Space Acquisition Head Says Fixed-Price Contracting Model Not Universal

Frank Calvelli, the assistant secretary of the Air Force for space acquisition and integration, clarified on Friday that the U.S. Space Force does not utilize the fixed-price model for all programs.

Fixed-price contracts require that industry pay for unexpected development costs instead of the government, C4ISRNET reported Saturday.

Speaking at a Center for Strategic and International Studies event, he explained that his office selects the best strategy for each procurement, adding that the fixed-price approach tends to suit “small footprint systems using existing technology.” 

Calvelli, a past Potomac Officers Club event speaker, shared that the Space Force considered a fixed-price approach for the Evolved Strategic Satellite Communications program, for which Northrop Grumman and Lockheed Martin have been prototyping spacecraft since 2020. The service branch is instead leaning toward a cost-plus deal, he added.

Defense companies have warned that a fixed-price approach is too risky. Lockheed CEO Jim Taiclet said such deals cause companies to take on “tremendous” funding risks.

Meanwhile, Northrop CEO Kathy Warden and RTX Chief Operating Officer Chris Calio shared that their companies have passed on some high-profile projects due to the fixed-price model.