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It’s about time. Microsoft didn’t send its lobbyists to offer homage/cash, and paid the price in their antitrust suit. Or so one theory goes. The problem of course is that if you’ve got a federal government sticking its nose into everything (baseball steroid use?), then whatever you do, you need lobbyists and lawyers to protect your interests. Would that it were not so.

SpaceX, the article notes, has hired the Podesta Group to lobby for additional NASA funding,

While I support greater government funding for SpaceX, so much for the “new space” funding our way to the Solar System. Before they even manage a successful launch, SpaceX looks increasingly like they are headed down the same road well-traveled by Orbital Sciences.

Interesting article in this week’s AvWeek about China investing in the infrastructure to support human spaceflight for the long term. I like the argument, but the only evidence offered appears to be some paintings and the deployment of TDRS-like relay spacecraft.

– Donald

DONALD: While I support greater government funding for SpaceX, so much for the “new space” funding our way to the Solar System. Before they even manage a successful launch, SpaceX looks increasingly like they are headed down the same road well-traveled by Orbital Sciences.

Donald,

So SpaceX should unilaterally disarm, and not buy “equivalent access” to get their message across to national decision-makers? Are you suggesting that Elon should let others (like Griffin, Kranz, USA, Lockheed, Boeing) dominate the conversation on Capitol Hill, and define the debate?

Hiring a lobbying firm does not mean you are “headed down the smae road well-traveled by Orbital Sciences”. In fact, Orbital Sciences could learn a thing or two from Elon. The OSC leadership generally disdains the lobbying strategy, and OSC is known for having a comparatively small lobbying effort.

It means that Elon learns fast, and that SpaceX is not making the same mistake as those made by Beal, and MirCorp, and many other internet millionaire’s who get into space — who generally bring the blind spots of their industry’s with them.

Space is one of the most political of industries, and politics always wins.

Finally, Elon is NOT in the same wealth class as Jeff Bezos, who can afford to ignore all this political. Elon needs to leverage federal funding as part of his strategy. Bezos does not. (That said, even Bill Gates learned that he could not ignore politics. Bezos may be OK for the moment, but he needs to be careful as he proceeds to the next phases of his strategies.)

FWIW,

- Al

“Politics is not rocket science, which is why rocket scientists do not understand politics.”

Before they even manage a successful launch, SpaceX looks increasingly like they are headed down the same road well-traveled by Orbital Sciences.

I don’t have any idea what you mean by that, but until they become a cost-plus contractor, I see no danger of that.

Al, I do not think SpaceX should disarm. I was just pointing out that, apparently, it is only by abandoning much of the “new space” ideology of gritty independence from the government that new space can go forward. \

In other words, while people like Rand belittle my argument that the ISS is the market we need, that is in fact the market many of these companies are going after. Yes, Mr. Elon leaned fast; he went after the one market that could fulfill his manifest — NASA and the ISS — and hired a lobbying firm to try to make that market larger . . . and I respect him for that.

Rand, give them time!

– Donald

Good Lord, how can anyone seriously consider Breaux as a “leader” in the space context - his office was the one shopping those ridiculous loan guarantees back in the VentureStar days because it protected jobs in his territory (at Michoud), even though they made NO economic sense.

Donald.

Let’s see. Orbital tourism, maybe a billion dollar market if all the stars align.

CRS - 3 billion for cargo already on the table, maybe a couple more for astronauts in very near future. Plus a couple hundred million to build your rocket.

Now which market would I go for if I was SpaceX?

Elon, like a true capitalist, is going for the biggest, faster ROI. The govenrment. Go Elon!

Yes, Mr. Elon leaned fast; he went after the one market that could fulfill his manifest…

Nonsense. He went after any potential market he could find. He had many customers prior to COTS, and he has many customers that are not COTS. The fact that he wants COTS business as well simply means that he’s not a stupid businessman, not that he can’t make it without COTS.

Rand. He may well be able to make it without COTS. It would just take far, far longer. I believe that he has stated himself that he would not yet be working on the Falcon-9 or the Dragon if it weren’t for the COTS money.

Stop dreaming about future markets and worry about the ones you have. That’s what Elon is doing and it is the correct decision. If you supply the existing market with a good rocket, future markets (i.e., tourism) will take care of themselves.

– Donald

If you supply the existing market with a good rocket, future markets (i.e., tourism) will take care of themselves.

Sorry, Donald, but that is simply not true, unless by “take care of themselves” you mean “not be satisfied by your vehicle.” If one is going to go after the tourist market, one has to develop and field a vehicle that is capable of satisfying it. Existing markets cannot justify such a development. Elon may be successful at satisfying existing markets, but his vehicles are not going to be for most space passengers. The vehicles for that market will almost certainly emerge from the suborbital industry.

Rand: The vehicles for that market will almost certainly emerge from the suborbital industry.

If that is so, than I think we have a long time to go before we see a viable orbital tourism industry. Evolving from suborbital reusable vehicles to orbital vehicles is anything but a casual job. Fortunately, I think the Russians and Space Adventures have proven you wrong. There is more than one way to skin this cat, and I expect that it will be approached from both ends — super-rich continuing to fly on existing rockets (especially if SpaceX, et al, succeed in significant cost reductions) and evolve “up” from any suborbital industry. That said, the advent six person ISS crews, if it happens, creates a barrier, but Space Adventures has shown great resiliancy and I suspect they’ll find a way around it. If you are an investor, it is certainly worth noting that the orbital market, however small, exists today, while even the suborbital market, however large, remains for the future — maybe for the near future . . . but possibly not.

– Donald

I agree that it will be approached from both ends, but the cost reductions and mass market will come from the low end. Orbital tourism will remain a novelty for now, and is far too small to justify dedicating a launch vehicle development to it. The smart money is building the market from below.

He had many customers prior to COTS, and he has many customers that are not COTS.

Yep, all government related for the Falcon 1.

As for Falocn 9, it was only after COTS a handful of comsat customers appeared, piggy-backing on the COTS work.

Really, the SpaceX manifest is no different then that of Boeing/Lockheed in terms of the mix of government/comsat business.

Really, the SpaceX manifest is no different then that of Boeing/Lockheed in terms of the mix of government/comsat business.

So?

What’s your point? That was always their business plan.

So wasn’t New Space suppose to be different? Or is that the old New Space view?

SpaceX is following the same route as Orbital Science because that is the most likely path to commercial success. The New Space firms that survive over the next few years will look much like the Old Space firms, for the same reason, that is the business model that works best for commercial space. And for that business model to work you need your Washington sales staff - aka lobbyists.

So wasn’t New Space suppose to be different?

Who said that SpaceX was New Space?

SpaceX is following the same route as Orbital Science because that is the most likely path to commercial success.

No, they’re not following the same path as OSC. Sorry, but they’re largely spending their own money. And they aren’t doing cost-plus.

Rand,

Who said that SpaceX was New Space?

So Elon is no longer New Spacer? I guess that makes SpaceX Old Space?

As for Orbital Sciences, some history…

http://satjournal.tcom.ohiou.edu/issue12/slides/pdf/Carl_Marchetto_Orbital.pdf

Slide 6

A Big Concept: that a small, entrepreneurial company could do things better
and faster than lumbering aerospace giants

And

http://www.orbital.com/About/

Orbital Sciences Corporation (NYSE: ORB) was founded in 1982 with the goal of making space technology more affordable, accessible and useful to millions of people on Earth.

SpaceX is where Orbital was before it lost the TOS. It learned how the game is played in commercial space, Elon is learning as well.

Also, the government went to cost-plus contacting to reduce the risks associated when contractors needed to deliver at a specific price, including using lower quality material to cut costs, or not pursuing future contracts due to losses from previous fixed priced contracts. So there is really nothing evil about cost-plus contracts despite New Space hype. They are just a practical solution to situations involving new technology. where it is difficult to estimate costs. SpaceX will move to cost-plus as well after its been burned a time or two as the older firms have. So will Xcor.

SpaceX is where Orbital was before it lost the TOS.

So?

That doesn’t mean that SpaceX will “lose the TOS.”

Still awaiting actual evidence that SpaceX is “following the path of OSC.”

But not holding breath.

Orbital got funded by oilmen and then the reagan administration (Bush as vice president an oilman himself) through nasa gave orbital money to fund additional propulsion for shuttle launched satellites.

Yes they were a small company in the right place at the right time alright.

Rand,

First, I recognize that no amount of evidence will convince a true believer in the New Space myth. That is what happens when individuals replace science (economics) with philosophy (libertarianism). Look at all the evidence for global warming that is dismissed by the believers who feel man’s activities are too unimportant to impact the climate. This is for the lurking third parties.

The parallels are strikingly similar to us old timers in commercial space. Both started out with the belief that small entrepreneurial firms would be better capable of accomplishing this then the old space dinosaurs. Both believed in the Mantra of CATS – build it cheap enough and they will come. And both learned that beyond the government and Comsats their was no viable markets for space launch. And both government and comsat were more sensitive to the reliability of a system then its cost, which is why New Spacers are now calling CATS, CRATS.

Now that Elon has hired his own lobbyists the only step left in the transformation is the move to costs-plus contracts. That will likely come after the SpaceX IPO, once Elon has a fiduciary responsibility to shareholders to not risk SpaceX money away on high risk practices like a fixed price government contract.

When that happens in the next year or two I expect you to acknowledge it.

First, I recognize that no amount of evidence will convince a true believer in the New Space myth.

This is kind of an idiotic statement, since I don’t necessarily consider SpaceX “New Space.” I’ve actually never been that big a fan of SpaceX. I’m just trying to keep it real.

[rest of irrelevance from irrelevant anonymous commenter snipped]

“Now that Elon has hired his own lobbyists the only step left in the transformation is the move to costs-plus contracts. That will likely come after the SpaceX IPO, once Elon has a fiduciary responsibility to shareholders to not risk SpaceX money away on high risk practices like a fixed price government contract.”

Not going to happen. All this talk of costs-plus contracts is bunk. They don’t exist WRT launch services. All NASA launch service contracts are fixed price. Been that way since after Challenger.

Spacex just recently onramp to the NLS (NASA Launch Service) contract and will be held to fixed prices.

“Both believed in the Mantra of CATS – build it cheap enough and they will come. And both learned that beyond the government and Comsats their was no viable markets for space launch.” — someone

Do you think if the propert rights issue for the moon was a limiting factor. What is the point of private exploration if you could not claim and own anything that you found? Why invest in a civilian lunar habitat that does get to own the land it sits on when it gets there? If you want to see capital invested there has to be an incentive to go. Free lunar land and all the mineral rights attached is that incentive.

Me,

All NASA launch service contracts are fixed price. Been that way since after Challenger.

Gasp! You mean old space firms like Orbital, Boeing, etc. are doing FIXED price contracts for NASA… What is this world coming to What will the New Space faithful say?

Seriously, my reference was not to launch contracts, but to the some of the suggestions that NASA use the Dragon as a substitute for the CEV to missions to ISS, perhaps even for lunar missions and other similar projects involving new hardware, or systems specifically designed for NASA/DOD missions, the same situations where old space firms receive the same “infamous” cost-plus contracts.

To put it simply, if SpaceX is offered a NASA or DOD cost price contract for a job it would be “poor” business decision for them to turn it down, and I would be surprised if they do. Especially if they have become a publicly traded corporation accountable to shareholders. And the same will be true for any other “new space” firm that has an IPO.

Which again brings up the question. What is the difference between New Space and Old Space? Other then the length of time of they have been in business..

I think it would be well for the space advocate community to stop creating these false divisions (Moon/Mars, New Space/Old Space), and strawmen like the “evil” cost price contract and instead start looking at how to work together to create a favorable environment for creating a space infrastructure suitable both private and government space.

“but to the some of the suggestions that NASA use the Dragon as a substitute for the CEV to missions to ISS,”

Still would be fixed price, see CSR (COTS II)

Me,

I was not referring to the CRS, but to the 100% replacement of the CEV if the ESAS is cancelled. If the ESAS is cancelled NASA will likely put out a RFP to replace it with a new system manned space access. Politically its difficult see NASA being 100% dependent on private space systems. Dragon would put SpaceX in a good position to bid on building the replacement spacecraft for NASA which will likely be owned by NASA.

However we are drifting from the core topic of my post, namely there really is no basic difference between New Space and Old Space, other then the time the firms have been in business. The key point is if NASA point out a RFP for a system and awards the winner a cost-plus contract a New Space firm will take it just as a Old Space firm takes a fixed price contract when offered, as for launch services and CRS. So saying New Space out works on Fixed Price contracts and Old Space only works on cost-plus is one of those strawmen that seeks to divide the space community needlessly.

Typos

point = put
out = only

The key point is if NASA point out a RFP for a system and awards the winner a cost-plus contract a New Space firm will take it just as a Old Space firm takes a fixed price contract when offered, as for launch services and CRS.

Go tell it to XCOR. They consistently refuse to work on a cost-plus basis. Including development contracts.

Except that the Defense Contract Auditing Agency makes you run your business with the same metrics as is the case for a cost plus contract. You have to have your G&A rates, overhead, and profit margin verified by the government and it is part of your scoring for future contracts. Fixed contracts are more risky for contractors is that losses are not covered but profits are still capped. If XCOR made 20% profit on a contract you can bet your last government dollar that their next negotiation would force that number down.

The reason that XCOR refuses to do cost plus is precisely so that they don’t have to report their costs to the government. Dan DeLong has said on more than one occasion that the if they had to implement the accounting procedures required to do a DCAA audit, it would dramatically increase their costs of doing business. And as far as I know, they don’t. I’ve never heard of DCAA complaining about it.

“I was not referring to the CRS, but to the 100% replacement of the CEV if the ESAS is cancelled. If the ESAS is cancelled NASA will likely put out a RFP to replace it with a new system manned space access.”

There is no such thing as the “ESAS” being canceled. ESAS is a study. If the lunar missions are canceled, the CEV can exist without Ares I, or Ares V. There is no reason to “replace” it with another RFP.

Me,

Perhaps CEV will survive, perhaps it will join the OSP. TIme will tell. But I only used it as an Example of a Potential opportunity that MAY produce a chance for a cost-plus contract for SpaceX to bid on. There are many more I could have used.

The ley point is that if a RFP for a NASA (or DOD) cost-plus contact comes up which SpaceX is in a good position to compete for it will likely do so, especially if that have become a publicly traded company with shareholders (and Wall Street analyists) to respond to.

Rand,

Go tell it to XCOR. They consistently refuse to work on a cost-plus basis. Including development contracts.

Then they are putting themselves at a competitive disadvantage. A luxury they will not be allowed when and if they go IPO. Markets don’t care about philosophy, just earnings.

XCOR is doing just fine with its earnings, as far as I know–they think that going cost-plus would both damage their earnings and their strategic goals. And I’m not aware of any plans on their part to go public. Their current investors seem quite happy with their approach.

You don’t seem to understand that XCOR (like SpaceX) is in business to reduce the cost of access to space (while making money), not to maximize earnings. If the latter were their goal, they wouldn’t have gone into the business in the first place. There are lots better ways than the space business to maximize earnings.

That, in fact, could be described as the most useful distinction between “old” space and “new.”

Yes, I do. I see biotech and computer companies like that all the time. The idealist researcher struggles for years, then makes a breakthrough after which they are scooped up by a organization that is much better managed financially. The researcher get a small return while the firm that bought them out gets rich.

Think of Micosoft and DOS. (know the story?)

Which may well be the best explanation of the relationship of New Space to Old Space I have seen. New Space are the hobbyists that do it for a passion amd lifestyle, while old space are the professionals who do it as a business.

Yes, and the people who actually open up the frontier will be those who combine their passion with business sense. XCOR seems to be doing a pretty good job of that, so far.

Someone wrote: “New Space are the hobbyists that do it for a passion amd lifestyle, while old space are the professionals who do it as a business.”

Your views on this subject, along with those on Global Warming skeptics, prove to me that you don’t really understand what you’re talking about.

So what if so-called NewSpace ventures start out as “hobbyists” and, if successful, get copied or bought out by OldSpace companies. The plain fact of the matter is that, if this happens, they will have succeeded in moving us forward in a way that the current status quo will never be able to!

If you’re so knowledgeable about these things, stop belittling the efforts of NewSpace ventures an please explain to me how OldSpace will move us forward in a more effective manner than has it’s demonstrated these past 40 years?

The people who argue the inevitability of New Space companies eventually either going cost plus, or belly up, reminds me of when I was at Rockwell back in the early nineties, trying to help American Rocket work with Rocketdyne. The discussion went something like this:

Rocketdyne Exec: So let me see if I understand how this company works. You raise money from investors?

AmRoc: That’s right.

Rocketdyne Exec: Then you take the money, and you develop a rocket with it?

AmRoc: Right.

Rocketdyne Exec: And then you sell launches to customers, both commercial and government, at prices greater than your costs? And you take a profit?

AmRock: You got it.

Rocketdyne Exec: [scratches head for a while] Why don’t you just go out and get a government contract? You people don’t understand business at all!

Rand,

Proves my point.

American Rocket went under in 1996.

Meanwhile Rocketdyne division is still in business, although it was sold to United Technologies a few years back, part of one of the reshuffling of the space industry. They just received a 1.2 billion contract to build the J2X.

So the Rocketdyne knew what he was talking about.

Your views on this subject, along with those on Global Warming skeptics, prove to me that you don’t really understand what you’re talking about.

Says the guy who gets his global warming and climate change information from fossil fuel industry funded right wing shill websites, and hasn’t actually read any peer reviewed scientific literature or white paper on the subject.

That may make you look good to your redneck steroid addled friends, but among those who actually have some education, training and experience in mathematics, physics and the engineering sciences, you look real stupid.

Proves my point.

Your point being what? That real businesses have no business in the space industry?

That the space business is the same as other business - it about ROI, not libertarian philosophy.

The Rocketdyne executive understood the business, the American Rocket people you were working with did not.

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