WASHINGTON — As NASA devises its strategy for fostering development of a commercial successor to the space shuttle, the nation’s primary rocket builder is cautioning the agency not to count on industry for a substantial upfront investment in an endeavor rife with uncertainty.
“Not surprisingly, we are a little reluctant to commit,” Andrew Aldrin, director of business development for Denver-based United Launch Alliance (ULA), said during a March 30 event here sponsored by the Marshall Institute. “But this wasn’t always the case. Just remember, it was about 10 years ago that we invested billions in EELV (Evolved Expendable Launch Vehicle) systems for a [satellite launch] market that frankly looked much more solid than the [human spaceflight] market we are looking at today.”
The Atlas 5 and Delta 4 rockets ULA operates primarily for the Pentagon and NASA were developed by Lockheed Martin and Boeing, respectively, under separate EELV cost-sharing deals with the U.S. Air Force. The companies invested heavily in their competing vehicles in anticipation of a robust market for launching commercial telecommunications satellites that failed to materialize, setting the stage for the 2005 formation of ULA — a Boeing-Lockheed joint venture that today depends on hundreds of millions of dollars in Air Force sustainment funding to keep its doors open.
Aldrin said the decisions NASA makes in the coming months will determine whether the agency’s new human spaceflight strategy succeeds or fails.
“I think we can make commercial crew work, I think we can do it in such a way that we build a robust industrial base, and I think we can do it saving the taxpayers a lot of money. But it’s a program that’s got a lot of risk, and a lot of that risk is really embodied in how you define commercial and what the actual details are of an acquisition strategy,” Aldrin said. “Let me be clear, this is a great program, but we are certainly capable, as we’ve demonstrated in the past, of screwing this up.”
NASA’s 2011 budget proposal, in addition to canceling the agency’s 5-year-old, Moon-bound Constellation program, calls for spending $6 billion over the next five years to spur private development of spacecraft for transporting astronauts to and from the international space station.
Although NASA is still devising its acquisition strategy, NASA officials are pointing to the agency’s Commercial Orbital Transportation Services (COTS) program — under which NASA is subsidizing development of two competing space station resupply vehicles — as a model.
“The idea is to do something very similar to what we did for cargo, which is initially probably a Space Act Agreement-like approach for development of new commercial crew capabilities” followed by “a service-purchase approach once we get a little farther down the road on the development,” Laurie Leshin, NASA deputy associate administrator for exploration systems, said during the Marshall Institute event.
Space Exploration Technologies Corp. (SpaceX) of Hawthorne, Calif., developed its Dragon cargo capsule and Falcon 9 launcher in part with $278 million in NASA COTS funding. The company is preparing for a series of test flights that, if successful, will pave the way for cargo deliveries to the space station using Dragon starting in 2011 under a separate, $1.6 billion Cargo Resupply Services contract with NASA.
Ken Bowersox , SpaceX vice president of astronaut safety and mission assurance, said SpaceX is willing to take a COTS-like approach to developing crew-capable versions of the Dragon and Falcon 9.
“The model I believe makes sense is to start with a Space Act Agreement-type arrangement where the company contributes some funding and the government contributes partial funding and sets the high-level requirements,” Bowersox said during the Marshall Institute event. “You have a small team from the government that’s overseeing the development effort and then as that development effort sort of reaches a critical mass then you let a bigger contract.”
ULA, which operates the only proven U.S. launchers capable of delivering crew capsules to orbit, is positioning itself as merchant supplier in NASA’s emerging human spaceflight program. ULA is offering the Atlas 5 to multiple companies eager to meet NASA’s crew transportation needs, including Houston-based Boeing Space Exploration and Littleton, Colo.-based Sierra Nevada Space Systems.
“At the end of the day we’re going to have to work with a variety of contracting mechanisms and we are going to support any prime contractors however we can,” Aldrin told Space News in an interview.
But as Aldrin sees it, there is little demand outside NASA for launching humans into space, even at the $20 million-per-seat price SpaceX is promising.
An often-cited 2002 study by the Bethesda, Md., consulting firm Futron Corp. forecasts that by 2020, orbital space tourism will be a $300 million market. In comparison, the U.S. government’s annual space spending exceeds $60 billion, about a tenth of which goes for human spaceflight.
“It’s good stuff, perhaps a reasonable and useful market,” Aldrin said of the prospect of launching private citizens into space. “But it’s not the second coming of the Internet. It’s not going to really reshape what we do.”
ULA’s primary business is delivering the nation’s national security and scientific spacecraft safely into orbit.
Aldrin said ULA is ready and willing to do the same for NASA astronauts. But without an acquisition strategy that appropriately distributes risk between industry and government, NASA’s commercial crew initiative could easily fail, he said.
“Quite simply, the downside of this is there’s real risk that commercial providers aren’t going to actually meet the objectives and provide systems in anything like a timely fashion,” Aldrin said at the Marshall Institute event. “Look at the structure that NASA is suggesting — Space Act Agreements, fixed-price contracts — there’s a lot of risk there. This in fact looks a lot like the contract structure those of us in the launch business dealt with in the early EELV program. And it’s only seven years ago that we came … close to exiting the business.
“What you have to wonder is whether companies in the commercial space business are going to retain the same commitment. Because the truth is, Boeing and Lockheed stuck this out at least in part because they had another $20 billion or so in business with the Pentagon. … I think the risk of exit here is a serious one.”
Aldrin questioned NASA’s intent to ask industry for fixed-price development contracts and substantial corporate investment.
“In the commercial world, industry pays everything up front. With market certainty I think we could get comfortable with that. But we’ve got to be honest, this is NASA,” he said, citing several major NASA initiatives that were abandoned after hundreds of millions if not billions of dollars of taxpayer investment: the X-33 and X-34 experimental rockets, the National Aerospace Plane, the Space Launch Initiative, the Jupiter Icy Moons Orbiter, Orbital Space Plane “and now maybe Constellation. The record of actually getting programs to flight isn’t high, so it would be awfully difficult to ask industry to put up hundreds of millions of dollars of investment for a program that may not fly.”
Aldrin said if industry is asked to develop a commercial crew system under a fixed-price contract, prudent companies will build in big reserves to guard against losing money on the deal, while others might underbid the job in hopes of securing the win. “Here you have an interesting situation — competitive environment and fixed-price development contract. Trust me on this, the management reserve in these bids is going to overwhelm the differences in cost efficiencies or design efficiencies,” he said. “So you will end up with the lowest-cost provider, or the choice based in large part on which company decided to risk more. And I’m not sure that’s the way we want to choose the next provider of human spaceflight systems.”
Aldrin said the more appropriate time for fixed-price contracting is once the vehicle has entered service, not during its development. “That may be the real answer of what is commercial — fixed price during the operations stage once you have stable requirements,” he said.
Jim Muncy, an Alexandria, Va.-based consultant and a longtime commercial space advocate, said at least one major prime contractor believes it can build a space capsule for NASA at a fixed price. Whether that approach succeeds will depend largely on NASA, he said.
“Commercial is not just about how you buy, it’s about what you buy,” Muncy said. “NASA cannot buy the perfect system in a commercial fashion. It cannot decide what it wants as it goes along. … NASA needs to decide up front what it needs to have, what it really needs to have — no kidding, needs to have — and spell it out.”
Aldrin said expecting NASA to set indelible requirements for an astronaut launching system might be asking too much.
“This is going to be a very different way of doing business for NASA,” Aldrin said. “Let’s be honest, [NASA] in the human spaceflight business is accustomed to being involved in everything, and stepping back from that isn’t going to be a trivial change in the way they do business.”
Kent Rominger, a former space shuttle astronaut now with Alliant Techsystems of Minneapolis, said the space shuttle solid-rocket boosters his employer builds for NASA must meet some 32,000 individual requirements spelled out in 110 separate documents totaling 17,000 pages.
“That’s awfully difficult to codify anything like that in a fixed price contract,” Aldrin said.
“I don’t think you get to have 32,000 requirements in a commercial program,” Muncy said. “They have to be functional requirements more than design requirements. That may be tough.”
ULA, SpaceX, Boeing, Sierra Nevada and others expect to get a clearer idea of NASA’s commercial crew approach when the agency releases its human-rating requirements and concept of operations later this year.
An early draft is expected to go to industry for comment as soon as this month but no later than June, Mike Hecker, a NASA official involved in the planning, told the NASA Advisory Council’s commercial space committee during its March 30 meeting here.
“We don’t want to dictate to industry how to build a solution … We are staying true to the idea that we are going to keep this at a top level — only specify what’s necessary,” Hecker said, before adding, “That’s truly a challenge for an agency full of engineers.”