In an about face blamed on a “dynamic budget environment”, NASA is switching back to Space Act Agreements (SAAs) for the next phase of its Commercial Crew program, the agency announced Thursday. NASA had planned to issue this coming Monday a request for proposals (RFP) for what was called the Integrated Design Phase of the program. Instead, it will switch back to SAAs, used in the first two rounds of the Commercial Crew Development (CCDev) program, with details on timing to come in the next few weeks.
In a telecon Thursday morning with reporters, Bill Gerstenmaier, associate administrator for NASA’s Human Exploration and Operations Mission Directorate, said the limited funding available for commercial crew in 2012—$406 million instead of the requested $850 million—as well as uncertainty about future budgets, led to the decision to shift its procurement strategy. “In a dynamic budget environment, it makes it tough for us to deal with that budget fluctuation” when using fixed-price contracts, he said. “If we don’t get the funds that we anticipated, it makes it tough for us to negotiate the contract and inefficiency in renegotiating that contract.” That budget uncertainty in future years, he said, drove them to make the shift back to SAA.
The new SAAs will replace the Integrated Design Phase contracts, which had been intended to get system designs to the critical design review (CDR) level of the development. The goal of the new SAAs will also to get designs as close as possible to CDR, although Gerstenmaier warned that, since NASA cannot direct companies under an SAA like it can under a contract, “there is a risk there what we won’t get exactly what we anticipated.” However, he said that risk is mitigated in part by the publication of NASA requirements for crew transportation systems and later contracts for providing those services.
The decision comes several months after NASA announced its plans to switch from SAAs to a more conventional contract for the next commercial crew phase, despite strong feedback from much of industry not to do so. The rationale at the time was the need to direct companies to meet NASA requirements, something that NASA now hopes companies will do without explicit direction from the agency. While industry might support this move back to SAAs, Gerstenmaier said that NASA made this decision without consulting industry. “We really made this decision on our own,” he said, with budgets as the driving factor.
However, NASA did consult with Congress on this, he said, “and they kind of understand our position and they understand the logic behind why we made this shift.” (It’s worth noting that as recent as September the Senate directed NASA to limit its use of SAAs in future commercial crew procurements.) He added that NASA is also working with Congress on an extension to its existing Iran North Korea Syria Nonproliferation Act (INKSNA) waiver to allow it to continue purchasing Soyuz seats, as budgets will likely delay the entry of commercial crew systems into service to 2017.
Asked if this was as far as NASA could go with SAAs for the commercial crew effort, Gerstenmaier said this morning that he thought so, but “I wouldn’t definitively say that at this time.”
I would have liked to be a fly on the wall and hear how this decision came about. Glad to see NASA moving in the right direction again and scrap the last plan.
It’s about time, but delaying crew flights into or after 2017 is disappointing. Hopefully budget pressures will ease after 2012 and funding can be returned to higher levels.
@ DocM wrote @ December 15th, 2011 at 2:30 pm
“Hopefully budget pressures will ease after 2012 and funding can be returned to higher levels.”
Interesting comment, based on what? The US debt will be resolved next year?
Hmmm.
If the funding environment is in question, wouldn’t it be better to down select the bidders to increase the odds of work being funded to a conclusion? The current crop of NASA management schmucks refuse to deal with reality and restructure. The budget environment will continue to deteriorate as long as the nation pursues low growth socialist economic policies.
I’m confused about something.
NASA chose the SAA approach because they were given less money. Yet the commercial companies want this less funded approach? How does this work?
JohnHunt wrote @ December 15th, 2011 at 4:09 pm
I’m confused about something.
NASA chose the SAA approach because they were given less money. Yet the commercial companies want this less funded approach? How does this work?
From what I’ve read, the FAR based approach requires reams of paperwork, auditing, etc. It means each company would need to devote a lot of resources to something other than creating a workable spacecraft. That’s why all of them were adamantly opposed.
As for why NASA did an about face and returned to the SAA approach, I’m sure everyone here would love to know. My guess is that, with limited funds to dispurse to the companies, and more of it going to deal with auditors, a lot of time would be lost. That would have pushed completion dates out even further. But that’s just a guess from a layman. Maybe some of the experts here could come up with a better theory.
I think it is called wishful thinking.
The irony here cannot be more delicious. NASA has been forced not to go to the FAR approach solely because Congress was stingy with funding. I suppose that the supporters of Obama’s commercial crew will now thank the appropriators for keeping the space agency on a tight fiscal leash.
Mind, commercial crew is still flawed with its subsidies and lack of private markets. But thankfully it is now less so.
 Mark R. Whittington wrote @ December 15th, 2011 at 5:28 pm
Mind, commercial crew is still flawed with its subsidies and lack of private markets. But thankfully it is now less so.”
Such a hoot SLS doesn’t haven a government payload. Whittington the supporter of government pork. RGO
@mark
repeating the lie that ccdev is a subsidy doesn’t make it true. spacex and the other companies are paid by nasa to provide a service/develop a capability, this is how things work. they’re ten times more cost-efficient than your old space buddies though.
as to this decision: nasa should just give the money to innovative, high-performing companies like spacex and blue origin and otherwise keep their mouths shut. nasa is incompetent while new space people get things done. so this is a step in the right direction as long as the control freaks don’t revert back to far contracts.
BTW, Blue Origin has an excellent proposal, NASA should limit its subsidy to only 20 percent of the development cost of a particular launch vehicle. That would mean that the government will not spend so much that the market gets distorted and that private companies will be forced to raise more of their own money.
Thanks, Congress. You just forced us back onto Soyuz until at least 2017. I hope you’re proud of growing the Russian economy instead of ours.
Mark R. Whittington wrote @ December 15th, 2011 at 5:28 pm
“commercial crew is still flawed with its subsidies and lack of private markets.”
Where are the subsidies? All money paid so far under COTS and CCDev by NASA has been for work performed per a NASA specification. If the companies don’t do the work, they don’t get paid – that’s not a subsidy.
And maybe you should tell Boeing that their contracts with Bigelow Aerospace and Space Adventures for crew transportation are imaginary. Sheesh…
JohnHunt wrote:
NASA chose the SAA approach because they were given less money. Yet the commercial companies want this less funded approach? How does this work?
I listened to the entire press conference. (Hopefully the recording will be online soon and I’ll post a link for you to listen.)
Basically, Gerstenmaier said they wanted to go the RFP route now because it would have begun a phase where NASA could begin to dictate to the CCDev candidates specific criteria in order to issue a fixed-price contract.
The CCDev candidates wanted to use Space Act Agreements (SAAs) because they didn’t want to be told what to do. They were afraid that NASA would impose bureaucractic requirements that would delay development. Some of their fears were justified, e.g. a requirement that they switch over their workers’ timesheets to six-minute increments.
But because Congress slashed the CCDev funding and, more importantly, NASA can’t rely on Congress in the future, NASA doesn’t want to enter into a fixed-price contract because if Congress cuts the funding again they’ll have to keep amending the contracts.
So they switched over to SAAs again because it’s a way to get down the road a little further without worrying about Congress cutting the budget again. But the trade-off is that NASA still can’t dictate design standards to the candidates.
The bottom line is that Congress pushed us back onto Soyuz through at least 2017. I’m sure a lot of Russian space workers are jumping for joy right now.
I have to agree for once with Mark. It is ironic. I guess the only way to stop NASA from wasting money is to not give them as much. There’s a lesson to be learned there for SLS. And Webb…
One of the major costs of normal contracting for a project like this are the design reviews, intended to give the NASA civil servants a chance to show that they are making all the critical decisions. Unfortunately for the most part they have no hands-on experience, so the contractor has to prepare huge volumes of details and the civil service people have to bring support contractors to read through them. This process can account for 10-15% of the total program cost.
As to the budget pressure, the cost of Constellation will be over $400 billion if we ever get to Mars with this technology, which is already as old as the Spirit of St. Louis was when the moon race began. If it is not cancelled, it will absorb the entire NASA budget.
Two GAO audits released today approved of NASA management policies for the ISS and Commercial Crew Development, but warned of how Congress’ failure to properly fund these programs in the future can have consequences.
ISS report: http://images.spaceref.com/news/2011/d12162.pdf
CCDev report: http://images.spaceref.com/news/2011/d12282.pdf
During the Bush era, the GAO issued several reports warning about NASA mismanagement of Constellation, caused in part by lack of funding. These positive reports are good news that the current administration has improved NASA management practices, but the warning about Congress remains the same.
By the way, two of the Congressional goofballs responsible for this sad state of affairs issued press releases criticizing today’s announcement because they claim it will reduce NASA oversight of flight safety:
Rep. Ralph Hall (R-TX) http://www.spaceref.com/news/viewpr.html?pid=35563
Rep. Bernice Johnson (D-TX) http://www.spaceref.com/news/viewpr.html?pid=35567
Gotta protect that Texas pork, y’know …
 Mark R. Whittington wrote @ December 15th, 2011 at 6:01 pm
BTW, Blue Origin has an excellent proposal, NASA should limit its subsidy to only 20 percent of the development cost of a particular launch vehicle. That would mean that the government will not spend so much that the market gets distorted and that private companies will be forced to raise more of their own money.”
Since you have a habit of misstating things I would have to see it myself.. But if you’re representation is correct I don’t think much of it.
The launch vehicle development cost are probably not the long tent in the pole for commercial crew.
SpaceX and Boeing should have minimal launch vehicle development cost for instance RGO
Mark R. Whittington wrote @ December 15th, 2011 at 6:01 pm
You make no sense.
NASA shouldn’t spend any money on the development of new launch vehicles under CCDev, since that is not the focus of the program which is spacecraft and space systems. They agree, which is why ATK’s paper rocket went straight to the recycle bin.
OLer, by launch vehicle I lumped in launch vehicle and spacecraft development. Sorry about the confusion. In any event, a great suggestion.
Others. So by your definition, Solyndra was not a government subsidy because the government was providing a guaranteed loan for a product–ie solar panels. For that matter, ethanol subsidies are not subsidies because it creates a product as well.
I guess it is all a matter of what is is.
Let’s recap folks… In 1966, NASA received about 6% on the national budget. It’s down to about 0.4% today, or 15 times less. We complain about the cost of a launch vehicle (Ares) that was going to be on the order of one quarter the cost of the Shuttle. It’s been 2 years since Mr. Obama cancelled the Constellation program. We’re back to the same spacecraft (Orion) and NO, repeat, NO, foreseeable launch vehicle. SLS is still a pipe dream, and I’m not seeing a commercial alternative coming very fast. The return of American manned space flight is delayed another 2 years. Is this a country on the forefront of space exploration? This is sad…
“… limited funding available for commercial crew in 2012—$406 million instead of the requested $850 million—as well as uncertainty about future budgets…”
Sing along, NASA, “This is the dawning of the Age of Aus-ter-ity, Age of Aus-ter-ity… Austerity! Austerity!” Zero it out all commerncial space funding. Private capital markets await.
Blue Origin are not being funded to develop a launch vehicle. They are being funded to develop their crew vehicle which will fly on an Atlas V. Blue Origin is developing a reusable LV on their own dime. When that is developed they intend to switch to it, but that is some way down the track.
Ares I was only “one quarter the cost of Shuttle” if you counted only the LV for Ares and the entire program for Shuttle. What’s more, its operating costs per launch would (and still will, with SLS) be higher than that of Shuttle, even though Ares I carried no cargo. SLS/Orion is consuming at least six times the whole Commercial Crew budget.
Who benefits from the funding cut to the commercial crew program?
First-Lockheed Martin, who must be thinking that if the CCDev program takes cuts in funding as an excuse to stretch the schedule to first launch, then they have more time to slip in and say “I’ll just do it” (with Orion, on a Delta, on SLS, etc). LM knows this is a horse race and CCDev must be stopped – the sooner the better.
When someone can develop a LEO capsule/module for 1/10th to 1/20th of what LM is spending, then LM knows success there would eventually come to bite them. Note that Orion funding is about $1B a year, and has been since about 2006. Dragons development, through first orbital test flight, added up to $300M. LM has yet to achieve an orbital test flight, and won’t, till about 2013. That would have been a run-up till 2013 of about $7B.
(And yes, I’m aware that the delta-v’s of re-entry are different, before everyone chimes in. Yet to think that mods to a Dragon for BEO delta v’s on re-entry would need another 20X more funding is ludicrous. The comparison would be made, the possibility opened up, and LM would suffer.)
Second-the longer the ISS can be starved, for some, the better. There’s a subtle and insidious school of thought at NASA that would de-orbit the ISS tomorrow, and believes that NASA is about “real” exploration and “big rockets” (developed, owned and operated in-house). That NASA is not about creating or growing industry or markets and crap. (The former is not a school of thought I am part of). And that till we have “real” money “real” exploration can’t be done. So the sooner we free up funds by de-orbiting ISS the better. Starving CCDev is consistent with starving ISS and furthers this meme.
Looks at the goals people.
At where we draw the line and say no more.
There could have been executive decisions to stick to 2015 or earlier for a first commercial crew to ISS. Somehow, such as eliminating the weakest players. Stretching schedule under guise of SAA’s favored by all the players (and other outsiders rooting for these) may be a strategically failure. It could remove a chance for new players to displace old ones, more affordable, at higher flight rates, with that potential then to create non-NASA customers along the way.
Whittington apparently follows the European school of thought, where it is an unfair subsidy if the government pays a company for providing a service it wants and does not currently exist. Somehow, that is the same thing as direct launch aid where money is just funneled from governments into companies.
Mark R. Whittington wrote @ December 16th, 2011 at 12:00 am
Which is complete nonsense. Only one company is doing any LV development under CCDev at all, and none under the current round of funding.
I’m not too familiar with the whole Solyndra affiar, but if the money the company received was indeed a loan then, no, that is not a subsidy.
Money paid to artificially lower the price of a product or support an otherwise less competitive industry is a subsidy.
Mark R. Whittington wrote:
“So by your definition, Solyndra was not a government subsidy because the government was providing a guaranteed loan for a product–ie solar panels. For that matter, ethanol subsidies are not subsidies because it creates a product as well.”
A loan guarantee is not always a subsidy. If the borrowing firm does not default than there wasn’t any government funds going towards the firm so there wasn’t any subsidy. What determines if it is a subsidy and how much is something called the “credit subsidy costâ€. If a bank is totally unwilling to take part in any form of borrowing because they determine is it to high risk to be involved there is costs associated with that. The risk is determined by the GAO and is rarely ever made public how they determine the risk. It involves the government having to allocate those resources to back the loan, because those funds can then not be used for other funding it ties up funds for a pretermined time and that time has a cost, even if the firm doesn’t default on the original loan. I do not know how much the credit cost was for the Solyndra loan.
Ethonal is a direct subsidy. When the government determines they want more of a product but the production cost is higher than the market will pay the fed will subsidize the producer so they can sell it at a price the market will bear, or they will subsidize the consumer directly so they can afford the higher price.
Farming is the easiest example for illustration of most direct subsidies. If prices are low and farmers do not want to plant that grain, the fed gives a subsidy to more is produced. Or if there is over production the fed will pay farmers not to grow a grain pushing the price up for the farmers still producing it.
If ethonal was only a concept on the drawing board and the government wanted to fuel some navy ships with it and wan’t a production facility built to produce it, that would not be a subsidy, it would be the government buying a product or service that does not exist.
That is the case with CCDEV. The government is demanding a service that does not exist. So they are buying the milestones from private industry. The milestones they believe will ultimately be needed by any firm that ends up contracting that service.
Once a firm is established, depending on how much NASA pays them and the contracting method used, THAT could be a subsidy. We do not know yet if commercial crew will be subsidized yet, we have to wait until the service is actually in existance and contracts issued.
I’m not too familiar with the whole Solyndra affiar, but if the money the company received was indeed a loan then, no, that is not a subsidy.
It is when the loan is guaranteed by the government, because it allows the company to borrow the money on more favorable terms than it would in the market.
Rand Simberg wrote @ December 16th, 2011 at 3:19 pm
I’d argue that’s not because the money gets paid back (it’s expected to, anyway), plus there’s now a tax-paying business, but I can see how someone would look at that differently. In all honesty I’m not terribly interested in arguing about it here, especially because it’s not terribly relevant to commercial crew which operates in a different way.
@Common Sense
Based on almost $4T of US corporate funds offshore that is likely return for reinvestment if amateur night ends next November. That’s one helluva “stimulus” that for sure would be better spent than the fiascoes we’ve seen since 2009.