Old Vs New Thinking About Space Commerce
Capitalism in Space: Private Enterprise and Competition Reshape the Global Aerospace Launch Industry, Bob Zimmerman
“A close look at these recommendations will reveal one common thread. Each is focused on shifting power and regulatory authority away from the federal government and increasing the freedom of American companies to act as they see fit to meet the demands of the market. The key word that defines this common thread is freedom, a fundamental principle that has been aspired to since the nation’s founding. Political leaders from both parties have made the concept a central core tenet of American policy. Democrat John Kennedy stated that his commitment to go to the Moon was a “stand for freedom” in the Cold War. Republican Ronald Reagan proposed “Freedom” as the name for the new space station, and viewed it as a platform for promoting private enterprise in space. Freedom is actually a very simple idea. Give people and companies the freedom to act, in a competitive environment that encourages intelligent and wise action, and they will respond intelligently and wisely. The United States’ history proves that freedom can work. It is time to prove it again, in space.”
Wishful thinking collides with policy, economic realities in ‘Capitalism in Space’, op Ed Scott Pace, Space News
“Unfortunately, the report is rife with factual errors and misleading comparisons that make it all but useless, while occasionally making points we can agree with. It begins with erroneous assumptions on how NASA cargo and crew capabilities are being programmatically implemented. It projects outcomes based on the only operating NASA example of a public-private partnership, ISS cargo transportation. The core problem is that based on this minimal experience the author poses a false binary choice between “government” or “private sector” approaches to space transportation, a choice in which he argues that the government should abandon traditional acquisition practices in favor of relying on “free enterprise.”
Keith’s note: Scott you know as well as everyone else that there is indeed a clear difference between government space and private sector space. You also know that the moment that the government starts to stick its fingers into the way that a company does things that effort quickly becomes a de facto government space effort – no matter what sort of verbiage you may want to paint all over it to suggest otherwise. There is indeed a choice facing all of us as to how we do things in space. Some people are willing to consider that choice and embrace new ways of doing things. Others are determined to avoid doing so, preferring instead to dwell on outmoded models that no longer work.
Yes, the government approach to space versus the free market approach.
Keith. Are there really new ways of doing things? Just because a new location and some new technology is identified, people and governments are the same as they have been. Especially in our case regarding all modern modes of transportation (stagecoach, train, ship, airplane, subway, escalators, etc.). People are controlled by ego and money and self-control is individualistic and not guaranteed. And many many times behaviors and actions are to the detriment of workers, customers, passengers, etc. The question is how much oversight is needed by the (any) government to hold humans accountable for their works (i.e., actions) when they are in a position to either do harm or subsist off government funds to any amount.
P.S. I get so tired of hearing about economic systems and government oversight, and such, when people do not account for basic human psychology (probably because they don’t really understand it).
It seems to me that one fundamental change in the “acquisition” process in recent years is the shift from “Cost Plus” type contracting to “Fixed Price” type contacting. Governments have historically used “Cost Plus”, commercial has traditionally used “Fixed Price”. This shifts the responsibility for Profit to the success of the managers and engineers in the commercial firm, and away from the perverse requirement that to increase profit a firm must increase costs. Is this not correct?
A commercial entity wishing to purchase a good or service can do so based on the judgement of its management. A contract is often required but there is no formal selection process.
With a government contract, the cost and time required for soliciting, competing and negotiating a binding contract is so high that rather than create a new contract when its needs change, the government often chooses to add tasks to existing contracts. As a result there isn’t any way to even roughly predict the cost of the contract in advance and there is little alternative to the “cost plus” approach. In practice this may give the government less control of costs over the life of the contract than a commercial entity would face with its more arbitrary approach.
Cost Plus also does nothing to limit changes. Every change the government wants to make is embraced by the contractor because changes mean more “plus” in “cost plus”, so the contractor will receive more money and therefore more profit.
Fixed price tends to limit changes to only those that are absolutely necessary. This is because any change imposed by the government (after the contract was signed) would increase the contractors costs and lower their profits. This creates a huge disincentive to accept changes once the project is underway. Fewer changes means fewer impacts to the schedule. From the government’s point of view, it means giving up some control that they’re currently used to (i.e. micromanaging of projects and changes).
Addendum to first comment:
And for those asking for the, “for example,” I suggest you to do your homework, but here is a starting points: Interstate Commerce Act of 1887 and railroad Safety Appliance Act of 1893.
I am sure the railroad tycoons were unhappy with having to spend such a pretty gold piece on these.
The ICC is a good example of the regulation cycle. When regulation is first done it is usually needed, but the you always have regulation creep at the regulators find more and more things to regulate, eventually micromanaging the industry.
When the ICC started out it provided need oversight over railroad pricing. But then it started to govern every railroad decision.When railroads wanted to drop unneeded rail lines or unprofitable trains the decision by the ICC often took years,slowly killing the railroads by preventing them from adapting to a changing economy. By the 1970’s its micromanagement reached the point the government needed to take over some eastern railroads and passenger trains so the rail system wouldn’t collapse. That is when the government finally did away with the ICC, allowing railroads to recover. But thanks its decades of over regulation we still have the legacy of government run passenger trains, the east-west divide in the nation’s rail system, and the inefficiency of long haul trucking.
It is truly a shame that so many old spacers refuse to embrace the new technologies and methodologies they helped to create. We stand on the backs of giants.
The king wears no clothes.
Absolutely! It often reminds me of the story of The Naked King. Eventually, the king runs off of the stage and is replaced with one who doesn’t care about nudity.
The point I have is that SLS really isn’t needed. So the argument that only the US Government can do certain things really shouldn’t apply to SLS. That is unless you are making the argument that the US Government should be spending money just to preserve its ability to do certain things (i.e. welfare for aerospace engineers).
Well, Scott is both right and wrong. Historically, exploration has mostly been the role of government, at least financially, for the reasons that he offered. But we are not talking about exploration…we are talking about transportation.
Long before humans ride on a Falcon 9, the “exploration” side of it will be history. The same with the Falcon Heavy, since it has a full manifest for commercial robotic missions ahead of any human spaceflight plans.
Yes, in a way the first time humans ride on the SLS might be called exploration. So the correct thing to say, if you still want to call rocket building “exploration”, would be that only a government should build and fly SLS/Orion. But you can only say that if you want to say that SLS has enough new tech to be exploration-worthy. Even that stretches the word “exploration” a bit.
Can LEO space habitation still be called “exploration”, after Skylab, Mir, ISS, and Shensu?
Can the moon still be called “exploration” after Apollo?
Can Mars really still be called “exploration” after so many robotic missions?
Even if the destination qualifies to be called “exploration”, the ” transportation” portion of it doesn’t have to be.
When the Lewis and Clark expedition were going back down the Missouri on their return leg, they met the first commercial interests on their way out. John Colter got permission from the Captains to jump ship and join them (how many astronauts have been doing that). On that historic model, commercial space is way, way overdue.
It seems to me that it may be time for a NACA-type model for NASA’s space interests.
1.7 million lbs of thrust, quoted in the Scott Pace article, is the Falcon 9, not the Falcon Heavy. Falcon Heavy is 5 million.
Also, his claim that commercial cargo to the ISS is NASA’s only functioning commercial partnership is totally out to lunch. Space Act Agreement contracts are used for NASA spinoff programs and Next Step. CCDev is itself a partnership program, as is Red Dragon.
He claims to be an experienced industry analyst, but this looks like he just published something that he received in an email from Boeing without even reading it. Maybe he’s looking for a job at Boeing.