How does NASA buy products? What are the challenges that the agency is facing compared to traditional commercial organizations? We spoke with Marvin Horne, deputy assistant administrator for NASA’s Office of Procurement to know more about how their office secures products on behalf of the space agency.
How does NASA manage its product procurement?
Marvin Horne: “NASA’s procurement process adheres to the federal acquisition regulation, often referred to as the FAR. The FAR encompasses the fundamental framework of procurement procedures and policies for the entire U.S. federal government. It also includes standard solicitation provisions and contract clauses. Our primary approach to procurement revolves around competitive procedures, aiming to secure the best value for American taxpayers while fulfilling our mission requirements. However, there are instances when non-competitive awards become necessary, typically for unique requirements or situations where only one entity or company possesses the capabilities to meet NASA’s specific needs.”
For instance, what would constitute such an example?
Marvin Horne: “It could be a unique valve, one exclusively offered by a single manufacturer owing to their ownership of proprietary data and the rights to develop, produce, and manufacture that particular item. Whenever we proceed toward a single-source or exclusive sourcing scenario, we post all our single-source justification documents on Sam.gov. It enables us to reach out to a broader audience potentially interested in various procurement opportunities, whether they aspire to be prime contractors or subcontractors seeking to compete for the kinds of projects we have on offer. We also ensure that small businesses, women-owned, veteran-owned, and minority-serving institutions, receive an equitable share of NASA’s annual expenditure. Over the past few years, our annual spending has averaged around $19 billion. A substantial portion, roughly 80%, of NASA’s overall budget flows through the Office of Procurement as part of its expenditure.”
How do you conduct purchasing on behalf of the agency?
Marvin Horne: “Our organizational structure revolves around five mission directorates and one mission support directorate. This arrangement determines both what we procure and where we procure it. The aeronautics mission directorate places its focus on air transportation and the aviation industry. The exploration systems mission directorate is dedicated to the design and development of space capabilities for the future, including projects like the Space Launch System (SLS). The space operations directorate concentrates on the maintenance and strategic planning of systems for the next two decades. This encompasses operational entities such as the International Space Station (ISS). The science mission directorate (SMD) is responsible for researching, developing, and deploying satellites, in missions like for example the Mars Rover. The Dart program also falls under the SMD. The space technology directorate specializes in the development of deep space technologies crucial for upcoming missions.
Our procurement office provides support to these distinct missions through a network of 12 buying locations strategically dispersed across NASA centers. As mentioned earlier, approximately 80% of our budget flows through these 12 buying offices. In fiscal year 2022, this amounted to around $19.6 billion and involved approximately 28,000 procurement actions.”
What’s the extent of foreign product inclusion in NASA missions?
Marvin Horne: “NASA’s procurement practices are governed by federal acquisition regulations, which include compliance with the Buy American Act and other executive orders aimed at promoting domestic manufacturing of end products. While there is a preference for American-made products, NASA does depend on a variety of suppliers and there are instances where products are sourced from outside the United States. If it’s determined that there isn’t a domestic product available, we may explore international alternatives that align with the agency’s needs. For instance, in projects like the Mars rover, many components originate from diverse regions and countries to support the mission. For high-profile programs like Artemis and the SLS rocket, components are often sourced from manufacturers located across the globe. In fiscal year 2022, NASA awarded approximately $71.5 million for work conducted abroad. This work spanned 27 different countries, contributing to the Artemis program and various other NASA initiatives. We rely on an extensive network of international suppliers to fulfill these requirements, in addition to collaborating with space agencies from other nations.”
Could you provide examples of foreign companies with which NASA is conducting business?
Marvin Horne: “NASA does business for example with Cimel Electronique. This French company supports NASA through the Aeronet Project by supplying the sun photometers and parts necessary for the repair, upkeep, and upgrade of the sun photometers. Akira Mecaturbines is another French company that supplies the DGEN 380 engine hardware for NASA projects and missions.
Given that you also collaborate with other space agencies, do you sometimes find yourselves sharing the same suppliers?
Marvin Horne: “Absolutely. This stems from the fact that many suppliers of human space-rated products must undergo rigorous certification processes. These certifications are administered through NASA’s stringent supply chain risk management procedures. We coordinate internally with our Office of Safety Admission Insurance and our Office of Strategic Infrastructure due to the inherent nature of high-risk space flight activities and other research and development endeavors. To produce these specialized products, companies need certifications in areas like triple E (electrical, electronic, and electromagnetic). Consequently, there is some overlap with companies that also support the European Space Agency while simultaneously serving NASA’s needs.”
Additionally, as you collaborate more frequently with SpaceX, a private company, do they adhere to the same regulations as NASA?
Marvin Horne: “We engage with SpaceX for various programs, and as a result, we exercise oversight and scrutiny over the products and services they provide. This involves thorough reviews, audits, testing, and collaborative efforts not only with SpaceX but also with other providers working on missions for NASA. Our engineers and our safety and mission assurance teams offer oversight and insight throughout the process, ultimately making final approvals in conjunction with these contractors.”
Are you utilizing online sourcing?
Marvin Horne: “Our approach ties back to our market research. As we all recognize, supply chains have undergone significant disruptions since the advent of COVID-19, and they are gradually recovering. Depending on the specific product, there may still be limitations in supply or increased costs. So we are contending with numerous challenges associated with supply chain management. Through market research, we continuously seek to enhance our understanding of available resources. This endeavor is not limited to procurement alone; our technical and engineering teams are also actively involved. Our engineers, who often specialize in particular disciplines or components, actively explore the industry landscape by visiting various manufacturing facilities. Industry players frequently reach out to us to showcase their latest products and innovations. We also engage in extensive outreach efforts. From a procurement perspective, we provide guidance on how to conduct business with NASA, recognizing that a significant portion of the industry may not be familiar with federal government procurement processes. These activities extend to our technical community, which collaborates with industry partners to discuss specific products and certification processes.”
What are the key challenges NASA faces when sourcing products?
Marvin Horne: “NASA encounters some distinctive challenges in sourcing products. One major difference from the commercial sector is our typically low production volume requirements. Unlike mass-producing hundreds of SLS rockets, we manufacture only a few. These are highly specialized and unique, and their human-rated certification adds complexity to our supply chain considerations. Long lead times for procurement are also a significant challenge. Given our limited procurement volume, manufacturing companies often lack continuous production lines. For certain products, it can take a year or even longer for them to be fully assembled, tested, and ready for utilization in a mission program. This challenge ties directly to the inherent value and uniqueness of our missions. Vendor obsolescence is another issue we face. Companies may cease production of a specific valve, component, or part or upgrade it without obtaining the necessary certifications. These unique challenges prompt us to explore new vendors and products and undertake rigorous testing to ensure product certification for integrated space flight applications.”
What is currently the most challenging component to source for NASA?
Marvin Horne: “I’m not certain if there’s a single answer to that question. It tends to vary depending on the specific mission and the items we’re procuring. One day it could be one thing, and the situation can change over time. For example, in the immediate aftermath of COVID-19, microchips were challenging to obtain, but that may not be the case today. It’s a dynamic situation that ebbs and flows based on external factors, the evolving industry landscape, and shifts in the availability of certain components.”
|About the BUY AMERICAN ACT|
|Per FAR 25.101, the Buy American statute restricts the purchase of supplies, for use within the United States, and exceeding the micro-purchase threshold (currently $10,000) that are not domestic end products.|
|For manufactured end products, there is a two-part test to define a domestic end product: |
(a) The article must be manufactured in the United States; and
(b) The cost of domestic components shall exceed 60 percent of the cost of all the components (increases to 65 percent for items delivered in calendar years 2024 through 2028 and 75 percent for items delivered starting in calendar year 2029); except that for end products that consists wholly or predominantly of iron or steel or a combination of both, the cost of foreign iron and steel must constitute less than 5 percent of the cost of all the components used in the end product.
|There are also a number of exceptions at FAR 25.103 to the Buy American statute which when they apply enable the contracting officer to acquire a foreign end product without regard to the restrictions of the Buy American statute:|
|(a) Public interest (requires head of the agency determination)|
(b) Nonavailability (individual nonavailability determination required except: (1) if the item appears on the articles listed in FAR 25.104 on which a class determination has been made that domestic sources can only meet 50 percent or less of total U.S. Government and nongovernment demand; OR (2) a determination is not required before January 1, 2030, if there is an offer for a foreign end product that exceeds 55 percent domestic content)
|(c) Unreasonable cost. The contracting officer may determine that the cost of a domestic end product would be unreasonable, in accordance with FAR 25.106 and subpart 25.5.|
(d) Resale. The contracting officer may purchase foreign-end products specifically for commissary resale.
(e) Information technology that is a commercial product. The restriction on purchasing foreign end products does not apply to the acquisition of information technology that is a commercial product when using fiscal year 2004 or subsequent fiscal year funds.
|Lastly, per FAR 25.402, 25.403, 25.404, 25.405 and 25.406, the Trade Agreements Act provides the authority for the President (delegated to the U.S. Trade Representative) to waive the Buy American statute and other discriminatory provisions for eligible products from countries that have signed an international trade agreement with the United States, or that meet certain other criteria, such as being a least developed country. Pursuant to this authority, the Buy American statute and other discriminatory provisions for eligible products have been waived for acquisitions of products from World Trade Organization Government Procurement Agreement countries, Free Trade Agreement countries, Israeli Trade Act countries, Least developed countries, and/or Caribbean Basin countries.|
For more information how how to do business with NASA: visit https://www.nasa.gov/office/procurement/doingbusiness