Procurement in space

Deadlines ruled by the solar system and buying equipment for the harshest conditions: Nick Martindale on procurement’s role in space exploration

The past few months have been an exciting time for space enthusiasts. Just a few weeks after the Philae space lander managed to attach itself to a comet some 500 million miles from Earth, as part of the Rosetta mission in November 2014, NASA’s new Orion crew capsule completed an unmanned four-and-a-half hour test flight which could eventually lead to humans travelling into space beyond the international space station, to the moon or even Mars.

In the case of Rosetta, the bulk of the project was delivered by prime contractor Astrium, now part of Airbus Defence and Space, working alongside its own suppliers, on behalf of the European Space Agency (ESA). “Probably the most bespoke part of the satellite is the payload, which is hundreds of bits of equipment that are integrated together to allow you to connect all the equipment up, and to antennas,” says Dr Michael Healy, procurement director at Airbus Defence and Space. “This could include down-converters, amplifiers and filters. But on the other side there’s the platform equipment, which can be avionics, solar arrays, sensors and propulsion equipment. We buy those or we make them in-house, and that’s a choice that we make and which we occasionally review.”

The Rosetta mission was launched in 2004, so its contracting and manufacturing elements took place well over a decade ago. More recently, Stefano Fiorilli, head of ESA’s procurement department, has focused on maintaining the international space station as well as developing the next generation of MeteoSat, which provides detailed imagery of Europe, the North Atlantic and Africa every 15 minutes to help meteorologists.

Fiorilli’s role stretches from sourcing initial feasibility studies to working closely with prime contractors on the design and manufacture of satellites or space infrastructure, including the automated transfer vehicles that dock on the international space station to equip astronauts with food and furniture and take away waste.

The international space station has also been a focus for Bill McNally, assistant administrator for procurement, who is responsible for all purchasing at NASA’s headquarters. Here, the focus is often on buying services – such as transportation or launch contracts – rather than developing or owning the hardware itself, and can require a spot of innovative thinking. “One of the challenges is how you maintain a laboratory that is in lower orbit,” he says. “We work with a vendor that is willing to make the upfront investment in developing a system that can create water for the astronauts. This way I don’t have to transport water; any time you transport cargo to the station there is a cost to it.”

As well as the sheer range of equipment and services that need to be bought, there are a number of other factors associated with this sector which make it particularly challenging. This can include the need to cope with extremely hostile environments. “On Orion we’re manufacturing a space capsule for NASA that can take humans to Mars,” says David Krivich, business development director at Lockheed Martin Space Systems Company. “Among the many unique requirements for human spaceflight is a heat shield – the largest ever made – that can withstand temperatures over 4,000 degrees Fahrenheit. It’s a requirement we don’t have on any other programme.”

The Rosetta spacecraft had to cope with wildly fluctuating temperatures, as its journey was to take it relatively close to the sun and into the depths of space. “There was a very specific thermal subsystem developed which was effectively a Venetian blind concept,” recalls Healy. “When it was relatively close to the sun it would have the blinds open to dissipate heat, and when it was 400 million miles away it would have them closed, because the electronics were obviously very cold at that point.”

Deadline pressures

The length of time it takes to design and deliver a project can also make life tricky, for both buyers and suppliers. “A science satellite can take years because we can almost be developing technology,” says Healy. “If you’re going to the sun, you’re going to have to put a specific focus on certain thermal technologies, which can take several years to develop. But we typically deliver a telecommunication satellite in about 27 months, and roughly half of that is the equipment procurement.”

Even in this environment, however, there can be fixed deadlines, particularly for scientific exploration missions, says Fiorilli. “We have a number of scientific missions which can only exist if we catch the right cycle of the sun or the moon so that does really oblige us to be on time,” he points out. “We have to put in place a number of incentive schemes which point to the technical performance of the satellite, and protect against schedule slippages.”

Testing equipment is also vital, and a major challenge given the difficulty of replicating conditions on earth. “You’ve got to give your customer the confidence that they’re buying technologies that have been proven to work in space,” says Robert Elliott, space business development manager and ESA key account manager at the National Physical Laboratory, which acts as both a consultancy and a testing operation for organisations in the space sector. “If they haven’t then you have to do a considerable amount of testing, to ensure that things which work on the ground are also going to work in space for a sustained period of time in very harsh temperatures.”

This is a particular focus for RUAG Space, which provides electronic hardware such as computers, frequency converters, antennas and mechanical systems, separation systems and adaptors to prime contractors such as Airbus and Thales, including the computer for the satellite and some of the antennae in the Rosetta mission. “You can perform radiation testing to simulate or test components under similar conditions to space,” says Lars Loftang, senior manager, supply. “There are a lot of different and well established test methods that we use and we have the capability in-house to perform most of those tests. Sometimes we will even support our suppliers with this.”

The specialist nature of the space sector can also mean there is a shortage of potential suppliers, both prime contractors and those further down the supply chain. “We’re in a market which, if not captive, is certainly rather limited,” admits Fiorilli. “Today we basically have three large space integrators – Airbus, Thales Alenia Space and OHB – so we don’t have a very wide scope of actors. On the other hand, the fact that we’re playing with these so often allows us to maintain a dialogue with them on what is the best way to accommodate the various challenges.”

Specialist suppliers

It’s a problem Badr Bouchiyoua, who worked as procurement manager for Airbus Defence and Space in Riyadh until the end of 2013, recalls when looking for specialist suppliers for engines and flight systems. “These are very strategic businesses in aeronautics and do not have many competitors, so the prices are often driven by the engine or system manufacturer and the negotiation can take a long time and involve top management on each side,” he says. Other categories, including cabin interiors, also suffer from a lack of competition.

From a buyer’s perspective, this requires a different approach to usual, suggests Loftang. “You need to be more involved; both I and the supplier have a common interest in them being profitable and that they survive,” he says. “We also know that most of our competitors use the same suppliers, so if there is a problem then we have a common problem and can come together to put pressure on them to resolve the situation. I wouldn’t say it’s common but it happens.”

All this can make it difficult to maintain a focus on cost, although this remains important. “There are a lot of factors beyond price,” says McNally. “When we run our competitions we look at three particular factors. One is mission suitability, and there we’ll look at the technical and management approach of the companies that are bidding on jobs. Secondly, we’ll look at their past performance or the relevant work that they have, and the third factor is price. Then we do a trade-off between the three factors, and pick the company that provides us with the best value.”

Procurement professionals can help by ensuring they are aware of the implications that any particular specifications can have, suggests Elliott. “Performance requirements in some areas are very difficult to achieve and you have to spend an enormous amount of money and resources to deliver them,” he says. “If the buyer had a little better information at the start in the design phase then they might have been able to lower the performance slightly but reduce the cost vastly. There’s a real challenge in ensuring that performance requirements are very well established very early on, and that the interfaces between science and engineering and delivering downstream services – where those performance requirements are handed over – are very carefully managed.”

Where possible, this will mean standardising products and components and also drawing on any economies of scale. “The key is to get a set of building blocks where the customisation is as minimal as it can be, while optimising the mission,” says Healy. “If we manage to do that then we get a common building block. We’re still procuring project-by-project but it’s on the basis of a very well understood base product from a sub-set of a number of suppliers.”


Customisation constraints

Such standardisation means Airbus can commit to at least a degree of volume from its supply base, he adds, as well as helping to keep lead times down. “But because of the customisation that is necessary and which the customers expect we haven’t got to the point where we buy 40 components for one customer and 50 for another, and they’re exactly the same,” he admits. “That is a constraint.”

There are intricacies which other sectors and organisations are less affected by. ESA is made up of 20 member states, and aims to support the industries and economies of those countries. Not only does this at times restrict the list of potential suppliers, it can also mean Fiorilli has to be involved in the selection of second-tier suppliers by its main contractors. “We’re at the crossroad of political mandate and industrial reality because we do everything in a way that ensures that all our member states have a stake and participate,” he says. “So we as the final customer will have visibility on the way prime contractors select their sub-contractors. It’s very transparent and does not hamper competition or the search for the best possible price, but it is an additional constraint.”

For suppliers this can be frustrating. “You’ll see a tender release which looks interesting but it falls under a special initiative that favours a majority of input from a country that is currently under-returned,” says Elliott. “It almost gets to where you think the effort of bidding doesn’t make sense.”

Fiorilli, though, believes this only adds to the challenge, and the satisfaction gained when the world watches the successful launch of a satellite or deployment of new equipment at the international space station, knowing it began with procurement.

“Everything starts with us; we issue invitations to tender on a dedicated database which all our registered suppliers can access and we are the only authorised and identified interface,” he says. “So not only do I have to procure at the best possible price and secure the right use of taxpayers’ money, I have to do that in a transparent and fair way and I have to use competition. The department in charge of that is procurement.” He’s perhaps entitled to smile when it all finally pays off.