NASA Anchor Tenancy Change Encourages Commercial Space Backers

by

SAN FRANCISCO — NASA’s plan to modify contracting rules to clear the way for the space agency to serve as the first and primary customer for new commercial ventures has heartened commercial space proponents and elicited widespread curiosity.

In a notice published May 25 in the Federal Register, NASA announced plans to revise the space agency’s supplement to the Federal Acquisition Regulation (FAR) to make it clear that NASA can enter into multiyear contracts to serve as the anchor tenant for commercial space ventures. It defines anchor tenancy as “an arrangement in which the United States Government agrees to procure sufficient quantities of a commercial space product or service needed to meet Government mission requirements so that a commercial venture is made viable.”

While many commercial space entrepreneurs welcome the proposed revision as a sign that NASA leaders want to support fledgling enterprises, no one could figure out what prompted the proposed regulatory change. Speculation, however, was widespread. Are NASA officials seeking to shore up regulations to protect the space agency’s plan to serve as the anchor tenant for launch providers developing cargo and crew capsules to serve the international space station? Or is the move designed to pave the way for future projects, such as the creation of space-based fuel depots?

NASA’s point person for the proposed rule, procurement analyst Leigh Pomponio, declined to discuss the matter. “Generally, when a proposed rule has been published, it is inappropriate to give out additional information in a forum other than a public meeting, so to ensure that all members of the public have the same opportunity to hear the information,” she said in a May 31 email to Space News.

Pomponio simply pointed to the Federal Register Notice, which states that NASA is issuing the rule to remove an incorrect statement in the space agency’s FAR supplement that said NASA was prohibited from entering into anchor tenancy contracts. “A recent legal analysis indicates that NASA does have authority to enter into anchor tenancy contracts,” Pomponio said. “Inasmuch as we want to ensure that our procurement regulations are as flexible as possible, we are anxious to include the option for use of anchor tenancy arrangements. The rule should not be considered an indication that NASA has plans to issue anchor tenancy contracts. It is also noted that the final rule may differ from the proposed rule as a result of public comments.”

The subject of anchor tenancy, a term generally applied to real estate, was first used with respect to NASA during the 1980s when Space Industries Inc. of Houston proposed the development of a commercial microgravity research and manufacturing facility, according to James Muncy, president of PoliSpace, an independent consulting firm in Alexandria, Va. Although some NASA officials initially were supportive of the idea, that backing waned when Space Industries failed to attract commercial customers and began looking to NASA for long-term financial support. “When Space Station Freedom got into trouble in 1987-1988, some in government proposed tossing out NASA’s program and replacing it with a lease of the Space Industries facility,” Muncy said. That proposal, described as an anchor tenancy, led to congressional legislation passed in 1991 and regulations explicitly prohibiting that type of arrangement.

One year later, however, the NASA Authorization Act of 1992 explicitly authorized multiyear anchor tenancy contracts. “Apparently, NASA is finally getting around to changing the FAR Supplement,” Muncy said.

Still, the timing of the proposed regulatory change has some space industry officials wondering if some NASA officials are seeking to protect commercial crew and cargo transportation projects from additional attacks. In a May 26 hearing before the House Science, Space and Technology space and aeronautics subcommittee, some lawmakers criticized NASA’s plan to rely on commercial space companies to ferry cargo to the international space station. That criticism has been repeated frequently by other lawmakers who opposed cancellation of the Moon-bound Constellation program and are skeptical of the ability of commercial companies to safely transport astronauts and cargo to the space station.

Other space industry officials said the regulatory change could benefit companies seeking to establish orbiting fuel depots. NASA could, for example, commit to large-scale purchases of services from the private sector including propellant on orbit from a commercial fuel depot, Muncy said. With NASA as a customer, the depot builder or operator could show potential customers that the business was viable and create a market for propellant delivered to the depot, he added.

In addition, multiyear NASA contracts could help entrepreneurs seeking to establish propellant depots attract investors who often steer clear of projects that are not likely to produce revenue within three to five years, said Jonathon Goff, chief executive of Altius Space Machines, a firm based in Louisville, Colo., that is developing rendezvous and capture technology for a variety of missions including fuel depots. If entrepreneurs can show potential investors that NASA is prepared to serve as the anchor tenant for fuel depots, companies proposing those projects will have a better chance of attracting private capital, Goff said.

The revised regulations may also bring private capital to other space ventures. “NASA’s proposition of Anchor Tenant FAR regulation in commercial space contracts is another very welcome indication that NASA and the White House are serious about partnering with the private sector in space,” said Robert Richards, chief executive of Moon Express Inc., one of the teams competing for the Google Lunar X Prize, a race to send the first privately funded vehicle to the Moon. “If passed, this will further encourage private investment, leading to new, competitive, job-creating opportunities in the U.S. commercial space industry.”