Whatever happened to competition in space agency procurement? The case of NASA

Using the U.S. National Aeronautics and Space Administration (NASA) as a case study, this paper examines how conflicting objectives in procurement policies by public space agencies result in anti-competitive procurement. Globally, public sectors have actively encouraged mergers and acquisitions of major contractors at the national level, since the end of the “Cold War”, following largely from the perceived benefits of economies of size. The paper examines the impact the resulting industrial concentration has on the ability of space agencies to follow a pro-competitive procurement policy. Using time series econometric analysis, the paper shows that NASA’s pro-competitive policy is unsuccessful due to a shift, since the mid-1990s, in the share of appropriations in favour of its top contractors.procurement, space industry, space agencies, NASA

The Importance of Co-ordination in National Technology Policy: Evidence From the Galileo Public Private Partnership.

Policy makers seek to identify an institutional framework that facilitates the commercialization of publicly funded R&D. In the space industry, the formation of such a framework is complicated by certain non-economic factors, such as national security considerations and the fact that numerous sovereign nations are often included in the commercialization process. In this paper, a model is outlined, that incorporates both economic and non-economic factors. The paper then demonstrates the importance of co-ordination in national technology policy to achieve an optimal result. The benefits of co-ordination are illustrated through a case study of the design of a major European public-private partnership (PPP) in the space industry, referred to as Galileo.

Integrated Approaches in Economics of Contracting and Knowledge Management

Knowledge management (KM) in the space sector is a particularly interesting study owing to the specific characteristics of lack of patenting and recording of information associated with security considerations, as well as the sectoral age pyramid and the obsolescence of equipment that results in significant KM transaction costs and loss of information. Coupled with the custom-made nature that is typical of space projects, the analysis in this paper focuses on contractual mechanisms that incorporate transfer of KM within and beyond a project’s life-cycle and the implications for specific types of contracts that are typically used -mostly in procurement. This leads to incentives for contractors to enhance also inter-firm transfer of knowledge and develop the management tools that will sustain virtual skills of past project teams. The paper shows that this approach can result in significant benefits for all stakeholders, despite challenges associated with potential transaction costs in contracting and lack of standards and relevant experience in usage of such mechanisms. Finally, a critique of the industry tradition of cost and performance assessments prior to end of lifetime is emerging

European Policies and the Space Industry Value Chain (Note 1)

The economics of contracting have received rather limited attention insofar as the implications for efficiency from the selection of types of contracts employed in the aerospace and defence sector are involved. The paper analyzes the challenges confronting the cost-plus/cost-reimbursement type of contracts of European Commission and intergovernmental organizations like the European Space Agency (ESA), who are involved in security and defence projects with significant multiplier effects within defence and security networks. The analysis indicates how institutional limitations result in contractual choice inefficiencies and anti-competitive practices that may affect the whole of the aerospace industrial base, including subcontractors. The paper concludes with policy implications and further research recommendation

Integrated Approaches in Economics of Contracting and Knowledge Management

Knowledge management (KM) in the space sector is a particularly interesting study owing to the specific characteristics of lack of patenting and recording of information associated with security considerations, as well as the sectoral age pyramid and the obsolescence of equipment that results in significant KM transaction costs and loss of information. Coupled with the custom-made nature that is typical of space projects, the analysis in this paper focuses on contractual mechanisms that incorporate transfer of KM within and beyond a project’s life-cycle and the implications for specific types of contracts that are typically used -mostly in procurement. This leads to incentives for contractors to enhance also inter-firm transfer of knowledge and develop the management tools that will sustain virtual skills of past project teams. The paper shows that this approach can result in significant benefits for all stakeholders, despite challenges associated with potential transaction costs in contracting and lack of standards and relevant experience in usage of such mechanisms. Finally, a critique of the industry tradition of cost and performance assessments prior to end of lifetime is emerging.</jats:p

The European space-industrial complex: New myths, old realities

This article is an economic analysis of the main factors affecting the evolution of the European space industry. The critical role of the government is analyzed with regard to both military alliances and civilian intergovernmental collaboration. The analysis explores how moving from a pure public goods paradigm in collaborative projects toward a commercially-oriented, competitiveness-enhancing paradigm leads to duplication of effort and rivalries within the space agencies and other organizations. Drawing on the example of defense alliances such as NATO, the article illustrates cooperation challenges faced both at European and transatlantic levels as competition and rivalry result from inter-alliance specialization and the difficulties involved in the allocation of benefits.</jats:p