) report (GAO-15-623).

The Air Force is changing its approach to acquiring launch services. Specifically, the service intends to introduce competition for certain launches, treat these launches as commercial item procurement and award firm-fixed-price contracts for the launches. The Air Force intends to rely on what it believes will be adequate price competition to ensure prices are fair and reasonable.

One of United Launch Alliance's Atlas V heavy lift rockets. Photo: ULA.
One of United Launch Alliance’s Atlas V heavy lift rockets. Photo: ULA.

Further, by treating these launches as commercial item procurements, it will enable the Air Force to use streamlined contracting practices and shift the risks associated with the cost of performance to the contractors.

But GAO warns that relying on the commercial market reduces the Air Force’s access to certain types of information that is currently provided under incumbent launch provider United Launch Alliance’s (ULA) Phase 1 contract, a cost-reimbursable deal. For example, under this contract, the service requires ULA to maintain six major business systems that need to be reviewed and approved by a government oversight organization and provide insights into ULA’s cost and schedule performance on a continuous basis, among other benefits.

Under the revised acquisition strategy, the Air Force will not have the access to the same level of detail it currently obtains and the contractors will be allowed to use business systems that are not required to meet Defense Department standards. GAO said the service determined that the trade-offs associated with its new strategy, including the determination that the launch services could be appropriately treated as a commercial item, were manageable, though several officials across DoD expressed concerns about the loss of visibility into contractor data.

GAO said by procuring the launch services as a commercial item, the AIR Force is prohibited from requiring significant amounts of contractor cost or performance data, because according to Federal Acquisition Regulations (FAR), the nature of commercial item procurement makes those requirements unnecessary. In addition, in a firm-fixed-price contract, the Air Force does not need to validate costs incurred by the contractor, because the contract price is fixed and generally does not change regardless of the costs incurred.

GAO recommends the Air Force use an incremental approach to the next acquisition strategy to ensure that it does not commit itself to a strategy until data is available to make an informed decision. GAO said DoD concurred with the recommendation.

ULA is a joint venture of Lockheed Martin [LMT] and Boeing [BA].