There is an emerging truth about NASA\u2019s push toward commercial contracts that is increasingly difficult to escape: Companies not named SpaceX are struggling with NASA\u2019s approach of awarding firm, fixed-price contracts for space services.<\/p>\n
This belief is underscored by the recent award of an $843 million contract to SpaceX for a heavily modified Dragon spacecraft that will be used to deorbit the International Space Station by 2030.<\/p>\n
The recently released source selection statement for the \u201cUS Deorbit Vehicle\u201d contract, a process led by NASA head of space operations Ken Bowersox, reveals that the competition was a total stomp. SpaceX faced just a single serious competitor in this process, Northrop Grumman. And in all three categories\u2014price, mission suitability, and past performance\u2014SpaceX significantly outclassed Northrop.<\/p>\n
Although it\u2019s wonderful that NASA has an excellent contractor in SpaceX, it\u2019s not healthy in the long term that there are so few credible competitors. Moreover, a careful reading of the source selection statement reveals that NASA had to really work to get a competition at all.<\/p>\n
\u201cI was really happy that we got proposals from the companies that we did,\u201d Bowersox said during a media teleconference last week. \u201cThe companies that sent us proposals are both great companies, and it was awesome to see that interest. I would have expected a few more [proposals], honestly, but I was very happy to get the ones that we got.\u201d<\/p>\n
NASA\u2019s push into \u201ccommercial\u201d space began nearly two decades ago with a program to deliver cargo to the International Space Station. The space agency initially selected SpaceX and Rocketplane Kistler to develop rockets and spacecraft to accomplish this, but after Kistler missed milestones, the company was subsequently replaced by Orbital Sciences Corporation. The cargo delivery program was largely successful, resulting in the Cargo Dragon (SpaceX) and Cygnus (Orbital Sciences) spacecraft. It continues to this day.<\/p>\n
,<\/p>\n
A commercial approach generally means that NASA pays a \u201cfixed\u201d price for a service rather than paying a contractor\u2019s costs plus a fee. It also means that NASA hopes to become one of many customers. The idea is that, as the first mover, NASA is helping to stimulate a market by which its fixed-priced contractors can also sell their services to other entities\u2014both private companies and other space agencies.<\/p>\n
NASA has since extended this commercial approach to crew, with SpaceX and Boeing winning large contracts in 2014. However, only SpaceX has flown operational astronaut missions, while Boeing remains in the development and test phase, with its ongoing Crew Flight Test. Whereas SpaceX has sold half a dozen private crewed missions on Dragon, Boeing has yet to announce any.<\/p>\n
Such a commercial approach has also been tried with lunar cargo delivery through the \u201cCommercial Lunar Payload Services\u201d program, as well as larger lunar landers (Human Landing System), next-generation spacesuits, and commercial space stations. Each of these programs has a mixed record at best. For example, NASA\u2019s inspector general was highly critical of the lunar cargo program in a recent report, and one of the two spacesuit contractors, Collins Aerospace, recently dropped out because it could not execute on its fixed-price contract.<\/p>\n
Some of NASA\u2019s most important traditional space contractors, including Lockheed Martin, Boeing, and Northrop Grumman, have all said they are reconsidering whether to participate in fixed-price contract competitions in the future. For example, Northrop CEO Kathy Warden said last August, \u201cWe are being even more disciplined moving forward in ensuring that we work with the government to have the appropriate use of fixed-price contracts.\u201d<\/p>\n
So the large traditional space contractors don\u2019t like fixed-price contracts, and many new space companies are struggling to survive in this environment.<\/p>\n
The US Deorbit Vehicle offered an interesting test case for how NASA would approach commercial contracts given all of the above. This mission required a spacecraft capable of docking with the International Space Station, remaining attached for about a year, and then powering the large station down through the Earth\u2019s atmosphere, where it could make a controlled descent into the ocean. This, NASA determined, was the safest way to dispose of the aging station after more than 30 years of operations.<\/p>\n
,<\/p>\n
While there were myriad potential solutions, it seemed clear that SpaceX, with Dragon, and Northrop Grumman, having acquired Orbital Sciences and the Cygnus spacecraft, were the clear favorites. What happened next is telling. I have pieced the following together from the source selection statement, publicly available documents, and on-background interviews with a handful of key officials.<\/p>\n
Initially, within the International Space Station program, the expectation was that a deorbit mission would cost less than $1 billion. However, the agency\u2019s Office of the Chief Financial Officer later estimated it might cost as much as $1.7 billion. This prompted NASA to ask the Office of Management and Budget for $1.5 billion for the program.<\/p>\n
The agency\u2019s deputy administrator, Pam Melroy, and then-associate administrator Bob Cabana, made it clear internally that they did not want SpaceX to win the contract without competition. There is a general unease within the agency and industry that SpaceX is increasingly mopping up the lion\u2019s share of new NASA contracts. Certainly, this is not attributable to favoritism\u2014indeed, NASA would prefer not to be beholden to a single contractor, however excellent its present performance and price may be. SpaceX, rather, is winning because it is often the best and sometimes only option for the government.<\/p>\n
Notably, the initial draft \u201crequest for proposals\u201d for a deorbit mission issued in May 2023 called for a \u201csingle-award Hybrid Cost-Plus Incentive Fee and Firm Fixed Price core\u201d contract. However, four months later, in its final request for proposals, NASA said it wanted to maximize competition. Companies, therefore, could propose contracts that were either largely based on cost-plus or<\/em> fixed-price.<\/p>\n Essentially, Northrop told NASA it would not bid for a firm, fixed-priced contract. And conversely, SpaceX said it would not bid under a cost-plus contracting mechanism, which would require the company to add a new layer of bureaucracy to process such contracts. (SpaceX was also not particularly interested in a one-off mission for Dragon when the company is so focused on Starship development). Sticking to the original contracting mechanism would likely have meant that NASA had just a sole bidder, Northrop, for the deorbit mission.<\/p>\n ,<\/p>\n The result of the change is that Northrop made a bid under a hybrid cost-plus approach and SpaceX under a firm-fixed price contract.<\/p>\n SpaceX\u2019s bid price was $680 million. The source selection statement did not reveal a price for Northrop\u2019s bid other than saying it was \u201csignificantly higher.\u201d Based on NASA\u2019s budget request, Northrop\u2019s bid was likely approximately twice as high.<\/p>\n But SpaceX did not just win on price. Its \u201cmission suitability\u201d score, effectively its technical ability to design, develop, and fly a vehicle capable of deorbiting the space station, was 822, compared to Northrop\u2019s score of 589. SpaceX\u2019s approach had one weakness, compared to seven weaknesses in Northrop\u2019s bid, according to NASA evaluators.<\/p>\n Finally, the selection was also based on past performance by the contractors. SpaceX\u2019s performance was rated as \u201cvery high,\u201d given how it has delivered with the Cargo and Crew Dragon spacecraft and its Falcon 9 rocket. Northrop\u2019s performance on Cygnus and its various rockets was given a \u201cmoderate\u201d rating. Overall, the NASA evaluators expressed a \u201cvery high level\u201d of confidence in SpaceX being able to complete the mission, whereas a \u201cmoderate level\u201d of confidence was expressed in Northrop.<\/p>\n There is a telling line toward the end of NASA\u2019s source selection statement that really underscores the stakes here: \u201cIt is so important that NASA has a robust contractor community to support our important mission directives because we all benefit from the technical diversity offered.\u201d<\/p>\n This really is the point. In this competition, for which NASA expressly wanted multiple bidders from its \u201crobust contractor community,\u201d the agency had to bend over backward from a contracting standpoint to get two entrants. And when the competition unfolded, it was not even close: SpaceX had the far lower bid, with a far higher chance of success.<\/p>\n ,<\/p>\n Here\u2019s where all of this leaves NASA. The agency would like to move toward an era of commercial space, in which the agency shares development costs with the private industry and benefits from the ideas and nimble development practices of entrepreneurs. Everyone wins.<\/p>\n However, the space agency has encountered serious turbulence in this endeavor.<\/p>\n Based on the experiences of Commercial Crew and now the US Deorbit Vehicle, on a level playing field, it is clear that traditional space providers such as Boeing and Northrop struggle to compete with SpaceX on price and performance.<\/p>\n But so do newer entrants. For some time, the agency has been hoping that other new space companies would step up and similarly thrive like SpaceX in an environment of purely fixed-price contracts. To succeed over the coming decade in low-Earth orbit and on the Moon, the agency is counting on a new generation of companies, such as Axiom Space and Intuitive Machines, to take this next step. But what happens if they don\u2019t?<\/p>\n It is not clear that any new space company that lacks a wealthy backer to heavily subsidize operations, such as Blue Origin and Jeff Bezos, is really sustainable in the present environment.<\/p>\n In short, only one company\u2014SpaceX\u2014is thriving in NASA\u2019s commercial space ecosystem.<\/p>\n That is not a great position for the space agency to find itself in, so there are plenty of questions for NASA and policymakers. Do they cave to traditional space contractors and go back to cost-plus contracts for most services? (Slow and expensive.) Do they turn over many of their spaceflight functions to SpaceX? (Not desirable or politically practical.) Do they continue to hope and wait for other companies to make the next step? (The early returns are not great.)<\/p>\n The push toward commercial space seems admirable. But NASA needs a strategy, likely involving fewer requirements and more financial support, to help us get there.<\/p>\n","protected":false},"excerpt":{"rendered":" There is an emerging truth about NASA\u2019s push toward commercial contracts that is increasingly difficult to escape: Companies not named SpaceX are struggling with NASA\u2019s approach of awarding firm, fixed-price contracts for space services. This belief is underscored by the recent award of an $843 million contract to SpaceX for a heavily modified Dragon spacecraft […]<\/p>\n","protected":false},"author":1,"featured_media":45015,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[2],"tags":[9665,190,9666,21,316],"class_list":["post-45012","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-fixed-price","tag-nasa","tag-northrop","tag-space","tag-spacex"],"acf":[],"_links":{"self":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts\/45012"}],"collection":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/comments?post=45012"}],"version-history":[{"count":0,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts\/45012\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/media\/45015"}],"wp:attachment":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/media?parent=45012"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/categories?post=45012"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/tags?post=45012"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}A blowout<\/h2>\n
Whither commercial space?<\/h2>\n