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XP and Michelle-B
Rocketplane XP (left) and Michelle-B will be developed by Rocketplane Ltd. and TGV Rockets, respectively, in Oklahoma. (credit: Rocketplane Ltd/TGV Rockets)

Oklahoma is OK for suborbital

One of the constants of American business is the effort made by state and local governments to lure new businesses to their regions. From automobile factories to biotech research firms to sports franchises, local governments often pull out all the stops to encourage businesses to move to their areas. Those enticements can range from a variety of tax breaks to promises of low costs of doing business to descriptions of a well-educated, available workforce.

Commercial suborbital spaceflight might seem exempt to those efforts: after all, the industry barely exists, and only at a developmental stage, at best. There would seem to be larger, more lucrative industries a state or local government could pursue. Yet one state in particular, Oklahoma, has made a concerted effort to lure suborbital RLV developers. In the last year two companies, Rocketplane Ltd. and TGV Rockets, have set up offices in the state. While superficially similar, though, the two companies are pursuing different vehicles and business plans, and have come to Oklahoma for different reasons.

Winning the O Prize

Rocketplane Ltd. (formerly known as Pioneer Rocketplane) is one of over two-dozen teams competing for the $10 million Ansari X Prize. However, earlier this year the company won something potentially far more lucrative: certification by the state of Oklahoma that the company qualifies for a set of incentives that will give tax credits of up to 60 percent to the investors of the company. Rocketplane’s director of marketing, Chuck Lauer, calls this “winning the O Prize.”

Those incentives date back to the late 1990s, when Oklahoma was one of more than a dozen states trying to become the launch site for Lockheed Martin’s VentureStar, an RLV based on the X-33 vehicle the company was developing in conjunction with NASA. While VentureStar faded away several years ago with the cancellation of the X-33, Oklahoma retained the incentives, hoping that they, along with the Oklahoma Spaceport, would attract other commercial RLV companies. (See “Little spaceport on the prairie”, The Space Review, June 7, 2004.)

Rocketplane’s director of marketing, Chuck Lauer, calls getting the Oklahoma state tax incentives “winning the O Prize.”

The tax credits were originally proposed during an economic boom, when state coffers were relatively flush. The recent recession, however, caused a decline in tax revenues and has caused fiscal problems in Oklahoma and other states. Tax credits and similar incentives, therefore, have become targets of cost-conscious legislators. The tax credit legislation (often referred to by its bill designation, SB55) had a deadline that had previously been extended to the end of 2003, but the fiscal situation made it infeasible to further extend it. Thus, Rocketplane or any other company that wanted to take advantage of the legislation had to act quickly.

In order to qualify for the tax incentives in SB55, companies had to meet several requirements, including demonstrating that it had a capitalization of at least $10 million. In an interview at the International Space Development Conference in Oklahoma City in May, Lauer said that Rocketplane was still short of this goal a week before the December 31 deadline, despite two and half years of concerted efforts by the company. In the final week of 2003, though, the company was able to raise $30 million, with company president George French investing some of his own money into the company. The company submitted the required documentation to the appropriate state government office “at 4:45 pm on December 31,” Lauer said.

With the certification for the tax incentives complete, Rocketplane has spent the last several months selling the tax credits it won (the sale or transfer of the tax credits is permitted by SB55) and is now ready to move ahead with the development of its suborbital RLV, the Rocketplane XP. The XP will use the fuselage of a Lear 24 but with new wings. The Lear’s jet engines will be retained, and a liquid oxygen/RP-1 rocket engine from Orbital Technologies Corporation (ORBITEC) added. Under a typical flight profile, the XP will take off from the Oklahoma Spaceport under jet power and fly to altitude of about 6,000 meters. The XP’s rocket engine will then fire for two minutes, sending the vehicle to an altitude of about 100 kilometers. Once the vehicle returns to the lower atmosphere and drops to subsonic speeds, the jet engines will reignite for a powered landing back at the spaceport.

Rocketplane Ltd. recently opened offices near the Oklahoma City airport and is in the process of hiring an engineering team. Lauer said a preliminary design review is planned in about eight months, with a critical design review eight months after that. The first XP flight is planned for late 2006, with a six-month flight test program preceding commercial flights for space tourism and other markets. Two XP prototypes will be built, Lauer said, although the company will need to raise an additional round of funding to complete development of the vehicles. The company is also bidding on DARPA’s FALCON small launch vehicle program, using technology developed for XP as well as previous work for DARPA’s smaller RASCAL program.

Lauer has been involved with the company since its founding as Pioneer Rocketplane in the mid-1990s. (The company changed its name to Rocketplane Ltd. when it moved from California and established an Oklahoma corporation as a requirement of the tax incentive legislation.) Lauer’s background is in real estate, and he said he’s missed out on a number of deals in that business because of the time he’s spent on Rocketplane. “The opportunity cost to me has been phenomenal,” he said. Finally raising significant funding that will permit development of the vehicle to move forward is “extremely satisfying.”

TGV’s galactic headquarters

Pat Bahn, CEO of TGV Rockets, likes to call the company’s offices its “galactic headquarters”. The term conjures up visions of a sprawling, modernistic structure that might be home on Coruscant, the capital world in the Star Wars universe. Reality, though, is quite the opposite: the company’s headquarters building is an unremarkable two-story brick building that dates back at least to the 1960s, located along the flight line at Max Westheimer Airport, a small airport operated by the University of Oklahoma and located a few kilometers north of the university’s main campus in Norman. The building does have one interesting attribute, though: its street address is on Goddard Avenue.

The interior of the building is no more remarkable than its exterior. The building belongs to the university’s aerospace and mechanical engineering department, and a number of offices in the building are devoted to the department’s faculty. Since these professors also have offices on the main campus, though, many of these offices go unused; peering inside one can see a thick layer of dust on desks and bookshelves. Perhaps the most active portion of the building is an area on the first floor devoted to a children’s “flight academy” educational program.

TGV’s unremarkable office building does have one interesting attribute, though: its street address is on Goddard Avenue.

TGV leases several offices in this building under an agreement with the department that also includes the sponsorship of several graduate students by the company. A large office on the second floor formerly used as a grad student “bullpen” has been converted into an engineering office. At first glance there is little to suggest that this office isn’t still home to grad students, other than that most grad students don’t have new Apple G5 computers and large LCD displays to work with. Bahn shares a downstairs office with two other company officials; the most prominent item on his desk—an old wooden one that could easily date back a half-century—is a cheap coffee maker.

With such an unimpressive office, it might be tempting to dismiss TGV as an insignificant contender for winning a share of the suborbital marketplace. However, the barebones appearance of the company’s office is a deliberate decision by the company to focus its spending on developing its suborbital vehicle, the Michelle-B. TGV has raised an unspecified amount of money to date; at the Space Access ’04 conference in Phoenix in April, Bahn said the company had enough money to take the company through a preliminary design review in the second quarter of next year. The money raised to date has gone into hiring engineers and giving them the tools they need—like those G5s—to work on the design of the Michelle-B.

The vehicle, under conceptual development for several years, will take off and land vertically using rocket engines and, during the descent, a shuttlecock-like speed brake. The focus of the development work, though, has not been on new vehicle technologies but operations. “It’s the ops, stupid,” said Bahn at Space Access. “Operations dominate life cycle costs. Operations is the great frontier, that’s where the big improvements can come.”

“I’m still here, and they’re not,” Bahn said of his late-90s competitors. “Maybe my initial proposal was correct.”

While other companies have focused primarily or exclusively on space tourism, Bahn has been almost disdainful of that market, noting, among other things, the potential for high liabilities should a tourist-carrying vehicle be lost in an accident. “Amateurs talk propellant, professional talk insurance,” he said. TGV is instead looking at other markets ranging from remote sensing to microgravity science. The Maryland newspaper The Gazette reported in late June that the company has won a contract with the Defense Department. Rep. Chris Van Hollen (D-MD), the congressman who helped TGV win the award, told The Gazette that the Pentagon was interested in TGV’s technology for “field reconnaissance in battle.”

Bahn continues to work to raise money, splitting his time between Norman and Bethesda, the Washington DC suburb where TGV was founded and where Bahn maintains an office in his mother’s home. The company is on track, he said, to have the Michelle-B ready to enter revenue service by the second quarter of 2007.

When Bahn founded TGV in 1998 as a suborbital company, the entrepreneurial launch industry was dominated by companies seeking to develop orbital RLVs to launch satellites for telecommunications ventures like Teledesic and Iridium. Since then those companies have either shifted their focus on suborbital vehicles, like Rocketplane Ltd., or have gone out of business. (See “Suborbital’s ascending trajectory”, The Space Review, April 14, 2003.) “I’m still here, and they’re not,” he said. “Maybe my initial proposal was correct.”