Space Access Update #94 07/09/00
Copyright 2000 by Space Access Society
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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:
http://www.spaceviews.com/2000/05/article3a.html
http://www.space.com/sciencefiction/larryniven/niven_rocket_men_000616.html
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
www.space-access.org for details.
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Contents:
- 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
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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.
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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.
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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."
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Alert: "RLV Competition And Risk Reduction" NASA Budget Line
Should Be Eliminated
Background
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 www.vote-
smart.org.
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
appreciated.
That's all for now - thanks for your help in this!
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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.
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Space Access Society
http://www.space-access.org
space.access@space-access.org
"Reach low orbit and you're halfway to anywhere in the Solar System"
- Robert A. Heinlein