Space Access Society 6/11/14 Followup to
Space Access
Society Political Action Alert 6/4/14
Space Access
Society 6/5/14 Followup
There’s been some additional
action in the fight over the future of NASA’s Commercial Cargo and Commercial
Crew programs. Florida
Today and The
Houston Chronicle ran stories reporting the Commercial Spaceflight
Federation industry association’s view that Senator Shelby’s provision to
impose cost-plus contract-type “certified cost and pricing data” on
these programs could disrupt contracting and would increase overall costs.
“The
language would effectively change an efficient and lean commercial program into
a traditional government procurement with all of the associated overhead and
cost,” said Alex Saltman, executive director of the
Commercial Spaceflight Federation.
“In
addition, if this language were to become law before NASA awards the latest
commercial crew contracts, NASA would likely have to restart the procurement
with these new rules, pushing back the program up to a year and sending
hundreds of millions of more taxpayer dollars to Russia for Soyuz rides,” Saltman added. “If the language were to go into effect
after the awards, NASA could be tied up in contract renegotiations and
challenges for months if not years.”
Michael
Lopez-Alegria, president of the CSF and four-time
NASA astronaut, added “It’s just bad policy. The whole idea behind the commercial crew
program is to not do a lot of the stuff that we have traditionally done. It
would be nice to be a little forward leaning, and to save taxpayer money.”
The papers also asked Senator
Shelby about our contention that this Senate NASA Appropriation provision is
intended (among other things) to protect the massively wasteful Space Launch System
project. His reply: “That’s not true. We’re looking for
transparency.”
With all due respect to the
senior Senator from Alabama, we disagree.
This is not at all about
transparency.
If it were, Senator Shelby
would be doing something about Space Launch System’s major cost-transparency
issues. The GAO says that preliminary SLS
program cost estimates fail to include either “the long-term, life cycle
costs associated with the programs or significant prior costs”. SLS is already subject to full
“certified cost and pricing data” reporting. It doesn’t seem to help. (It looks to us as if SLS management is
hiding the real long-term costs lest it become too obvious the program is no
more affordable than its Ares/Constellation predecessor.)
We believe this is actually about
control.
Specifically, about bringing
control over all NASA space transportation development back to the Alabama-based
NASA old guard faction that’s running SLS, about bringing control over all NASA
space transportation funding back under Senator Shelby’s thumb, and also about
maintaining his control over Defense space transportation funding. Affordable timely manned space-transport
development and the US taxpayer meanwhile get thrown to the wolves.
Consider:
– Cost-Plus contract-type “Certified
Cost And Pricing Data” requires excruciatingly detailed accounting of a
company’s development process. Cost-Plus
contracting thus enables excruciatingly detailed customer control of that
process, for customers so inclined.
NASA’s traditional space-launch development faction is very much so
inclined. The unfortunate fact is that
this increases costs dramatically, even before the contractor starts being
summoned to endless meetings over the precise thickness of gold-plating to be
applied to the newly-added NASA-mandated kitchen sink. The final result is baroquely complex
designs, endless project delays, and costs ten
times or more those of commercial-sector equivalent projects. (This is a large part of why Shuttle was so
expensive, and of why every single one of NASA’s internal efforts to replace
Shuttle over the years has failed.)
– The USAF bureaucracy that handles rocket
acquisition for DOD is less inclined to meddle with design details, but even
so, under the traditional Cost-Plus contracting, the effective requirement to
buy components from the shrinking number of vendors who’ll comply with both “certified
cost and pricing data” reporting and the Air Force’s voluminous historical
accumulation of quality assurance rules causes existing Defense booster
procurements to cost two to three times commercial equivalents.
– Cost-Plus contracting profoundly affects a
company’s internal culture. It
essentially turns productive workers into part-time accountants. Lots of hours that used to go to producing
beans get spent on counting them instead.
This significantly increases costs and cripples companies for normal
commercial competition. Large companies
tend to have separate Government Contracts divisions, smaller companies tend to
either specialize in government cost-plus work or (if they want to maintain
commercial viability) avoid it like the plague.
– Of the contractors involved in Commercial
Crew, Boeing is very used to Cost-Plus and would have little trouble switching
over. SpaceX has only ever worked
fixed-price and we surmise would be very reluctant to erode their commercial
agility and cost advantage by reworking their internal processes for Cost-Plus. Sierra Nevada is somewhere in the middle.
– Over in DOD launch, ULA currently works
cost-plus, while SpaceX is strictly fixed-price. This is a big factor in the price advantage
that SpaceX is pressing hard in an effort to increase their share of the
Defense launch market. (The situation is
of course far more complex than that. We
will mention DOD’s legitimate need to assure redundant national defense launch
capabilities, SpaceX’s relative newness as a vendor,
the interestingly timed ULA multi-year 36-booster “block buy”, and ULA’s political problems with one of their engine vendors
as factors, without going into further detail for now.)
– This NASA budget isn’t the
only place where Senator Shelby has issues over traditional government
cost-plus procurement versus upstart commercial fixed-price vendors. In a Senate Defense Appropriations
Subcommittee hearing back in March, he got into an intense head-to-head
confrontation with SpaceX’s CEO Elon
Musk over the difference between ULA’s cost-plus
versus SpaceX’s fixed-price operations. (Fast-forward to between 52 and 55 minutes
into this video.) Senator Shelby seems visibly upset at SpaceX’s “unfair” advantage over ULA’s Alabama-based booster manufacturing operation.
– Shelby’s “certified cost and pricing
data” mandate also covers the upcoming next contract round for Commercial
Cargo. The existing vendors, SpaceX and
Orbital-ATK, will both be affected.
(Orbital currently gets significant parts of their Antares/Cygnus
vehicle from overseas vendors who may not be happy about providing
“certified cost and pricing data”.)
Any new “cost-plus” Commercial Crew vehicle will also have a
cargo capability, so the inclusion of Commercial Cargo in the mandate may
greatly affect the next round of contract competition.
Our take on all this: Combining
the House Appropriations Report mandate to downselect
Commercial Crew to one contractor, Senator Shelby’s mandate to go to cost-plus
accounting in Commercial Crew and Commercial Cargo, and Senator Shelby’s (otherwise
inexplicable) support for raising FY15 Commercial Crew funding to $805m, and it
forms a clear picture: The new low-cost
commercial vendors frozen out, and one old-line cost-plus contractor doing both
Commercial Crew and Cargo out of Huntsville the old, slow, and expensive NASA-total-detail-control
way.
What To
Do
Write
(Or Call) Your Senators about
this, soon. Senator Shelby is carving
out and claiming a very large piece of turf here. Senators from California, Texas, New Mexico, and
Florida (SpaceX) and Virginia and Utah (Orbital) should be directly
concerned. Other Senators may also want
to discourage this sort of overreach.
Don’t try to go into depth or
detail. Keep it simple and top-level. Most incoming email won’t get read beyond
the first paragraph anyway. Get the key
points in the first paragraph, or in your first two sentences if calling.
The gist should be that
there’s language in the Senate CJS NASA Appropriation Report mandating
cost-plus type accounting for NASA’s Commercial Cargo and Commercial Crew
programs, despite those being run on fixed-price contracts. This mandate will
greatly increase costs and delay schedules in essential programs that have been
till now models of cost-saving. It should be removed from the bill.
If you want, mention that
delaying Commercial Crew means paying the Russians hundreds of millions more
for their rockets (if they’ll even sell them to us) and (if you’re writing) maybe
put in a few URLs to news coverage and other explanations after that. But get
the main points in at the start.
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