Letter: Old Model Doesn’t Apply To SpaceX’s Expenditures

by

I am writing to correct the record on the cost of development of the Falcon 9 launch vehicle and Dragon spacecraft. In a letter printed on Jan. 24 [“Understating the Cost of SpaceX’s Success,” page 18], Joseph W. Hamaker, a senior cost analyst for SAIC, makes erroneous guesses about Space Exploration Technologies Corp. (SpaceX) expenditures to date, and concludes that “playing with these numbers and being as optimistic as I dare results in costs of well over $1 billion for Falcon 9/Dragon — probably more like $1.5 billion.”

He is unequivocally wrong. Mr. Hamaker’s error is his assumption that SpaceX’s employee count, currently over 1,000, has remained constant over time. This is a mistake given that we were founded eight-and-a-half years ago and have only recently passed 1,000 employees.

The cost of developing Falcon 9 and Dragon was approximately $600 million — including the demo flights. Total company expenditures since being founded in 2002 are less than $800 million, which includes all development costs for the Falcon 1, Falcon 9 and Dragon, as well as building launch sites at Vandenberg, Cape Canaveral and Kwajalein. That $800 million figure also includes five flights of Falcon 1 in addition to the two flights of Falcon 9 and one flight of Dragon.

Falcon 9 was developed from a blank sheet to first launch in four years and seven months for just over $300 million. It is worth noting that Falcon 9 is an EELV (Evolved Expendable Launch Vehicle) class vehicle that generates roughly 1 million pounds of thrust (four times the maximum thrust of a Boeing 747) and carries more payload to orbit than a Delta 4 Medium. The Falcon 9/Dragon system — with the addition of a launch escape system, seats and upgraded life support — will carry seven astronauts to orbit, more than double the capacity of the Russian Soyuz.

We understand these numbers break the NASA/Air Force Cost Model (NAFCOM) predictions developed by SAIC, but they are objectively true and clearly demonstrate the potential of competitive commercial spaceflight. Based on SpaceX’s proven track record in scaling tenfold in thrust from Falcon 1 to Falcon 9, we are confident we can scale tenfold again and develop a heavy-lift launch vehicle with a 150 metric ton to orbit capability.

We can do so for no more than $2.5 billion, within five years, on a firm, fixed price basis with payment made only on achieving hardware milestones. If SpaceX fails to achieve progress, the contract can be canceled and the remaining milestone payments applied elsewhere, as occurred with Rocketplane Kistler in the NASA cargo Commercial Orbital Transportation Services program.

We are confident because our predictions are based on the reality of SpaceX’s execution, not outdated information from last century’s cost-plus contracts.

 

Gwynne Shotwell

President, SpaceX