Navigating the New Space Paradigm: A Framework for Procurement Strategy Selection in Space Agencies

The space industry is undergoing significant transformations. Increased private sector participation, new satellite-based services, reduced launch costs, digitalisation, and innovative space infrastructure designs decrease entry barriers. New Space companies from the private sector introduce innovations, spin-ins, capabilities, expertise, and practices. At the same time, space agencies contend with time constraints and the imperative to ensure value for money in times of constraint budgets. In this dynamic environment, space agencies must evolve approaches and interactions with the private sector to reaffirm their pioneering role in space exploration, research, and commercialization. As many New Space organizations are still in their growth phase, space agencies aim at supporting the New Space ecosystem by fostering competition, facilitating capacity building, and catalysing market creation. In parallel, expanding the pool of bidders enables space agencies to avoid being locked into potentially inefficient solutions when acting as client. As space agencies transition towards the New Space paradigm and intensify collaborative endeavours, there exists a knowledge gap concerning the optimal utilization of conventional approaches, such as cost-plus contracts, versus emerging practices like service contracts and parallel bidding. This paper aims therefore to investigate the rationale, decision gates, and timing behind the preference for favouring a traditional or an innovative strategy by space agencies. Following qualitative research, we conducted a multiple case study focusing on projects within space agencies governed by traditional and New Space strategies. Employing a polar case selection approach, we analysed successful and challenging instances stemming from the implemented procurement practices. By leveraging primary and secondary data sources, our investigation illuminates the motivations, best practices, and limitations associated with the selection of traditional and New Space strategies. We provide a set of key drivers guiding the configuration of procurement strategies within space agencies. By comparing theoretical patterns between these key drivers and procurement practices with empirical evidence from analysed cases, our analysis reveals that a "one size fits all" approach does not exist. Each PPP has distinct objectives— such as early technology development, demonstrators, first operational hardware, cost reduction, or commercial purposes—and varying levels of risk appetite. It appears that the choice of approach is determined by the interplay between objectives and associated risks. Our contribution to practice encompasses a set of drivers facilitating the selection of procurement practices by space agencies. By incorporating considerations of both space agencies and bidding companies, and by highlighting alignments and misalignments between theory and empirical evidence, our research enables space agencies to transition from a traditional paradigm to a commercially driven one, posing attention to some drivers that may hinder the effectiveness of the procurement practice selected.