The National Geospatial-Intelligence Agency is making novel use of a classic legal mechanism to test out commercial space capabilities for free and provide feedback to companies just getting started in sectors like the small satellite market.
NGA is using “bailment agreements” to take temporary possession of a commercial product, such as satellite imagery, in order to evaluate its utility in operational settings, according to Dave Gauthier, director of commercial and business operations at the agency, and chairman of the intelligence community’s Commercial Space Council.
“A bailment agreement is probably not a new type of vehicle, but it is rather new for us as an intelligence agency to be using it, and in the government,” Gauthier said in an interview with Federal News Network.
Bailment agreements typically involve one party putting property in the custody of another for a specific purpose. A common example is using a paid parking lot, where the owner of the lot is responsible for the temporary safekeeping of a user’s car.
For NGA, such agreements provide an easy, no-cost avenue for working with small companies where traditional contracts and acquisition mechanisms often prove too slow and cumbersome.
“We found ourselves in a quandary a couple of years ago where we wanted to partner early and often with smaller companies who may be starting up geospatial businesses,” Gauthier said. “And we wanted to both understand what capabilities they were bringing to market, but also help guide them in what our needs would be, and how they should maybe productize their offerings to best meet government needs.”
NGA started out with three bailment agreements in fiscal year 2019, with one of the companies eventually going on to perform as a subcontractor for the agency. In FY 2020, the agency did five bailment agreements, and one of those companies went on to win a prime contract of a service the agency has used for the past two years, Gauthier said.
In FY 2021, NGA is aiming to ink between 15 and 20 bailment agreements, he said.
“I think we are seeing the benefits,” Gauthier said. “More companies are approaching us and asking to be part of this program, and we’re trying to scale up as we go.”
Under such agreements, NGA will typically take possession of a product, such as early imagery from a company just getting out in the synthetic aperture radar market, Gauthier offered as an example. The agency will measure its quality and performance characteristics, as well as provide it to analysts to see how they would use it for certain missions, he said.
NGA will also typically ask for some proprietary information, such as a company’s plans for its fully operational constellation.
The agreements are short-lived, oftentimes just 90 to 120 days, he said, but in some cases, NGA may be allowed to continue using the imagery. The agency will provide feedback to the company, as well as catalog the assessment in NGA’s “GEOINT Supplier Matrix.”
While the agreements allow companies to get their foot in the agency’s door, Gauthier said NGA explicitly tells firms that there’s no expectation of follow-on work or contracts.
“There’s no expectation that they launch right from a bailment agreement into paid work,” he said. “We’re being very transparent up front with them that this is the first step on a path, and it may take some time before you are able to compete for government work. And when you compete, it’s no guarantee you win. But this helps them with putting their best foot forward, and especially for these smaller companies, I think gives them an opportunity to compete where they might not otherwise do so.”
The agreements also give NGA a chance to help shape the commercial satellite market, which is still relatively nascent.
“In some cases, as the small satellite industry was just taking off, many companies coming out of Silicon Valley were focused on speed, being first to market, not necessarily thinking through some of the long term implications of what their data could provide and who they could sell to,” Gauthier said.
“So early on, we noticed there were some potential concerns with cybersecurity, and other things,” he continued. “We like to get with the companies early and say, ‘Here are things we expect if you eventually want to compete for a government contract. These are things that might be important for you to look at now, early in your design phase while you’re creating your business cases,’ to help them posture themselves in a way that makes them much more attractive to the government down the road.”