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Falcon 9 launch
SpaceX successfully demonstrated the Falcon 9 rocket twice last year, but still faces scrutiny from those who don’t believe it can maintain its published low launch prices. (credit: Chris Thompson/SpaceX)

Commercial space skepticism

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These are, by and large, encouraging times for commercial space ventures. Last month NASA issued awards to four companies, ranging from aerospace giant Boeing to small, secretive Blue Origin, to develop technologies for future proposed commercial crew transportation systems (see “Commercial crew’s final four”, The Space Review, April 25, 2011), while SpaceX—another commercial crew awardee—and Orbital Sciences prepare to launch cargo demonstration flights to the International Space Station later this year. Several companies are also achieving milestones on suborbital vehicle systems: in just the last week Virgin Galactic carried out the first glide flight of SpaceShipTwo with its wings in the “feathered” configuration required for reentry on spaceflights, while Blue Origin apparently carried out, or planned to carry out, low-altitude flight tests from its West Texas facility, according to an FAA notice to pilots.

“You’re asking for us to increase your budget for a ‘what-if,’” Rep. Adams said of the FAA/AST budget request. “I have grave concerns about that.”

From these developments, it would seem that several companies are making good progress on systems that can soon offer capabilities to government and commercial customers that either aren’t available today or cost far more on existing systems. Yet, there remains considerable skepticism about these developments, both in Congress and industry, about the ability of these companies to carry out those plans. Those doubts were evident last year in the heated debate about NASA’s commercial crew plans, but it’s clear that that skepticism now extends to other ventures as well, as observers wonder whether companies can make good on their plans given a historical track record of delays and failures.

“Grave concerns” about a “what-if”

That skepticism was on display last week when the House Science, Space, and Technology Committee’s space subcommittee held a hearing on the 2012 budget proposal for the FAA’s Office of Commercial Space Transportation, known in the agency’s lexicon as AST. The office had a budget of $15.2 million in fiscal year 2010, but the 2012 proposal called for a nearly 75 percent increase, to $26.6 million. (The office’s final 2011 budget wasn’t available because of the passage just last month of the final overall spending bill for the fiscal year.)

Part of that increase is linked to plans announced last year to create a Commercial Spaceflight Technical Center at NASA’s Kennedy Space Center (KSC), where the agency will hire 50 people to provide safety and technical support. Another $5 million is set aside for a proposed “Low Cost Access to Space Prize”, patterned after NASA’s Centennial Challenges prize program and the original $10-million Ansari X PRIZE, which would award the money to the first non-government team to demonstrate a partially-reusable launch system that can place a one-kilogram cubesat into orbit.

Another reason for the additional spending is an anticipated sharp increase in commercial launch activity overseen by AST. “In FY2012 we expect to see several dozen licensed or permitted launches,” George Nield, FAA associate administrator for commercial space transportation, said in his opening statement at Thursday’s hearing. The bulk of that activity requiring launch licenses and experimental permits will come from suborbital vehicles, although he also cited commercial resupply missions to the ISS. That’s a sharp increase from past years, where the FAA has rarely had more than ten licensed launches in a year; in 2010 there were only four.

Some members of the subcommittee, though, were skeptical about the need for such a significant budget increase for AST. “You’re asking for us to increase your budget for a ‘what-if,’” claimed Rep. Sandy Adams (R-FL), who was perhaps the strongest critic of the proposed budget increase during the hearing (although, ironically, her district includes KSC and would thus benefit from the increased budget.) “I have grave concerns about that.”

That statement came after she questioned another witness at the hearing, Gerald Dillingham of the Government Accountability Office (GAO), on the prospects of increased commercial launch activity. “Does the increased activity the GAO does expect in the next two years for suborbital flights justify a 45-percent increase in staff and a 74-percent increase in the AST budget?” she asked. “No, ma’am,” Dillingham replied. “We have argued that, maybe incrementally, based on the development of the industry, one could start making that move in that direction, rather than the ‘big bang theory.’”

Another subcommittee member, Rep. David Wu (D-OR), expressed concern that AST was not regulating safety of commercial space vehicles, particularly those carrying humans, to the same strict standards as commercial aviation. Wu said he was surprised a statement to that effect by Nield earlier in the hearing hadn’t “elicited a gasp from this audience.” “I am absolutely stunned about that characterization of the future of commercial human spaceflight,” he said, warning later that an accident involving a crewed commercial vehicle “could potentially flatten the space program for a period of years.” Nield responded that any form of transportation has risks and fatal accidents. “The nation needs to understand that that is part of the risk of exploring the unknown, of doing new things,” he said.

GAO’s Dillingham said that “maybe incrementally, based on the development of the industry,” AST’s budget could be increased, but not the huge increase the office is seeking.

That debate over AST’s budget and its workload overshadowed another issue facing AST and the commercial space industry. The Commercial Space Launch Amendments Act (CSLAA) of 2004 included a provision that restricted AST from regulating the safety of commercial vehicle crew and passengers (officially called “spaceflight participants”) for eight years after the bill’s passage, except in cases of accidents that resulted in, or carried the “high risk” of, deaths or serious injuries. The idea was to given the industry enough time to build up flight experience so that any future regulations could be based on that experience base.

That moratorium expires next December, but the industry has not developed as quickly as in the heady days of 2004, when SpaceShipOne won the X PRIZE and a bold new future for suborbital human spaceflight in particular seemed right around the corner. With the December 2012 deadline approaching, some in industry have sought to extend the deadline. In fact, a provision included at the very end of HR 658, a reauthorization bill for the FAA passed by the House last month, amends the CSLAA by changing the start date for the eight-year period from the enactment of the CSLAA to “the first licensed launch of a space flight participant”. (The Senate version of the FAA reauthorization act, passed earlier this year, does not include that provision; differences between the two bills such as this will have to be worked out in a conference committee.)

During the hearing there seemed to be little objection to that extension, although there was some discussion about why that restriction should be eight years long. Dillingham said it wasn’t clear to the GAO “what the basis was for the eight years”, while another witness, Henry Hertzfeld of George Washington University, suggested that in place of an “arbitrary” time limit, the extension should be based instead on indicators “of the maturity of the industry and the risks involved.”

As for AST’s proposed space prize, subcommittee chairman Rep. Steven Palazzo (R-MS) suggested in his opening testimony that such efforts should be left to NASA. “It is my view that NASA is doing a more than sufficient job funding new technologies and capabilities through aggressive use of Space Act Agreements,” he said. Given the constrained fiscal environment, he added, “I question the wisdom of implementing another form of federal largesse.”

SpaceX’s low, low prices

Few companies were mentioned by name during Thursday’s AST hearing. However, when it comes to commercial spaceflight in particular, one company typically gets more attention—and criticism—than the rest of the industry: SpaceX. The company was in the crosshairs in last year’s policy debate about commercial crew development, and was lauded when it successfully launched its Falcon 9 rocket twice last year, including a successful flight of its Dragon capsule on the second launch last December (see “2010: the year commercial human spaceflight made contact”, The Space Review, December 13, 2010).

SpaceX attracted new attention to its plans to offer commercial launches at much lower costs that competing vehicles based on comments made by officials with China Great Wall Industry Corporation, the company that markets Chinese rockets to foreign customers. Company officials, not speaking for attribution, told Aviation Week that they were “confounded” by the low prices SpaceX publishes for its launch vehicles, and they felt Chinese rockets could not match them.

“These prices are based on known costs and a demonstrated track record, and they exemplify the potential of America’s commercial space industry,” Musk said of SpaceX’s launch costs.

That comment rippled through the industry, since China established its initial foothold in the commercial launch market in the 1990s primarily because of the lower prices it offered. While Chinese vehicles play a limited role in the commercial launch market today because of US export control restrictions that prevent satellites with American components from being exported to China for launch, they still get some business from so-called “ITAR-free” satellites that lack US-built components because of its lower prices. If China can’t beat SpaceX’s prices, the reasoning went, just what is SpaceX’s secret, and how seriously should the company be taken?

SpaceX CEO Elon Musk responded to those comments in an update posted on the company’s web site last week. “I recognize that our prices shatter the historical cost models of government-led developments, but these prices are not arbitrary,” he wrote. “These prices are based on known costs and a demonstrated track record, and they exemplify the potential of America’s commercial space industry.”

In his update, Musk stated that the “standard” Falcon 9 launch price is $54 million, with contracts for launches signed at that price or even less. A Falcon 9/Dragon cargo flight to the ISS is $133 million, he said, based on the company’s existing fixed-price contract for 12 flights to the ISS for $1.6 billion. “If there are cost overruns, SpaceX will cover the difference,” Musk added. Overall, he wrote that total company expenditures from its inception in 2002 through 2010 were less than $800 million, including the complete development of the Falcon 1 and 9 rockets and the Dragon spacecraft.

Not everyone is convinced by Musk’s claims, though. Lexington Institute COO Loren Thompson, in a blog post on the organization’s web site Thursday, sharply criticized Musk and SpaceX for failing to meet schedules and for suffering three launch failures early in the development of Falcon 1. “When even the Chinese say they can’t match a company’s prices, there's only two likely explanations,” Thompson concluded. “Either Elon Musk is an alien visitor from some superior off-world civilization, or his prices are going to rise later.”

“I want to preach against the sin of triumphalism,” said XCOR’s Jeff Greason last month. “We’re not there yet, and our problems are not over.”

Some of Thompson’s claims don’t stand up to closer scrutiny. He writes that “NASA can’t seem to get enough of SpaceX, shelling out $2 billion to get its launch vehicles to a point where they can begin lifting payloads into orbit to support the Space Station and other missions.” But, as Musk noted this week, SpaceX has spent less than $800 million overall; the bulk of NASA’s support has come from its $278-million COTS award to SpaceX in 2006. (Thompson may be adding to the COTS award SpaceX’s $1.6-billion commercial resupply services contract, but that funding is largely reserved for actual services to be provided by SpaceX, not for development of the Falcon 9 or Dragon.) He later claims that SpaceX “is now trying to back out of price commitments it made” for Falcon 9 launches, without going into specifics. Thompson did not respond to a request for comment Friday on those issues.

There is, though, a grain of truth to some of Thompson’s criticisms. Development of SpaceX’s launch vehicles has taken longer than the company originally anticipated, and it suffered, as he put it, “three catastrophic launch failures in a mere seven missions”. (On the latter point, one can also accurately state that SpaceX has now had four consecutive successful launches, which puts a very different spin on the company’s reputation.) And the prices SpaceX has published for the Falcon 9 have gone up: when originally introduced, SpaceX offered Falcon 9 launches for $35–55 million, depending on the mass of the payload; the company now quotes prices of $54–59.5 million on its web site. However, as Musk noted in his message last week, the company has sold launches for less than that quoted price.

Overturning the historical record

Perhaps the biggest factor in skepticism about the commercial spaceflight industry’s claims is its track record. Many remember the flowering of entrepreneurial space ventures in the latter half of the 1990s, when several companies proposed new vehicles, including fully reusable launch vehicles, to launch satellites for ventures like Iridium, Globalstar, and Teledesic at a fraction of the price of existing expendable vehicles. Most of those ventures had trouble raising money and eventually faded away when the demand for those satellites failed to materialize. Thompson obliquely refers to this in his post last week. “The last time that California gurus predicted the era of commercial spaceflight had arrived, it turned into a disaster for the U.S. space program. Private demand evaporated in the bust.”

Some in the industry have expressed caution about the new wave of enthusiasm about commercial space ventures, both orbital and suborbital, noting both that past track record and the long road ahead for current ventures. “I want to preach against the sin of triumphalism,” Jeff Greason, the president of XCOR Aerospace, said at Space Access ’11, an entrepreneurial space transportation conference in Phoenix last month (see “Whither human spaceflight?”, The Space Review, April 11, 2011). “We’re not there yet, and our problems are not over.”

Addressing that skepticism in the short term may be difficult, particularly when commercial space ventures intersect with policy issues, be it funding for government regulators at AST or maintaining support and funding for commercial crew development programs at NASA. In the long run, though, the answer to that skepticism is simple: fly.