Space Access Update #94 07/09/00 
                Copyright 2000 by Space Access Society 

Space Access Society was born on the Fourth of July, 1992.  We're 
officially eight years old now (though like actress and ballplayer 
birthdates, ours is a bit deceptive) and all we have to say is, my oh 
my, these are interesting times.  Gary Hudson has left Rotary Rocket, 
all sorts of promising approaches are gone from NASA's SLI "Space 
Launch Initiative", X-33 is on lifesupport till after the election, 
X-34 is under the post Mars-screwup microscope, and NASA's "2nd-
Generation RLV Program" is under the axe - and we think the Congress 
*should* chop a major part of it, and we're going to ask you all to 
tell them so over the next couple of weeks.  

And then there's this new angle on why we've been in a space-launch 
blind alley since 1970 - something we heard at this year's Space 
Access '00 conference clicked, and a pattern emerged that makes a lot 
of sense of recent decades.

Speaking of our annual Space Access conference, this year's went well 
- see Jeff Foust's and Larry Niven's reports at: 

In a burst of enthusiasm, we've already signed a hotel contract for 
next year's Space Access '01.  It'll be at the same place as this 
year, the Holiday Inn Old Town in Scottsdale Arizona, Thursday evening 
April 26th through Saturday evening April 28th, 2001.  Watch for details.  


 - Cheaper Space Launch: Stranded On The Demand Curve 

 - X-33 Impasse Unlikely To Be Resolved Before Election - Cash 
Transfusion (And Who Pays), Or Pull the Plug? 

 - NRA 8-27 Awards Foreshadow NASA SLI Direction 

 - Alert: "RLV Competition And Risk Reduction" NASA Budget Line Should 
Be Eliminated 

              Stranded On The Flats Of The Demand Curve:  
                         Cheap Launch In Limbo 

Consider how the demand for space launches varies with changes in 
launch cost.  Start plotting launch cost at infinity and reduce it as 
you move to the right, with demand on the vertical axis...  At the 
infinite-cost start of our plot, demand is at zero - for most of 
history, all the wealth of the planet couldn't have put a BB into 
orbit.  Then, as cost drops to mere millions per pound, demand starts 
stirring - at least if you have a Cold War going on and national 
security requires that you keep up with the other guy.  

After you get halfway good at flying modified missiles to space and 
the huge R&D costs are written off, you find you can actually get 
costs down to mere tens of thousands of dollars per pound.  At that 
point, things get interesting - you find there are things you can do 
that pay off.  Surveillance of the other side in that Cold War, first 
of all, and right along with that Cold War national-prestige missions, 
and then comes the money app, communications. 

And then, as launch costs come down more...  not much happens.  Nobody 
cares.  You've hit a flat "price-inelastic" section of the demand-
versus-cost curve; costs can drop more without persuading anyone to 
buy more flights.  Since 1970, launch costs have come down to mere 
thousands of dollars per pound, with some bargains as low as two 
thousand a pound - but the people buying spysats and comsats and 
national-prestige missions have decided how many launches they need 
based mainly on other factors - even as low as a couple thousand a 
pound, there's been no launch-buying spree.  The demand curve is flat. 

This is not just us saying this; the government-sponsored industry-
wide Commercial Space Transportation Study (CSTS) back in the nineties 
concluded that not only are we in a flat section of the launch demand 
curve, but also that the flat section extends to well below a thousand 
dollars a pound - their estimate was that launch demand wouldn't start 
taking off in response to lower costs until six hundred dollars a 
pound.  Somewhere around that point, existing space operators might 
start modifying their operations to take advantage of lower costs, and 
more important, new applications would start springing up.  Past that 
point, the curve isn't flat anymore, and the sky's the limit. 

Meanwhile, though, we're still stranded out here on the flat section 
of the curve.  This has significant consequences for space-launch 
investment decisions.  We'll just hit the high points for now; a 
detailed analysis would take a book. 

(Depending on the launcher, the destination, and the customer, US 
launch costs can actually vary quite a bit, but for the sake of 
argument, call the current cost of American space launches $10,000 per 
pound.  It's far from a free market in international launch; 
considering US launch in isolation makes sense for our purposes.) 

(Again for the sake of argument, let's call launch cost reductions of 
up to half "minor", of up to ten-fold "major", and of twenty-fold or 
more "radical".  Note that "major" reductions would still leave launch 
cost above the point in the curve where demand finally starts rising 
fast - only "radical" cost reductions would get past that point.) 

(This is, by the way, why Space Access Society pursues "radical" 
reductions in the cost of launch.  We see no point in working this 
hard merely to increase some launch company's profit margins or to 
reduce the slice of NASA's budget it devotes to the limited number of 
launches it uses each year.  We want to see revolutionary growth in 
the space economy get underway, soon, because we think that would be 
one of the finest gifts anyone could give to this country and to the 
world in this coming century.) 

The major established launch contractors have no incentive to invest 
in lower space launch costs, beyond minor investments aimed at minor 
cost reductions that show up in higher profits on existing traffic. 
Large investments aimed at major cost reductions would tend to have 
the effect of significantly reducing their launch business cashflow, 
as their largest single customer, the government, would insist on 
having the savings passed along.  At worst, it would lead to a price 
war in the relatively flat commercial market and both majors would 
take a very large space-launch business hit.  

Beyond that, neither major is at all likely to go even further and 
pursue "radical" twentyfold-or-more cost reduction - the potential 
payoff may be huge, but it's a long-term and speculative payoff; the 
new markets can't be straight-line projected from current markets, and 
they won't spring into being overnight.  The current majors have too 
much near-term existing cashflow that would be put at risk; if their 
management did try such a thing, their stockholders might well fire 
them - and rightly so, at least by current business theory. 

Our read of Lockheed-Martin is that they've reacted to this by a dual-
track strategy of, to date, soaking up most available government 
cheap-launch R&D money so none of their competitors (competitor, now) 
could get the jump on their existing high-cost launch business, while 
pursuing government financing for their own "Venturestar" concept in 
the hope of using other people's money to get the jump on their 
remaining competitor. They have, understandably, showed not the 
slightest interest in putting their own money on the line for more 
than a fraction of any major launch cost reduction project. 

Boeing, meanwhile, seems to have kept their powder dry in the form of 
a reusable launch engineering department that stays ready to go, when 
and if Boeing is forced to go by external competition, but not one
moment sooner.  They also seem to have had their Washington lobbyists 
oppose "Breaux Bill" Venturestar loan guarantees, for which we for our 
own reasons are grateful. 

Let's look at the various startup launch companies now.  All have 
pursued some "major" degree of reduced cost as their only real hope of 
being able to compete on price and grab a slice of the existing market 
near-term enough to attract investors.  The ones of interest to us 
have taken approaches that also have potential for eventual "radical" 
cost reductions at higher flight rates. 

To date, though, neither the conservative nor the conservative/radical 
approaches have attracted enough investment to get to orbit - the lure 
of a highly regulated flat market (even flatter now that the LEO coms 
companies are in trouble) has not sufficed for the conventional 
investors, and the number of long-term high-risk visionaries willing 
to plow in several hundred million dollars on faith remains at zero. 

(This is why we continue to insist that the government must be the 
investor of last resort in pushing launch costs down to "radically" 
lower levels - the country and the world would benefit hugely, but 
getting past the break-point in the demand curve has so far taken too 
much money and time for private investors in the current climate.) 

And finally, we come to NASA.  NASA's current Space Launch Initiative 
policy is to pursue "major" (up to tenfold, but they hint that they'd 
settle for two or three-fold) decreases in launch cost, in order to 
allow them to continue doing what they currently do in space, 
launching a half-dozen heavy manned and a dozen or so medium unmanned 
missions every year, for somewhat less money. 

The problem with this is that SLI is predicated on, after NASA subsidizes 
prototype development, commercial investors putting up several times 
that much money to build operational vehicles that will give NASA 
their cheaper launches and somehow also gain enough commercial traffic 
to make money and pay off the investors.  And as we've seen, the main 
effect of a three-to-tenfold launch cost reduction on the current 
market is going to be a major reduction in overall market cashflow.  

No commercial investor in his right mind is going to put money into 
pursuing that result.  Absent some flavor of government subsidy - loan 
guarantees or a market guarantee, and at that point it isn't a 
commercial operation, it's a quasi-government monopoly - it isn't 
going to happen. 

NASA has a legitimate interest in pursuing major reductions in cost 
for their in-house launch needs.  But commercial launch vendors, as 
we've seen, are more hurt than helped by mere "major" tenfold 
reductions in launch cost.  

NASA needs to bite the bullet and budget for their own modest cost-
reduction needs separately from their support for the commercial 
requirement for nothing less than "radical" twenty-fold or more launch 
cost reductions.  The US commercial launch market must somehow get 
past the flat sector of the demand curve.  

So far, private investors haven't shown themselves ready to do it.  
Absent powerful level-playing-field launch investment incentives, if 
NASA won't do it either, some government agency that will do it must 
be found and funded, soon.  The potential benefits are far too large 
for the nation to forego for another generation via foolish reliance 
on NASA's current "'2001' by 2040" plan. 

         X-33 Impasse Unlikely To Be Resolved Before Election:
          Cash Transfusion (And Who Pays), Or Pull the Plug? 

Following the internal workings of NASA is a bit like tracking events
in the old Soviet Union.  When things are going well, they'll tell 
you all about it.  When things aren't going well, finding facts is 
like pulling teeth.  Often, the most informative source there is is 
what NASA won't tell you and how they won't tell it - the outlines of 
the informational no-go areas can speak volumes. 

Things aren't going well for X-33.  One of the composite multi-lobe 
tanks failed massively during routine test last fall, and the report 
on that (and on problems with the program in general) was originally due 
out last winter.  The trouble seems to be, though, that this report is 
supposed to say how NASA and Lockheed-Martin are going to deal with 
the various problems - and as best we can tell, they can't agree on a 
fundamental point: Who pays for the extra couple years of work both 
sides seem to think it'll take to fly X-33. 

Our best guess as to the nature of the impasse is, NASA refuses to pay 
because there's no money in their budget for X-33 past this September 
(X-33 was originally supposed to fly in March '99; the most recent 
blown schedule said July '00, AKA now) and because, well, the contract 
they have with Lockheed-Martin, the "Cooperative Agreement", says 
Lockheed-Martin pays for any overruns.

Lockheed-Martin meanwhile is understandably reluctant to dip into 
their own pocket for the couple hundred million dollars extra 
(minimum) to get X-33 to flight - they are already in enough trouble 
with their stockholders over recent technical and financial 
performance problems. 

Neither side is eager to do the obvious thing, admit the project is 
too far up a blind alley to be worth salvaging and shut it down, 
because neither needs another expensive embarrassment right now.  

Lockheed-Martin however quite probably thinks they have negotiating 
leverage, because NASA needs the embarrassment even less than they do.  
Not only is NASA currently trying to get the new SLI funded, but the 
White House that NASA works for is trying to get the man who unveiled 
Lockheed-Martin's win of X-33 elected President.  It wouldn't likely 
be a major embarrassment (though it might put another dent in that 
candidate's reputation for technological savvy) but no embarrassment 
is welcome during a Presidential campaign. 

The most recent public word on when the X-33 report was due out said, 
late May.  Since then, not a peep, officially, but the unofficial word 
had it that X-33 work at NASA has been "put to sleep" till after the 
November election.  Our estimate of the situation is, that's exactly 
what makes sense for NASA, for Lockheed-Martin, and for the White 
House (though not the taxpayers): Put off any decision until after the 
election.  Everything we see says that's exactly what NASA's doing. 

             NRA 8-27 Awards Foreshadow NASA SLI Direction 

"NRA 8-27" was the NASA Research Announcement soliciting bids for 
initial SLI study contracts.  Awards were announced last month, and we 
have to say we were surprised - we'd expected NASA to be more 
politically astute and hand out at least token study contracts to all 
the startups, in addition to the predictable awards to the established 
majors.  Instead, they showed their hand early, freezing out a number 
of the startups whose approaches were more focussed on radically 
higher flight rates and radically lower costs to open up commercial 
high-volume markets than they were on meeting NASA's launch needs.  

NASA Marshall pretty much stuck to the established STAS (Space 
Transportation Architecture Study) contractors in making the NRA 8-27 
awards, which we think does not bode well for there being any room 
within SLI for approaches aimed at getting past the flat part of the 
launch demand curve and into the steep-growth region.  "The customer 
is NASA." 

     Alert: "RLV Competition And Risk Reduction" NASA Budget Line 
                         Should Be Eliminated 


The "commercial" portion of NASA's new Space Launch Initiative, done 
in the manner NASA looks more and more certain to do it, will be worse 
than doing nothing at all.  It will most likely fail in the same 
inconclusive manner as the current X-33 program, at twice the price, 
wasting five more years and additional billions of taxpayer dollars.  
In the unlikely event it does "succeed", it will have created a quasi-
governmental space-launch monopoly that will stall the space market 
short of the high-growth part of the curve for a generation to come. 

We do not oppose the other two major portions of SLI, "NASA-Unique 
Systems" and "Alternative Access".  NASA-Unique Systems appears to be 
aimed at some flavor of "Space Taxi" Crew/Cargo Transfer Vehicle, 
something which will assure capability to meet NASA's basic manned-
space obligations without (as best we can tell) unduly disrupting 
commercial markets.  We think this will be a good thing if NASA pulls 
it off, and even if they fail it shouldn't do much harm. 

Our colleagues over at ProSpace and the Space Frontier Foundation, 
meanwhile, have put a lot of effort into promoting Alternative Access 
(to Space Station) as a way of supporting the RLV startup companies.  
We're not convinced NASA Marshall won't turn it into a program to have 
one of their local contractors build a FasTrac-powered expendable, but 
for the moment we think AA deserves the benefit of the doubt.  We'd 
like to be proved wrong. 

But absent radical changes in the "RLV Competition & Risk Reduction" 
plan, we recommend killing this $2.5 billion-over-five-years ($145 
million this coming FY'01) part of SLI now, in the hope that whatever 
new Administration takes over next January will rethink things.  We 
believe it's better to wait one more year than waste another five. 

The House HUD/VA Appropriators (NASA is funded in the HUD/VA And 
Independent Agencies bill), in a tactical budgetary move last month, 
already zeroed the entire FY'01 $290 million NASA "Second Generation 
RLV" program, the core of SLI.  This includes $145 million for "RLV 
Competition & Risk Reduction" (including its associated "Systems 
Engineering & Requirements Definition" budget line), $50 million for 
NASA-Unique Systems, $40 million for Alternative Access, and $55 
million for Ongoing Pathfinder Programs (the final-year windup of 
X-34, X-37, and the other former "Future-X" programs.) 

The Senate VA/HUD Appropriators should meet and "mark up" their 
version of the bill towards the end of this coming week of July 10th.  
Early word is that they're inclined to restore the entire $290 million 
for "Second Generation RLV"; we have a few days to make the case to 
members of this Senate subcommittee to kill the "RLV Competition & 
Risk Reduction" budget line. 

Once the Senate Appropriators finish their VA/HUD Appropriation 
markup, the bill goes to the full Senate for amendment and passage.  
Sympathy for (or even awareness of) our opposition to the "RLV 
Competition" budget line by any or all Senators will be extremely 
helpful here if it ends up being the subject of floor action. 

Once the Senate passes their VA/HUD Appropriation, the next step - 
sometime between next week and the end of the summer - will be a 
House-Senate HUD/VA conference committee, which will meet to hammer 
out a compromise between House and Senate versions of the HUD/VA 
funding bill.  The members of this conference committee will be mainly 
drawn from the House and Senate HUD/VA Subcommittees.  This will be 
the final (and possibly the best) real chance for us to persuade 
Congress to kill NASA's "RLV Competition & Risk Reduction" FY'01 
budget request line.  (Federal FY'01 starts this October 1st.) 

     Action Recommendations 

As early as possible this coming week, if one of the VA/HUD 
Subcommittee Senators is from your state, contact their Washington DC 
office via phone, fax, or paper mail, and ask them to zero the NASA 
"RLV Competition & Risk Reduction" budget line.  Ask them to do that 
specific thing, explain briefly why, then thank them for their 
attention and ring off/end the letter. 

Senate Appropriations Committee, VA/HUD Subcommittee: Bond MO, Burns 
MT, Shelby AL, Craig ID, Hutchison TX, Kyl AZ, Stevens AK, Mikulski 
MD, Leahy VT, Lautenberg NJ, Harkin IA, Byrd WV. 

For DC office voice/fax numbers or mailing addresses, check 

For the rest of you, check whether your member of the House of 
Representatives is on its Science Committee, Space Subcommittee or on 
its Appropriations Committee, HUD/VA Subcommittee.  If so, contact 
them as above; make the case for killing the NASA "RLV Competition" 
line as well as you can. 

We may well be asking all of you to contact your Representative and 
both your Senators on this in the coming weeks.  If you don't fall 
into either of the above categories, it can't hurt and might help to 
do this now.  Understand that you'll probably get told "we're not on 
that subcommittee", at which point just say you wanted to let them 
know you feel strongly about this, and anything they can do would be 

That's all for now - thanks for your help in this! 

Space Access Society's sole purpose is to promote radical reductions 
in the cost of reaching space.  You may redistribute this Update in 
any medium you choose, as long as you do it unedited in its entirety. 

 Space Access Society 

 "Reach low orbit and you're halfway to anywhere in the Solar System" 
                                        - Robert A. Heinlein