Even as the COVID-19 battered the Colorado Springs economy, costing tens of thousands of jobs, the defense contracting industry stayed strong.
Why? Thank U.S. Space Command and the new Space Force, at least in part. The arrival of the joint command, the creation of the new military branch and a greater emphasis on space have triggered a major wave of growth for local defense contractors.
Industry officials say the defense industry is thriving in Colorado Springs, where more than a third of the local economy depends on military spending, because the U.S. Space Command is based at Peterson Air Force Base, at least temporarily, and much of the operations of the new Space Force also are spread across area bases.
“The opportunity (from U.S. Space Force and U.S. Space Command) is on par with when NorthCom (U.S. Northern Command) was stood up almost 20 years ago,” said David Fuino, who directs the multi-domain battle management program at Raytheon Technologies and is the company’s top executive in Colorado Springs. “While the powers that be will make the decision on the ultimate home for U.S. Space Command, everything points to a lot of business being done here in the next five years. There will be more than 1,000 government personnel and all the contracting activity goes well beyond that.”
Reggie Ash, chief defense development officer for the Colorado Springs Chamber & EDC, said the U.S. Space Command headquarters brings more than 1,400 additional troops to the area and also huge contracting opportunities. He said a combined command, meaning one than spans all military services, will “result in significant growth in the surrounding community, which is what we saw with Northern Command. That could result in billions of dollars in contracts and thousands of jobs.”
Chris Pettigrew, a Lockheed Martin spokesman in the Denver area, said it’s a bit too early to make such comparisons, especially until the Department of Defense and President Donald Trump decide the permanent headquarters location for Space Command in January. Both Space Force and the joint command are barely more than a year old. Colorado Springs has submitted its proposal to permanently land the command, which oversees the satellite efforts of all military branches, with dozens of cities and towns from New York to California joining the competition.
Still, there is no denying the Colorado Springs economy has bounced back from the pandemic faster than most areas because of the steadying influence of its defense industry. Military contractors were deemed essential during a stay-at-home order imposed March 26, so those companies continued to operate — though many remotely, at least in part — and no major contracts were canceled or reduced. At least one major award came well after the pandemic hit — Dallas-based engineering giant Jacobs won a $455 million award in June with the North American Aerospace Defense Command, a contract previously held by Northrop Grumman.
“Through the pandemic, the defense community and contractors have been doing very well. The Department of Defense is making sure that the defense supply chain remains healthy during this crisis,” Ash said. “We’ve heard from a few contractors that they are in the middle of or planning big expansions in the Colorado Springs area, including new buildings and leasing additional space,” he said. He declined, however, to identify the companies other than an $100 million new building planned near the Colorado Springs Airport by Aerospace Corp., a nonprofit that handles research and development for the Air Force and Space Force.
Ash attributes those expansion plans to Space Force’s and Space Command’s operations here and the expectation that Colorado Springs eventually will be named as the command’s permanent home . But he also attributes contractor expansions to a strong, well-qualified local workforce for defense contractors, including many military retirees and civilians who work in cybersecurity and information technology, which frequently overlap with military work.
Lockheed Martin, one of the largest defense contractors in the Colorado Springs area with more than 1,500 employees, continues to expand its workforce across the state, adding more than 500 employees so far this year to the 11,000 people it already employed in the state. The company has about 800 open positions statewide, including 90 in the Colorado Springs, across operations in space, missile warning and defense and cybersecurity, said J.D. Hammond, Lockheed Martin’s vice president of command, control, communications, computers, intelligence and reconnaissance in the Springs.
“We are seeing growth from existing customers and contracts that are going through growth relative to missile defense at both Schriever and Peterson (air force bases) and all over Colorado Springs. We also have some new contract wins and a lot of growth within existing customers and contracts,” Hammond said. “We also are expanding our relationship with small businesses by standing up an innovation center at the Catalyst Campus (for Technology and Innovation). A lot of our growth in Colorado Springs is coming with Space Force and U.S. Space Command.”
Much of Lockheed Martin’s growth in Colorado Springs has been generated from a mission planning system for Air Force pilots, developing the next generation of the Global Positioning System network and its iSpace software product. iSpace catalogs all space objects and helps military, civilian, commercial and international customers protect their satellites and other spacecraft avoid collisions and other threats.
Hammond said Lockheed Martin and “the entire defense (contracting) sector has been very adaptive to the (COVID-19) situation, and so have our customers. We have shifted with our customers and been able to continue to do business and work the programs we have here (in Colorado Springs). That has been true across the defense sector more than others.” Up to two-thirds of the company’s employees worked from home during the stay-at-home order, a percentage he said has since dropped to 45%.
Here’s a look at how other companies have been faring:
• Raytheon has added nearly 100 employees in the past 12 months in Colorado Springs, mostly working on software and data analysis systems for missile warning and defense, command and control operations for satellites, systems engineering and cyber engineering, said Fuino. The company has about 20 job openings and plans to add 20 more soon, mostly for software engineers, information technology technicians and cybersecurity specialists, according to openings listed on the company’s website.
Raytheon also shifted about two-thirds of its Colorado Springs employees to remote work during the peak of the pandemic, providing them computers and other equipment to work from home. Fuino said the shift to remote work also had an unexpected benefit — allowing the company to shift workers from any location onto a project, rather than relying just on who might be available in the local office.
• Aerospace Corp. began construction Wednesday on a $100 million research and development facility at the Colorado Springs Airport that will employ 200 people. The nonprofit already employs 240 engineers, scientists, analysts and cybersecurity specialists in a 78,000-square-foot building opened in 2007 in the airport’s Peak Innovation Park that has “surpassed capacity,” according to documents filed with the city of Colorado Springs in February by Stantec Architecture for the company.
The 90,000-square-foot second building, adjacent to the existing facility, is needed to “meet the growing requirements of the U.S. Space Command, U.S. Space Force and a variety of other customers,” the company said in a news release. The building, planned for completion in spring 2022, will be able to accommodate 200 additional technical employees. About 70% of the space in the new building will be for classified work for acquisition, test and evaluation, tactics, techniques and procedures development.
• Northrop Grumman has leased nearly 100,000 square feet in the Interquest office complex at the former Quantum manufacturing plant in northern Colorado Springs, expanding its footprint in Colorado Springs by more than 75%. Northrop Grumman built a 130,000-square-foot complex near the Colorado Springs Airport it later sold to Denver-based Flywheel Capital, also its landlord for the Interquest complex. The company employs about 1,100 in Colorado Springs and 2,300 statewide, including 270 hired in the past year and more than 350 open positions.
Scott Day, a Northrop Grumman spokesman, said the company leased the space “in support of current growth on several programs.” He said some of the company’s buildings are near capacity and the additional space would give the company enough space for “several years” of growth. The company has 350 job openings statewide, including 85 locally.
Much of Northrop Grumman’s local growth comes from two programs: its longtime work on missile defense and a $13.3 billion contract the defense giant won earlier this month to modernize the nation’s ballistic missile program, while based in Utah will include plenty of work in Colorado Springs and across Colorado, Day said.
• Jacobs’ contract with NORAD, under which the company will support the classified communications and processing for command and control operations from air and space-based threats to North America, is expected to result in hiring about 450 people during the six-year project, said Dave Dykhoff, general manager of the company’s missile defense group. The company lists 78 openings on its website in Colorado Springs, including 57 on the NORAD project.
The contract is the second major win for Jacobs in the past three years after securing a $4.6 billion contract in 2017 to provide integrated solutions supporting test, training and operations in the Missile Defense Integration and Operations Center and supporting the Missile Defense Agency’s communications and information technology network, all at Schriever Air Force Base. The company hired 844 people for that contract and Dykhoff said Jacobs may add more employees during the eight-year project.
“It certainly appears that there will be considerable opportunity for contracts providing technical services,” which is the primary focus of the company’s work in Colorado Springs, Dykhoff said in an email.
• Colorado Springs-based Delta Solutions & Strategies has nearly doubled its revenue this year to $30 million and now has a $120 million contract backlog, allowing the company to double its workforce this year to 180 employees, CEO Mark Stafford said. The company focuses on space, cyber technology, training, modeling and simulation and civil engineering for the Air Force, Space Force and U.S. Space Command, much of it through the federal government massive OASIS contracting system.
Stafford said the job market for defense workers, particularly engineers, is so tight that salaries are up 15% in the past year to between $90,000-$100,000, on top of immediate vesting for 401(k) matching retirement contributions and fully paid health insurance, sometimes including signing bonuses and moving expenses for out-of-town hires. He said the company has five to 10 job openings a month and is building out more offices to accommodate its rapid growth.
• Marcus Featherson, senior vice president of space for Parsons in Colorado Springs, said the company has added 20 to 25 people in Colorado Springs during the past year as part of its effort to become a “major player in space.” The company recently won a $28 million contract over five years to develop software that keeps track of space objects more quickly — with weekly updates instead of major releases that take years to develop.
“While not all of our growth is in space, there is a tremendous growth across the entire industry in space — you are seeing tens of millions if not more in contracts with (local) companies both large and small” for space-related work, Featherson said. “We’ve been mostly unaffected by COVID with most of our employees — now about 80% — working from home and our customers have been very accommodating.”