Perfecting Public-Private Partnerships: Future of Government Space Contracting

Author: Dr. Moon Kim and Adrian Mangiuca

Publisher: Commercial Space Federation

Publication Date: February 24, 2025

Link: CSF Website

In collaboration with the Commercial Space Federation, Rational Futures built a strategic primer on the role of public-private partnerships (PPPs) and non-traditional procurements in U.S. federal space programs. The paper explores how agencies can improve outcomes by optimizing risk-sharing with private entities and highlights several practical mechanisms for engagement. This paper also develops a conceptual framework for using these mechanisms to aligning program characteristics with market realities.

Findings

  • PPPs are primarily defined by risk ownership. In a PPP, public and private entities share the risks. When discussing “commercial contracting,” most discourse focuses on this definition. Mixed empirical evidence across sectors shows that extracting benefits from these contracts depends on careful planning, involvement of appropriate experts, and understanding of market conditions and program characteristics.
  • Common mechanisms to managers for good contract design fall into three categories. These categories are agency-, program-, and contract-level mechanisms. At the agency level, managers can build internal capacity beyond engineering, communicate transparently, conduct capability surveys, and establish a coordination office. At the program level, managers can conduct robust market assessments, signal clear multi-year demand, and support multiple suppliers for competition and redundancy. Finally, at the contract level, managers can elect appropriate procurement options that align with program characteristics, commit to requirements, and utilize block buys for economies of scale. 
  • Mechanisms should be applied after comparing program characteristics to market conditions.  Program characteristics that must be evaluated include: Criticality, meaning the importance of the capability to government objectives; Complexity, meaning the technical and organizational programmatic interdependencies; and capital expenditure, meaning the total lifecycle costs. Market conditions that must be evaluated include: Private sector demand, meaning the size and persistence of non-government markets; Private capital, meaning the nature and availability of investment sources; And macroeconomic context, meaning the broader economic factors influencing investment and cost.