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Falcon 9 before CRS-1 launch
The success of SpaceX’s Falcon 9 rocket and Dragon spacecraft in supporting the International Space Station demonstrate that alternative, more affordable models exist for space exploration and development. (credit: J. Foust)

How the US can become a next generation space industrial power


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I want to thank the Marshall Institute, Jeff Kueter, and Eric Sterner for holding this important discussion about the “why” and the “how” of space exploration and development. Their wisdom shows in first discussing the “why”, and then the “how”. To paraphrase Lewis Carroll, “If you don’t care where you are going, any road will get you there.”

First to “why”. My answer is simple. Our goal should be to extend human civilization across the solar system. A human civilization led by free people, and founded upon free enterprise.

It behooves us to ask “Why?” again.

Human civilization needs a new frontier, to challenge the best in us, and to seed the greatest new ideas. That frontier is space. Permanent human expansion into space, led by free people and founded upon free enterprise, is the tonic humanity needs.

The heart and soul of America, the core values of America, were born on the frontier. The Declaration of Independence, which declared that “all men were created equal, that they are endowed by their Creator with certain unalienable Rights” would have died a bloody death on the continent of Europe. Indeed, the French Revolution was quite bloody. The powers in Europe did not hold these truths to be self-evident. The same is true around the rest of the established world. Billions still live under tyranny.

“The Blessings of Liberty” and the “Bill of Rights” were born as part of the Constitution, which was born in America. All of these ideas would survive, grow, and then flourish on the American frontier. Freedom is a disruptive innovation, a disruptive cultural innovation. The existence of a new geographic market to take root in—where the competing tyrannies and powers were weak—has accelerated the growth of freedom for all people on this planet.

We declared, “We are a free people.” We established our self-identity and image on the frontier. We then fought our greatest wars—a war to end slavery and a war to defeat fascism—because of who we said we are. While we have our failings, as we are forever becoming a more perfect union, America has led the charge for freedom for all humanity across the planet these last several centuries.

But the American frontier is now closed. I watch as we increasingly turn inwards, becoming more self-absorbed, more bureaucratic, and more divided. I fear that America is the metaphorical frog, sitting quite cozily in a pot of water, and slowly becoming more like Europe.

Human civilization needs a new frontier, to challenge the best in us, and to seed the greatest new ideas. That frontier is space. Permanent human expansion into space, led by free people and founded upon free enterprise, is the tonic humanity needs. This human civilization will be the ultimate light on the hill. This human civilization, if only by example, will contribute to the elimination of the last vestiges of darkness here on Earth.

While this goal is persuasive to me, and perhaps to some of you and to a few others, there is a major problem. There is a trap that we must avoid. We represent the visionaries, and leading adopters, but most Americans (including our elected representatives) have much more pragmatic concerns.

The vast majority of Americans cannot, and will not, put a high priority on space exploration, or extending human civilization across the solar system. This was Newt Gingrich’s mistake in Florida in late January. Newt mistook the repeated standing ovations he received from the hundreds of space industry people in the room for something that the far larger electorate cared about. We all need to learn from his mistake.

We need an answer to the “why” question that appeals to the pragmatic majority. We need a pragmatic strategy that ties near-term national and economic security to a fiscally-responsible but visionary economic development plan for the solar system.

I will now lay out a pragmatic general strategy, and a five-point plan to achieve it. I have two simple prescriptions to lay the foundation.

Prescription 1: complete the analysis before prescribing a solution. Stop doing what does not work. Do more of what is working.

American free enterprise is working in space. Let’s build off America’s strength—we are the land of free enterprise innovation. Our strategy must be to do things that amplify and reinforce market forces. China is scared we will figure this out. So too is Europe.

While China can copy our rocket designs, and steal our satellite technology, please tell me how they are going to copy our American free enterprise system. They can steal, and they can imitate. But they can’t copy our value system without becoming us.

Prescription 2: commercial space and national security space can be fundamentally aligned at the strategic level.

Alfred T. Mahan, a visionary sea power theorist from the late 19th century, figured out the linkage between power and free enterprise a long time ago. Admiral Mahan, the father of the Steel Navy, wrote the following about sea power:

“If sea power be really based upon a peaceful and extensive commerce, aptitude for commercial pursuits must be a distinguishing feature of the nations that have at one time or another been great upon the sea.”

Let’s extend Mahanian theory to space. In the 21st century, an aptitude for commercial space is the distinguishing feature of nations, who are, or will be, great in space. The corollary is also true: the nation that dominates future commercial space markets will accrue great advantage to its national security, as well as great wealth for its people.

With this as context, I propose that America’s national space strategy should be to become a Next Generation Space Industrial Power. Here is my five-point plan to do so.

Point 1: America must recapture world leadership in commercial space transportation. We are now fourth in the world in commercial space transportation, behind Russia, Europe, and Ukraine. China and India are coming on fast. This is completely unacceptable. The loss of these markets is an economic tragedy.

With a radical reduction in launch costs, and high flight rates, we are a next generation space industrial power. Without it, we are not.

If this was only about jobs and profits, I would say let the markets decide. But this is a national security problem. Our national security is harmed because US launch vehicles are more expensive, and less reliable, because they fly less often. Our national security is harmed because of the hollowing out of the space industrial base. Our national security is harmed when it depends on Russian rocket engines.

Becoming number one again in commercial space transportation is an easy first goal. We may already be on a path to achieve this goal because of the American entrepreneurial spirit. But we need to declare this an important goal, and take effective action to see it through.

Point 2: We should set the national goal of low-cost, reliable access to space—an order of magnitude reduction in cost, and an order of magnitude increase in reliability.

Low-cost access is a critical national and economic security issue. It is the one key point to becoming a Next Generation Space Industrial Power. It is the one key point to expanding human civilization across the solar system. With a radical reduction in launch costs, and high flight rates, we are a next generation space industrial power. Without it, we are not.

Whichever country achieves low-cost and reliable access to space first will start a virtuous cycle that will deliver tremendous national and economic security benefits. This nation will dominate the carrying trade, which will create new markets, which will drive new technologies and new capabilities, which will increase flight rates and lower launch costs, which will allow us to expand into more new markets and so on. Low-cost access is Mahanian theory in action.

At NASA, in the summer of 2011, a team I led that included all mission directorates and all centers unequivocally concluded that low-cost and reliable access to space was the number one priority from among all emerging commercial space opportunities.

This NASA team came to two other critical conclusions:

  1. American industry can build a two-stage reusable launch vehicles with today's technology. Technology was the primary barrier forty years ago. Technology is not the primary barrier today.
  2. The primary problem is that we can’t close a traditional business case. The flight rate from existing markets does not justify the investment.

In another business, private risk-taking capital would take over at this point, and make the investment. But the huge size of the required investment, combined with the speculative nature of the future markets, makes the risks far too high for any private investor. This has much in common with the Transcontinental Railroad, which could not be justified as a pure commercial investment. Both are examples of market failure at the national strategic level.

The key to closing the business case is not for government to take over design and development. It is not loan guarantees. It is not a multibillion-dollar 2nd Generation RLV technology program. The key is to stimulate on the demand side, to create incentives that drive up the flight rate and close the business case for reusable systems.

The easiest and best methods to close the business case for commercial RLVs are large prizes and commercial propellant delivery.

Prizes are demand-side incentives that only pay for success. Further, they prevent government bureaucracies from picking winners. It leverages the power of the private investment market, as private investors (like Paul Allen) will ultimately take the risks and pick the winners.

No matter who wins the election, we are probably looking at a return to a Clinton-era policy where human spaceflight is the ISS and only the ISS. Deep space human exploration is on the verge of being deferred for another decade as a luxury we can’t afford.

Beyond prizes, we need a hard requirement for high flight rates. That large demand market is right in front of us. We only need to separate propellant from expensive, valuable exploration spacecraft. Propellant is cheap and easily replaceable. If there is a launch failure, you fill up and fly again. It is the perfect commercial market opportunity. It is also 70–80% of the mass needed for deep space exploration. This one decision could close the business case for commercial investment in RLVs.

Point 3: We need an affordable human space development strategy that flies soon, often, and advances us as a space industrial power.

Right now I fear that our national leadership is on the verge of cancelling all deep space human exploration. I don’t care who wins this week: both parties are face-to-face with trillion-dollar deficits and $16 trillion in debt. I have talked to senior space policy thought leaders in both parties, and we are on the edge of a cliff. No matter who wins, we are probably looking at a return to a Clinton-era policy where human spaceflight is the ISS and only the ISS. Deep space human exploration is on the verge of being deferred for another decade as a luxury we can’t afford.

With this in mind, I propose point #3 in my plan: we should set the goal of returning humans to the surface Moon in a decade in partnership with commercial industry for the primary purpose of using the resources of the Moon to open up the solar system, and do so within the existing NASA budget.

At NASA, I led a six-center NASA team that developed a plan to do this entirely with commercial launch. This plan withstood multiple independent reviews from all human spaceflight centers. The numbers add up.

Point 4: We should completely privatize all US launch systems. The process of privatization started over 25 years ago, when Ronald Reagan removed commercial satellites from the Space Shuttle in 1986 by executive order. It continued when a Democratic Congress passed the Launch Services Purchase Act of 1990, which was signed by a Republican President. Then, again, when a Republican Congress passed the Commercial Space Act of 1998, which was signed by a Democratic President. Finally, a second President Bush proposed the Commercial Crew and Cargo program in 2004, and President Obama made it his top space policy priority.

The government does not design or develop airplanes, or trucks, or trains, and it should not be designing launch vehicles. Based on their written policies, I believe that both President Obama and Governor Romney would agree.

There is a critically important role for NASA in helping industry be successful with launch, but it is based on the highly successful model of the NACA that helped create the world’s most advanced airline industry, and Commercial Orbital Transportation Services (COTS). Which leads to point 5.

Point 5: COTS works. It saves money. Lots of money. We should expand the now proven COTS-commercial service purchase procurement model to other areas.

We now have definitive proof that the COTS model works, and can save the US taxpayers billions of dollars. NASA’s cost experts used the NASA-Air Force Cost Model, or NAFCOM, to estimate what it would cost to develop the Falcon 1 and Falcon 9, plus new engines and avionics, using the traditional NASA approach. The answer: $3.9 billion. The SpaceX cost? Less than half a billion dollars.

This factor of eight difference shocked many at NASA, but not me, because I knew my history. In the early 1990s, SpaceHab spent $150 million to design, develop, and manufacture two pressurized modules that had to be human spaceflight certified to go on the Space Shuttle. Price Waterhouse worked with NASA, using NASA’s then standard cost model, and estimated that it would cost $1.2 billion using traditional methods. This was eight times what it cost SpaceHab to develop the same system using commercial practices. In other words, SpaceHab demonstrated the exact same magnitude of cost savings that SpaceX demonstrated almost two decades later.

We now have definitive proof that the COTS model works, and can save the US taxpayers billions of dollars.

Another fact. Most people don’t realize that the COTS-model now has three successes in a row. It is three-for-three. They are called Atlas V, Delta IV, Falcon 9. The EELV development process followed the COTS model. The EELV program used the DOD’s other transactions authority, and commercial industry put major skin in the game. In each case, the private company (not the government) was in control of the development process. This is a critical point. All three of them took exactly four years to develop a new rocket. All three of them have succeeded on their first, second, and third launch. COTS works.

So when you see lists by others of all the “failures” of the last two decades, that is only half of the story. Ask them, “Where is your list of successes?”

Let me make clear that there will be COTS failures. But based on the multiple hard empirical data points we now have, I can say with certainty that there will be fewer failures, and more successes, than among traditional programs.

It is fine to develop a list of failures, but before we start discussing changes in national policy, we need to also look at all the data, including what works. The COTS-CRS model works. The Launch Service Purchase Act worked. The NGA “NextView” model worked.

There are many existing services and systems that we might consider for applying these models. At the top of the list, I think we should seriously consider, again, privatizing and commercializing Landsat, TDRSS, and even our weather satellites. The Carter Administration was right to say we should privatize all these functions. The Reagan Administration was right to try to do so.

Obviously, better and smarter people have tried and failed. Some of you are in this room. But we have three decades of lessons learned about how—and how not—to commercialize these systems.

More importantly, the American commercial space industry now dwarfs US government space budgets in total funding. There is no good reason we cannot find a way to buy these important but routine and repeatable services in a commercial manner.

Considering our trillion-dollar deficits, it is time to consider commercial approaches again.

Thank you and I look forward to the discussion.


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