In a memo to Acting Defense Secretary Patrick Shanahan, Undersecretary of Defense for Research and Engineering Mike Griffin designated Kennedy as his choice to become the first director of the Space Development Agency.

WASHINGTON — Fred Kennedy, head of the Defense Advanced Research Projects Agency’s Tactical Technology Office, has been selected to serve as the director of the Defense Department’s new Space Development Agency.

In a memo to Acting Defense Secretary Patrick Shanahan, Undersecretary of Defense for Research and Engineering Mike Griffin designated Kennedy as his choice to become the first director of the Space Development Agency.

Shanahan in January decided to put the SDA under Griffin’s portfolio. The designation of Kennedy to lead the SDA comes two months after Griffin enlisted Kennedy to lead a study of how the SDA should be organized. Shanahan asked Griffin to submit a plan by March 1 to establish the SDA as a separate defense agency.

In a draft memo obtained by SpaceNews, Griffin proposes a budget of $149.8 million for the SDA in fiscal year 2020 to fund the “initial set of next-generation military space capabilities.” The agency would start out with about 50 employees — 30 civilians and 20 military.

The idea of a Space Development Agency first surfaced in August in a congressionally directed report where Shanahan had to explain how the Pentagon would organize a new military branch for space. Griffin in an October memo said the SDA is “one of the tools we offered up as a way that we’re going to reenergize the space development culture, shorten the time cycles that we talked about, bring some new things to the table.”

Griffin made the case that the SDA should be under his portfolio so it can collaborate with the other agencies that he oversees and do space-related work — the Missile Defense Agency, the Defense Advanced Research Projects Agency, the Strategic Capabilities Office and the Silicon Valley-based Defense Innovation Unit.

Air Force Secretary Heather Wilson had argued for the SDA to be placed alongside existing organizations like the Air Force’s Space Rapid Capabilities Office. But Shanahan rejected that plan and backed Griffin’s idea of a Pentagon-led agency that would be unconstrained by military procurement red tape. Changes need to be made to defense procurement across the board, Shanahan has said, but that could take years, and space is an urgent priority that cannot wait.

Like Griffin, Kennedy has criticized the procurement culture in the Defense Department for choosing to pursue costly in-house developments instead of buying technology available in the open market at far less cost. Both have been proponents of deploying smaller, cheaper satellites in large numbers to make U.S. space systems more resilient to disruptions or hostile attacks.

Kennedy has led DARPA’s Tactical Technology Office since September 2017 after being promoted from deputy director. He had previously worked at DARPA from 2005 to 2008 as a program manager. Kennedy served 23 years in the U.S. Air Force and retired as a colonel. One of his posts was at the Air Force Space and Missile Systems Center’s Remote Sensing Directorate where he worked on multibillion-dollar satellite programs.

During his first stint at DARPA, Kennedy led a joint project with NASA called Orbital Express that in 2007 demonstrated semi-autonomous satellite servicing by transferring fuel and a new battery to another spacecraft. Griffin was NASA administrator at the time.

New agency to impact jobs, budgets

Since plans to establish the SDA first came to light, speculation has intensified on what this means for the Air Force Space and Missile Systems Center, based in Los Angeles. SMC is a subordinate unit of Air Force Space Command. Established in 1954, it is the center of technical excellence for developing, acquiring, fielding and sustaining about $6 billion worth of military space systems. The center employs more than 6,000 military, civilians and contractors.

SMC is undergoing a reorganization known as SMC 2.0 aimed at speeding up technology developments by taking an “enterprise” view of space programs as opposed to the traditional vertical organizations that run programs without coordinating with each other, which causes inefficiency and duplication. An industry official who works with SMC said these are useful reforms but don’t fundamentally change the SMC organization, reaffirming Griffin’s belief that the existing space procurement structure cannot be fixed and that drastic measures are in order.

Griffin’s memo to Shanahan suggests that SDA costs will be offset by personnel reductions in other organizations because many jobs associated in the space procurement bureaucracy will no longer be needed.

Although the Pentagon has the authority to stand up a new agency, by law it has to make up the cost with savings elsewhere. The secretary of defense has to submit a report to the chairs of the congressional appropriations and armed services committees certifying the projected savings. “Our assessment of savings shows that establishing the SDA will reduce the Department personnel and financial requirements,” Griffin’s memo said. “Specifically, SDA will use a combination of existing special hiring, contracting, and acquisition authorities, lean organizational structure, and a streamlined reporting chain to develop and deploy new capabilities quickly.”

The creation of the SDA, the memo said, “allows a significant reduction in both the required number of government employees and military members, as well as the number of employees of contractors and FFRDCs, needed to develop and field the foundational element of next-generation space capabilities.”

FFRDCs, or federally funded research and development centers, earn millions of dollars conducting reviews and studies for organizations like SMC. One of the largest is the Aerospace Corp., in El Segundo, California.

According to sources who are familiar with Griffin’s thinking on the SDA, the new agency is not intended to replace SMC but will grab pieces of the space portfolio, which could wipe out hundreds of government and contractor jobs at SMC.

Griffin in the memo said he will work with the Pentagon’s comptroller and “affected organizations to provide fiscal oversight and make determinations to effect transfers of funds, as required, to realign FY 2019 and FY 2020 resources.” He also will work with the Defense Department’s cost assessment and program evaluation (CAPE) office to “evaluate resourcing for the FY 2021 and beyond.”

The SDA planning is moving quickly as Shanahan said he wanted the agency to be in place by the end of March. Griffin’s memo does not mention the actual location of the SDA. DoD sources said Shanahan prefers that it be based in metropolitan Washington. Alabama lawmakers reportedly have urged DoD to move the agency to Huntsville, nicknamed “Rocket City,” where there is a large government and space industry presence.