Congress, NASA

An explanation for that COTS “rescission”

The House Appropriations Committee document earlier this week that appeared to show a $113.9 million rescission in NASA’s FY9 budget for COTS got a lot of people up in arms and wondering exactly happened. The committee hasn’t provided any additional information, such as the report to go along with the actual appropriations bill, to clarify exactly what has gone on. But as it turns out the cut might only be imaginary.

As Jim Muncy explained in an email late today, COTS got $153 million in FY09 (plus $150 million in stimulus funding, if and when Sen. Shelby relents). The FY10 budget request included $39.1 million for COTS, which the committee apparently fully funded (it does not show up in the list of programs that got cuts in the FY10 bill). What’s $153 million minus $39.1 million? $113.9 million, or exactly the amount of the “reduction” that appears on the committee’s list.

While this explains the amount and the rationale (“program phase out”, as COTS is winding down), one problem with this logic is that this doesn’t really represent a cut: the funding was supposed to go down as SpaceX and Orbital completed work on their funded Space Act Agreements with NASA under the program (and also because NASA was not funding any Capability D, or crew transportation work, as a part of COTS.) Would the committee really take credit for a $113.9 million “reduction” of a program that was supposed to go down by that much anyway? Stranger things have happened…

6 comments to An explanation for that COTS “rescission”

  • realrockets

    What I have seen is that the $150M stimulus is not going to the COTS contractors (Orbital and SpaceX) at all – some is going to the COTS program office (C3PO) to fund their participation in the way the rest of the money is going to be spent (mostly internal to NASA is my guess).

    Here is some information from

    “NASA earlier announced it was putting $150 million of stimulus funding towards commercial ISS crew transportation: $70 million to develop general capabilities, including human rating requirements for commercial vehicles (the lack of which was cited in the ASAP report) and $80 million “to stimulate activity for commercial crew”, as acting administrator Chris Scolese explained last week during a hearing by the Senate Commerce Committee’s space subcommittee.

    Alan Lindenmoyer stated at the ISDC conference in May () that the COTS office had paid Orbital $100M of the $170M total (which leaves $70M for milestone payments to go), and that they had paid SpaceX $234M of the $278M total (which leaves $44M for milestone payments to go).

    Adding the “to go” amounts you get $114M – which is the exact amount of the 2009 rescission. Unless there is a plus-up in 2010 budget to cover the $113.9M there is no funding for future milestones – which may make it very difficult for Orbital and SpaceX to continue their development and to get ready for CRS missions.

    However, if this action allows NASA to eliminate the requirement to perform demonstrations to ISS under COTS then it would save them both, especially SpaceX, a lot of money. The 3 SpaceX demo missions may cost them around $100M (probably more) and the one demo that Orbital has to perform under COTS may cost them around $150M. As long as this budget action does not impact the awarded CRS contracts ($1.6B for SpaceX, and $1.9B for Orbital) this may actually help them, as long as NASA changes the funding restriction in CRS that caps payments at %30 of active missions until “ISS integration” is achieved (which is what NASA would have to do – either that or terminate CRS altogether).

  • Major Tom

    Mr. Muncy’s explanation makes sense, and probably reflects reality. But assuming it’s the case, then the appropriators should be taking credit for “savings” from development programs in their late stages elsewhere at NASA and throughout the government. For example, with SM-4 over, the HST budget is going from $208M in FY09 to $113M in FY10, a net “savings” of $95M. It’s curious that the appropriators would take credit for COTS but not HST “savings” (or other examples).


  • Real Rockets…

    I don’t know who you are or what company you work for, but you’re wrong. There was no budget action. No rescission. No cut. Nada.
    It’s simply not in the bill. I checked.

    And there is no way the two COTS cargo partners are not going to complete their demonstrations, because without that the ISS program is not going to let them berth/dock their vehicles with ISS. Which means they don’t earn the boatload of contract value they won.

    Your statement that unpaid milestones equals this amount is just wrong, because the Congress is providing the $39.1M needed in FY2010 for future milestones and will presumably provide more in FY2011 when requested for the final amount.

    Sorry. I’ll bet you make great rockets. I probably even love your rockets. But unless you’re an evil registered lobbyist like me, you might want to read Jeff’s full article or my original letter (on NASA Watch).

    – Jim

  • Major Tom —

    You’ll appreciate this, I’m sure.

    I was at a party tonight with a former OMB manager. I explained what I had learned about the non-rescission rescission, and he was impressed. “We used to take credit for savings that weren’t savings all the time.”

    So I guess Administrations can posture just like Congress. And we wonder why we can’t reform entitlements…

    – Jim

  • Bill Adkins

    I think Jim Muncy is basically right on the explanation of the chart. It is not a “real” cut in the sense that funding is rescinded.

    The purpose of the chart is to show trends on how the FY10 approps bill compares to what was enacted in FY09 (not including stimulus) and what was requested in FY10. It’s to help Members and others understand how funding has changed, especially where things are reduced (a reasonable thing to know). Keep in mind that most federal programs don’t follow the “bell-shaped” funding pattern that many NASA and DoD acquisition programs do. Instead most agencies’ funding goes for salaries, ops and other fairly fixed costs. In these cases, the chart may be somewhat more useful. For COTS, it looks like a cut in available budget, but it’s really just the program naturally winding down (while CRS gets cranked up).

    The approps committee’s overall philosophy for funding NASA this year has been to fund SMD, Aero, and SOMD at the FY10 requested level (with a few exceptions) and fund ESMD at the FY09 enacted level, although COTS is an exception because the program was wrapping up and less funding was requested by NASA. Also, the committee moved some of the institutional overhead funding tout of the directorates, but this didn’t effect content for the most part.

  • realrockets


    Thanks for the clarification on the non-budget action. Federal budget actions & politics are not my specialty.

    As for ISS demonstrations and COTS/CRS – that is my specialty. The demonstrations are mostly an artifact of policy that does not allow NASA to “procure” services via Space Act Agreements. In principle the COTS demonstrations are a good idea – make sure contractors systems perform correctly before you pay them for a cargo delivery service – however they do not “protect” the ISS since each company will approach, perform proximity operations and berth with the ISS (SpaceX on demo 3, Orbital on their first and only demo) under their SAA milestones. The demonstrations were originally designed/timed to show that COTS winners were viable before NASA had to commit to CRS awards – unfortunately for NASA SpaceX could not meet their original milestones and was allowed to delay their initial demo (F9 & Dragon) by nine months (SAA amendment 2), and the termination of RpK and subsequent competition and award to Orbital ate up more than an year – so now the second COTS company is a year and a half behind NASA’s intended schedule. These facts, combined with STS shutdown and NASA’s need for cargo in 2010 forced NASA to hold the CRS competition prior to either of two COTS companies effectively demonstrating their viability. The CRS contracts limit the amount of payments for cargo missions to 30% until the contractors demonstrate ISS Integration (which can be done through analysis and testing on the ground – like ATV and HTV).

    As far as how the budget request ties into the COTS funding outlays I have no idea.

    As far as understanding both the SpaceX and Orbital Space Act Agreements (with amendments) performance requirements and NASA’s milestone funding commitments I am an expert. SpaceX signed a funded SAA on Jun 26, 2006 and NASA signed on Aug 18, 2006 for a total of $278M (COTS A, B, C capabilities). NASA has paid them $234M to date. Remaining funding for SpaceX is $44M. SpaceX COTS-D has not been funded yet. Orbital signed a funded SAA on Jan 30, 2008 and NASA signed on Feb 19, 2008 for a total of $170M (COTS A, B capabilities – although Orbital does not have to demonstrate capability A). NASA has paid them $100M to date. Remaining funding for Orbital is $70M. Add the remaining funding for SpaceX and Orbital, it is $114M. I know that COTS program office (C3PO) did get a little more funding for 2010 & 2011 – but none of the money is obligated to SpaceX or Orbital.

    As far as rockets goes – I don’t make them – but I help customers fly their spacecraft on them. Rockets are just fancy delivery vehicles (they ones I’m involved with anyway) and they are not the object of my desire – – I love to make satellite customers very happy.

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