Space Force Working Capital Fund to Facilitate Flexible Funding for Commercial Services

Space Systems Command recently announced that the United States Space Force will have access to a working capital fund to buy commercial space services on-demand. But the fund, which is authorized to hold up to $1.2 billion in a given fiscal year, is not actually new money appropriated by Congress to the Space Force. Rather, it presents another flexible funding option to move money around in response to emerging mission requirements. 

But the timing of the announcement also coincides with the Acquisition Transformation Strategy, an initiative recently unveiled by Secretary of War Pete Hegseth. Together, these actions represent how the Space Force, and the Department of War at large, is actively reforming how it acquires commercial services from industry partners. 

In this episode of "The Elara Edge," Founding Partners Major General (Ret) Roger Teague and Mike Dickey share how the working capital fund fits into the broader acquisition reforms taking place across the Department of War. Major General (Ret) Roger Teague is the former Director of Space Programs for the United States Air Force, where he directed the development and acquisition of space programs for Air Force major commands and Mike Dickey is the former Chief Architect of Air Force Space Command and the United States Space Force.

"The Elara Edge" is hosted by Scott King and produced by Regia Multimedia Services. The full story can be found on Elara Nova's Insights page here. Music was produced by Patrick Watkins of PW Audio.

Transcript

Host: Scott King 

SME: Maj Gen (Ret) Roger Teague, Founding Partner at Elara Nova (RT) 

Mike Dickey, Founding Partner at Elara Nova (MD) 

00:02 - 01:18 

Space Systems Command recently announced that the United States Space Force will have access to a working capital fund to buy commercial space services on-demand. But the fund, which is authorized to hold up to $1.2 billion in a given fiscal year, is not actually new money appropriated by Congress to the Space Force. Rather, it presents another flexible funding option to move money around in response to emerging mission requirements. 

The timing of the announcement also coincides with the Acquisition Transformation Strategy, an initiative recently unveiled by Secretary of War Pete Hegseth. Together, these actions represent how the Space Force, and the Department of War at large, is actively reforming how it acquires commercial services from industry partners. 

Welcome to The Elara Edge! Today’s topic is the Space Force’s access to a working capital fund and how it relates to the broader acquisition reforms for the Department of War moving forward. Joining us are two of Elara Nova’s Founding Partners. 

Retired Major General Roger Teague is the former Director of Space Programs for the United States Air Force, where he directed the development and acquisition of space programs for Air Force major commands. 

Sir, welcome to the show!  

01:19 - 01:19 

(RT) Thank you. Great to be with you.  

01:20 - 01:29 

It's great to have you.  

And then we also have Mike Dickey, the former chief architect for Air Force Space Command and the United States Space Force. Mike, welcome back.  

01:30 - 01:33 

(MD) Thank you, Scott. It’s always a pleasure to be on The Edge. 

01:33 - 01:44 

So the Space Force is now authorized to access just over $1 billion in flexible funding through a working capital fund.  

But let’s start with the basics here: what is a working capital fund?  

01:44 - 04:04 

(MD)Yeah, let me take a shot at that, Scott. And I think we need to take a little step back and talk about a couple different things about money in the Department of War. There's a process by which the Congress appropriates dollars that the military services and the Department can spend and they put that in certain accounts, and specifically call out where the government can spend that money.  

There's a separate process that involves: what are the avenues by which the Department of War disperses money to get the services and the products that they want? And that distinction is important here when you're talking about working capital funds. 

So on the appropriations process, that's a long process. So the services start thinking about their budget two years before the year that they're going to need that money. And it goes through, puts and takes at the Department level, puts and takes the Office of Management and Budget. Then it goes to Congress. And Congress gets the ultimate decision and the authority of how much money and in what accounts it goes to do the things that they're appropriating that money for. 

So you don't have a lot of flexibility in any given year to move money around. But things change. And so especially in the area of like, logistics and buying fuel for the Navy and for aircraft or in the case of what we're going to talk about buying communications capacity for the entire Department. 

Those things really fluctuate year to year. So there is this concept of the working capital fund that allows you some flexibility within the year of execution to take money that was maybe appropriated for something else and move it to the working capital fund to meet emergent requirements. And it's usually, again, like in this logistics type of business where prices are fluctuating year to year. 

And so it's not new money. The services have to decide to take money from something else and then put it into the working capital fund so it becomes accessible. So a working capital fund is almost like it's got aspects of a checking account and a debit card. So the account is there, but there's no money in it unless somebody that needs a service puts money into that and then they can use that vehicle to go buy the service.  

So it's an important distinction that the billion dollar working capital fund is not a new appropriation from the Congress. It is the authority to use a flexible avenue to spend money that's been appropriated for something else.

04:05 - 04:09 

And Mike, what are the advantages of using a working capital fund? 

04:10 - 06:02 

(MD)Yeah, the advantages are that you get some flexibility in the year of execution. Normally when the Congress appropriates money and you want to move money from one thing into another thing, you have to go back and ask permission at pretty small dollar levels and so that process can take months. It can not get approved.  

The working capital fund gives you that again, the billion dollars. So up to $1 billion we will allow to be put into that vehicle to be spent. So there's even a limit on the working capital fund. Again, the common misperception is that it is not new money.

The Space Force did not get $1 billion of new money to spend through that working capital fund. It just creates that avenue to spend and that working capital fund, while new to the Space Force, is not new to the Department. The Defense Information [Systems] Agency had this fund for years and years and years that we were buying satellite communication through. Once the Space Force stood up and got legs under it, that's been moved over to the Space Force and allowed also to use not just for satellite communications, but for some other services that they might buy too. 

It's always about services and we can get into that too. What I'll say about that is the working capital fund accesses services from companies that already have those services available. So satellite communications is a good example. We buy 80% of the communications that are needed for the Department through commercial providers that are supplying those services across the globe. 

And so the working capital fund will prescreen a set of companies that have services that the Department is likely to need and those sort of sit astride that working capital fund and then as an army brigade or a carrier strike group or an Air Force expeditionary wing is going forward and needs a surge in capacity, they can take some of their money that might have gone towards paving a parking lot at the base and put it into working capital fund and buy that capacity as they move, as they move forward. 

06:03 - 07:01 

(RT) Scott, if I could, I would also add, I think from a big picture perspective, the working capital fund really gives operational agility. It really enables faster acquisition, especially now as the Department seeks to acquire, I know we're going to talk a little bit more about Secretary Hegseth’s mandate and acquisition reform. But I really do believe that this is a great tool to be able to accelerate acquisition.  

And I think another great feature is that you can buy in bulk, and you got a centralized management function that's able to buy services. Comm is a great example of that, that you're able to have a centralized focus, but yet buy a large quantity of services and or capability.  

And the other thing that I think that's a real advantage is that the services that are typically acquired under a working capital fund’s construct are paid for by the actual users. They've got skin in the game, and there's good alignment, if you will, between the acquirer and the actual operator or user.  

07:01 - 07:06 

And what about disadvantages? Are there any risks or challenges that need to be considered? 

07:06 - 08:01 

(MD)Well one limitation of a working capital fund, it is, sort of year of execution. So it's not a long-term contract like a lot of companies would like to get a five-year contract to help provide services, provide products, whatever it might be. This is sort of a year of execution. So in fiscal year 2026, which is the year we're in now, if a Combatant Commander or that army brigade puts money into that pot, they can buy those services for the rest of the year. And then they got to start that process over again in the following year.  

So and it's not buying things, right? It's like buying services that already exist. So it's not a path for companies to build new products, build new satellites, those types of things that you normally think about.  

It is certainly by selling the services, they can then reinvest in the back side of the infrastructure and help make those products more, services more valuable. But it's really providing a service in the year of execution for that operational agility that Roger talked about.  

08:01 - 08:29 

(RT) Yeah, I would add one more in that it's related to one of the advantages, that it also presents a disadvantage and or a risk in that it's dependent on customer funding. And if the customer reduces their usage of a particular service, that fund may shrink, which may ultimately affect service continuity throughout the enterprise or as they had planned it, as an organization may have planned that. So it's something that the acquisition organizations certainly have to be cognizant of.  

08:29 - 08:43 

Now much of the government’s acquisition protocols can be traced back to the Federal Acquisition Regulation, otherwise known as FAR.  

What influence does the FAR have when it comes to understanding how the government buys a commercial product or a service? 

08:44 - 09:45 

(MD)Yeah, I'll say that there's a couple of big chapters in the FAR that come to play here. The FAR Part 15 is buying bespoke military equipment - an aircraft carrier is something that's not a commercial product, right? A fighter, a stealth fighter is not a commercial product. 

But if there is a commercial market for things, the government has a lot of black Suburbans, right? Those are basically commercial products. And so a different chapter of the FAR applies [here], which is FAR Part 12, which is buying a commercial product or commercial services, and that is basically you don't get to decide a whole lot. 

You can say you want the black ones. But other than that, you're buying a commercial product and you can do that in a much quicker way with less onerous cost accounting and all that kind of thing. Because there's obviously a commercial market you can look up mSRP on those black suburbans.  

So the FAR Part 12 allows [you] to go buy those things off the commercial market when a commercial product can largely satisfy with a little bit of tweaking, perhaps, around the edges of military function. 

09:46 - 10:50 

(RT) The government really approaches buying services and products very differently. First it’s driven by acquisition strategies. The intended product or service lifecycle. How long am I going to be doing it? And then ultimately, what is the performance and its associated metrics? What outcomes am I looking to achieve with a particular product and or service? 

A service is really people and time-based. And products are really deliverable and spec-based. And so there's some real core distinctions that I think it's important to be mindful of as we look at that and acquisition officials are very attuned to as they consider their acquisition strategy.  

A lot of times, you'll see contract types especially associated with service acquisitions for time and materials or some type of cost reimbursable construct, whereas, more often a product acquisition, now is more typically aligned under a firm fixed price or delivery order based construct, versus the other flexible way, if you will, more flexible, maybe, service-oriented acquisitions.  

10:51 - 11:14 

And then there are other, somewhat flexible ways the Department of War can use money appropriated to them by Congress, and I'd like to compare and contrast some of those options with the working capital fund. 

We’ll start with operations and maintenance funds, otherwise known as O&M, and then OTAs, Other Transaction Authority. So can you describe the relationship between how a working capital fund is either alike or different from those other two options?  

11:15 - 13:05 

(MD)The O&M funds and an OTA are sort of a little bit apples and oranges.  

So the Operations and Maintenance is what we call a color of money. It's a category of money that is appropriated by Congress to do just that: operations and maintenance on a daily or weekly basis and that money is good for a year.  

So if you're fixing up the base, if you're flying hours for your jets, those types of things are built into the Operations and Maintenance account. In space, it's the operations of the squadrons that are actually flying the satellites. So that's a color of money.  

Again, an OTA is kind of like what we talked about in the working capital fund discussion is a pathway to buy things from the industry. So Other Transaction Authority means it's outside. We mentioned FAR Part 12 and 15 - those are specific authorities. The Other Transaction Authority is sort of “and everything else,” right? So it's a path through the contracting world. That allows you to be much more flexible in the terms and conditions negotiation with the contractor and there are some important eligibility requirements to fit into an other transaction. 

One is: are you a non-traditional contractor or do you have a non-traditional supplier as part of that contract? Because those nontraditional suppliers don't have a certified cost and accounting systems that the Defense Department normally wants, and all the other trappings that come with working with the government. It's a pathway to get to a non-traditional supplier base, and I think we'll probably talk about that when we talk about acquisition transformation.  

The other way and this is important in this day and age is in Other Transaction Authority - you can be eligible for that if you also if you cost-share with the government. So in a world where we have hundreds of billions of dollars coming into this base world from the private capital markets - an Other Transaction Authority is a good way to tap into those sources of capital so the government isn't footing the entire bill for a product or service. What did I miss, Roger? 

13:06 - 13:50 

(RT) No, I think that's excellent, Mike. The thing I would footstomp is the fact that OTAs are contract mechanisms. They're not funding sources. As we talked about working capital funds and O&M and whatnot ever, an OTA is a contracts mechanism.

And, while the really the working capital funds obviously are financial structures, OTAs represent external acquisition pathways to get work done. You see them typically utilized by DIU, SpaceWERX and AFWERX, non-traditional vendor kind of arrangements, is really the most often use case that I think is in service today. But it does give the flexibility for non-FAR based contracting, especially for R&D and prototyping, which is very, very helpful.  

13:51 - 14:10 

Earlier Mike, you emphasized that working capital funds are designed specifically with commercial services in mind.  

And General Teague, you’ve been on The Elara Edge in the past to discuss the Commercial Augmentation Space Reserve, or CASR, which is also designed to enable the government to leverage commercial services. Can elaborate on how CASR relates to this conversation?

14:11 - 15:02 

(RT) Yeah, and I maybe footstomp like I just did for, really what I described for the working capital fund and the difference between that and the OTA. In that CASR, again, it's a strategic reserve concept. It's not a financial mechanism. 

Where the working capital fund - it's operational, it's transactional. CASR is really contingency based and it's policy driven. CASR really intends to establish a framework to leverage commercial space capabilities, during national security or emergency needs it's very similar to the Air Force's Civil Reserve Air Fleet. And its intent is to provide access to strategic capabilities, whether it be in certainly for space, but it would be for launch or satellite constellations or capabilities and or data services, during crises or surge demand times. 

15:03 - 15:26 

Now, the Space Force’s access to a working capital fund is actually through The Department of the Air Force Working Capital Fund, which will account for space services through an Enterprise Space Activity Group. 

So I have a two part question here: 

One: what does the Enterprise Space Activity Group mean? 

And two: what is the relationship between The Department of the Air Force Working Capital Fund and the Space Force’s access to it?  

15:27 - 16:22 

(MD)So, there is only one working capital fund. It is the working capital fund under the Department of the Air Force. So the Air Force can access it and the Space Force can access it under specific limitations and those limitations are established in these activity groups.  

So that's basically the checking account, or the debit card account as we talked about earlier. So the Enterprise Space Activity Group is the account underneath The Department of the Air Force’s Working Capital Fund that the Space Force gets to sort of have control of and that's where the limit of $1 billion has been put on that Enterprise Space Activity Group.  

So, that account, that activity group, is where the Space Force will buy things like communications, like they're starting to do with, tactical surveillance, reconnaissance and tracking, kind of activities. Other things have been allowed underneath that activity group, but it's all part of one working capital fund that the Department of the Air Force controls. 

16:23 - 16:46 

(RT) I'm excited about it, Scott. Only because ESAG, or the Enterprise Space Activity Group, it’s managed under the Commercial Space Office, there at SSC. 

So you’re getting alignment there of commercial space services, obviously with the warfighter and allied needs, using working capital fund mechanisms to help streamline procurement. You’re really getting after the fight tonight challenge and I’m excited about it. I think it’s a great step forward.  

16:47 - 17:07 

(MD)They're creating a toolkit, really, of access to these companies. So in the Commercial Space Office, you'll have access through this working capital and the Enterprise Space Activity Group, you also have the CASR activity that Roger just spoke of. So they're putting together this set of tools within that toolbox to rapidly go out to grab commercial services when we need them most. 

17:08 - 17:32 

As the director of the Commercial Space Office, Colonel Tim Trimaillo recently called the working capital fund, “an important milestone in integrating commercial capabilities into the architecture.” 

We’ve discussed the need for an integrated space architecture on the show before. But Mike, can you recap for our audience what we mean by ‘integrated space architecture’ and why is the working capital fund would be an important milestone toward this end? 

17:33 - 18:24 

(MD)The future architecture that the Space Force is headed toward is, what they call a hybrid architecture, a resilient architecture, you know, has diversity involved in it. 

And that diversity comes from a variety of spacecraft and capabilities in a variety of different orbits, coming from a variety of different suppliers, coming from both bespoke military systems and commercial services and products that can be bought off the market that have dual-use applications.  

So the Commercial Space Office allows access to that commercial side of a hybrid architecture and that office works alongside all the program executive officers at Space Systems Command to make sure that the commercial activity comes in alongside the military bespoke activity to to provide the combat effectiveness and resilience of the hybrid architecture.

18:25 - 18:39 

(RT) I would just add that’s where that utilization of the working capital, the Space Force's working capital fund. It's a major enabler of that vision. It's going to allow very rapid, flexible acquisition of commercial services that plug directly into the national security space enterprise. 

18:40 - 18:52 

The Commercial Satellite Communications Office will be the first program that's authorized to use funds from the working capital fund. So why is satellite communications an appropriate starting point? And what other capabilities can the working capital fund be used for? 

18:53 - 19:43 

(MD)This really comes from the history of the working capital fund. So the Commercial Satellite Communications Office has existed for a long time. And it existed, as I mentioned earlier, as part of the Defense Information Systems Agency, DISA, and when the Space Force stood up, that office was moved to the Space Force and so they have the workforce, the contracts, the relationships with all these prescreened vendors and the onboarding of new prescreened vendors. They have that legacy, that history. They know how to run that machine very, very well and so that just basically came in whole to the Space Force to do that.  

Now they have been given some expanded authorities to move beyond commercial satellite communications into some of the areas we've talked about: space domain awareness, tactical surveillance, reconnaissance, tracking. So those are sort of more nascent mission areas. But the system, the machine is the same.

19:44 - 21:13 

(RT) Scott, I think that there's a number of different missions and or capabilities or services that are required and are needed on a recurring service based or modular kind of commercial capability. 

And this applies to a number of different space mission areas, to include communications. But take for instance, launch, launch services. You could have on-demand access to commercial launch providers for small satellites for rapid reconstitution. There's a tactical unit that needs a responsive launch to deploy a particular sensor or capability in a constellation after a threat event has occurred or in advance of maybe, ISR providing indications or warning that an event may be about to occur. You could certainly use an asset that way.  

Another example would be like space domain awareness. If I had a subscription-based access to a commercial tracking and characterization, anomaly detection, there's any number of different ideas there regarding space domain awareness. But the Space Force would have access to a commercial provider to continue to monitor adversary satellite maneuvers as an example, in geosynchronous orbit or geostationary orbit. 

And, you know, make sure that it's just another set of eyes and ears, paying attention to what's going on and fulfilling domain requirements. So I do think that there's a lot of different missions that commercials can contribute to on a regular basis. 

21:14 - 21:27 

This brings us to the second part of our conversation, and that is the recently announced changes from the Secretary of War Pete Hegseth, who last month unveiled the Acquisition Transformation Strategy.  

Can you speak to some of the objectives the Secretary has laid out in this document? 

21:28 - 23:06 

(MD)You know, the Acquisition Transformation Strategy is all of like 39 pages and we commend it to your nighttime reading table. But it's based on five big points and I'll just quickly paraphrase each of those, and then we can kind of dig into the details.  

The first one is to rebuild a defense industrial base. So this is having access to more suppliers providing products and services into the Department. It's about private capital, participating in that industrial base.  

The second one is elevating and empowering the acquisition workforce. So kind of making some fundamental changes and we can talk about what that workforce looks - like having longer tours, being portfolio-focused instead of program-focused. And really to get away from the incentives and sometimes the disincentives for these program managers, to sort of fall back on being compliance-based instead of taking informed risk decisions.  

The next one is to maximize flexibility. So this is kind of about all the regulations that are piled on top of the law and so the first move there was to eliminate the JCIDs requirements process that's already underway. So things like that maximize the flexibility.  

Then to do rigorous enterprise, technical and execution excellence. This has a lot to do with sort of digital transformation, being able to do digital engineering and simulation and live virtual constructive training. 

And then the last one is lifecycle risk management. So in the lifecycle of a system, does the military have the organic capability to do repairs in the field? Do we really have insight into the supply chain and any risks there?  

So those are kind of the five big things. Probably the most interesting to talk about might be the first couple, which is about the industrial base and the acquisition workforce.  

23:07 - 24:33 

(RT) Yeah, I think it's a really important point and it's going to provide a lot of flexibility to former PEOs and or SPD's, as we were back in the day. 

Even so, the PEOs took an important step to be able to control, and make decisions and trades within their programs, among their programs. I think the Secretary's memo was being very deliberate in calling them Portfolio Acquisition Executives to emphasize the fact that they are fielding a portfolio of capabilities and those capabilities are designed to satisfy a particular mission area. 

And so there are a number of different trades that Portfolio Acquisition Executives should be considering, as they field capability in response to any threat.  

I think it's great. It empowers the acquisition executives and the team and certainly speeds decision-making and it demands accountability, not only within the government but also from industry. 

And ultimately, this is all about speed - driving capability, shrinking acquisition timelines literally from years to months or even weeks. And I think it's much, much needed, and complemented by a number of other initiatives that are in work right now, are really helping to take the foot off the brake, and the hands off the steering wheel and letting Portfolio Acquisition Executives really take control of and drive delivery of capability.  

24:34 - 25:00 

(MD)And just to tie this conversation to what we've been talking about as part of that portfolio of responsibility there's an objective of the portfolio - of the missile warning portfolio or the satcom portfolio. And if that can be satisfied by commercial, those portfolio executives have the option to go to the commercial markets and buy this too, which is different. Really, the PEOs have really been focused on the bespoke military sorts of requirements. So this adds that arrow into the quiver as well. 

25:01 - 25:39 

(RT) I think that's a terrific point, Mike. And one other one that I was really happy to see, likewise was, if you will, reducing the bureaucracy and really reforming the Foreign Military Sales, and requirements process. 

As you talked about the requirements, but being able to get after some FMS cases, in real and meaningful ways, I think especially as nation blocs like NATO, for example, look to field commercial capabilities, and or our friends in the Far East, likewise are looking to do the same. Hopefully we will have the ability to be able to be responsive and offer commercial systems and capabilities, much, much more rapidly. 

25:40 - 26:20 

And, Sir, you said that some of these acquisition reforms really place an emphasis on speed. I'd like to tie that to what’s known as Moore’s Law, which more or less states that technology becomes more and more powerful with every iteration, particularly as costs and size decrease. 

But it seems space technologies in particular have traditionally had long acquisition timelines, which meant that by the time the government gets a certain capability up on-orbit, that capability might be outdated already - simply because the technology here on Earth continues to advance that much faster. 

So my question for you is: how does this reform effort, and that emphasis on speed, factor into the Space Force’s acquisition needs? 

26:21 - 27:32 

(RT) Well, it just reinforces and underscores the exact construct that you just outlined there, Scott, in that you're trying to take advantage of Moore's Law. You're trying to continually resupply and keep current the most capable systems that you can on-orbit. 

We don't need to be reliant on 286 and 386 computer technology that may be fielded in some of today's systems. And I use that as a reference point, but it's illustrative of the challenge that a lot of time space programs field, because the satellites are so well built, they often live well beyond their design life by a decade or more. 

And so you're, if you will, stuck in a system that's performing against a performance baseline that was designed to maybe 10 or 20 years ago, be unable to take advantage of the capabilities that exist today. And so, as Mike alluded to earlier, you’ve got acquisition executives who now are going to be able to focus on portfolios and field updated capabilities, current capabilities, much, much faster, much more consistently aligned with their objectives and ultimately the warfighter needs. 

27:33 - 27:40 

Now, broadly speaking, how should industry, and particularly the commercial space industry, be thinking about these reform efforts?  

27:41 - 28:36 

(MD) I think the most important thing that individual companies can do is to try to understand the military problem that their product or service solves. 

And if they can understand the terminology of the day or pain points and those types of things to really understand what the military is trying to achieve and where they're having trouble achieving it. It will allow the companies then to use again some private capital, perhaps their own internal research and development funds, to present solutions to the government and then the government with OTAs and all these other pathways we're talking about, could rapidly say, ‘Yes, that's not perfect, but it's 80 or 90% of the way there. I love it, I want some of that.’ 

And to move forward in purchasing those products and services. So really understanding their government customer and the military problem that is trying to be solved is the best thing a company can do to get its product and services across the line, if you will.

28:37 - 29:49 

(RT) I took away a couple of additional thoughts there, and Secretary Hegseth’s memo was blunt. It basically said “Giddy up.” He said, move faster and invest more or we might just do it for you.  

They're trying to drive speed. They're trying to drive scalability. And so it's a call to action, I think by certainly within the space industry to upgrade your production lines, your digital workflows, your plans for modular architectures, you're wholly embracing commercial capabilities and standards, which gives way to offering commercial off the shelf solutions, any number of different, opportunities with regard to commercial - you don't always have to wait for the bellwether program of record that lasts a couple of decades, because ultimately, in the end and I mentioned this before, I think that the Department is ultimately trying to drive accountability, not only speed, but accountability.  

And that these Portfolio Acquisition Executives, they should be demanding customers. They should be demanding buyers and expect industry to deliver and give the nation the kinds of capability it needs, at the price point that it expects, with transparent cost structures, and on delivery timelines that the acquisition community as a whole agrees to.  

29:50 - 31:52 

(MD)And so part of my training as an engineer is to figure out why the glass is half empty instead of half full. So let me offer a counterpoint here. Just a caution in this transformation strategy. And that is that this is not, unilaterally a decision that the Department of War can make. 

Congress appropriates the money. Congress likes to have a lot of control over how that money is spent. So whether Congress will have to sort of buy into this and provide some expanded guardrails, if you will, among the authorization and the appropriations process. 

I think there's a reason to be optimistic about that. There's actually both in the Senate and in the House, there are proposed space acquisition reform legislation, on the table for this, this year.  And so we'll see how that falls out. And this transformation itself will need some funding, right? They're talking about training and advanced digital tools and use of AI. So that will also need some funding. So it's going to take a sort of an all-of-government sort of approach here to be able to actualize this strategy. I certainly hope that happens, but we'll need to, kind of work the details. 

And the other thing I'll say is, we got to this sort of onerous compliance-based process because every time there's a slip in a program, then, ‘Okay, well, there's probably three new policy things we can put in place to make sure that slip doesn't happen again.’ And it just builds and builds and builds.  

What the Secretary is trying to do is provide those portfolio acquisition executives the ability to make informed risk decisions and sometimes those decisions are going to be wrong. And you have to be able to live with that and move on without then just piling back more and more bureaucracy to try to limit the decision space of that executive. 

Like to Roger’s point, we want those folks to be accountable when they make great decisions. We want to reward them. When they make bad decisions. If it was really a bad decision, then, well, we'll be accountable in that way too. But usually those are professional acquirers and professional military men and women, and they're going to make decisions that what's the information at the time was the right decision and then we just deal with it from there.

31:53 - 32:17 

That brings this conversation full circle, as we've kind of discussed two broad changes. One was the introduction of the Space Force’s access to a working capital fund. And then two: the Acquisition Transformation Strategy that Secretary Hegseth recently unveiled. But I'd like to draw a thread between the two of them. 

What parallels do you see between the Space Force’s access to a working capital fund and the Acquisition Transformation Strategy?

32:18 – 33:04 

(MD) I believe the working capital fund, as important as it is and as useful as it is. It is a tiny step in this broader transformation strategy, right? 

There are so many things that the acquisition workforce has been hoping would happen over many years and that Congress has been wanting to happen over many years. That working capital fund is a little step, an important step, and there are a lot more steps to take and many of those have been outlined in the Acquisition Transformation Strategy. 

Many more are in the legislation that's pending on the Hill. So, it's all part of a broader focus on expanding the industrial base that we have available to us, taking advantage of the speed and agility of dual-use and commercial activities and making those apply to military problems that we have and we've got many. 

33:05 - 33:20 

Now, Elara Nova has also continued to evolve. As two of the founding partners at the strategic advisory firm, can you share some of the recent developments going on behind the scenes? 

How is Elara Nova prepared to connect what exists in industry today and where the government wants to go in the future? 

33:21 - 34:43 

(RT) Scott, I can take a shot at that. And I think maybe you're referring or tying us back into particularly the Elara Nova Capital Advisory Services, our newly launched, strategic finance and investment advisory team.  

We stood it up at the beginning of the year, and it's designed to bridge the gap between really space innovation, and the capital markets, whether it's capital structuring, support for startups or, if you will, the prime contractors or even government-aligned ventures, providing strategic advice for growth and venture capitalists or infrastructure or technical due diligence expertise, even policy and compliance insight to help navigate the regulatory domain and, if you will, the environment that space companies operate within.  

Elara Nova really is positioned well, we're just not a financial consultancy. It's really a mission-aligned capital catalyst, so to speak. That allows us to help stakeholders across the space enterprise, help them deploy their capital with confidence. 

And they can do so in a risk-adjusted manner, and do so with confidence, because all of this, as Mike has alluded to comes together in a nexus of knowledge that ultimately allows us to raise all boats, from a space perspective, and continue to grow the enterprise in a real and positive way and make a real difference. 

34:44 - 35:19 

(MD)Yeah, well said Roger, I think we just sit at this exciting place, as you suggest, at this nexus between who are the people with the problems? And in our case it's typically the space security, national security, and broader than just space now with aeronautics and adjacent cyber type of activities.  

Those customers with the industrial base that can solve those problems with the capital markets that can provide the fuel basically to solve those problems back to those customers. So, having that be a really dynamic and sharing ecosystem is what we are trying to do as a company and I think we've found some success.  

35:20 – 36:01 

This has been an episode of The Elara Edge. As a strategic advisory firm, Elara Nova is the trusted guiding partner that builds tailored teams to illuminate unseen opportunities and deliver impact across every domain.  

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If you liked what you heard today, please subscribe to our channel and leave us a rating. Music for this podcast was created by Patrick Watkins of PW Audio. This episode was edited and produced by Regia Multimedia Services. I’m your host, Scott King, and join us next time at the Elara Edge.