In July, NASA alarmed much of the entrepreneurial space community when it announced it was considering shifting from a Space Act Agreement (SAA) approach to a something closer to a conventional contract for the next round of its Commercial Crew Development (CCDev) program. The first two rounds of CCDev, as well as the earlier Commercial Orbital Transportation Services (COTS) program to develop cargo vehicles for the International Space Station (ISS), all used SAAs and were well-received by both NASA and industry. However, NASA’s proposal to use a hybrid between an SAA and a conventional contract based on Federal Acquisition Regulations (FAR) raised concerns among some in industry that it would create a greater bureaucratic burden for companies and increase costs.

On Friday, NASA held a follow-up forum on its plans for the “Integrated Design Phase” of CCDev, organized on only a few days notice and apparently to a modest in-person audience at the Kennedy Space Center (with a larger audience presumably watching via webcast). At the forum NASA officials confirmed that, even after getting considerable feedback from industry on the use of SAAs versus FAR-based contracts, it was still pressing ahead with its original plans to use a SAA/FAR hybrid for the upcoming CCDev competition.

“Why did we end up going to a contract when many of our partners in industry would prefer a Space Act Agreement?” asked Brent Jett, deputy manager of the Commercial Crew Program at NASA. He explained than one purpose of the CCDev program was to certify commercially-developed vehicles to fly NASA astronauts to the ISS. He said that the focus of the upcoming Integrated Design Phase was to have a mature “end-to-end” crew transportation system at the critical design review (CDR) level, as well as a plan on how to certify that system to meet NASA’s requirements in later development phases. “When you look at that objective, it’s clear to me that the purpose of the Integrated Design Phase is directly for the benefit of the US government and NASA,” he said. “When you talk to procurement and legal experts, they will tell you that since that is the purpose of this phase, that we cannot use a Space Act Agreement.”

That analysis hinges on exactly when NASA or other government agencies can use so-called “Other Transaction Authority” (OTA), which in NASA’s case is a Space Act Agreement. OTA gives government agencies the flexibility to use alternative, streamlined agreements with the private sector, but to avoid their being used to get around conventional procurement regulations, there are limitations on when such agreements can be entered into. At a Women In Aerospace presentation this summer not directly related to CCDev, an official from NASA’s Office of General Counsel described when SAAs can be used. The presentation noted that a contract is required when the purpose of the activity is to acquire goods or services for the direct benefit or use by the government. NASA’s argument—one that is not likely shared by many in industry—is that the Integrated Design phase will be primarily for the benefit of NASA, hence some form of contract, rather than an SAA, much be used. (As for previous CCDev phases, NASA argues it has been primarily helping industry accelerate their technologies for commercial crew systems that serve multiple customers, and thus is not primarily for the benefit of the government.)

Jett, as well as Phil McAlister of NASA Headquarters, emphasized that the contract that they’re proposing would retain many of the desirable elements of an SAA. The contract, while FAR-based, will include milestone-based payments, and allow companies to propose their own detailed statements of work for this phase of the effort. Companies will be exempt from Cost Accounting Standards (and the bureaucratic overhead associated with them) in this contract phase. There will also be a “balanced approach” to intellectual property, without going into greater detail, Jett said.

NASA is planning to release a draft RFP for the next CCDev phase next week, with a requirements workshop and industry day planned for October 4 and 5, respectively, at the Kennedy Space Center. The final RFP is due out by the end of the year.

NASA is not the only one who has been scrutinizing the use of SAAs for the CCDev program. In the report accompanying its fiscal year 2012 commerce, Justice, and Science appropriations bill, the Senate Appropriations Committee was critical of NASA’s use of such agreements for CCDev. While giving NASA $500 million for CCDev in 2012, one of the strings it attached was language limiting the use of SAAs in future CCDev rounds. “The Committee believes that the current practice by NASA has gone beyond what is cited under NASA’s own policy directive” for using SAAs, the report states. “Such misuse of these authorities undermines the oversight of NASA in the procurement process and threatens crew safety. For future rounds of commercial crew competitions and acquisitions, NASA shall limit the use of funded Space Act Agreements as stated in the directive in order to preserve critical NASA oversight of Federal funds provided for spacecraft and launch vehicle development.”

The question now facing companies currently involved or interested in CCDev is whether this shift from a pure SAA to a FAR-based contract with some elements of an SAA—but also likely with some greater overhead—is worth the promise of federal funding to develop crew transportation systems.