SpaceX

Editor's Note: Today, NASA announced contracts to support Boeing and SpaceX as they continue building spacecraft to carry American astronauts to orbit. In this story from January 31, 2014, PM contributor Joe Pappalardo analyzes NASA's plans for private space—and points out where things could get testy.

Many space nerds were smiling when they saw details of the 2014 budget: NASA's big-ticket missions have been spared the Congressional ax. The Orion crew vehicle gets $1.2 billion, the Space Launch System (SLS) gets $1.9 billion. Together, these are supposed to get humans to Mars or an asteroid, or both.

But there's some who are not quite so happy: the private space companies vying to get astronauts to orbit by 2017, including Boeing, SpaceX, and Sierra Nevada. The White House request for $821 million to support the commercial crew program was trimmed to $696 million.

So far, the private space experiment has worked pretty well. Two companies, SpaceX and Orbital, are delivering cargo to the International Space Station using hardware they designed without strict NASA oversight. The effort to replace the space shuttle with a new private-sector vehicle is also going well, with the three companies hitting milestones and setting dates for flights. But the true test of how much NASA can really change from a spacecraft developer to a customer of flight services will start this year.

Relying on private companies to make and operate spacecraft is intended to break the bureaucratic logjams that plague major government programs like NASA, where delays and cost increases are expected. And the United States needs a way to get people into orbit soon. After all, it costs $70 million per seat to fly astronauts in the Russian Soyuz spacecraft, as NASA has been doing since the space shuttle retired in 2011. But there are reasons to fear that NASA's private space program could morph into the same old big-government program. This year is the tipping point—and it started off with a thud, as Congress denied funding to the new way and upheld the status quo SLS program with a major cash infusion.

Funding "One and a Half" Companies

The budget news does not bode well for the effort. Any reduction is bad news for the three companies vying for the next contract, which is called Commercial Crew Transportation Capability (CCtCAP). This next stage is intended not just for development of a spacecraft, but to actually send them into orbit. It calls for at least one flight test to verify the spacecraft can dock to the International Space Station, plus two to six manned missions carrying NASA astronauts to meet its crew rotation requirements.

Here's catch No. 1: NASA has not decided if it can fund more than one program. It intends to cut one of the three in what government procurement people call a "downselect." It's a grim and tense time for the companies, which are laboring to meet mission milestones as NASA deliberates. NASA officials, including director Charles Bolden, have spoken publicly about funding two companies, or funding one and partially funding another (what Bolden calls "funding one and a half companies"). The decision should come sometime this summer.

Who will get the ax? Boeing, with its experience running the gauntlet of NASA rules and regulations? SpaceX, with its extremely cost-effective, now-proven rocket and capsule combo? Or Sierra's Dream Chaser, a space plane shot on an Atlas V rocket with roots in NASA? No matter who is trimmed, it will be a heartbreak to the space community.

And it might come back to haunt NASA. A 2013 report from the NASA office of the inspector general warns against putting all the eggs in one basket. Funding one company means NASA could lose its only option for sending people into orbit if that company hits a snag. And the lack of competition drives up the price, too.

NASA Helping, Interfering, or Both?

Here's another reason to worry: This could be the year NASA forces private space companies into building spacecraft the old-fashioned way. Up until now, private space firms have had a fairly free hand in designing their rockets and spacecraft. The CCtCAP contract will reintroduce greater NASA oversight—and along with it, an increased chance of conflict, delays, and cost overruns.

"The U.S. commercial space industry has made tremendous progress designing and developing the next generation of U.S. crew transportation systems for low Earth orbit," said William Gerstenmaier, NASA's associate administrator for human exploration and operations in Washington, D.C. "Finalizing these systems in accordance with NASA's certification requirements will not be easy."

NASA and private space companies have already sparred over contracts, as PopMech covered in depth back in 2008. Company officials complained that the contracts failed to state who had final say over the engineering. There were new government review boards that could reject hardware designs. Some insiders compared intensive NASA control to the FAA certifying the design of airplanes, as opposed to simply certifying their airworthiness. At the time, Phil McAlister, NASA's director of commercial spaceflight, told PM that NASA's experience in making safe manned spacecraft was indispensable. "Since the crew are going to be on these systems, we want to be—we need to be—much more substantially involved in the development of those systems," he said.

Space companies were spared from this intrusive contract back then. But this new CCtCAP deal includes the more hands-on approach NASA originally wanted. For example, NASA in 2007 wanted to place its own people inside private space facilities to oversee design choices. The 2014 contract features Joint Test Teams (JTT) which do just that.

Is heavy NASA involvement a bad thing? After all, NASA has a deep knowledge of manned spaceflight systems, with some hard lessons learned about safety and assurance. And it is paying the bill. But NASA is also a big bureaucracy, with a tendency to blow out budgets and blow off timelines. According to NASA's inspector general, the agency has been slow to get human rating requirements (the rules they must follow to fly NASA astronauts) to the companies.

Space companies want to know, within two or three months, whether their home-built hardware meets the specs that NASA has issued. But NASA is used to signing off on every screw and wire. The inspector general's report found this back and forth is taking much longer than the companies want, with "a significant amount" of requests pending for more than 120 days without resolution. And delays mean taxpayer money wasted. Remember, now that the space shuttle is retired, NASA can send people to the International Space Station only via a Russian Soyuz spacecraft, which costs the U.S. $70 million per seat. Delays also give Congress more chances—and ammunition—to cut funding.

Another reason to worry is the kind of contract this is. CCtCAP uses fixed-price contracts in which a company gets a set fee. That means that as costs rise, Boeing's or SpaceX's or Sierra Nevada's profit margin shrinks. (The alternative, a cost-plus agreement, pays for all expenses and provides additional funds to guarantee a profit.) This can be a problem if NASA demands more testing; a company could quickly lose its profit margin if it starts spending more money on more testing. In 2007, NASA officials tried to offset these worries by promising to share the costs of the tests, and the solicitation for CCtCAP seems to have some limits to how these might be handled. But as astronauts get closer to flying, engineering spats could turn into showstopping power struggles.

Trying Something New

Give NASA credit for trying something new. "The acquisition approach we are using is designed to leverage the innovative power of industry with the expertise, skill, and hard learned lessons from NASA," Gerstenmaier said.

This is a new effort for the agency, and it is bucking Congress and its selectively tight purse strings to make it happen. Let's hope this experiment works. Congresspeople might like massive projects that spend billions of dollars (especially if the government spends those dollars in their districts), but taxpayers shouldn't share that enthusiasm. And in this case, Congress is spending billions on a major space effort in the form of SLS, which doesn't have a specific mission and ignores the very real launch demands of 2017.

There's more at stake here than resupplying a space station. If NASA's more hands-off approach works, it will keep hundreds of millions of dollars and lots of engineering jobs in the United States and help to kickstart a revitalized American launch business by reducing the cost of accessing orbit. And if there's hope of NASA finding a smarter way to do business, and at the same time keeping astronauts safe during missions, it could be a beacon for other government agencies to do things in a leaner, smarter way.

NASA was once a synonym for doing the impossible. If the space agency insurgents pull off this private space coup, people might start believing it again.

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