Are US Space companies favored to purchase subsystems from US only suppliers. Are there any specific laws that dictate this?

Question

While i was doing a study on spacecraft subsystems for satellites launched, I noticed that many of the subsystems aboard an American satellite are derived from companies based in the US. By common logic, it is understandable that a country would prefer domestic suppliers over foreign ones, but being space industry where often at times certain components are not available (like the US procuring RD -180, or certain satellites using propulsion systems or payloads from foreign suppliers), i would like to know what are the rules, regulations and the treaties that bind.

I have read through general space law, but I am not aware of the economics behind all of this. Can anyone sell Aerospace related applications directly to a company in the US? DO they have to form a partnership? what is the approach towards business?

Answer 1

Gov't contracts often have a "Buy American" clause which requires them to buy from US companies or Trade Agreeement Act countries.

See FAR Subpart 25.11, and 52.225-1, 52.225-3, and 52.225-5. See the bottom of this page and the links there-in

http://farsite.hill.af.mil/reghtml/Regs/far2afmcfars/fardfars/Far/25.htm#P1179_116157 and http://farsite.hill.af.mil/reghtml/Regs/far2afmcfars/fardfars/Far/52_220.htm#P1619_271908

Subpart 25.11 – Solicitation Provisions and Contract Clauses

25.1101 – Acquisition of Supplies The following provisions and clauses apply to the acquisition of supplies and acquisition of services involving the furnishing of supplies.

(a)

(1) Insert the clause at 52.225-1, Buy American—Supplies, in solicitations and contracts with a value exceeding the micro-purchase threshold but not exceeding 25,000 dollars; and in solicitations and contracts with a value exceeding 25,000 dollars, if none of the clauses prescribed in paragraphs (b) and (c) of this section apply, except if--

(i) The solicitation is restricted to domestic end products in accordance with Subpart 6.3;

(ii) The acquisition is for supplies for use within the United States and an exception to the Buy American statute applies (e.g., nonavailability, public interest, or information technology that is a commercial item); or

(iii) The acquisition is for supplies for use outside the United States.

(2) Insert the provision at 52.225-2, Buy American Certificate, in solicitations containing the clause at 52.225-1.

(b)

(1)

(i) Insert the clause at 52.225-3, Buy American--Free Trade Agreements--Israeli Trade Act, in solicitations and contracts if --

(A) The acquisition is for supplies, or for services involving the furnishing of supplies, for use within the United States, and the acquisition value is 25,000 dollars or more, but is less than 180,000 dollars;

(B) The acquisition is not for information technology that is a commercial item, using fiscal year 2004 or subsequent fiscal year funds; and

(C) No exception in 25.401 applies. For acquisitions of agencies not subject to the Israeli Trade Act (see 25.406), see agency regulations.

(ii) If the acquisition value is 25,000 dollars or more but is less than 50,000 dollars, use the clause with its Alternate I.

(iii) If the acquisition value is 50,000 dollars or more but is less than 80,317 dollars, use the clause with its Alternate II.

(iv) If the acquisition value is 80,317 dollars or more but is less than 100,000 dollars, use the clause with its Alternate III.

(2)

(i) Insert the provision at 52.225-4, Buy American--Free Trade Agreements--Israeli Trade Act Certificate, in solicitations containing the clause at 52.225-3.

(ii) If the acquisition value is 25,000 dollars or more but is less than 50,000 dollars, use the provision with its Alternate I.

(iii) If the acquisition value is 50,000 dollars or more but less than 80,317 dollars use the provision with its Alternate II.

(iv) If the acquisition value is 77,533 dollars or more, but is less than 100,000 dollars, use the provision with its Alternate III.

(c)

(1) Insert the clause at 52.225-5, Trade Agreements, in solicitations and contracts valued at 180,000 dollars or more, if the acquisition is covered by the WTO GPA (see subpart 25.4) and the agency has determined that the restrictions of the Buy American statute are not applicable to U.S.-made end products. If the agency has not made such a determination, the contracting officer must follow agency procedures.

(2) Insert the provision at 52.225-6, Trade Agreements Certificate, in solicitations containing the clause at 52.225-5.

Answer 2

Much of the rocket industry in the US has to deal with ITAR, a set of laws aimed at regulating the sale of weapons. Launchers are seen as weapons due to their ability (in principle) to deliver a payload on a ballistic arc.

The Department of State insists that ITAR has limited effect and provides a security benefit to the nation that outweighs any impact that these sectors must bear.... It is apparent that companies and institutions within the affected areas are somewhat stifled by ITAR regulations, in addition to the trade the U.S. economy would receive, and the science technology that it would share, notwithstanding that its restrictions encourage U.S. allies (such as Australia and the UK) to procure defense equipment from other sources that may not be interoperable with U.S. equipment.[69] Companies argue that ITAR is a significant trade barrier that acts as a substantial negative subsidy, weakening U.S. industries' ability to compete.[70] U.S. companies point to announcements in Europe by TAS (Thales Alenia Space) promoting their "ITAR-free" telecommunication satellites.

From what I've seen, ITAR is 'greedy'. If one component on your rocket falls under ITAR, the whole rocket could fall under ITAR. ITAR compliance requires large amounts of paperwork.

So an overseas supplier may be required to comply with ITAR to be able to supply components to US launcher companies (depending on what components). This does not deter some (Swiss company RUAG supplies fairings for several US launchers), but may be an impediment to others.

For some major projects, the US government dictates which suppliers have to be used (infamous example: SRBs were mandated for Shuttle and SLS to support Thiokol/ATK.

Answer 3

The only component that has any major political tie-ups is the RD-180 engine from Russia. Political tensions have made its future in the US rocket industry unclear

The deal was signed in 1995 with the promise that American RD-180s would be built within 4 years. However, spiraling costs and production overruns kept the American engine from becoming a reality. By 2008, the Air Force and ULA agreed to end domestic production attempts. Thanks to an "unmatched combination of performance and reliability," to quote a ULA study, NPO Energomash has become essential to American space flight.

So essential, in fact, that starting in 2014 there have been American attempts to develop an equivalent. That year saw conditions that might strike those living in 2018 as familiar: Heightened tensions between America and Russia brought forth economic sanctions. New kid on the block SpaceX tried to argue that purchasing RD-180s was actually illegal, considering how NPO Energomash is majority-owned by the Russian government. While the company made some legal headway, various federal agencies weighed in to say that buying RD-180s was fine

However, the case brought Russian threats of a boycott, which then led to American threats of a ban. A Congressional compromise in 2016 agreed to phase out RD-180s by 2022.

Blue Origin has stepped in with its BE-4 engine to fill that gap. The Air Force is also investing in private companies developing launch systems not reliant on the RD-180.