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Problems for Kepler?

In a column in Sunday’s Naples (Fla.) Daily News (free registration required), Ben Bova covers familiar ground regarding the Hubble Space Telescope. However, he adds that Kepler, a Discovery-class mission to search for extrasolar planets, may also be endangered. He notes that between $35 and $50 million will be cut from the program in NASA’s proposed FY2006 budget. This cut “effectively guts the program” and raises fears that the mission could be cancelled. Even if it isn’t cancelled, Bova concludes, the cut could stretch out the program and result in layoffs, increasing its overall costs.

What isn’t clear from the report is the source of the size of the Kepler budget cut. NASA’s FY2006 budget proposal (p. 341) calls for $111.5 million for Kepler in FY2006. In comparison, NASA’s FY2005 budget request projected $114.4 million in 2006. It is true, though, the Kepler’s launch has slipped from October 2007 to “TBD” because of “schedule concerns”, upon which the budget document doesn’t elaborate. However, Kepler has passed its critical design review and was approved to enter Phase C/D a month ago.

25 comments to Problems for Kepler?

  • Chris Martel

    What’s the point of discovering extrasolar planets when humans can’t get beyond LEO and the best we’ve done with robots is the heliopause? Anyone who thinks that Earth like extrasolar planets don’t exist has never really thought about cosmology and probably never will. So how dose proving the existence of extrasolar systems help anyone in any way? Cut, cut, and cut! Make room for important missions that will enable mankind to one-day dream of actually putting exrtasolar systems to good use.

  • I wouldn’t put it this strongly — I do see value in “pure” space science — but, basically, I agree. It is why I believe, if it really does come down to a choice between HST and the Moon-Mars initiative, the latter should win.

    – Donald

  • Matthew Brown

    Because its sexy to the mainstream (If we can get pictures). It garners public interest in the Space program. That will open up the coffers more then anything so we could build the infrastructure needed for cheap access to space.

    Look who brought it up, Ben Bova, a science fiction writer, and probly the best solar sci-fi writer of the day. (Though I can’t wait to see what Alistair Reynolds does with the genre) A common device among solar sci-fi, which i am using in my own attemp of a novel, is a rich person kick starts the whole space infrastructure themselves, as the government is too slow and has alot of inerta. It is not thats its technically infeasble but the politicans who runs the government can not convience those that put em power, and keeps em in power.

    So its public outreach that can at least get the voters say space is important. And extra solar planets is apart of the overall public outreach. For the ammount of money being talked about, with manned spaceflight in NASA its enough for maybe one paper study of a flight system. I hope the JWST isn’t next on the chopping block though as that will surly kill any momentum for sexy pictures for publicch outreach.

    NASA really needs to hire someone from madison avenue.

  • Chris Martel

    If all efforts to do “pure” science at NASA were diverted to establishing a basic space transportation infrastructure by the year 2020 we wouldn’t need “sexy” pictures. People would be able to witness first hand what space has to offer. Science would likely be the prime benefactor of a space infrastructure. Again I ask what’s the point of saying “Oh! There’s a planet just like ours 100 light years that way.” if you can’t even get off the surface of Earth? Build the car then start making the road maps.

  • But, here, I strongly disagree with you.

    I think a lot of what’s been wrong with space launch development is that it is not market driven — generally, it’s light years ahead of its market. The market, today, is milsats, the Space Station, scisats, and comsats, in about that order of value, though not all of them are commercial markets. If VSE goes forward, the launch market well expand. But, right now, one of the principle markets keeping launch vehicles in business is science satellites. If you divert all the money now spent on scisats and the Space Station into launch vehicle development, you won’t get better launch vehicles. You’ll get congress folks and bankers asking themselves why am I spending all of this money on launch vehicles when there is nothing to launch?

    I strongly believe that after all these years of failing to build better launch vehicles for which there is no market, we need to try the other approach. We need to use the launch vehicles that exist now to develop markets — _then_, once there is a bigger market, there will be the incentive for private industry to build bigger and better vehicles.

    Rather than putting science money into launcher development, it should be the other way around. That, I believe, is the advantage of the VSE approach. It takes money that was being wasted on the Space Shuttle, RLVs, et cetera, and puts that into missions that will create actual results. It is those results, ultimately, that will justify better launch vehicles.

    Going straight to launch vehicles for public access to orbit is too big a step. It’s got to be done incrementally, both from the X-Prize one-small-step-at-a-time approach, and from the modest improvement of existing technology approach — until the market is there and in place.

    A Lunar Base will require a lot of supplies which require better launchers. But only if the Lunar Base is there. You may need an egg to get a chicken, but you need a chicken (i.e., results) before anyone is going to invest money in a better egg. We’ve got the eggs — EELVs — however inadequate they may be. Now, we’ve got to come up with a chicken — a Lunar Base and more payloads — to justify better eggs.

    – Donald

  • Robert G. Oler

    Posted by Donald F. Robertson at February 28, 2005 06:50 PM

  • Robert G. Oler

    Posted by Donald F. Robertson at February 28, 2005 06:50 PM …

    Try again.

    Tell me what purpose it serves for the federal government to spend a lot of money on a base which has no value other then just being there…and causing the Government to buy a lot of EELV’s.

    Its like saying “we developed Velcro to go to the Moon”…which we didnt.

    But here is a deal. Why not just buy the EELV’s and skip the rest of the program. Save about 100-200 billion dollars…and who knows what else will happen.

    Robert

  • Bill White

    In comparison with the cost of developing a genuine cislunar infrastructure, Kepler is like a drop in the ocean.

    What we need to find is a way to earn a profit in space, without government subsidy.

  • Chris Martel

    The general public couldn’t care less about space science. Regardless of any new discoveries that NASA makes most people will continue to think space exploration is a waste of time and money. Don’t get me wrong. I Love space science. If everyone else had half the affection I have, we would not be debating this issue. The infrastructure would already be in place.

    Donald wrote: “We need to use the launch vehicles that exist now to develop markets…”

    What markets? Current launch technology was built under cost plus government contracts to support markets that you go on to mention in your post. These vehicles are overly complex, expensive, and outdated. I can’t envision of a single useful market popping up from these launch systems. Please enlighten me. The way I see it is there is a relatively small group of people who are interested in all that space has to offer (people like you and me). Contrast this with the vast majority who don’t, and probably will never, see any reason to explore space. This latter group is not interested in any new discoveries about the cosmos. The key to expanding space science, not to mention our roll in the universe, is to make space a useful subject to everyone. Building a robust space transportation infrastructure will enable colonies (scientific, mining, adventure, etc.). Colonies will make space relevant to the public. Better launch technology is Paramount and that is what NASA should be spending its money on. Privet sector will utilize the things that NASA develops just as they always have and the infrastructure will practically build itself. As for the analogies… Let me say it again. Build the car then start making road maps or maybe more fitting, build the boat then chart the sea.

  • Harold LaValley

    As for the media coverage IMO unless it is bad news they barely will even give it a mention. The chance of getting the general public involved then will be nill and only thoses that follow as a hobby will even know of any events or science that may have been preformed on the ISS or for that fact anywhere else.

    Ex. did most people hear about the food shortage that the last crew had to endure until a progress brought up fresh supplies… or of the cystal growing.. How about the new launch that carries snails this time.. not a peep in the general public news sources.

  • Chris says, “Let me say it again. Build the car then start making road maps or maybe more fitting, build the boat then chart the sea.”

    The problem with this analogy is, first, that we’ve been trying it ever since Apollo and it’s not working.

    Second, it is not what’s worked in history. The car did _not_ come first. People colonized the West with what they had at the time, horses and carriages and sailing ships. Only once the West was already colonized, and there was a market for supplies and transportation, did Congress and private groups fund the rail roads and, later, develop cars and freeways and such.

    You are trying, quite literally, to put the car before the horse — to develop an optomized transportation system before there is a reason for it to exist. Apollo and the N1 proved that can be done, but this was a clear exception in human history.

    The reason the lunar base has to come first is the same reason San Francisco had to come before the transcontinental rail road (http://www.speakeasy.org/~donaldfr/sfmodel.pdf). Once you have a base, you have a need for supplies, and that justifies your transportation.

    We can see it happening now with the Space Station. The Station is what’s keeping both the Soyuz and the Shuttle in business. (Yes, NASA and we would be better off if NASA farmed that out to entrepreneurs, but that is a question of strategy that does not change my basic point; the fact is, the Station _is_ the major near-term market orbital entreprenures have to look foward to.) Shortly, the Station will provide a significant part of the upgraded Ariane’s market. I haven’t calculated it out, but Space Station requirements undoubtedly represent a large fraction of all the tonnage delivered to orbit. If the Space Station were to disappear, that market would disappear with it, and Ariane, Soyuz, whatever the Americans finally decide to use, et al, would be left fighting over the odd comsat.

    VSE will do the same thing. It will keep incrementally upgraded versions of current launch vehicles in business and provide a market to justify new ones.

    If we go straight to launch vehicles, as we have in the past, the VSE money will disappear. There will be no lunar base and no reason to develop new launch vehicles. We’ll be right where we’ve been for most of my lifetime — that is, nowhere.

    It is time to learn the lessons of history and create a place to go with what we’ve got before we try to develop optimized ways to get there.

    – Donald

  • Chris Martel

    Donald,

    First you say, “…we’ve been trying it ever since Apollo and it’s not working…”

    Who’s been tying since Apollo? NASA has only supported LEO operations for humans. Since the demise of Apollo there have been no efforts to further man’s presence in space.

    Second you say, “…The car did _not_ come first…”

    Your mixing up my analogies so lets just forget them and talk realities. Ocean going ships, subsidized by old world governments, were the technology that enabled the new world to be discovered and colonized. Rail systems enabled large-scale westward expansion. Before the train only courageous explorers and adventurous made it to the west coast (see Lewis and Clark et all). Those not up to the task failed and died (see The Donner Party). The rail system made it easy for people to migrate to the west and start what is now the worlds 6 largest economy i.e. California.

    Furthermore you say, “You are trying, quite literally, to put the car before the horse — to develop an optomized transportation system before there is a reason for it to exist.”

    You CAN NOT build anything on the moon with today’s launch capabilities. Optimized transportation is the technology witch will enable settlement of the moon and other space locals.

    Again you say, “If we go straight to launch vehicles, as we have in the past, the VSE money will disappear. There will be no lunar base and no reason to develop new launch vehicles. We’ll be right where we’ve been for most of my lifetime — that is, nowhere.”

    I agree with you that a launch vehicle for the sake of a launch vehicle has no direct value. However you are missing the main point of VSE, which is to create a permanent infrastructure to support human efforts in space far into the future. So the launch vehicle will not be like Apollo without a real purpose. Instead the all important launch technology will be designed specifically to enable construction of the necessary infrastructure.
    Finally you say, “It is time to learn the lessons of history and create a place to go with what we’ve got before we try to develop optimized ways to get there.”
    Here I think your priorities are just completely out of whack. How do you propose to build anything in space or on the moon without optimized ways of getting there?

  • I don’t think you are reading my posts carefully enough to get the thread of my argument. Therefore, rather than repeat what I’ve already written, I’ll just answer your last question.

    Many years ago, General Dynamics did a study of returning to the moon with a permanent infrastructure (albeit less than a full base) using one Shuttle cargo bay and three Titan-IVs. As I recall, two Titans would pre-position supplies on the moon, the Shuttle would launch crew, lander, and Apollo-derived return vehicle. The third Titan would launch trans-Earth and trans-Lunar propulsion, derived from single-engine Centaurs. This required only one more docking than Apollo did, though it does require precision landing on the lunar surface.

    One Shuttle flight = circa $400 million.
    Three Titan-IVs = 1.5 billion.
    Total, plus pad for development, maybe 3 billion for the first flight, 2 billion thereafter.
    Thus, even with the worst case possible for launch costs, you could fly four of these for well under the minimum estimate I’ve seen for developing an ELV and flying nothing.

    All it takes is a bit of immagination and thinking beyond brute force launch-it-all-in-one-flight.

    If we could build San Francisco sailing through the Antarctic sea with sales (how my partner’s great grandfather got here from New York), we can certainly start a lunar base with EELVs. We Americans are supposed to be good at taking risks and improvising — well, let’s get started.

    – Donald

  • Matthew Brown

    The plan for the transcontinental railroad was done in 1838, but congress did not deem it important enough at the time. Then the gold rush occured in 1849, 80K people used into calfifornia mostly via overland routes. Suddly easy overland travel was needed. Even so it didn’t begin construction till 1861. Even so the expense would be yeah so to justfy that The Homestead act of 1862 was made to start a massive colonization of the west. The railroad was not completed till 1869. THe west would not be as developed as it is today if it wasn’t for early government subsidies.

    But back to the orgional point. two things I’d love if if NASA was splitup into two angencies, space science and space transportation. But to say the 5-10% of NASA’s budget that is for science is moved over to space transportation would have made that much of a difference. Thats really wishfull thinking. Its not how much money there is but how its used. The cost plus model that NASA’s contractors operate under does NOT make space travel cheap. There is no incentive for the contractors to be more effcient, because they can not garner a greater profit, less cost means less profit with cost plus.

    Sexy pictures may not mean much to some, but if it wasn’t for the sexy pictures from Carl Segan’s Cosmos when i was a kid I would not have gotten into science, and probly be some dumb jock either making millions in the NFL or pumping gas wishing for my glory days in highschool. I have met numerous of pro space travel people that is the same. The more people we can make passionate for space travel, the more likely congress will really support cheap acess to space.

    We use the sexy pictures to draw people in, then tell them that space access needs not be as expensive as it currently is by a couple of factors of magnatude. Imagine what would happen if we could convience people we could end terroism by going into space.

    It is the boardrooms and congress where the real challenge for cheap acess in space lies, I can’t do anything about boardroooms. But grass roots can change Congress. And Sexy pictures can help us motivate the grass roots.

    Public outreach is more important then engineering at this point. The public funds the engineers. Private sources fund the engineers but much more effciently, but private sources won’t fund unless there is a market. So we are left with the public, to give more money and to force NASA to use it more effciently fighting the special intrests who profit from the bloat.

  • Chris Martel

    Donald,

    Thank you for the insight. The General Dynamics study sounds like a good plan if anyone wants to read about it here’s the link:

    http://www.abo.fi/~mlindroo/Station/Slides/sld051e.htm

    I may be wrong but I don’t think a small habitat module on the moon will do much for public opinion on space exploration. As noted by Mr. LaValley earlier in the post, the media doesn’t report unless it’s bad news. Think of all the important accomplishments we space advocates have made in recent history Hubble, ISS, The Mars invasion, etc. Most people just don’t care. I know. I’ve asked them. The average citizen thinks about space exploration approximately Zero times a day. If you put a base on the moon that figure will increase to approximately Two times a day for about a week. Then it’s back to Zero. I’m obviously being facetious here but my point remains true. Without safe access for the average person in space no one will care. Even if we follow the General Dynamics Lunar approach or the Zubrin Martian approach the problem will remain: no access to space for you and me no interest in space from you and me. We don’t need NASA or anyone else to build an outpost. Privet interest will build their own infrastructure IF they have the means to get there. That’s why I keep saying build the ship(s) then people can do what they do naturally. Explore, expand and evolve.

  • Matthew Brown

    heh we are arguing in circles then, we can’t cost effectivly explore without the ships. We can’t build the ships without public support. We need to explore to gain Public support.

  • Chris Martel

    Mr. Brown, your comments on sexy pictures are right on. I too was inspired by Carl Segan’s cosmos. It still inspires me today as I’m sure it does for countless others. However the fact remains that most people see the pretty pictures and think wow that’s a pretty picture. In general they are unmoved by the eloquent notions put forth by Segan or anyone else for that matter. Most people think space advocates are a bunch of Star Trek Convention dreamers who live inside there own little world (some of us actually do). Science has given NASA many tools for public outreach and they have used them well. They no doubt will continue to use them in the future, as will you and I. Public outreach sort of goes with the territory. In order to change the perception of space as a foreign and far away place we need more access. More access can only come through engineering. As a last note on sexy pictures almost everything coming out of the NASA sexy picture department lately either looks like stuff we’ve already seen or are like faces only a mother could love. By the latter I mean the microwave background and the Hubble deep field etc. Don’t get me wrong. I find all the new discoveries and photos to be fascinating and wonderful. But I am a self proclaimed Space Junkie. Most people have the attitude, “If you’ve seen one picture of Mars You’ve seen them all. And the scary thing is that to some extent they are right.

  • I’m a little too old to have been inspired by Cosmos, but I was certainly reinspired by the imagery in it.

    The direct jump to masses of people in space is economically, if not technically, impossible. But, it _is_ happening. I think the work initiated by the X-Prize will ultimately lead to that, but, even if everything goes right, it will take decades. Even if NASA were to dedicate itself solely to that project, and nothing else, it would still take decades.

    One thing Apollo and space advocates have both done is over-set expectations. As I argued in some of my early articles, that is a guaranteed route to disappointment and a loss of faith. Rule one in both politics and technology is _never_ over set expectations. It is better to promise too little and achieve it than it is to promise too much and fail. So, we need to set the highest expectations that can reasonably be achieved and no higher. (This does not mean that higher achievements will not be made; once a project is started, people start thinking, and, like Apollo, the goal can be beat.)

    The fact is, if you look at history, new frontiers are colonized slowly.

    Matthew says, “The plan for the transcontinental railroad was done in 1838, but congress did not deem it important enough at the time. Then the gold rush occured in 1849, 80K people used into calfifornia mostly via overland routes. Suddly easy overland travel was needed. Even so it didn’t begin construction till 1861. Even so the expense would be yeah so to justfy that The Homestead act of 1862 was made to start a massive colonization of the west. The railroad was not completed till 1869. THe west would not be as developed as it is today if it wasn’t for early government subsidies.”

    These figures are comparable to the ones I used in my article, and he proves both my points. It will take a _long_ time to colonize the Solar System, just as it took many decades to colonize the West under far more ideal conditions than we are dealing with. If we really want to start this process, rather than just talk about it, we need to recognize that it will take generations and then find the _minimum_ next step that will result in more human infrastructure off-planet and greater transportation requirements to get to it. Currently, I believe that’s a lunar base with EELVs. (If someone can think of a smaller step that would get us off-planet human experience, please feel free to suggest it.)

    Otherwise, we’ll create lots of view graphs and dreams about instant success, and probably spend lots of money, and end up right where we are now.

    – Donald

  • ken murphy

    Wow, there’s a lot of good discussion here!

    Like Mr. Martel, I’m not particularly sold on most of the Deep Space stuff that we do now, and I question the value of the knowledge that there is an Earth-like planet around another star that we won’t visit for generations. Especially when we don’t know all of the objects in our own neighborhood. Sure it’s nice to look out 14.5Bn years to the edge of creation, but what does that serve?

    I don’t think it’s a matter so much of of NASA hiring some Madison Avenue type to better flog the public with something they’re largely indifferent to, but rather of NASA going to the American public and asking them what they want the U.S. to do in space. Do they want us to fix GEO sats? Do they want us to mine the Moon to build Solar Power Satellites? Do they want us to look for asteroids? Do they want us to take a close up look at Pluto’s atmosphere? Do they want us to watch nearby stars for pre-nova activity? Do they want us to look for planets around other stars?

    Ask the public to prioritize them (say $20Bn to spend on $40Bn of activities) and see what the results are. And not just a standard 1000 person sample, but lots and lots of folks.

    When you think about it, things like SPSes and Lunar Power Towers aren’t going to be built by NASAnauts, they’re going to be built by Teamsters. That means the kid in shop class can actually think about going into space, as well as the nerd in AP Cosmophysics. There are plenty of blue-collar Americans who’d be willing to work in space for a year for $100,000 or two. With that kind of nut you can buy a small business, set yourself up, maybe even send a kid to the community college. Years and years of wages rolled into one.

    Pretty pictures of space are one thing. A job in space is truly another.

  • GuessWho

    This is an interesting discussion with many good points. I would add a couple of observations.

    First, there has been a number of comments highlighting the need for a “market” to make space exploration viable. The implication being that space tourism or space adventures is the logical first market. While I would agree that these are the current flavor-of-the-month, I would submit that they will never be the spark that unleashes a flood of space exploration. Europe’s expansion into the New World was not driven by a market, but rather by the perception that there were new, valuable resources to be found and exploited. Similarly, westward expansion of the US was initially driven by the search for new natural resources, farmers seeking new lands to farm, trappers seeking animals for their pelts, and ultimately, prospectors searching for new ores. While the farmers and trappers provided a slow, steady trickle to exploration, the discovery of gold in California was what unleashed the flood. Traditional commerce (the market) followed the source of new wealth and Government was forced to respond to the needs of the populace that had blazed the trail west and in a second way, reap the benefits of the new wealth as well. The question then is; “What resources do the Moon or Mars have that can ultimately be exploited in an economically valuable way?” To be sure, a small presence on both bodies is needed to provide the prospecting spark, but Government is not the right entity to accomplish this. If past expansion is the accurate model, any human presence on the Moon or Mars will naturally evolve to an activity focused on finding new resources to exploit and the resulting generation of wealth that will attract greater numbers of people looking to make their mark if a non-government entity leads the effort. If Government leads, then it will devolve into an effort of program self-preservation, e.g. the Shuttle and ISS, that is perceived as nothing more than a white collar job works program with no impact on the general public. This perception leads to a rapid loss of interest by the public as correctly noted in previous posts.

    Second, I would agree that using existing lift capabilities is a better approach to the initial exploration than sinking funds into yet another new and improved, bigger is better, launch vehicle. Multiple launches with either distributed payloads or on-orbit assembly of a single transport system are viable ways of addressing the limited launch-mass capability. The focus should be in getting there and getting things done than developing new and better toys. If there are resources to be exploited, new transport systems will be developed to return those resources as economically as possible. Trappers and prospectors didn’t focus on building a railroad system to get them west, thay packed several mules, put them together in a train, and headed out.

    Finally, the comment that cost-plus contracts to space contractors is the wrong approach indicates a lack of understanding of how aerospace companies operate. Producing spacecraft on a one-sy, two-sy basis will never be done on a fixed-price basis. The potential of failure in space of essentially one-of-a-kind spacecraft with no means of in-field repair is too great as profit is realized upon success milestones. Aerospace companies are, for the most part, publically held entities with shareholders. If the company cannot produce a profit to those shareholders on a consistent basis, investment dollars go elsewhere and the company folds. The closest they come are commercial sats, and to some degree launch vehicles, with limited modifications that can be produced on a scale large enough to ultimately realize a standard architecture that can reasonably assessed for risk of failure and amortorized over enough units to warrent a fixed-price approach. Science sats are a long, long way from reaching that scenario. Note, privately held companies aren’t held a tightly to this model. Mr. Musk can choose to sink as much of his own money into a space enterprise as he wishes. No one is going to fire him or cause his company to fold if he fails.

  • Chris Martel

    I feel as thought we’ve been packing mules for decades. The time is right to start building the railroad. I believe that is what NASA under VSE is trying to do, at least for the moment. Even if NASA drops out in the future my hope is that privet industry will prevail. Sustainability is key. It will be exciting to see how it all turns out. Just to clear up a possible misconception. I never said cost plus was wrong. That system fit during the time of mules. I only meant to indicate that cost plus is not conducive to growing a healthy market driven program. It may be good for the design and prototyping stages of development. However if were are ever going to have space access, and therefore relevance, for the general public we will need a whole fleet of ships. I know NASA will probably never run such a fleet. But if they can develop the initial infrastructure (likely using cost plus contracts) than privet interest can start to develop mass transit. I guess you could say that in this example cost plus sort of inadvertently fosters a market. My point is. The time has come to start building the railroad that will facilitate our upward expansion.

  • Bill White

    We need heaps of money to build a genuine cislunar infrastructure, yet too many people are too prissy to take the money from an obvious source, advertising, marketing and sale of media rights.

    Apparently some of the SpaceShipOne people were even bent out of shape from the marketing of M&Ms during the winning X-prize flight.

    This editorial linked at spacetoday (tips hat to Jeff Foust) says “Get over it, already!”

    The Kepler money is chump change compared to what we need and the fact that so much energy is being spent arguing about the Kepler money tells me we are much further away than we would like to believe.

  • Chris Martel

    My feeling is that Kepler only sparked the discussion. It has evolved into a more all-encompassing rhetoric.

  • Matthew Brown

    I also agree that cost plus is mandatory for the inital prototype and first flights of a new system, otherwise no one will risk capital. But it doesn’t make it possible for innovation of the system. In a cost plus model, innovation does not occur without out a direct request from the customer. Its frustrated a number of engineers i know who have come up with innovations. I grew up around Boeing people.

    I have come up with an advanced cost-plus model. don’t have s nazzy title for it but here it is.

    After the first few flights on the cost plus model the buying price is set and any reduction in cost for the contractor, the sell price is reduce half of that. So say its 20% plus cost. a $100M cost will be sold at $120M price for a $20M profit.

    If the contractor reduces its cost by 10% the customer now buys it at 5% below the “Set” price.
    Costs $90M sells for $114M for a $24M profit.

    This gives them an innocentive to innovate. For any additional costs added due to request by customer for a period of time that is at what ever % of basic cost plus. Also needs to be checks for safety for manrated items and not quite sure what happens when costs go up at no fault of the customer or the contractor.

    Sure the accounting is a little tougher, but if we can send a man to the moon.. ;)

  • GuessWho

    Mathew Brown’s cost-plus approach may have merit. I have had experience with a past company wherein a fixed-cost contracting approach was taken with a number of twists; any cost savings realized by delivering below the fixed price were kept by the company and if those savings exceeded pre-set values (say 10% of the overall costs) then the Government further paid the company an incentive award, any cost overruns (regardless of fault) were borne by the company up to an agreed upon level (again say 10%), overruns above and beyond this level were borne by the government. In return, on a periodic basis (say every 2 years) the company would revise its “fixed-price” either up or down based upon the last two years of performance. Thus the company benefits by continuing to increase productivity and tapping into the incentive awards (which could be substantial) and the Government is incentivized to reduce overruns from their end to continually drive down the unit costs and thus the overall amortorized costs. Both entities were at risk if costs went up, i.e. the company in the near-term and the Government in the longer-term. Note however that this model works when there is a reasonable level of commonality in the product from year to year while still allowing evolution. I don’t think it would apply well to the one-sy, two-sy approach of current science satellites unless the margins and incentives (particularly to the industrial partner) were fairly generous, at least at the outset.