Rethinking Requirements and Risk in the New Space Age

Recent advancements in the commercial space launch and small satellite sectors are revolutionizing how the U.S. Department of Defense (DoD) will access and use space. Increasingly, many within the national security space community view commercial space capabilities as essential for maintaining U.S. competitive advantage and protecting national security interests in space.¹ However, DoD is still failing to take full advantage of the benefits from the commercial space sector. This shortfall is due to fundamental differences between defense and commercial innovation cycles, as well as differing perspectives on requirements and risk.

To propose practical solutions to the critical shortcomings in current approaches, this paper will examine four areas: recent strategies to streamline acquisition processes, the commercial space sector’s short technology innovation cycle, a “fail fast” approach to risk, and the advantages of considering commercial space capabilities as a service. Ultimately, DoD should take advantage of the commercial sector’s shorter development timelines, especially in satellite communications and Earth imaging constellations composed of smaller, inexpensive satellites with relatively short mission lives.

Recommendations

• DoD needs to fundamentally rethink its understanding of requirements and risk to take full advantage of the commercial space innovation cycle.
• DoD should reemphasize that failure is a key element of the innovation cycle and is, at times, acceptable during the development cycle of less critical mission systems.
• DoD should study and recognize specific capability needs, and where applicable, fill these needs by utilizing commercial space systems as a service.
• DoD and commercial space industry leadership should meet on an annual basis to discuss their perspectives on requirements and risk and how space as a service can be better incorporated into existing licensing and acquisition processes.

Recent Strategies to Streamline Acquisition Processes

The DoD has begun to embrace reform to better integrate innovation and emerging commercial capabilities. The 2018 National Defense Strategy (NDS) addresses a systemic problem within the department:

Success no longer goes to the country that develops a new technology first, but rather to the one that better integrates it and adapts its way of fighting. Current processes are not responsive to need; the Department is over-optimized for exceptional performance at the expense of providing timely decisions, policies, and capabilities to the warfighter. Our response will be to prioritize speed of delivery, continuous adaptation, and frequent modular upgrades. We must not accept cumbersome approval chains, wasteful applications of resources in uncompetitive space, or overly risk-averse thinking that impedes change. Delivering performance means we will shed outdated management practices and structures while integrating insights from business innovation.²

The DoD is actively addressing many of the problems noted in the NDS by streamlining some acquisition processes to incorporate novel technologies and processes. These initiatives include using Other Transaction Authority (OTA), which allows DoD to use the authority found in 10 U.S.C. 2371 to enter into transactions with private organizations for basic, applied, and advanced research projects.³ The fiscal year 2016 NDAA expanded DoD’s ability to use OTA for certain prototype programs, including making some authorities permanent.⁴ Advantages of OTA include exempting such efforts from some procurement statutes and acquisition regulations, including the Federal Acquisition Regulation. Defense acquisition professionals often view the use of OTA as a method of streamlining certain types of acquisitions and incorporating the latest commercial technologies and capabilities.

The Defense Innovation Unit (DIU) has successfully used OTA to accelerate access to commercial space sector innovation.⁵ Space is one of five DIU portfolios, and the organization is looking to the commercial space sector to improve resiliency. These improvements include employing micro-satellites that incorporate data analytics, along with a responsive launch capability for low-cost, precise, and “on demand” launch of small space payloads.⁶ For example, DIU is partnering with Capella Space, a San Francisco startup developing a synthetic aperture radar constellation, to help provide persistent imagery.⁷ Also, DIU selected the Virgin Orbit LauncherOne as a prototype for a responsive launch service.⁸

While DoD efforts to use OTA to better incorporate commercial space innovation are meaningful and in the right direction, the department needs to fundamentally rethink its understanding of requirements and risk to take full advantage of the commercial space innovation cycle.

Leveraging the 18-month Innovation Cycle

Unlike the ten-plus-year development cycle for many major defense acquisition programs (MDAPs), the commercial space sector often follows an 18-month technology and innovation cycle. Indeed, this cycle is common to numerous technology-focused companies because they use many high technology and computer-based components. When considering technology cycles, Moore’s Law frequently comes to mind. In a 1965 paper, Gordon Moore postulated that technologies improve exponentially with time. From his research and the work of others, analysts commonly view the innovation cycle as meaning computing power doubles every 18 months.⁹

Yet some researchers suggest that Theodore Wright’s Law, which stems from his 1936 paper, is more useful in forecasting technological progress.¹⁰ Based on the aviation industry in the early 1900s, Wright’s Law theorizes that the cost of a unit decreases as cumulative production increases, which economists and businesses today refer to as economies of scale. When considering both Wright’s and Moore’s Laws in forecasting technological progress, it is understood that capability increases and cost decreases as a function of production and time.¹¹ Therefore, while DoD’s development cycle can take more than 10 years, the commercial sector’s cycle is routinely only 18 months.

Unfortunately, these variances in models between the MDAP’s lengthy development cycle and the commercial space sector’s 18-month innovation cycle are a result of stark differences in thinking about requirements and risk. Requirements and risk for MDAPs commonly focus on ensuring critical mission capabilities at a given cost. In contrast, the commercial space sector tends to focus more on providing innovation quickly using economies of scale. The commercial sector understands that time dynamically shapes decisions related to requirements and risk because of the relatively short innovation cycle. In a highly competitive space sector with tight profit margins, those unable to innovate quickly will likely be out of business soon. Alternatively, space systems with mission assurance requirements – where failures are detrimental to national security and military operations – often drive DoD’s timelines. Program managers of critical national security space systems commonly require additional time to test and verify that satellites can perform missions with a very low probability of failure.

Risk and a “Fail Fast, Fail Forward” Outlook

Because of the relatively short innovation and development cycle, the commercial space sector has a different approach to risk and failure than the defense community. Specifically, the commercial space launch and satellites sectors are more inclined to embrace a “fail fast, fail forward” perspective. When commercial companies seek true innovation, failure is accepted and even encouraged. Organizations that never fail in research and development or product initiatives are not being aggressive enough with their development programs. Good organizations recognize failure quickly and learn from it.

A “fail fast, fail forward” outlook means nascent technology and capabilities will fail most often in the initial phase, but as technology and capabilities mature, overall risk will decrease. This means decisionmakers in DoD must understand that setting strict requirements and specifications to minimize associated acquisition and programmatic risk – with good intensions of protecting national security interests – is counterproductive when seeking to rapidly incorporate commercial innovation. Consequently, when the defense acquisition community seeks to use requirements to incorporate novel capabilities or services, program managers should consider requirements and risk over the period of intended use, or the length of the service agreement, to take advantage of technology maturation.

Furthermore, DoD should embrace the right kind of risk under the right circumstances. A “fail fast, fail forward” approach is not appropriate for the development of the most mission critical space systems or capabilities, where a single launch or satellite failure can result in dire national security consequences or significantly impact military operations. The DoD will often seek the lowest risk of failure in systems related to exquisite reconnaissance sensors; position, navigation, and timing services in wartime; command and control of nuclear forces; and launch detection of ballistic missiles. In these mission areas, the acquisition community typically avoids taking on high technical risks through the introduction of immature technologies, inadequate testing and systems engineering, and overly optimistic assumptions about applicability of commercial practices for military space systems.¹²

In areas with lower mission criticality, the defense community can take full advantage of innovation and technological advances by incorporating incremental capability improvements and leveraging economies of scale. Appropriate applications for incremental improvements include: constellations of smaller, less expensive satellites with shorter mission lives used for routine communications or long-term Earth-imagery change detection; novel additive manufacturing techniques of complex rocket engines; and improvements in the energy storage of space-qualified lithium-ion batteries.

When failure happens, the defense acquisition community should recognize it early, learn the relevant lessons, and rapidly incorporate needed improvements. Failure is a crucial step in the innovation cycle; therefore, DoD should avoid the propensity for making future acquisition or purchasing requirements more stringent in the event of setbacks when using innovative technologies, techniques, or capabilities. Instead, the DoD should reemphasize that failure is a key element of the innovation cycle and is, at times, acceptable during the development cycle of less critical mission systems.

Space as a Service

To take advantage of the commercial innovation and technology cycle, where capabilities increase and relative cost decreases with time, DoD should study and recognize specific capability needs and not focus exclusively on particular hardware requirements and specifications. This means acquisition professionals should consider requirements more in line with what effects are needed to improve lethality and operational effectiveness. Innovation happens rapidly. Considering military requirements as static hardware specifications means DoD will not be able to take full advantage of the rapid, significant improvements in cost and emerging technologies coming from the commercial space sector.

In many cases specific hardware is not the real requirement. Frequently, the defense community only requires the data or information needed to make decisions, support the warfighter in the field, and achieve a certain effect. For instance, the requirement is often just for reliable sensor cueing to improve targeting. In such situations, DoD can use commercial Earth imagery services, in which machine learning and predictive analytics are used to cue other systems to the locations of potential threats. In another example, deployed forces often need day-to-day satellite communications for routine and non-critical command and control functions, which can be provided cheaply and reliably using commercially available satellite communications.

In many situations, buying space capabilities as a service will reduce costs and increase warfighter access to innovative technologies. However, the most critical missions and capabilities will require the government to own and control all aspects of the space system architecture. If DoD correctly defines its requirements, it can determine whether a service agreement or commercial services license is most appropriate, or if DoD should acquire the actual satellite hardware and associated ground terminals.

Additionally, the government benefits from using commercial space systems by not needing to allocate funding for acquiring satellite hardware, networks, or associated architecture. More importantly, DoD can access innovative technologies on a commercial development timeline, not an MDAP timeline, at lower costs due to economies of scale. This approach allows DoD to take full advantage of commercial innovation in artificial intelligence, data analytics, and machine learning.

Sharing Perspectives

The commercial space industry and the defense community see requirements and risk very differently, and these different perspectives can create misunderstandings that negatively impact both parties’ desired results. In noting this, Scott Pace – the present executive secretary of the National Space Council – observes, “In public policy, it is well-known that markets and governments each represent imperfect alternatives for acquiring goods and services.”¹³ Through repeated and meaningful dialogue, however, commercial space providers and defense officials can mitigate misunderstandings by sharing concerns, experiences, and anticipated future trends in capabilities. Such sustained communication efforts can help – even if incrementally – to bridge the cultural divide and improve acquisition processes and innovation.

Toward this end, leadership from the offices of the secretary of the Air Force and under secretary of defense (acquisition and sustainment) and executives from the commercial space industry – including launch providers and satellite owner/operators – should meet at least annually to discuss their perspectives on requirements and risk. This dialogue should include considering how space as a service can be better incorporated into existing licensing and acquisition processes, along with what novel approaches are needed.

Communication is a two-way process; while the commercial space industry will have feedback and lessons for DoD leadership, the reverse is true as well. This annual dialogue should assist commercial partners in gleaning information on the challenges that military operators face and the shortcomings of current space systems and services. These discussions should capture and promulgate lessons learned, along with necessary policy and acquisition changes. Through frank and sustained dialogue, DoD and the commercial space industry will be better partners in addressing the national security space challenges that lie ahead.