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The future of COTS

Right now a number of companies are busy working on their proposals for funded Commercial Orbital Transportation Services (COTS) agreements as part of the new round (officially designated JSC-COTS-2) that opened up when NASA terminated its existing funded Space Act agreement with Rocketplane Kistler (RpK) last month. While NASA is proceeding with the competition, with proposals due Wednesday the 21st, there are still some factors involving RpK that could throw a wrench in NASA’s plans.

As Space News reported in its print edition this week, RpK filed a protest with the Government Accountability Office (GAO) about the new competition on October 30. The protest is not about their original agreement, because that was performed under a Space Act agreement that, unlike conventional procurements, is not subject to GAO protests. “RpK did not protest our decision to terminate,” Neil Woodward of NASA’s Exploration Systems Mission Directorate said Monday at the Reach to Space conference at George Washington University. RpK followed an appeal process internal to NASA that has since concluded, he said.

The RpK GAO protest, instead, is on how the new competition should be structured. “They did file a GAO protest on the second announcement,” Woodward said. “What they’re protesting is whether it should be done as a Space Act agreement or under federal procurement regulations; that is, whether it should be a FAR [Federal Acquisition Regulation] procurement, or whether it could be an agreement, which is what we have been doing.” While the protest proceeds, NASA is continuing with the current competition, with plans to make one or more awards early next year. Left unsaid is why RpK would seek to change the procurement process.

One of RpK’s major complaints about its original COTS award was that NASA was sending mixed messages about the level of support it was giving to the program, either though comments by NASA officials or its contract with Roskosmos for additional Progress and Soyuz flights to the ISS, making it difficult for RpK to demonstrate to potential investors that there was a viable market for commercial ISS resupply. Woodward disagreed that NASA, unintentionally or otherwise, gave out conflicting messages. “Our messages have actually been consistent” from the original COTS announcement to the request for information the agency issues earlier this year for COTS phase 2.

13 comments to The future of COTS

  • al Fansome

    Very interesting.

    I wonder how RpK can protest NASA’s choice of using a funded space act agreement for the upcoming competition.

    The reasoning is beyond me.

    Thoughts by anybody else? Insights?

    - Al

  • anonymous.space

    “Left unsaid is why RpK would seek to change the procurement process.”

    Unfortunately the GAO docket provides no details, but I’d guess that it’s all about the cost-share. RpK found that they could not raise enough private investment to share the costs of remaining K-1 development with NASA under NASA’s Other Transaction Authority — the legal authority that allows NASA to share costs with industry (and do other interesting things) through Space Act Agreements. So RpK is now challenging NASA’s ability to use its Other Transaction Authority and Space Act Agreements to execute the remaining COTS program, which would force NASA to execute COTS using standard procurement contracts under the authority of Federal Acqusition Regulations, which would greatly constrain NASA’s ability to seek industry cost-sharing. If RpK won their GAO challenge, NASA would likely be forced to pay the whole COTS bill, or give up on COTS altogether.

    That would be my guess. It’s still a very, very longshot at best for RpK. RpK would have to convince the GAO to force NASA to use the FAR, despite the fact that the 1958 legislation that created NASA gives the agency Other Transaction Authority and despite the precedents set by NASA in using that authority for nearly half a century. (X-33, for example, was also executed using a cost-sharing Space Act Agreement.) Then, if RpK won, NASA would have to be convinced to not abandon the COTS program and foot the whole bill using standard procurements under the Federal Acquisition Regulations. Then, if NASA chose to execute the remaining COTS program under those conditions, RpK would still have to win a COTS contract. I’d argue that the probability of all three events falling RpK’s way is practically nil. But desperate times, desperate measures, and all that.

    Hopefully the NASA OGC has their act together for once, GAO makes quick work of RpK’s protest, and COTS doesn’t get derailed. After that, COTS and senior NASA management needs to think deep and hard about the upcoming COTS selection and ensure that the content selected matches the remaining resources in a way that’s consistent with other, successful, launch industry cost-sharing development programs (like EELV) — or bring more NASA resources to the table in the form of up-front development dollars, hard flight purchase options, or both. If NASA does neither and another self-funded billionaire like Musk does not join the game, then the COTS program should just use its remaining dollars to accelerate Falcon 9 and Dragon. Without those changes, it still won’t be attractive to institutional investors, venture capitalists, or angels, especially in the worsening economic environment and in light of the highly public RpK failure.

    “Woodward disagreed that NASA, unintentionally or otherwise, gave out conflicting messages. “Our messages have actually been consistent” from the original COTS announcement to the request for information the agency issues earlier this year for COTS phase 2.”

    I have to say that it pains me greatly to see Woodward, another unflown astronaut with no program management experience from the Horowitz era, still working Constellation and COTS at NASA HQ. From my interactions, the guy is technically smart, nice, and very well-meaning, but he doesn’t have a clue when it comes to program management, systems integration, or business practicalities. If the COTS selection had been managed the way he wanted, the measly $500 million COTS budget would have been wasted and sprinkled like fairy dust over a dozen companies and vehicles, instead of the current, arguably still unaffordable, two companies and four vehicles.

    FWIW…

  • While I can speculate about several possible reasons why RpK may be protesting the COTS 2 procurement method, the only one that doesn’t smell like blackmail and therefore invite a libel suit from George French is this:

    One of RPK’s alleged barriers raising $500+ million in private funds (above their $207m NASA award) was prospective investors’ reported disbelief that NASA would buy services once the K1 was ready. An Other Transactions Authority agreement is a wonderful way to structure an innovative R&D project, but it does not allow for the purchase of services. Therefore, if RPK wanted NASA to combine a COTS award with a block purchase of ISS servicing mission in one legal instrument, it would have to be under a FAR-based contract.

    Again, I have no idea if this is why RPK is protesting the COTS 2 procurement method. But the above argument is at least valid on its face, although probably not compellingly so.

  • Dave Huntsman

    “COTS and senior NASA management needs to think deep and hard about the upcoming COTS selection and ensure that the content selected matches the remaining resources in a way that’s consistent with other, successful, launch industry cost-sharing development programs (like EELV) — or bring more NASA resources to the table in the form of up-front development dollars, hard flight purchase options, or both. If NASA does neither and another self-funded billionaire like Musk does not join the game, ”

    I’m not part of the COTS process or anything. But there is something else potentially out there. Bigelow is the only entrepreneurial space company to maintain or advance their schedule. His first attempt to jump-start some (affordable) transportation to service his modules was well-intentioned, but didn’t work; ie, America’s prize. But with his second – and more serious- attempt, to actually sign a service contract for up to $700m sooner, not later – and to put $100m cash down on signing – could conceivably dovetail very well with the one (or two) funded COTS ‘winners’ in their human transport formulations. ie, NASA ends up being a funding partner on the actual development – with a credible commercial, non-governmental customer waiting in the wings, and willing to sign a service contract before the government conceivably would.

    That then argues the question: what will be the emphasis on the COTS re-do? The real answer may be like the first COTS; ie, it depends on what the offers are, how credible they are, and what the relative chances are that they can do what they say they can. (The Agency can’t create a funded SAA out of whole cloth based on a composite of all those offered; at least one of the ones offered have to make sense across the board).

    In terms of need, I think it is fair to say the greatest need is on the human transport side. Reason: there is – or soon will be – more than one way, after 2010, to be able to supply cargo to things like ISS (e.g. not only Progress from Russia, but ATV from Europe, and a couple of others that can be ready). I have much fewer qualms knowing there is some competition and choice to get cargo at least up there, if not down.

    The real problem is the human transport; where after 2010 we’ve got a Soyuz monopoly and ever rising prices at the very least. In American English we refer to that as ‘bad’. The human transport issue is where the greatest help is needed. If one (or more) companies can plug into both COTS (for development), Bigelow (initial customer) and ISS (first government customer), that could form a real workable scenario.

  • Ray

    Dave: “In terms of need, I think it is fair to say the greatest need is on the human transport side. Reason: there is – or soon will be – more than one way, after 2010, to be able to supply cargo to things like ISS (e.g. not only Progress from Russia, but ATV from Europe, and a couple of others that can be ready). I have much fewer qualms knowing there is some competition and choice to get cargo at least up there, if not down.

    The real problem is the human transport; where after 2010 we’ve got a Soyuz monopoly and ever rising prices at the very least. In American English we refer to that as ‘bad’. The human transport issue is where the greatest help is needed. If one (or more) companies can plug into both COTS (for development), Bigelow (initial customer) and ISS (first government customer), that could form a real workable scenario.”

    I think NASA’s approach is to wait for any COTS vendors to prove they can do cargo reliably first before even considering astronauts. With lives at stake that seems reasonable enough to me. Of course with such a 2-phase approach I’d have all hands (or in this case dollars) on deck to help the stages happen quicker.

    I agree that the potential Bigelow/Space Florida deal could help a lot. It won’t work if Bigelow and NASA wind up with different requirements, so I hope they’re sitting down together and working them out so that they’re compatible.

    anonymous.space: “After that, COTS and senior NASA management needs to think deep and hard about the upcoming COTS selection and ensure that the content selected matches the remaining resources in a way that’s consistent with other, successful, launch industry cost-sharing development programs (like EELV) — or bring more NASA resources to the table in the form of up-front development dollars, hard flight purchase options, or both.”

    I agree with anonymous that NASA shouldn’t offer X dollars just because that’s what’s left over it COTS after RpK expenditures. The amount needs to be reasonably matched with the business and technical tasks the company or companies will be face with. It would be better not to go through the exercise at all (or just continue with SpaceX) if the funding isn’t realistic – and NASA will have to use some judgement on this, rather than just listening to optimistic projections by the hungry company.

    I don’t see why NASA wouldn’t agree to a minimum number of ISS service purchases – if it really wants them in non-Ares form! – as long as the company meets technical and business conditions that NASA carefully specifies with ample contract and legal scrutiny. Such an agreement would allow NASA to attempt to purchase more services, of course. This is a cheap way for NASA to help ensure it has U.S. transportation services. For new launchers, I’d also present similar NASA incentives for non-ISS launch business.

  • al Fansome

    OK, I have now seen RpK’s GAO protest letter (courtesy of NASAspaceflight.com)

    They make (IMO) an extremely weak case for stopping the OTA acquisition, and going to a FAR based procurement. If the GAO follows RpK’s logic then almost any OTA procurement would be overturned. In fact, it would probably destroy the OTA as an R&D tool.

    “NASA’s Solicitation calls for a Research and Development effort that requires th satisfaction of specific technical milestones for the direct benefit of the United States to allow NASA the ability to fulfill critical, time-sensitive, missions of the United States involving the International Space Station. Because the principal purpose of the NASA solicitation of this R&D effort “is the acquisition of supplies or services for the direct benefit or use of the Federal Government,” the use of a procurement contract in these circumstances is required. FAR 35.003″

    Now, if I followed this logic, neither the X-33, the EELV, the DARPA Falcon program, nor many other innovative space procurements would be alllowed.

    In addition, RpK explicitly ignores that the COTS Announcement explicitly states:

    The objectives of the Commercial Crew & Cargo Program are to:

    • implement U.S. Space Exploration policy with investments to stimulate the commercial space industry,

    • facilitate U.S. private industry demonstration of cargo and crew space transportation capabilities with the goal of achieving safe, reliable, cost effective access to low-Earth orbit, and

    • create a market environment in which commercial space transportation services are available to Government and private sector customers.

    So, on the fact of it — NASA’s COTS program has objectives that are very clearly above & beyond just ISS cargo services.

    But to argue that a Government can’t not have any interest in buying a good or service that might result from an R&D program that utilizes “other transactions authority” is a pretty difficult argument. I am betting that almost every OTA the government has competed to date could be linked to a good or service that a federal agency wanted to buy.

    - Al

  • anonymous.space

    “Because the principal purpose of the NASA solicitation of this R&D effort ‘is the acquisition of supplies or services for the direct benefit or use of the Federal Government,’ the use of a procurement contract in these circumstances is required. FAR 35.003″

    If the NASA OGC is on their toes, they’ll argue that the future FAR solicitation for actual ISS services (i.e., “services for the direct benefit or use of the Federal Government”) was made separate from the COTS OTA development effort (i.e., industry/NASA cost-sharing to develop national launch and in-space transportation capabilities) for this very reason. Heck, even the COTS announcements allow the demonstrators to choose targets other the ISS.

    I need to read the whole RpK complaint, but I don’t see where they have a leg to stand on from Mr. Fansome’s excerpts.

    FWIW…

  • Fred Willett

    COTS requires SpaceX to fly Dragon to ISS with cargo.
    However Dragon has two configurations cargo and crew. just rip out the racks and pop is seats for seven astronauts.
    It’s not exactly as simple as that, of course, but it’s not developing a whole new spacecraft either.
    Right from the get go SpaceX has designed Falcon 9 to be man rated and Dragon to be a cargo and crew vehicle.
    The only question is how long it will take them to get the crewed Dragon flying after they demonstrate cargo capability

  • Eli

    As you probably know, the ULA has been investigating the use of its EELVs as man-rated primary stages for crew/cargo transport. The ULA launch systems have over 50 years of heritage and hundreds of millions if not billions of dollars already invested in their development. An EELV is viable for COTS. Regarding the crew-or-cargo question, I don’t how COTS can be justified if the winner doesn’t have plans for people-ferrying. Space commerce involves the transport of people. Man has been going to space for almost half a century.

    NASA invested ~$2 billion in the HL-20 lifting body spaceplane, and has extensively studied the plane’s aerodynamics, ergonomics, integration issues, etc. SpaceDev is proposing using an HL-20 derived vehicle atop an Atlas V. According to SpaceDev, the HL-20 vehicle will be capable of landing at a standard airport. Bigelow has already made public that he would prefer a solution that provides a dry landing and carries 6-8 people. I don’t believe NASA needs another cargo-only provider during the gap years. They should fund a company (any company) that will be capable of providing a service to NASA as well as a service to what will likely be a franchise customer in Bigelow.

    PS I don’t mean to be on the bandwagon of any particular company, but as a supporter of NASA, I really want to see COTS succeed.

  • eliguy

    In that case, Mr. Big is free to approach SpaceDev and ULA and purchase launch services to wherever it is he wants to go, for the current average price of 100 million dollars, just like everybody else. We already have that.

    That’s why most of US are livid because NASA chose ESAS over EELV COTS.

    I think now the COTS II solicitation is about alternative access to space, and it’s pretty sad that EELVs are now considered alternative, when they should have been primary. However, with ESAS in line for near term failure, what we need is to shift the EELVs back to primary, and find another credible COTS proposal, which dovetails with EELVs and SpaceX on the high end, and has the promise of reduced launch costs and higher payload fractions.

    Remarkably, that is precisely the proposal I am working on right now.

  • reader

    there is one possible positive move that RpK, at least the K part of it, could do for the benefit of the rest of the industry at present. Part of it involves rolling over.

  • Vladislaw

    Some Canadian teachers union or something was going to invest 200 million I heard, but then nasa announced in an ammendment that foreign investment was not allowed and that russian would get almost a billion dollars another 100 million was pulled, leaving them with only 40 million of the required 500 million.

  • Cecil

    The EELV is the way to go and Spacehab is the way to use them. I very simple approach, their Arctus design is very practical, can take 6 metric tons to the ISS and when they increase the crew size from 3 to 6, they are going to need it. SpaceX doesn’t need anymore money and they say they are good for another two years when they intend to go public, SpaceD needs to wait for the COTS requirement D which is the manned rated procurement, t/space forget it as you would have to send a gillion rockets up, Planet Space, just not at all credible from an experience or financial standpoint i.e. “where’s the money”; not where is the investment banker (dime a dozen just looking for a fee) but the money.

    Spacehab is the only credible option as they have been involved with NASA for decades, and knowing how that system works is very important. Also they have figured out the microgravity equation which is much more commercially viable than tourists.

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