A number of commentaries are beginning to appear in space industry media relative to both the content and tone of the recently released National Space Policy. Most view the policy as “released under the radar screen, and for the most part containing nothing new.” I disagree with the view that it contains “nothing new.” In my view the Commercial Space Goals and Guidelines embodied in the new policy are significantly strengthened over the previous 1996 policy. If these guidelines are turned into agency policies and practice, history could very well view the 2006 National Space Policy as the one that opened the space frontier to the commercial development of space.
In particular, the essence of the commercial guidelines in the new policy is that the government shall use commercial products and services to meet their space program requirements first, not as a last resort. This policy coupled with the long-term commitment the government has made to space programs through the Vision for Space Exploration provide a unique opportunity to leverage private investment to meet government program needs as well as accelerate the opening up of the commercial space marketplace.
NASA Administrator Mike Griffin in his Oct. 20 speech at the X Prize Cup Summit called for NASA to continue beyond the Commercial Orbital Transportation Services initiative to partner with the commercial and entrepreneurial space sector in carrying out the Vision for Space Exploration. At the same time — and correctly — the administrator reminded everyone that shared risk and having skin in the game was the essence of a commercial partnership. To this I would add, based on my experience at Universal Space Network, the model for a successful commercial-based service provider is one of private investment to build the capability to offer cost-effective services from an infrastructure shared by multiple users and sold on a fee-for-service basis — clearly a model in which the private sector has skin in the game.
The success of the fee-for-service shared infrastructure business model requires the customer base to be broader than one program or one government agency. In the best case it should include commercial and international customers. Government programs are currently the major but not the sole potential market of space services. Given the size of the government market, private investment in space operations services and products will increase dramatically only when agencies demonstrate a commitment to the commercial goals of the new space policy.
The challenge is two fold. The first is to convince skeptical private-equity investors that the government is serious and committed beyond the current administration to continue the currently funded space programs and the use of commercial services. The second is to convince the equally skeptical government managers that industry can reliably deliver the goods and services they need outside of the traditional government contracting and ownership model.
In addition the transition to contracting structures and oversight policies conducive to procuring commercial services that are currently acquired as cost-plus services will require a culture change within both the government and industry. The skepticism of both the commercial investment community and the government managers are well warranted. The obstacles, however, are not insurmountable. Given the commercial space goals of the new space policy, a joint commitment by the government and industry to develop a partnership can succeed with a win-win outcome.
The private sector has long recognized that government programs and commitments to acquire products and services are dependent on administration and congressional priorities that can change with the national agenda. Unlike traditional government contracts where the government takes most of the financial risks, the financial risk for commercially provided products and services is assumed largely by the private sector. As the commercial space industry matures, the broader customer base will make the inherent instability in the government market place less of a concern for private investors. However, in the near term, a consistent practice by agencies of looking to commercial services as the first choice as laid out in the new space policy is critical. This will reduce the level of instability in the government marketplace and thereby encourage the private sector to accept the investment risk in commercial space services infrastructure.
Congress also plays a role in increasing private investment community confidence that the government is serious about the use of commercial services. As one example, congressional oversight committees are ideally positioned to hold agencies accountable for ensuring they have no other alternative before authorizing expenditures for new or upgrades to existing government-owned space operations infrastructure.
So my answer is yes, the 2006 National Space Policy can make a difference. The implications of Commercial Goals and Guidelines in this policy could serve as a catalyst for a significant increase in private-equity investment into an expanded set of commercially available space services. However it will only happen if — and only if — NASA, the Defense Department , the National Oceanic and Atmospheric Administration (NOAA) and Congress reduce it to practice. Commercial services can provide significant cost benefit for both the government and commercial space activities, and as a result accelerate the growth of in-space commercial activities.
Clearly the impact of the 2006 National Space Policy will be determined by the visible and consistent actions the Pentagon , NOAA and NASA take in turning these guidelines into agency policy, and perhaps more importantly, the routine practice of looking to commercial services as the first source to meet their program needs.
Joe Rothenberg is president of Universal Space Network.
