A Far Cry from a Commercial Approach

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It’s abundantly apparent to anyone trying to reverse America’s embarrassing reliance on the Russian Federation for human spaceflight that this nation’s problems have nothing to do with rockets, engines or technology in general. Companies such as Space Exploration Technologies have demonstrated that America still has the personnel and perseverance to make history with innovative, low-cost systems. However, there exists a force that no rocket is strong enough to escape from, and that is federal bureaucracy.

Often in our industry the question arises, what makes commercial crew “commercial”? If we limit this question to NASA’s Commercial Crew Development (CCDev) program, the answer is quite simple: Commercial crew is a procurement practice. Specifically, a “commercial” procurement uses Space Act Agreements instead of the Federal Acquisition Regulation (FAR), operates on a fixed-price milestone basis instead of traditional cost-plus contracts and requires private sector investment so the companies have skin in the game.

This procurement strategy has been successfully implemented via the Commercial Orbital Transportation Services (COTS) program and the first two rounds of CCDev. In spite of how well this approach has worked and the inherent advantages to both participating companies and the taxpayer, it appears that NASA is on the verge of eliminating one of the key pillars that commercial space has been built upon, the Space Act Agreement.

For those unfamiliar with Space Act Agreements, this powerful legal vehicle basically allows NASA to take a clean-sheet approach to contracting with a potential commercial crew provider, avoiding the thousands of pages of dense regulations that come with a traditional FAR Part 35 contract. Even Congress recognized that it would be impossible to conduct low-cost innovative development and demonstration programs under the FAR, which is why NASA was granted broad authority to enter into Space Act Agreements.

The advantages of Space Act Agreements are many and varied. For example, in acknowledgement of private sector investment and the desire to create private sector capabilities, under a Space Act Agreement, participating companies are allowed to retain their intellectual property rights, preventing those properties from being handed over entirely to the government and potentially shared with competing corporations. This protection of proprietary intellectual property is critical for any company to invest its own dollars in such an effort.

Moreover, the question of control is a vital part of this debate. The inherent flexibility of Space Act Agreements provides a framework under which design decisions are made by the private sector company rather than being dictated by government overseers. The ability of commercial crew providers to make design decisions is at the very heart of what the commercial crew program is, since it frees companies from constant government change requests and thereby provides relief from what would otherwise be numerous layers of bureaucracy, which slows progress and raises costs.

In stark contrast to Space Act Agreements, the FAR is all about government control and requirements. The FAR is the literal embodiment of government regulations, and the adoption of a FAR-based approach would represent a fundamental shift in the balance of power away from commercial crew providers and back to NASA. This shift would alter the very nature of the commercial crew program in a fundamental and eventually fatal way.

Of equal or greater importance, the FAR costs money — lots of money — to implement. Even supporters of the FAR-based approach would acknowledge that implementing the FAR would mean a lot more red tape, which would require shifting funding away from engineers and hardware development in favor of accountants, auditors and attorneys to verify that the FAR’s numerous and voluminous legal requirements have been adhered to, not only by participating commercial crew providers but by all of their subcontractors as well. For those who believe that we should spend more money on lawyers and less on launches, by all means, adopt the FAR. For those who are actually interested in success, I would argue that at a time when the commercial crew budget is already cut to a bare minimum, we can ill afford to spend more of our scant funds on bureaucracy.

Due to the problematic nature of the FAR (and there are many other challenges raised by the FAR that, in the interests of time and space, I have not addressed), after receiving feedback from industry, NASA acknowledged that at the very least a “hybrid” approach would have to be adopted, wherein the FAR’s Cost Accounting Standards would be removed or revised in a future contract. While we appreciate the commercial crew office’s attempt to address industry’s concerns, I fear that it is a gross oversimplification to single out the Cost Accounting Standards and expect to succeed with the FAR, even if Cost Accounting Standards and intellectual property issues are resolved. The FAR is simply too long, too dense and too complex for all of its shortcomings to be rectified. This is why NASA was given the authority to enter into Space Act Agreements in the first place. Just identifying all of the ways that the FAR will impact CCDev would be difficult, and gaining legal permission to alter them all would be nearly impossible. Conversely, virtually anything from the FAR could be added to a Space Act Agreement without importing thousands of pages of irrelevant clauses that will create potentially dire unintended consequences.

To be clear, commercial crew providers arguing against the FAR are not zealots supporting Space Act Agreements out of ignorance or irrational bias. We at Bigelow Aerospace certainly believe that there is a time and place for the FAR, and that time and place is when development and demonstration are complete. For example, we would wholeheartedly support a FAR Part 12 approach, which, unfortunately, I don’t see as viable here since commercial crew systems are still in the development phase. Bigelow Aerospace would also vigorously support a bifurcated strategy under which development and demonstration would be performed via Space Act Agreement and the procurement under the FAR. Any experienced program manager would tell you that such an approach has great merit, since the character and pricing of a development program are very different from a procurement program. I strongly recommend that NASA take a second look at such an approach, particularly since it has worked so well for COTS and the Commercial Resupply Services programs.

It’s also important for the space community to be aware that representatives of Bigelow Aerospace and other commercial space companies have discussed these substantive objections to the FAR with NASA officials and attorneys, and the push-back that we have heard time and time again is that NASA cannot levy requirements via a Space Act Agreement, a contention that we fundamentally disagree with. As a humanitarian, I will not recount the full legal argument here, but suffice it to say that the Government Accountability Office’s (GAO) Rocket-plane Kistler decision supports the contention that so long as NASA’s stated programmatic goal is to develop a private sector capability, Space Act Agreements can be utilized for commercial crew. An informal discussion I had with a GAO attorney has bolstered my belief in this position. Additionally, NASA’s Office of Inspector General described a strategy wherein the agency could provide requirements to commercial crew providers that technically would not be mandatory but that any organization that wished to be eligible for future NASA service procurements would have to abide by. Both the GAO and the NASA Office of Inspector General appear to believe that the third round of CCDev could take place under a Space Act Agreement-based approach, which is why NASA’s continued movement toward the FAR has justifiably led to frustration and cynicism among key CCDev participants.

Ultimately, Bigelow Aerospace’s concern is the development of a domestic crew transportation system that can service both NASA and our own needs. As evidenced by the fact that knowledge of Cyrillic is now a necessary part of being a NASA astronaut, the old way of doing business has already failed. NASA cannot return to a traditional approach and expect anything but the traditional result, which for the past two decades has been a failure to produce a replacement for the space shuttle and bloated, broken budgets. For all of these reasons, I urge anyone, inside or outside of NASA, who wants to see America again fly its own astronauts to vigorously support the continued use of Space Act Agreements for CCDev.

 

Mike N. Gold is director of Washington operations and business growth for Bigelow Aerospace.