The National Reconnaissance Office (NRO) is increasingly using fixed price contracts, even as the agency uses a range of buy options, NRO principal deputy director Troy Meink said on March 18.
In June 2022, Assistant Secretary of the Air Force for Space Acquisition and Integration Frank Calvelli credited Meink with giving him faith in fixed price contracts (Defense Daily, June 24, 2022).
“Frank and I have had more conversations than I can count on this topic–how you structure acquisition contracts to get the most benefit for the government but still ensure that the contractors are stable and make money,” Meink said at Satellite 2024. “If the contractors aren’t making any money at all, they’re not gonna be stable companies. That’s all part of the trade space. Of course, we would like them to make as low as possible to get the most bang for the government.”
“So, there’s no one size fits all,” he said. “A fixed price contract doesn’t always make sense. A cost-plus contract doesn’t always make sense. Sometimes we merge the two together. Matter of fact, almost always now, we merge a combination of fixed price and cost plus.”
Calvelli held Meink’s position between 2012 and 2020.
Factors typically weighing into government decisions on whether to use fixed price or cost plus include technology development risk, the number of possible program competitors, and required fielding timelines which, if short, may benefit from the use of commercial technology.
“I think we are using fixed price more than we have historically done at the NRO, but that’s not to say that we’re doing fixed price on everything, ” Meink said on March 18.
Meink, a former U.S. Air Force KC-135 navigator and engineer on ballistic missile test vehicles with the Missile Defense Agency, was the signals intelligence acquisition director at the NRO from 2008 until 2013 before leaving the agency to assume leadership positions with the Air Force and the Director of National Intelligence and returning to the NRO in May 2017.
The “huge decrease in launch costs” from hundreds of millions of dollars for high-need satellites to under $100 million for larger rockets and $10 million for smaller ones under the National Security Space Launch program has helped NRO control costs, as has the advent of commercial, digital technology to enable NRO to take more risk on higher numbers of lower cost satellites, Meink said.
“We can now build an entire payload for about the weight of what our power conditioning box used to be 10 to 15 years ago,” he said. “It is a dramatic change.”