Space Access Society: Update on Shelby’s commercial cargo/crew poison pill
The latest alert from the Space Access Society concerning Sen. Shelby’s attempt to undermine NASA’s commercial crew and cargo programs:
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.
– 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.
Space Access Society
To protect taxpayers, Sen. Shelby [R-AL] opposed the bailout of auto companies that just happened to be located in other states than his own. Today he has no qualms at protecting rocket companies in his own state from a lower cost competitor and happily wastes “billions and billions” of taxpayers’ money on an Alabama rocket to nowhere.