As they strive to improve profitability and as they work to meet the U.S. Defense Department‘s often complex requirements for space-based technology, aerospace companies want the government to continue working to introduce greater levels of stability in terms of funding, scheduling and technical requirements, according to several senior industry officials.

Many military space programs are characterized by uncertainty, making it a challenge to deliver satellites and other systems that meet the Pentagon’s operational requirements while remaining on budget, said Jeffrey Grant, vice president of business development at Northrop Grumman Space Technology (NGST) in Redondo Beach, CA, NGST often has to re-prioritize and re-focus multiple times while working on a project, making it difficult to turn a profit while fulfilling the customer’s expectations, he said.

“We make our highest margins when we deliver on schedule and meet [the customer’s] requirements,” Grant said during ‘The MilSpace Budget: Maintaining A Profit On The Private Side’ panel session last week at SATELLITE 2005. “I do not need anything else beyond that to motivate us.”

John Fuller, vice president of Air Force space systems at Boeing Integrated Defense Systems, Huntington Beach, CA, said the industry would benefit if the Pentagon took on more of the risk associated with developing and building satellite systems. Once a product is ready for production, it would be reasonable to modify the contract into a fixed- price arrangement, he said.

Contractors also need to work harder to develop systems in the context of other technologies the Pentagon is using, said Grant. “We are becoming far more aware of other platforms than in the past, when we just took an order and built a system,” he said.

In addition, aerospace companies are redoubling their efforts to improve quality control and to keep a closer eye on their subcontractors than in the past, Granted added. “To the degree that you end up with a supply chain without common rigor… failure becomes [a possibility],” even though it is unacceptable.

Beyond improving the reliability of space systems, these efforts can pay dividends in terms of better profitability, he said. “It is a very cost-effective addition to a program.”

Richard Skinner, vice president of transformational communications for Bethesda, MD-based Lockheed Martin Corp.‘s Space and Strategic Missiles division, said the Pentagon should look for ways to allow greater levels of technology sharing with U.S. allies, especially given the increasing proficiency of non-U.S. suppliers. “The United States is not the only source of good commercial technology,” he said. “A lot of industries are now off shore,” making it critical for U.S. policy makers to be clear about which countries can have access to U.S. technology.

Grant said space companies have to devote as much effort as possible to out-of-the-box thinking, and concentrate as much on the broad utility of products they develop as on meeting a certain list of requirements. He noted that the wildly popular Global Positioning System (GPS) developed by the U.S. Air Force was not intended for civil or commercial purposes, but turned out to be as useful for non-military users as for the Pentagon. Given that systems on the drawing board today may well be in operation in 2020 or beyond, it is important for designers to build as much flexibility as possible into the systems they develop so they can meet unforeseen needs in the future, said Grant.

“GPS is robust enough to do what was advertised and more,” he said, even though its designers had no idea the system would turn out to be so effective.

The panelists also discussed the industry’s challenge of trying to attract young talent to take over for longtime workers who are nearing retirement.

Skinner said Lockheed Martin is struggling with the fact that many engineering students at U.S. universities are not citizens of the United States, making them ineligible to work on sensitive projects for the government. Moreover, he said, there is a large pool of talent outside the United States that cannot be tapped for the same reason. “It is not easy for me to convince the government that I should go offshore [for people] who are not U.S. citizens.”

Grant said his company is seeing an encouraging level of interest among young people and is busy hiring upwards of 1,000 new employees a year, many of them fresh out of college. It is a welcome change from the days when Northrop Grumman was cutting the size of its workforce, he added.

Well-publicized space activities, such as NASA‘s missions to Mars, have proven key to the resurgence at the company, Grant said.

–Sam Silverstein