Considerations for Defense Contractors Entering the Small Satellite Market
Hoffman, Jeffrey A.
Welsch, Roy E.
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Federal defense agencies have historically relied on large unique satellites to accomplish their communication and earth-sensing missions. In recent years, there has been a rapid expansion of the commercial small satellite sector as technology has demonstrated that several small satellites can accomplish the same mission of some larger traditional satellites with a shorter lead time at a more affordable price point. As the advantages of small satellite applications become evident, there is a growing consensus that moving from large exquisite single satellite units to a proliferated Low Earth Orbit (LEO) model is necessary to maintain the United States’ (US) dominance in the space domain and is critical to robust national security. Company X, one of the largest aerospace and defense manufacturers in the world, has profound expertise in manufacturing large exquisite satellite systems with long lead times, high mission assurance, and high associated costs. Their experience with small satellites however, has primarily been limited to prototype manufacturing in conjunction with academia, making it difficult to realize the high-volume low-cost benefits that are seen in the commercial sector. This thesis presents a framework that can be used by Company X or any defense contractor to evaluate the attractiveness of a small spacecraft program relative to their own capabilities and expertise, as a function of the program’s Technology Readiness Level (TRL), Manufacturing Readiness Level (MRL), contract unit volume, satellite material costs, and technical sophistication. This framework can be used as a tool to determine if they should bid on a contract, and if so, what facilities and personnel should be involved in the manufacturing. The framework presented in this thesis can be summarized as six lenses for evaluating small satellite contracts. The first evaluates facility type, with Contractor Owned Contractor Operated (COCO) facilities, like Company X, being the optimal location for high TRL and high MRL programs that can utilize manufacturing expertise and justify investment in the program. The second evaluates the optimal manufacturing maturity as a function of the contract’s TRL and MRL requirements. As TRL and MRL increases, the optimal option moves from only using existing facilities with low manufacturing investments to a high-investment facility with assisted assembly, production management, and dedicated test capabilities. The third assesses a contract’s mission assurance requirements to ensure they will not render the program prohibitively expensive. If requirements are prohibitory, it suggests Company X should evaluate if they can negotiate reduced mission assurance requirements with supplemental quality assurance. The fourth analyzes optimal investment in manufacturing reliability as a function of satellite material costs and contract unit volumes. If evaluating the costs per successful on-orbit unit, it is almost always worthwhile to invest in increased manufacturing reliability. From a strictly manufacturing cost perspective however, the tradeoffs between reliability and increased per unit costs have to be evaluated carefully as a function of satellite material costs and contract unit volume. The fifth, evaluates different expertise such as space systems versus high-rate manufacturing, within the company and the value of each. The final one, assesses if the program is aligned with the corporate strategic priorities or if has the potential to demonstrate spacecraft manufacturing capability and therefore generate demand. It is clear that small satellite constellations and responsive space programs will be a necessary part of the DoD’s approach to space security in the near future. This thesis presents tools for Company X to evaluate which programs are compatible with their capabilities and how to best leverage them.
DepartmentMassachusetts Institute of Technology. Department of Aeronautics and Astronautics; Sloan School of Management
Massachusetts Institute of Technology