Thursday, May 21, 2020

The Numbers Don't Lie - NASA's Move to Commercial Space Has Saved Money

Ars Technica's Rocket Report this week includes an excerpt from a longer article with the same title as this blog post.
As part of its initial investment of $396 million into SpaceX, NASA got development of the Cargo Dragon, Falcon 9, and a launch site at Cape Canaveral.
A cost of 50 times more
... At the same time, NASA was developing the Ares I rocket to fly crew into low-Earth orbit. Independent estimates placed the cost of Ares I at about $20 billion. President Obama ultimately canceled the Ares I, projected to have a similar lift capacity to the modern Falcon 9 booster, because it was behind schedule and over budget. The agency, in turn, got a bargain.
The beginnings of the commercial space program goes back nearly 15 years to NASA administrator Michael Griffin, appointed by George W. Bush in 2005.  NASA placed a small bet on the nascent commercial space industry when it sought to diversify its fleet for delivering cargo to the International Space Station.  In 2005, NASA had the space shuttle to ferry supplies, of course, but recognized that the aging system was not going to fly forever.  So NASA administrator Griffin, committed $500 million in seed money for the development of new, privately built spacecraft.
Griffin may not have realized what he had unleashed. The first small “Commercial Orbital Transportation Services” contracts awarded to SpaceX and Orbital Sciences have since expanded into other areas of spaceflight while multiplying in value from hundreds of millions of dollars into billions of dollars. NASA now looks to private companies for not just cargo delivery to orbit but, with Crew Dragon, people. NASA also recently sought commercial services for sending supplies to the Moon and even landing humans there. What began as a pebble tossed into a pond has become a wave.

Critics of this commercial approach certainly remain—it has disrupted the business models of traditional aerospace powers like Boeing and Lockheed Martin, which have long profited from lucrative cost-plus contracts. Some at NASA, too, still don’t trust commercial providers, and they’re especially wary of Elon Musk, the brash founder and chief engineer of SpaceX.
Insiders are still fighting over cost-plus contracts.  In the days before the advances in commercial spaceflight, NASA would specify precisely what they wanted and monitor the contractors with intensive audits, visits and oversight.  If a vehicle ran five years late and doubled its original budget, (cough - SLS - cough) NASA was on the hook for cost overruns. This tended to incentivize programs being late and over budget, but eventually the government got what it wanted. And those big contractors absolutely loved it.  To be fair, when the government is asking some company to do something no one on Earth has ever done, cost-plus is a way of reducing the risk.  The reality is the method becomes harder to justify when a company is building the next generation of something that has been done many times before. 

As the infomercials say, "but that's not all!"  Like every other government agency I'm aware of, there's a conveyor belt of managers going back and forth between the agency and the private sector; between the buyers and the companies they buy from.  That makes it in the interest of some NASA people for the contracts to go late and over budget, too, further incentivizing cost-plus contracts. 

Griffin used the analogy of having a house built to describe his vision for commercial space.
“The contractor builds homes for a living, I’m not creating the contractor’s company. He has to have a company before I will consider allowing him to build a home for me. He builds his homes, and if I like them, I can buy a design that he offers. At different stages of completion he gets money from me if he’s building my home, but he doesn’t get all the money until he has furnished all the product.”
An important point about this analogy that may not be obvious is that if the contractor screws up, it's on his nickel.  That would make the contract for commercial space much more like the "Firm, Fixed Price" model the DOD uses.

Ars presents this table of the highlights:

ProgramCargo DragonCommercial crewConstellation
Type Private, fixed-price Private, fixed-price Government, cost-plus
NASA costs $396 million $5 billion $34.5 billion
Deliverable Cargo Dragon Crew Dragon Ares I rocket

Falcon 9 rocket Starliner spacecraft Orion

Florida launch site Booster integration (costs are estimated)

Results Cargo Dragon went on to fly Crew Dragon to fly in May, Ares I canceled, Orion to be

20 ISS deliveriesStarliner next yearused only in deep space.

Don't make the mistake I made; the entry under Commercial Crew for Starliner isn't the SpaceX Starship we frequently talk about.  Starliner is the Boeing private capsule, which (it seems to me) will be lucky to be flying in a year.  That $5 Billion is the total amount NASA has spent among the various contractors in the running.
Put another way, while SpaceX developed a cargo version of its Dragon spacecraft, the Falcon 9 rocket, and built its launch facilities at Cape Canaveral, the Constellation Program was toiling away on Orion, the Ares I rocket, and ground systems. “We were effectively doing what the Constellation Program was doing with about the same amount of money, total, that they were burning in a single month,” said Mike Horkachuck, the NASA engineer originally assigned to SpaceX for the commercial cargo program. “So that kind of puts it into perspective.”

But that’s just for cargo missions. Now compare the costs for crew transportation. All told, NASA will invest nearly $5 billion in SpaceX and Boeing to bring their Crew Dragon and Starliner systems to the launch pad. Phil McAlister, a NASA manager for commercial space, noted that NASA was on track to spend about six times more for the single Ares I-Orion system than what it ultimately paid for two distinct private spacecraft launched on private rockets.
It's hard to overlook that SpaceX has done much more with much less than the old line contractors have.  For cargo, it has flown more missions for less. As part of the crew development program, NASA paid Boeing about 50 percent more than SpaceX. Despite this, SpaceX completed Crew Dragon about a year ahead of Boeing, which, again, is unlikely to fly a crewed mission before next spring at the earliest.


  1. This comment has been removed by a blog administrator.

  2. And SpaceX land it's ships like they are supposed to!

  3. I'm not surprised the commercial sector can do it for less. What amazes me if for how much less they can do it. When I was doing launches, our cost was ~$60 million, and we charged ~$90 million. Everybody else was well over $100 million, ranging from $110~$130 million up to $175 million for certain payloads, so we were considered "Your Low Cost Leader!", and filled a nice niche.

    We weren't allowed to bid on ISS resupply missions because of State Department restrictions, but we could have done it, and management was trying to find some way to do it when they went Chapter 11.

    SpaceX would have put a serious dent in our market!

    1. I hadn't thought you guys would have been under State restrictions. (Hmm - Department of State has the same acronym as Denial of Service) OTOH, with Russia, China and the Europeans all copying SpaceX, it's pretty safe to say they've upended the market.

    2. SiG, I have seen the comment before that the Russians, Chinese and Europeans are copying SpaceX but other than an article stating that Arianespace was working on a landable booster I have seen nothing else. Do you have some references to articles of what is going on in those sectors?

    3. You name the agency, and they either watched us, or had some control over us. It was a massive political undertaking to get a Ukrainian rocket with Russian engines, and a Russian 3rd stage, approved for importation, along with all the Ground Support Equipment. Handling the personnel was also a big job. We even had to import "Russian Kerosene" (aka RP-1) when US sourced kerosene proved too aromatic for their seals and gaskets. It gave them an increase in specific impulse, but dissolved some of their elastomers.

      Day-to-day operations were controlled to some extent, too. We had several USGOV people beside the FAA people aboard when we were on a lunch, and I'm sure "The Other Side" had their guys aboard watching things to. One of the honchos in the "Rocket Segment Operations" had been a KGB General and he and our Head-of-Security went way back to the "Cold War Daze".

      Lots of spooks running around there, even though all we were allowed to launch were commercial communications satellites.

      Somebody, someday, should write a book about it. It was an excellent example of to do, and not do, an operation like that.

    4. BillB

      Some easy to find things - because I know I wrote these:

      Start here

      More on the ESA

      Let me pull a paragraph from a link to Ars Technica

      "Russian space officials have gone from dismissing the economics of reusable launch to creating a new design bureau with the express purpose of studying and developing reusable launch vehicles. For a long time, European rocket scientists, too, scoffed at the utility of reuse. Now they are also studying how to develop a Falcon 9-like rocket. Japan's next rocket after its new H3 booster will likely be reusable, and a raft of Chinese firms are also studying—or perhaps simply copying—the SpaceX model."

      If you go to that Ars Technica link, there are several more links to backup info in just that one paragraph.

      Some more on China copying SpaceX grid fins

      The only problem with getting information is coming up with the search terms that don't drown you. Hope that helps!

  4. I wonder how much quicker Boeing's program would have been if they had done a cargo version first to work out many of the kinks.

    Which SpaceX did with their Cargo Dragon.

    NASA is still good at some of the cutting edge stuff, but should be more of a guidance organization rather than 'the end all be all' of space.

  5. Good point. SpaceX was able to essentially get a head start with Cargo Dragon. It's probably why Boeing requested (and got) more money from NASA to develop Starliner.

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