I can't figure out from this space.com article on the new commercial ISS procurements why it's characterized as NASA 'subsidizing" commercial space development. Why is it a subsidy to provide money for services, but not to issue a cost-plus contract?

[Update a few minutes later]

Clark Lindsey asks the same question:

So when the Air Force contracts with airlines to deliver people and cargo to foreign miltary bases, is it "subsidizing" the airline companies? More likely it is doing so because outsourcing the deliveries is a lot cheaper and quicker than using its own vehicles to do the job.

Perhaps the difference is that these foriegn military bases serve some real purpose, but ISS doesn't?

Hi Paul!

However, NASA has an international obligation to fly ISS. So they really dont have a lot of choice. What's more, they've kind of admitted rather clearly in public places that they *can't afford* to fly their new CEV vehicle (or the existing Shuttle) to ISS within their existing budget profile while doing Moon-Mars.

So they need to bid out ISS resupply to *save money*. (I think that would be a case of "not subsidizing" some existing contractors in favor of new lower (and hopefully *fixed*) price ones, rather than a subsidy). But Space.Com obviously thought that too hard to explain...

-jcp-

Perhaps the difference is that these foriegn military bases serve some real purpose, but ISS doesn't?

That's a pretty subjective judgement, Paul. It's one that I agree with, but it can't be used as a basis to call one "subsidization" and the other not. The point is that NASA is going to pay for it either way, so again, why is it a "subsidy" if they buy the services from the market, but not if they had a contractor a cost-plus contract to do it?

Airline companies don't ask for money to develop and build their airplanes which the alt.space sector does (look at t/Space, they are asking a few hunderd millions to build their system). If they really are not asking for subsidies they should only be payed for their services not for developing their services.
I heard Griffin was for a short time involved in AMROC, so you shouldn't blame him for not having much fate in the commercial space sector.

Airline companies don't ask for money to develop and build their airplanes which the alt.space sector does (look at t/Space, they are asking a few hunderd millions to build their system).

No, but in the early days, they did ask for a market. The problem is that today, it's a lot harder to get Congress to commit to a multi-year market, so some companies are asking for development costs. The difference is, unlike the cost-plus contractors, they're willing to forgo payment until they deliver useful hardware.

Airline companies don't ask for money to develop and build their airplanes which the alt.space sector does (look at t/Space, they are asking a few hunderd millions to build their system).

I shouldn't blame him for his irrationality, in drawing a general conclusion from a single data point?

If NASA treats the launch services program as a subsidy rather than as an crucial route to big savings, then it will use that as the justification to cut the program when the inevitable cash crunch hits the top priority Shuttle/ISS/CEV/CLV projects.

Airline companies don't ask for money to develop and build their airplanes ...

I don't believe either SpaceX or Kistler plan to ask for development money. They would use a significantly sized contract for the launch services to raise additional private capital. (SpaceHab did its modules this way.) I expect there will be some other companies entering the competition as well who will not ask for vehicle funding.

Even in the T/Space case, they are asking for development funding via a fixed price/ strict milestone payment approach that will lead to a system costing a tenth of what the CEV will cost. Is that a subsidy or a sensible way for NASA to save a lot of money?

I heard Griffin was for a short time involved in AMROC, ...
Firstly, as proven by SpaceDev and its AMROC derived engines for SS1, AMROC made significant progress with hybrids.

Secondly, AMROC went under, like so many startups, not because its technology failed but because of a lack of capital.

Thirdly, there is nothing magic about the technology in the private sector. A given company's technology can fail just as easily as NASA's can. The advantage is that NASA will get lots of different solutions offered for ISS resupply. Survival of the fittest has been shown empirically to be a great way to find optimum solutions to complex problems.

>Even in the T/Space case, they are asking for development funding via a fixed price/ strict milestone payment approach that will lead to a system costing a tenth of what the CEV will cost. Is that a subsidy or a sensible way for NASA to save a lot of money?

What If Boeing or Lockheed asked for the same thing? Would they be forbidden to do so or is this just a hand out for a company that can't raise money in the private sector?

It is interesting that the alt.space movement people from the 90's have shifted from "the private sector can do it better!" to "The private sector can do it better, if you give us government money with no strings" If investors are not willing to put money into this new market then why is it incumbent upon the government to put money in where they fear to tread?

The answer is simple. The government is both the investor and the customer. However, the government is a very bad customer and the investment community knows it. The alt.spacers want to have it both ways with the government putting up the investment capital to subsidize what the admit they want to do in the private sector while not wanting the government to dictate requirements.

Private investors will dictate how the companies that they invest in will operate; what is it that the alt.space community offers the nation that warrants cash with no oversight?

What happens when they miss a milestone? What penalty do they offer? Many investments in the private sector also have milestones and when the are missed the investors dilute the founders and take over the company. I don't see any equivalent penalty offered here. Gary Hudson was very good at taking private money and then when the milestones were missed and the investors quit putting in money he just walked away and started a new company leaving chaos in his wake. Gump did the same at LunaCorp. Track records are important and it is interesting that in all of the boasting about fixed price and milestones that they don't have any penalties. How about for the first missed milestone that the company forefit's all officer salaries? How about for the second missed milestone that the founders are ousted.

Even Elon Musk has missed his milestones. What makes t/space think that they are immune to this?

What if Boeing or Lockheed asked for the same thing? Would they be forbidden to do so or is this just a hand out for a company that can't raise money in the private sector?

Why in the world would they be forbidden to do so?

Of course, the notion that contractors who are used to getting cost-plus contracts, with progress payments that have no correlation to actual progress (i.e., success), would ask for this is laughable.

To get back to the point of the blog ... ;)

I think what this shows is that NASA has totally lost contact with 'real world' contracting.

NASA says "... over the next seveal years subsidizing development ... " where 'real world' contracting would read '...over the next several years contracting development ...'.

'Real world' would have a responce to this that said something like ... 'This is our development plan, with this start date (enter here) we are looking to hit these milestones by these dates. We are also, as part of this development plan, projecting X number of test flights before presenting the developed vehicle with it's selected launcher to consumers that need payloads delivered to LEO orbit and any stations in accessable orbits by the selected launcher and it's avalable launch sites.'

Or something like that. ;)

Basicly, NASA has gotten into the habbit of giveing money to companies when they say they want something. New or not. The BAD part is that NASA has gotten into the habbit of 'we know best, do it our way or lose the money'.