Editorial: There is No COTS Betrayal

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  Space News Business

Editorial: There is No COTS Betrayal

posted: 03 May 2007
07:33 pm ET


The U.S. companies hoping to land future space station cargo-delivery contracts need to avoid focusing on NASA’s recent $719 million deal with Russia for similar services and concentrate on getting their own vehicles financed and built.

The contract in question calls for the Russian space agency, Roskosmos, to provide Soyuz and Progress vehicles to ferry crew and cargo to the international space station through 2011. Critics of that deal claim that it erodes the market for alternative space station logistics services, thereby making it difficult for companies hoping to provide them on a commercial basis to raise the necessary financing.

While there is some truth to this argument, the fact remains that NASA has bigger things to consider: The agency is not in position to gamble with an orbiting laboratory in which taxpayers from some 20 nations have invested billions of dollars. With no guarantee that the cargo-delivery capabilities being nurtured under the Commercial Orbital Transportation Services (COTS) program will materialize by 2010 or 2011, NASA had to make other arrangements to ensure the space station’s viability during those years.

Without knowing certain details of the NASA-Roskosmos contract — NASA Administrator Mike Griffin has declined to say, for example, whether there are clauses that would let NASA out of the deal in 2010 or 2011 — it is impossible to judge whether the U.S. agency has given itself maximum flexibility to utilize COTS-type services should they become available by then. But the two COTS agreement holders, Rocketplane Kistler and Space Exploration Technologies Corp. (SpaceX), still have been given a lot to show potential investors.

For openers, the companies stand to receive nearly $500 million between them in U.S. government seed money, a generous subsidy by any measure for an entrepreneurial enterprise. And having been selected by NASA over several other COTS hopefuls, Rocketplane Kistler and SpaceX have earned a vote of confidence that could not have gone unnoticed on Wall Street.

Since taking the reins at NASA, Mr. Griffin also has been consistent in his position with regard to commercially provided space station logistics services: field such a capability and NASA will be a customer. During an April 12 press conference, he said the contract with Roskosmos still leaves plenty of room for COTS-type services. After all, the space shuttle — the primary space station servicing vehicle — is slated to retire in 2010.

The wild card in this equation is the space station logistics vehicles developed by Europe and Japan, which are scheduled to debut in late 2007 and mid 2009, respectively. Current plans call for Europe and Japan to each conduct one station resupply mission per year. The fear among COTS advocates is that NASA will arrange for more such flights, and in doing so squash the market for a commercial alternative.

However, there is a key distinction between the European, Japanese and Russian vehicles, and those being developed with COTS funding help. That difference is the ability to bring substantial payload back to Earth for recovery: The COTS vehicles are supposed to have it; the others do not.

Moreover, whether or not NASA arranges for additional European or Japanese cargo missions will depend at least in part on the progress Rocketplane Kistler and SpaceX make in developing their respective services. It is worth noting in this regard Mr. Griffin’s pledge that NASA will not require the companies to demonstrate their full capabilities to win space station servicing contracts. Meanwhile, NASA has opened another avenue for COTS by dropping the pressurized cargo carrier from its contract with Lockheed Martin for the Orion Crew Exploration Vehicle.

Starting a new space transportation business is about as risky as it gets, both from a technical and market standpoint. Rocketplane Kistler , SpaceX and other U.S. firms eyeing the space station re supply market are well aware of this, as are any potential investors who have done even a modicum of homework. The U.S. government can help by retiring some of the technical risk and by being a willing customer. But it is not the government’s role to guarantee future business for any goods or services, particularly if doing so entails putting at risk a hugely expensive asset.

It is probably true that NASA added somewhat to the COTS market uncertainty by contracting with Roskosmos for space station logistics services. But the agency has more than offset that with the support it is providing to the COTS hopefuls, while also fulfilling a key responsibility to its space station partners by signing a short-term deal with a proven provider for continued access to the station.

Thanks in large part to a level of support that is rarely available to entrepreneurial companies, Rocketplane Kistler and SpaceX have an opportunity to make a giant step in the commoditization of space services . At the end of the day, it is up to them to find a way to take advantage.