Thursday, October 27, 2011

Why Commercial Crew Is Doomed

NASA's Commercial Crew Development program, or "CCDev", has been a resounding success - and that's why they're not doing it anymore.

Inspired by the earlier Commercial Orbital Transportation Services program, or "COTS", and funded by the American Recovery and Reinvestment Act of 2009 stimulus to the tune of $50M, CCDev came out swinging in 2010 with five US companies producing impressive results on what was essentially bonus pay to NASA. As such, it was no surprise when a further $270M was provided for the second round, or "CCDev2". This round is now coming to a close, with continuing achievement from US companies with minimal oversight from NASA. Also, a number of "unfunded" CCDev agreements have been made which receive only use of NASA facilities and expertise - they too have been successful.

With all this success, it might seem strange that NASA is dropping the CCDev program - but they are. They intend to move on to a "procurement" process where a number of companies will be required to submit designs, to be reviewed by NASA, with an eventually "down select" to one or possibly two approved providers for the next phase. The Commercial Crew Program, or "CCP", requested funding for the next five years is $850M/year or $4250M total, but at this time it appears unlikely that they will get more than $500M in the first year.

No, that's not a misprint. Here's a graph to hammer home the point.

Why the massive jump? The simple answer is given by acting program director Phil McAlister's comments at the 2011 International Symposium for Personal and Commercial Spaceflight - the commercial crew office has grown to 250 people, many of which are spending their days writing requirements and regulations and have been for "the last two years". In the near future, a number of these staff will be "embedded" into the companies doing their initial design work. This massive increase in oversight comes with a switch from Space Act Agreements - where NASA pays the partner only after agreed upon milestones have been met - to Federal Acquisition Regulation contracts. Although it is increasingly obvious that "partners" are becoming contractors, and NASA is taking control over the industry, McAlister continues to downplay the change, stating that it is "just rhetoric from people who don't want to engage in debate".

Well here's some debate. Fundamentally, the COTS and CCDev rounds were about partnership. NASA was not in control and this was a good thing - for the industry, for NASA and for the taxpayer. Yes, Space Act Agreements have been proven to work, but it's not just about that - it's about who has control in this relationship. Under the COTS/CCDev program, a partner could say no. They could say they weren't interested in pursuing a proposed milestone and NASA had to negotiate. The pay-on-performance standard encouraged partners to only take on milestones they knew they could achieve and, with good faith, NASA had clearly defined. Those milestones represented where the goals of the partner matched the goals of NASA - which many don't seem to understand are necessarily different.

During a congressional testimony today, where Elon Musk was a witness for the first time (see this summary in PopMech), Congressman George Miller (D) asked two questions which insisted that eventually NASA will have just the one provider for commercial crew. Later, Congresswoman Donna Edwards (D) expressed concern that NASA is creating a US monopoly on commercial crew. Setting aside that these people are supposed to be telling NASA what to do, not meekly asking for a forecast of the future, the NASA representative - William Gerstenmaier - essentially agreed with the assessment, stating a lack of funding to support two providers.

Oh, did I not mention that? Yes, NASA thinks nearly five billion dollars isn't sufficient to get commercial crew providers to a point where they can start actually paying them for seats. How much exactly they're going to pay them for seats is anyone's guess. SpaceX will happily tell you that they can do $20M/seat, but that assumes 28 seats per year. Which could mean anything because NASA can't actually tell you how many seats they want. NASA at least wants the price of seats on US commercial crew providers to be below the price of seats on Soyuz, but they seem to have no clue anymore why that is. As such, this has encouraged a number of hilarious Congress-does-math moments where the representative will add together the cost of development, price per seat by estimated number of seats, get a number which is bigger than just continuing to buy seats from the Russians and wonder how this is going to save NASA money. Hint: it's not. That's not the goal. The goal is to kickstart the industry by having NASA as an anchor tenant. The only reason to care about the Soyuz price at all is to ensure the US commercial crew providers are competitive in the international market. This should be obvious but NASA/Congress are stocked with morons.

Here's a prediction.. you heard it here first.. that whole lower-than-Soyuz-price thing will go away real soon. I think this will not be the last way NASA breaks the former-partners making them uncompetitive. Ultimately, the product that NASA wants - the mythical space transportation system that will keep the precious astronauts safe on their purposeless jaunts to "occupy" the ISS, maintaining international relations and supervising ants sorting tiny screws in space - is incompatible with actual productive use of human spaceflight. When the commercial markets fail to materialize, the government can say "we told you so!" and essentially nationalize the industry, as they did with launch vehicles.

Briefly, how was it ever supposed to work? The vision, for those who can remember it, was for NASA to simply buy tickets on commercial crew transportation providers. It was supposed that a promise to buy some number of seats per year would have been enough to encourage private development of the vehicles. This of course was naive, as a promise from NASA is about as bankable as a promise from Congress - that is, worthless. So instead, some money was thrown over the wall with a minimum amount of whatcha-gunna-use-it-for? The hope being that private investment would come to the table. This worked! So the sensible next step is to keep doing the thing that works.

Part II: The Market

What would happen if NASA continued to encourage the industry to develop, instead of embarking on a premature "procurement" process for their own piddling little needs? The answer is glorious: multiple commercial crew transportation providers racing to be the first available to offer seats. Actual price competition and ongoing innovation. This would open new markets and the virtuous cycle would open up the entire frontier.

But... so many people can't remember this vision - if they ever knew it at all. We regularly hear the proud proclamation that the government is the only "market" for human spaceflight. Ok, maybe they're willing to grant that there's a market for a few "overly rich tourists", yes, they really use that word, and maybe there's some other countries that would like to have a space program but don't have the wherewithal to slap together their own big-rocket-and-capsule program, but that's just icing on the cake. Even the commercial crew transportation providers seem to be ignorant of the actual market which is out there waiting to be tapped. Even Elon Musk seems to be ignorant of the real market.. there, I said it. Talk of colonizing Mars someday is great, but that's not where the money is right now.

I can hear the space solar power people screaming from the balcony. They know the answer! And while I appreciate their enthusiasm, I think they're wrong. Someday, space solar power will be operational and human spaceflight to maintain those massive solar arrays will be necessary, but that day is not here. We should keep them firmly in mind and think about their needs when making decisions about on-orbit capabilities, but right now they're still on the ground.

No, the market I'm talking about is the one space market that has consistently made profits since the beginning of the space age. In 2005 PanAmSat launched the Galaxy 15 telecommunications satellite, its ownership was later transferred to Intelsat. In April of 2010 control was lost and the satellite starting drifting, causing significant hazard to other satellites. More importantly, the satellite was out of commission and losing money every day. An estimate of the loss of the satellite, was required for accounting purposes and a figure of around $4194M was given, or ~$400M per year for the expected remaining lifespan.

This gives us some idea of the acceptable price for a satellite "rescue" mission out to geostationary Earth orbit. It's hard to imagine NASA screwing up commercial crew so much that such a mission could be made unaffordable by US suppliers, but if seats are available on the Russian Soyuz - as they will be when NASA finally switches to commercial crew - the inability of US human spaceflight providers to beat the Soyuz price will suddenly become important.

Much more interesting, I think, is to consider the current SpaceX pricetag of a Falcon 9 / crew Dragon flight, upgraded to the Falcon Heavy, and before any of the price reductions promised by reusability.. let's say, $200M. At this price it is not inconceivable to imagine sending a crew out annually to service a number of satellites in a constellation. When we consider that routine maintenance has never been done on communication satellites, it becomes obvious that extended lifetimes can be achieved that would more than offset the cost.

In short, NASA isn't the market for human spaceflight, it isn't even the icing, it's the free frogurt - don't eat it.