Senate Appropriations Hearing on National Security Space Launch Program
GAO: National Defense: Air Force’s Evolved Expendable Launch Vehicle Competitive Procurement
“If DOD requires all offers to contain both fixed-price and cost-reimbursement features for launch services and capability, respectively, similar to the way it currently contracts with ULA, there could be benefits to DOD and ULA, but potential burdens to new entrants. Alternatively, if DOD implements a fixed-price commercial approach to launch proposals, DOD could lose insight into contractor cost or pricing. DOD could also require a combination of elements from each of these approaches, or develop new contract requirements for this competition.”
GAO: Evolved Expendable Launch Vehicle: Introducing Competition into National Security Space Launch Acquisitions
“In December 2013, DOD signed a contract modification with ULA, committing the government to buy 35 launch vehicle booster cores over a 5-year period, and the associated capability to launch them. The new contract represents significant effort on the part of DOD to negotiate better launch prices through its improved knowledge of contractor costs, and DOD officials expect the new contract to realize significant savings, primarily through stable unit pricing for all launch vehicles. DOD is also leading a broader competition for up to 14 additional launches, expected to begin in fiscal year 2015.”
Testimony of Elon Musk, Hearing on National Security Space Launch Programs
“Recently, some have claimed that the Air Force’s block buy of 36 booster cores from the incumbent will save the taxpayer “$4.4 billion over the next several years.” Any “savings” resulting from a block buy of 36 rocket cores from the incumbent provider are derived directly from a 50 percent year-over-year budget projection increase in FY2012, which was purposefully based on worst-case assumptions for a single- Launch buy, and acknowledged at the time by the incumbent as being inflated.5 If SpaceX had contracted for these missions, using the same baseline, we would have saved the taxpayer a total of $11.6 billion.”
Testimony of Michael C. Gass, Hearing on National Security Space Launch Programs
“ULA was formed to enable assured access to space with two separate launch systems, with recognition the that market demand was insufficient to sustain two competitors. We went from two competing teams with redundant and underutilized infrastructure to one team that has delivered the expected savings of this consolidation.”
Testimony of Scott Pace, Hearing on National Security Space Launch Programs
Webcast
Hearing Summary: EELV costs under ULA up 166%, ULA leery of competition, SpaceX eager for competition.
— NASA Watch (@NASAWatch) March 5, 2014
The Senate Appropriations Space Launch Hearing saw Sen. Shelby arguing for the United Launch Alliance monopoly against SpaceX channeling 1947’s Sen. Brewster protecting encumbent PanAm against entrant TWA.
Musk: Delta and Falcon forward, phase out Atlas.
ULA/Congress: Not enough commercial business to support the industry–national interests at stake. We need business and flight rate to keep costs down!
NASA: we are building are own HUGE launch vehicle even though the world has excess capacity and we do not need a vehicle greater than 20 mT but its mandated to be 70 and 130 mT.
Congress: ULA and SpaceX are great at reliability.
NASA: We need cadence to make HLV reliable too, and this is very
troublesome. We also need budget for mission hardware–more
importantly, we need dollars for critical technology including both cryo
storage and EP.
Congress: How do we ensure the capacity and capability remains during downturn in budgets and lack of demand?
Musk: Fixed price on vehicles, Cost plus fee on mission unique elements.
NASA: 70% of our mission mass is propellant, while EP would help reduce this mass. Regardless of the LV we need propellant and hardware delivered cheaply to LEO. Our mission mass to LEO ranges from 100 to 450 mT. If the proper technology was put in place this would allow the mass to be launched in different FYs, giving the program managers tremendous, unheard of, flexibility in cost and schedule.
Congress/Wolf: What are the incremental stepping stones NASA needs to take to travel to Mars?
Suggestion: NASA builds a depot in LEO with Zero Boiloff and an L2 Gateway based on a DSH that would eventually travel to Mars, and incrementally demonstrates all the equipment for the long term ~ one year trip. L2 serves at the gateway to all destinations and missions: Mars, its moons, asteroids, lunar surface. The LEO depot opens up R&D so advanced concepts can deliver something of value (dirt cheap-propellant) in their development cycles.
Both the science and HSF missions are thrilled, as propellant can be offloaded to provide mass margin reducing development risks for their missions in the gas n go architecture. When the military has excess launch capacity, then the depot or ISS can be supplied. Commercial Crew and Cargo is incorporated into the long term plan. Even better, IPs can provide propellant and help reduce their LV costs.
This Senate hearing on commercial DOD launch contracts had a good set of question and answers. But first, ULA provided an excellent presenter and a refined opening statement through their CEO, Michael Gass. These big contractors have so much talent and experience within their ranks including management. Gass (Lockmart & Boeing) sounded a lot more polished than Elon Musk’s opening statement. In the future, Elon needs to send someone more suited for such a presentation. His delivery is a bit hesitant and he missed a few key opportunities to counter-punch the LockMart (ULA) chief. MP3 of the Q&A section: https://www.dropbox.com/s/d…
The key points of contention were launch reliability and cost. ULA drove home reliability of Atlas and Delta and gave arguments of essentially – you get what you pay for; reliability has its costs. SpaceX (Musk) emphasized the excessive and rising costs resulting from lack of competition, low cost of Falcons, downplayed ULA’s “perfect record” of 68 launches while emphasizing their record. ULA does not have a perfect record as they claimed; 2 failures. SpaceX had a failure in relighting their Falcon upper stage for a secondary payload and Musk made light of this, that the secondary payload was not part of the success criteria. Someone might correct me but I thought that the circumstance was that, yes, it did fail to relight but SpaceX wanted to fire the stage again to make the orbital correction but was denied the opportunity by the customer. Also, Musk argued that the choices should not be considered three – Atlas, Delta and Falcon but rather two, that because of the risk of Russians cutting off supply of the RD-180 engine for Atlas V, it should be retired in favor of Delta IV. ULA stated they have a two year stockpile of engines but Musk should have countered that it is unlikely that ULA (LockMart) could provide an alternative engine within two years; at what extra cost and reliability would have to be re-validated.
The government GAO rep, Cristina Chaplain, gave a very good opening statement as did Scott Pace from GWU. Pace gave grounds that supported both sides claims and he helped clarify points of contention. The key question for the legislators is whether adding additional launch suppliers will impact reliability negatively and overall raise the cost. Pace mentioned that every Falcon 9 launch proves 10 engines whereas ULA’s launches are using 2 or 3 at a time, which was something Muck should have emphasized himself. Furthermore, Musk failed to emphasize that future reuse of the first stages will provide valuable engineering analysis that will also accelerate SpaceX level of reliability. Also, Musk did not emphasize that Falcons are very competitive in the international market whereas ULA EELVs are no longer due to their non-competitive cost. With the demand in the private sector, SpaceX will be able to hold down costs while ULA’s EELVs, due to cost, have only the DOD and NASA as customers. Their use by NASA will likely be eroded away by the selection of the lower cost Falcons. ULA’s Gass tried to cry foul that SpaceX has an unfair advantage in taking NASA payload and astronauts to LEO (spec. ISS). That boils down to SpaceX’s lower cost and as successful launches continue to mount and costs remain low or lower, ULA’s argument of trade-off between reliability and cost will disappear.
In my opinion, at this point, the US government would be extremely foolish to not accept Falcon as an equal player for DOD launches. They have provided sufficient proof of reliability and when weighed with the cost savings, there should be a fair competition and SpaceX should begin receiving some of the DOD launch manifest. However, it would be foolhardy to hand the majority of the manifest to SpaceX based solely on low cost. Given some DOD launches, SpaceX will have a chance to continue proving their Falcons and also their overall operations. Reliability and proof of low cost will be confirmed or not. There are certainly some critical DOD payloads that should be launched on the more proven Atlas V or Delta IV, the latter with considerably less record. However, SpaceX, having real private launch demand, ULA not, plus more of NASA’s, will quickly show proof of reliability and low cost and given some DOD work, will prove their teams ability to process payloads also reliably and inexpensively.
I didn’t catch the webcast, but assuming this is a reference to the CRS-1/Orbcomm flight, the second stage didn’t fail to relight; NASA prohibited them from trying. Because of the first stage engine-out, they burned more on the first stage than expected to compensate. The resulting trajectory was outside NASA’s safety margins for assuring that relighting the second stage would get the Orbcomm satellite above ISS at a safe distance. (NASA wanted 99%, SpaceX said it’d be 95%)
However, the first time SpaceX did actually attempt a relight on the second stage (the CASSIOPE launch), that failed. But that was essentially an in-house test having nothing to do with customer payloads (all payloads were deployed beforehand). They identified the problem and the relight worked for both GTO satellites afterwards.
Listened to the Q&A, and while the Senator was referring to CRS-1/Orbcomm (He stated October 2012) Musk’s response described the CASSIOPE flight.
Interestingly, Orbcomm both filed a total loss insurance claim and publicly stated that they received good data from the prototype satellite, even in its degraded orbit. So by Mr. Glass’s criteria (“A mission is successful when the customer says it is”) I’m not sure if it’s a failure or not. They were clearly satisfied with the data from the flight, since they didn’t do another prototype launch, and they recouped nearly all their expenses by claiming it a failure. Nicely played. http://www.spaceflightnow.c…
That was a cool hearing. Two CEOs duking it out. Atmosphere was tense. Only Pace from GW expressing his input with ease of an expert scholarly type. The Senators clearly showed their favoritism in the choice of questions. The bald guy with northeastern accent against a bohemian type from you name it. The former out to KO the younger guy. The latter more ready to let actions reveal and speak for his words. Maybe a little exaggerated except maybe the hair part.
Thanks for clearly that up.
Any airline likes how they can play Boeing off against Airbus when purchasing airplanes.
While the big picture says to make sure there are always two players, and never squeeze so tight that a monopoly outcome occurs, there is a glaring false equivalency here between ULA and Space X arguments.
ULA management (and many in the Air Force too) do not want to compete, period. That much is clear. Under any circumstances. Cost plus, fixed price, part this, part that, requirement for readiness, all requirements the same, level playing field, etc. No competition please! What part of “no” is unclear?
Space X DOES want to put it all out there and compete on merits.
So any discussion or arguing on this topic is essentially between those who think the debate is useful, to decide what’s right, by people who will take in new information, learn and change, vs. others (like in ULA) for whom debate as an inconvenient hoop to jump through and use to help AVOID the impact of new information, change and learning.
ULA CEO Mass stated during the hearing that they found the Russian technology (RD-180) to simply be superior and unique and that the USA had failed to develop new engine technology for a long time and lagged. Guess what one big reason for this lag – lack of competition in the launch sector to drive innovation. It took an outsider to bring disruptive tech.
There was questions raised to the viability of two suppliers rather than one and they seem to call it three – Atlas and Delta suddenly not being part of one corporation. So they questioned the viability due to the volatility of the private market for LVs. This would support a conclusion that competition for the DOD launches would undermine the financial health of both suppliers. SpaceX in the private arena has a very good outlook and the private sector demand is likely to only rise as new private activity in space develop. It is really the viability of Atlas and Delta EELVs that worry the legislators because both are too costly for the private market.
Its insane if they continue with single source. They got away with the bulk buy of ULA EELVs in the neck of time, before SpaceX is ready to compete. The savings to the government in the bulk buy can be attributed to the pressure of an arriving competitor. SpaceX needs to be awarded launches, determine reliability and performance, weigh it all and go forward. There is pettiness in ULA – LM and Boeing, no willingness to compete and match cost-performance-reliability with SpaceX. While the present equation might make them equivalent or even ULA superior, it won’t last long and ULA needs to invest in new tech. Doesn’t this sound like the right way to do business and the US government to be part of.
Just so. One would think the right wingers- those who attend the Church of the Free Market- would be screaming ‘let the market decide!’
Right on. Its unfortunate that what you see in Dennis’ article, in Nasawatch blog posts and the discussion it generates revolves too much around politics. That is how it is. NASA dysfunction has a lot to do with Washington’s dysfunction. Sure NASA has internal problems with management that contributed (much/primarily) to loss of crew and vehicles.
Just so we are clear spacex isn’t bringing any new tech to the table at all. It’s small wonder musk only wants to compete with div and definitely not with atlas. How reliable is falcon? If atlAs is scheduled to fly on any given day the odds are unity that it will fly unless spacecraft or weather stop it. Falcon can’t say that within 50%. Ula/AjR don’t fear competing with spacex as long as they are held to identical oversight and scrutiny. And the burden it causes. And if that’s confusing your an observer/cheerleader not a player
I think there is a need for more than one domestic launch system. Right now ULA has the US Government by the neck, that is going to change. I am not sure how many launchers we can support domestically, but it makes no sense for the Taxpayers to be “giving” almost $1B to support ULA when the other guys are writing their own checks. Hopefully this will all play out and market forces will determine who the winners and losers are
Veeger.
The whole ELC subsidy argument has always been a red herring.
The $1B “given” to ULA pays for the manpower and infrastructure to do a mission, from early integration, transportation, infrastructure, engineering, operations, and post-flight. As discussed in the hearing, this contract provides the government with flexibility to make the inevitable adjustments to launch queue because of satellite delays and changing priorities, and also ensures readiness even if the system is not being used to capacity. SpaceX has to do all these same things. The argument is fundamentally over contracting approach, not content.
Current contacting approach: pay a capabilities contract under cost plus terms (audited to ensure charges are appropriate) which allows the government great flexibility to make adjustments and ensure readiness.
Alternative approach: purchase launch services on fixed price contracts. However, every time the customer–government or commercial– wants to change launch date or adjust something, the customer receives a proposal change request, with a cost increase. This in turn starts a negotiation and paper process that costs additional money and slows things down. (also, bidding on a fixed price generally drives the offeror to increase bid price to cover the increased rick it’s taking).
While the fixed price approach may seem attractive at first. It quickly becomes a costly burden, especially if you’re the government and launch 6-12 times per year.
ULA and its predecessors have been around this block numerous times. It may seem counter-intuitive at first, but it’s a better way for the government to do business in space launch. SpaceX just latched onto the idea of calling it a subsidy years ago because it sounded convincing. Total red herring.
I have a different perspective. The whole point of the EELV program was to 1) share cost with commercial customers, and 2) reduce cost through competition by multiple suppliers. But Boeing had cost overruns on Delta IV and then got caught with thousands of confidential Lockheed documents and was penalized by having some of the launches they had won taken away. They were losing money and forced to merge with Lockheed basically in charge.
As soon as ULA was formed they had a choice; keep competing in the cost-sensitive commercial market or concentrate on the US Government market, on which they now had a monopoly and could charge whatever they wanted, since their “customer” was well financed and had no choice. Naturally they did the latter and prices skyrocketed. Of course to raise prices in a government contract you have to demonstrate higher costs, but that’s easily done. One problem they had was the Delta II, which was competing too effectively with the more expensive (and profitable) Delta IV. A friend at ULA tells me how they had an O-ring which cost $200 to fabricate in-house. Management found an outside supplier that could provide it for $600. Naturally they went with the outside supplier.
Don’t get me wrong. There are a lot of really capable and experienced people at ULA who do a professional job, and I admire them. But the management would be fired by the board if they _didn’t_ inflate prices. That’s the easiest way to maximize profits if you are a monopoly supplier. That’s why ULA has no commercial contracts, and SpaceX does. If we fail to take advantage of competition, we are wasting tax dollars.
As to flexibility, if you want it you can specify it in a fixed price contract. If you know of one case where ULA has satisfied a significant change request without imposing additional charges please provide some details.
Originally (mid-90s), DoD was going to downselect to 1 provider, yes 1. But when the commercial market looked rosy because of Teledesic, and all the others, DoD decided to “ride the commercial wave” of demand and go with 2. Why not, right?. But the commercial market never materialized. 🙁 (fyi, this could also happen to SpaceX…just wait).
Second, the failures in 98-99 shocked everyone, especially the 3 Titan IV failures. :0 Major wake-up call.
After these failures, DoD could not sit on the sideline and simply be a buyer, it had to be involved. This is what drove “assured access” policies and the need for two families of vehicles. (fyi. Assured access had been discussed for years, but the failures vaulted it to front/center).
EELV was still in development (80% of development was funded by LMCO and BA, btw).
So, DoD had 3 options. 1. Pay the price to keep two suppliers minimally healthy, 2. pick one supplier and lose any semblance of assured access or 3. merge the two rockets under one roof and consolidate manufacturing, engineering, management, administrative, etc. Options #1 and #2 were not really palatable, so #3 was chosen.
On another issue you bring up, ULA cannot charge “whatever it wants.” That’s another red herring. This doesn’t mean there aren’t ways to reduce cost or that contractors don’t sometimes buy unnecessarily “gold-plated” parts. But that goes both ways (wasn’t SpaceX using cheap non-rad-hard-enough parts that resulted in some anomalies on the first ISS docking?)
You are correct, fixed-price contracts can include flexibility, but again, fixed price contracts that include uncertainty to account for flexibility will drive the bid price up. Unless, there is certainty on technical, cost, and schedule, the bid price for a fixed price contract will always be higher.
Again, it;s not about SpaceX or ULA, it;s about how best to structure the contract so the taxpayer gets best value and balance of cost and risk (not necessarily lowest price).
If ULA can’t charge “whatever it wants” please explain how the US government, with only one supplier, can bargain with them.
Commercial operators also need the best balance of cost and risk, and they have more to lose than the government. They are choosing SpaceX because right now it offers a better balance. What about the risk of Russia increasing the price of the RD-180? We have to keep track of the _total_ cost for each alternative, and it’s not always easy to tell. I actually think it would be healthy for ULA to have to think about how to reduce cost.
“A failure to reach agreement, Norman said, could raise NASA’s Atlas 5 costs by as much as $140 million per mission as ULA’s overhead costs are swept into individual launch contracts.”
http://www.spacenews.com/ar…
The “best balance” for one may not be the same as another. I believe the balance for DoD is more risk averse and they are more willing (and able) to pay to drive down that risk. Nobody wants a failure or is going to knowingly launch with a problem that could be fixed. But government and industry are not equals in terms of resources to drive that risk down.
I strongly disagree that commercial has more to lose than DoD. The argument I’ve heard put forth by some that industry would never cut a corner because they are betting their company and they’re own skin is in the game is poppy-cock. It assumes that there is perfect information about all potential failure modes and how close the margins are. But that simply isn’t the case for just about everything. The unique aspect with launch is that it is so unforgiving and the number of launches is so small that you never really fully understand all the failure modes.
There are plenty of examples of companies that have unwittingly cut the corner too close and lost, eg BP oil spill a few years ago. NASA never thought foam was a problem, etc.
Looking at the DoD side, when it’s not your personal money it’s a lot easier to spend, so you’re more willing to open the government wallet and pay for additional testing, oversight. I think this is further bolstered by the fact that DOD space systems protect lives. Is the additional expense result in higher reliability? After 68 launches, I’d have to say yes.
I agree that launch record is a valid indicator of reliability. Falcon 9 currently has 8 launches, which is good for an estimate within a few percent. It will have more shortly. Both Falcon and Atlas have good track records. The Delta IV upper stage had two failures (when it was used on the Delta III) but the problems were identified and the Delta also appears reliable.
I would say the costs and benefits of government oversight are open to debate. Shuttle and Titan IV both had intense government oversight and less-than-ideal reliability. NASA knew the foam was a problem however they had no way to correct it.
Frankly, I think you have to look more closely than simply the “mission success” record and examine the record on anomalies. ALL vehicles have anomalies, on nearly every flight. Most are very minor, some are not. Some jeopardize mission success, some don’t. But to get an accurate picture of how reliable a vehicle is you must “listen closely to what the hardware is telling you.” (to paraphrase the CAIB).
Shuttle and Titan IV days did have a lot of oversigth, though I question how uniformly good it was. My recollection is that people became complacent and schedule and cost pressure drove decisions.
On NASA and the foam. Some at NASA (and industry) knew foam was shedding, but I don’t know of anyone who thought it was possible to bust an RCC panel with foam. And it it turns out in the end, there was a way to reduce foam shedding, sadly it took an accident to bring it to everyone’s attention.
Yeah, I was astounded how little tile damage there was on the last few flights. It saved a bundle of money. The people working on the Shuttle new foam was shedding from the start, since it was the main cause of tile maintenance. But they were right that “shedding” of spray-on foam could not crack the RCC; that was the foam fairing block that came off the bipod strut.
I agree that oversight was ineffective. It still is. That’s why it’s pointless.
One launch was classed as a “partial success” Details apparently remain classified. http://www.spaceref.com/new…
“Is the additional expense result in higher reliability?” It seems unlikely, since the Titan IV and Shuttle also had intensive and costly oversight.
The Atlas V engine is a derivative of the RD-170, under development since 1976. Energomash has conducted over 1000 test firings of the RD-170 and its variants.
http://www.russianspaceweb….
So I agree experience and track record can be helpful, but in this case there was n NASA or DOD oversight.
Apparently you don’t understand how cost plus works. In general, companies do not like cost plus contracts but are forced by the government into the process. Cost plus, requires the company to turn over all financial records to the government. Furthermore, government auditors are co-located within the company and have real time access to all dealings. It is so intrusive that DCMA auditors can walk around and question any employee at any time for any reason. The government pays what they believe is the fair price of all items, sub assemblies, man hours, etc. and nothing more. The restrictions also make it impossible for any product development within a company. For example: Say the company wants to invest X dollars to develop a new gizmo which will lower the cost of all future products. In every case I have seen the government will say, you must spend your own money to develop the gizmo then you must pass on the cost savings to us in all future purchases. It gives the company no way to recoup the investment cost.
Contractors (at least the ones I’ve worked for) know how to game the system. It’s not difficult to increase costs if that is your goal. Some of the people I knew at Delta II were proud of their record at keeping cost down and really disappointed when ULA made a business decision to raise the cost of Delta II by simply not proposing it for new programs, until it could be shown to be uneconomical and government customers would have to switch to the more expensive (and more profitable) Delta IV. I think I mentioned the story of the O-ring.
The fact we are in this debate tells you it’s time for change when such dysfunction is the scenario.
Yes, ULA is basically going to always say give me $3 Billion a year, and I’ll launch about X number of launches (more or less, we’ll see) for you DoD. BTW, If I launch less, I still want the $3B ($1B ELC fixed plus $2B booked for launches per se).
There is one avenue open to the government for this scenario where ULA tries to sweep overheads around so that losing any bid just gets them the exact same total yearly amount through the other remaining work. That avenue is for the government to “deny” certain costs once billed in costs plus. For that you need very smart cost analysts working with contracting reps, lawyers and negotiators. This is what Chaplain hinted at in her testimony. This also requires cover for these people from the highest levels. They need a strong hand. They need to know their work will be supported on it’s merits, not politics.
This does however setup a conflict internal to Air Force where Air Force contracting and cost personnel start to push back on ULA, but Air Force engineering and payload personnel and those just wanting that satellite up there consider this all just a pain, and possibly distracting to the war fighting mission.
Again, such dysfunction say it all about the need for change, even if painful.
This was a great exchange I would like to see more of them. Lockheed will have to decide, break off the launch business and go after commercial customers, Boeing CST-100, Sierra Nevada Dreamchaser, Blue Origin Biconic Capsule and satellite launches or fold?
Seems Lockheed decided years ago to get out of anything commercial. Once upon a time Lockheed made airliners (L-1011). If Lockheed and Boeing as ULA has wanted to compete they could well have done so for COTS-cargo as ULA. Instead they took no-risk postures, like Planet-Space that basically proposed that if budgets were enough to pay what they normally charge for their vehicles etc. they’d be glad to take the money! Hardly “competing”, more like delusion!
ULA was prohibited from competing in
the COTS-cargo by the FTC agreement which allowed the formation of ULA. I’m guessing they would have been happy to get ~2 billion for a dozen flights to LEO.
Do you have a link to that FTC agreement that barred ULA from competing for NASA commercial cargo to the ISS?
Yes and No:
ULA is not allowed to directly sell any components or services under sections 2.08 of the Master Agreement found here.
http://www.sec.gov/Archives… without going through a “launch service provider” such as LM or Boeing to bid the contract. Furthermore under IIIB of the the FTC documents found here: http://www.ftc.gov/sites/de… the government gets final say weather ULA can bid on a contract. Now this is were the public paper stops and the hearsay starts but I was told by several people in the know that ULA was not allowed to bid because they need a launch service provider to bid on their behalf. The Master Agreement above seems to confirm.
Note:
Both LM and Boeing’s did bid using ULA launch vehicles using the EADS ATV for cargo but were not well received and it appears clear the competition was for new space market entrants only. RocketPlane Kistler, Andrews Space, Planet Space, tSpace, SpaceX all using rockets and spacecraft that only existed on paper in 2007. Nothing wrong with NASA’s strategy but you can’t really say ULA didn’t bid because they didn’t want risk.
Thank you for that info. Curious. ULA per se could not bid (legally,
directtly) as you show. I would not parse much a difference though
between saying ULA did not bid, as saying LM or Boeing did not realy
bid. On the record (the wiki at:
http://en.wikipedia.org/wik…
LM and Boeing did bid, as you point out.
I’ve had this
discussion though in a room full of people who were there at the birth,
and my perspective is that a non-responsive bid is no bid at all! So you
are given a program predicated on low cost, low prices, and unlike
other programs you even let it be known what type budgets we are looking
at. A business shows up and says I’d be glad to take your business,
except for that cost part, just so long as you pay what I always charge
(many multiples of the budget available). I’d say that’s not bidding.
But we parse words…
It’s my understanding that when ULA was formed both Lockheed and Boeing proposed to continue doing commercial launches separately with the Delta and Atlas, and even set up divisions to handle this. The problem was they failed to make any sales.
SpaceX is getting about $120M per flight up and down, spacecraft and LV. I believe the Atlas V is about $160M, and although the total payload mass capability is higher that’s without any system for rendezvous with ISS or any return capability.
$2b / 12 = $166m each. Seems fair.
Can you point to any ULA launcher and payload docking system capable of reaching the ISS for $166m per launch? ULA typically charges around $220m/launch for Atlas V, before pricing the cargo capsule. [The “not to exceed price” contract for Atlas V has generally been closer to $330m/launch.]
SpaceX charges about $120m/launch for F9/Dragon. OSC charges $160m/launch for Antares/Cygnus. So I don’t see much profiteering, or unreasonable favouritism arrayed against ULA. Quite the contrary.
Huh? This makes no sense.
Yes that was some hearing…
The ULA / Gass argument in their favor boiled down to a series of “but’s” anytime a question called for yes or no. So would they be open to compete if all the rules and the playing field and every requirement were the same for all? Well – yes, BUT (insert war story here).
The SpaceX/Musk observations were more credible, and at least consistent, as he basically said that even if SpaceX won contracts that had to include some “standing around” feature for when the payload is ready (a reference to the ELC subsidy that ULA gets) that they would still be cheaper for that “standing around” part too.
Pace was his usual self, having trouble adding up small numbers, and wanting to sound credible by repeating how it’s all complicated, space is hard, the other question is, etc. Typical NASA. What’s inconvenient to speak frankly about quickly gets “complicated”, space is hard and all that yada yada to hide behind. This caution masquerading as expertise assures a nice place to retire to in industry, think-tanks, etc. (Thermodynamics is complicated. That doesn’t prevent a good engineer from a straight-forward answer like “3 inch pipe”)
Chaplain was at least straight-forward, but GAOish in the end, albeit trigger shy. Pretty clear she wants here office job to be there tomorrow. She came close (but not quite there) to saying that pretty much what DoD gets in return for being price insensitive is control (it’s mine, mine, mine!) and flexibility (I want it now, now, now!). My take being the DoD/ULA analogy is you pretty much have a nationalized capability (your own airplane for troops would have been a close analogy), if that’s what you want, though it may not be what you need.
The question is not ULA or SpaceX. The real question is what’s the best contracting approach for DoD.
Unlike NASA, DoD doesn’t go to space for space’s sake. National security space launch is only one part of the military space architecture, and that space architecture fits into a much larger national security apparatus, so the tradeoffs on cost, risk etc. are different than for NASA or commercial sector.
The national security value of DoD’s space capabilities drives how much risk they’re willing to accept. This flows down to launch. So, in essence the launch companies themselves are not the ones driving this, it’s their government satellite programs and the DoD customers needs for those services. One might consider alternative space architectures, which the Air Force is doing, and this might change this risk profile, but that costs even more money, just it’s on the satellite side.
Introducing competition seems like it would be a good idea, but the devil is in the details. *How* competition is implemented will drive whether it improves things or simply exchanges one set of problems for another. For example, if the policy is to ensure two providers are healthy, it’ll result in a cartel. If you split procurements among providers, then you’ll sacrifice economies of scale. If you split the manifest between small and heavy missions, then providers are no longer competing. If you do a “winner-take-all” competition, you end up back with a single supplier.
If you have 2 suppliers with a huge disparity in capabilities and capacity, how do you level the field so they’re both playing by the same rules? Do you wait until the Air Force certifies the Falcon-Heavy? If you don’t, then SpaceX hasn’t really met the full requirement set. If you let SpaceX carve out a niche, it only trades costs on one program, to be offset by another. Maybe these things can be tailored and accounted for, but how do you do that fairly?
These problems need to be addressed head-on, not swept under the rug in a rush to embrace competition. Otherwise we may wake up and realize we’re just be paying more for duplication.
As with Pace, your over-complicating the matter. The questions (yes/no)
are about weather ULA and SpaceX can meet requirements (a yes from
SpaceX, they will meet any requirements, like reliability, readiness,
etc.), and who can do all these requirements – cheaper. Then you pick
the lowest two in any bid cycle. Knowing another cycle is always X
number of years away, the existing players stay on their game. With the
money saved you can even encourage and invest in developing new
entrants, or assisting existing ones with new capability (under the same
level rules). COTS-cargo ISS did this, albeit Antares is much more than
Falcon. But we had to go for the TWO lowest. Given that the proper
alignment of incentives had dropped costs so much you can now afford two
players, both healthy.
All the hemming and hawing about
complications and details is merely the spin a vested community of Air
Force and ULA organizations want everyone to believe.
A good
analogy is cable monopolies. It’s not that there are no viable
competitors in broad swaths of any state, or lack of data and evidence
that competition will help quality, rates and features advance (or costs
drop) more quickly. It’s that cities and municipalities are often in
cahoots (legally binding cahoots) in protecting (in exchange for more
fees, taxes, etc) existing monopolies. It’s the user who gets screwed. The spin? It’s the devil is in the details, it’s complicated, etc.
Another problem with launch is that it does not behave like a real market. there are not many buys and many sellers making decisions solely on cost and capability. Of the roughly 80 missions launched each year worldwide, about 60 are not addressable by competition, such as Russian and Chinese military satellites, but also nationalistic programs like India, Europe, japan and the US have.
So out of teh 20-25 missions that might be left over, most of which are GEO comm birds and a few polar orbiting imagery birds, the owner/operators, like Intelsat, intentionally rotate their launch suppliers, not just for competition but for risk management. So, a new entrant who is competing on the international market is only going to win a fraction of the 20-25, probably about 8-10, at best.
Launch is not a real market in any normal meaning.
Therein lies the crux of the matter. We want launch to be a “real market”. The DoD (and NASA too) think short term, and only provincially. It’s in the long term interest of DoD to make launch a real market. It may not be in the short term interest, for many, many reasons, but any consideration of this LONG TERM says the current situation does not help maintain a healthy US launch capability serving national security interest.
The size of the market is not fixed. Commercial launch follows the law of supply and demand. If the price can be reduced, as SpaceX is doing, the demand will increase.
When you have no idea what you need buying capability makes sense. But space launch is a commodity. Payload, altitude, inclination. Why try to game the system by announcing a goal of keeping both providers healthy?
I think you found the trap. Space launch is *not* *always* a commodity. Some missions yes: GEO communications birds. Many others no: exquisite national security satellites, one-of-a-kind observatories, planetary missions.
The problem is – If you’re in for a penny, you’re in for a pound. So, if you’re the government and you have a handful of these special missions a year, do you treat them differently and fly those missions on the expensive full-up rocket and then fly the commodity birds on the cheap rocket? If so, does that really save you money? Does the lowered rate of both vehicles undermine reliability and economies of scale? I don;t think that works out very well either because that’s basically what the US had through the 80s and 90s.
The US had direct and intensive DOD and NASA oversight throughout the 80s and 90s, without much obvious benefit to reliability. If the DOD officers and NASA civil servants looking over the shoulders of the contractors saved any vehicles from certain disaster I would be happy to see the details. As I recall Thiokol wasn’t enthusiastic about launching Challenger but NASA elected to go ahead.
ULA had two consecutive failures with the Delta III, essentially the same upper stage currently used with the Delta IV, and they had a Delta II blow up at 1200 feet. The first DIVH failed to put its payloads in orbit due to a double booster failure (premature shutdown). The Atlas V has an excellent track record (although I recall seeing the earlier-model AC-67 blow up) but Lockheed declined to second-source the RD-180 so A-V is dependent on Russia for both cost and availability. If the Falcon maintains its planned flight rate it will eventually pass the Atlas in launches, but in reality, as I-Shih Chan demonstrated in the seminal paper “Space Launch Vehicle Reliability”, 6-10 sucessful launches is enough to establish reliability _if_ all discovered failure modes are eliminated in the design, a critical step that was missed in the Shuttle program.
All this isn’t to denigrate ULA. But if there is any actual evidence that SpaceX cannot achieve the same reliability I would be interested in seeing it. Regardless of the payload, the customer wants it placed reliably in a destination orbit. Whether a launch service is a commodity doesn’t depend on the unique qualities of the payload. Every passenger on every airliner is both unique and priceless.
ULA didn’t launch Delta III, Boring did…granted a nit. Wasn’t Delta III a commercial vehicle, developed outside of government? So, maybe that was the reason for the low reliability…maybe.
On the commodity issue. I beg to differ. As an illustration, does Air Force 1 get more oversight and care than other Air Force jets? Of course it does…because of who it’s carrying.
Also, the technical characteristics of some exquisite systems requires specialized solutions. Those are not commodity launches.
The difficulty is that the space launch arena is a mixed bag of all these things…optimizing for one, undercuts the other and there is not a lot in the middle.
We are only in this discussion because we allowed a monopoly provider, ULA. At the time this might have made sense, but such moves always have an expiration date before the disadvantages clearly, as now, outweigh the earlier advantages.
Special missions would be bid and then we do this thing called “math” to see if the current approach (ULA and no competition) would be cheaper than a new entrant, or ULA bidding a new cost (efficiency). At any step along the way the process of competing does the math, takes bids, and makes smart decisions.
The only reason this discussion is occurring at all about the benefits or not of competing is because ULA remains in a monopoly position and we know that they will do everything to make anyone’s math look bad when it should by all rights look good.
For example, ULA may lose launches and then turn around and mark up the costs (costs “plus”) of other work. The detail they would provide would simply book a fixed cost that was X before at a higher value Y after losing some launch bids. This situation occurs because (and Chaplain hinted at this in her testimony) the buyers lack insight into costs and thus the smarts to adequately negotiate. Nonetheless, even if ULA does turn around and pursue such a strategy to make any competitive approach look bad in the math, this is only further proof of the need to take apart such a monopoly. Such behavior is stagnation and un-healthy, and will only strangle the ability to meet national security needs long term anyway, the very thing the monopoly is supposed to avoid.
We are in this discussion because SpaceX is claiming it can do launch for much less. Problem is, his capabilities are not comparable to ULA. SpaceX only has one real vehicle and it’s performance is only sufficient for just a few missions, so comparing cost is not meaningful, they’re doing different thing.
SpaceX someday may have capabilities comparable to ULA, and then maybe a cost comparison may make sense. But they’re not there yet.
On the monopoly issue. How many major operational DoD programs have multiple prime contractors? I cannot think of one. Most DoD programs have run a competition and then picked a winner. DoD did the same for EELV–it ran a competition, picked two winners and it was too expensive and inefficient.
So, in waltz’s SpaceX and demands to crack it all open because they got a rocket that can only meet a subset of the needs.
Meanwhile, he admits to charging the government 50% more than he charges commercial?
I’m not sure he should be allowed to compete until he can meet the whole set of requirements with a fully certified Falcon-Heavy.
TMK SpaceX is not bidding on missions it cannot launch. There is no need for the government to pick one supplier that can meet all its needs.
Okay…but supporting more than one supplier requires splitting procurements, which undermines economies of the scale. Competition does provide an incentive to reduce cost, but there’re also costs associated with competition, both direct and indirect costs of competition.
As ULA argued at the hearing, the question on whether competition ultimately saves money overall to the taxpayer (not necessarily on an individual mission basis, but overall) depends on whether the savings from competition is sufficient to offset the cost of duplication.
From what SpaceX has shown so far, they may have cheaper niche product, but that any. to result on a reduced cost overall.
I would just like to add that the military and its needs are completely dependent on a healthy economy. They constantly ask for more money as they allow programs to escalate in price due to poor control or drive Scope Creep in requirements. The more strain these inefficiencies put on our “recovering” economy, the greater they place strain on each US household. This is a strain that could eventually leave our country with economics like those found in Russia. Part of this equation is that our economy must always operate efficiently and with out subsidies (I know that’s asking a bit). In terms of launch as an industry and functional part of the economy, the Air Force and ULA together forced any real commercial business out of our country and to foreign soil due to their “required” monopoly. What do people like Sen Shelby care as long as they get their pound of flesh. The US Air Force can not be allowed to have and control of elements of national importance for their use only.