NASA and the Business of Space

[Mark Reiff <markreiff@xxxxxxxxxxxxx>]

FYI,

"NASA and the Business of Space"
NASA Press Release via SpaceRef.com
http://www.spaceref.com/news/viewsr.html?pid=18740

American Astronautical Society 52nd Annual Conference
Michael D. Griffin
NASA Administrator
15 November 2005

: We are entering the dawn of the true space age. Our nation has the
: opportunity to lead the way. It is an opportunity we are eager to
: pursue, and one which we are unwilling to postpone. But the
: exploration of the solar system cannot be what we want it to be as
: an enterprise borne solely by the American taxpayer, or even by the
: taxpayers of the nations willing to join with us in this
: enterprise.

: If we are to make the expansion and development of the space
: frontier an integral part of what it is that human societies do,
: then these activities must, as quickly as possible, assume an
: economic dimension as well. Government-directed space activity must
: become a lesser rather than a greater part of what humans do in
: space. To this end, it is up to us at NASA to use the challenge of
: the Vision for Space Exploration to foster the commercial
: opportunities which are inherent to this exciting endeavor. Our
: strategy to implement the Vision must, and we believe does, have
: the potential to open a genuine and sustainable era of space
: commerce. And the International Space Station will provide the
: first glimpses into this new era.

: But now let us turn to what I believe will be an even greater
: benefit of the ISS, and that is its role in the development of
: space as an economic arena.

: In order that we may devote as much of NASA's budget as possible to
: the cutting edge of space exploration, we must seek to reduce the
: cost of all things routine. Here in 2005, the definition of
: "routine" certainly should include robust, reliable, and cost
: effective access to space for at least small and medium class
: payloads. Unfortunately, it does not, and frankly, this is not an
: area where it is reasonable to expect government to excel. Within
: the boundaries of available technology, when we want an activity to
: be performed reliably and efficiently, we in our society look to
: the competitive pressures of the free market to achieve these
: goals. In space, these pressures have been notably lacking, in part
: because the space "market" has historically been both specialized
: and small. There have been exceptions – notably in the
: communications satellite market – but the key word here
: is "exceptions". Broadly speaking, the market for space services
: has never enjoyed either the breadth or the scale of competition
: which has led, for example, to today's highly efficient air
: transportation services. Without a strong, identifiable market, the
: competitive environment necessary to achieve the advantages we
: associate with the free market simply cannot arise.

: I believe that with the advent of the ISS, there will exist for the
: first time a strong, identifiable market for "routine"
: transportation service to and from LEO, and that this will be only
: the first step in what will be a huge opportunity for truly
: commercial space enterprise, inherent to the Vision for Space
: Exploration. I believe that the ISS provides a tremendous
: opportunity to promote commercial space ventures that will help us
: meet our exploration objectives and at the same time create new
: jobs and new industry.

: The clearly identifiable market provided by the ISS is that for
: regular cargo delivery and return, and crew rotation, especially
: after we retire the shuttle in 2010, but earlier should the
: capability become available. We want to be able to buy these
: services from American industry to the fullest extent possible. We
: believe that when we engage the engine of competition, these
: services will be provided in a more cost-effective fashion than
: when the government has to do it. To that end, we have established
: a commercial crew/cargo project office, and assigned to it the task
: of stimulating commercial enterprise in space by asking American
: entrepreneurs to provide innovative, cost effective commercial
: cargo and crew transportation services to the space station.

: This fall, NASA will post a draft announcement which seeks
: proposals from industry for flight demonstrations to the
: International Space Station of any combination of the following:
: external unpressurized cargo delivery and disposal, internal
: pressurized cargo delivery and disposal, internal pressurized cargo
: delivery and recovery, and crew transport.

: As these capabilities are demonstrated in the years ahead, we will
: solicit proposals for ongoing ISS transportation services from
: commercial providers. This announcement offers the opportunity for
: industry to develop capabilities that, once proven, NASA will
: purchase with great regularity, just as we regularly purchase
: launch services for our robotic spacecraft today. Once the
: announcement is on the street, we will receive proposals by late
: January, with the intent to execute agreements by May of next year.

: This competition will be open to emerging and established
: companies, with foreign content allowed, consistent with American
: law and policy. Proposals can include any mix of existing or new
: designs and hardware. NASA does not have a preferred solution. Our
: requirements will be couched, to the maximum extent possible, in
: terms of performance objectives, not process. Process requirements
: which remain will reflect matters of fundamental safety of life and
: property, or other basic matters. It will not be government
: "business as usual". If those of you in industry find it to be
: otherwise, I expect to hear from you on the matter.

: With this plan, and providing of course that we retain the support
: of the Congress necessary to carry it out, we will put about a
: half-billion dollars in play over the five years to promote
: competition that is good for the private sector and good for the
: public interest. I'm confident that this kind of financial
: incentive, on different terms than are usual with NASA, or indeed
: with any government entity, will result in the emergence of
: substantial commercial providers. Such successes will, in their
: turn, serve as a justification for even greater use of such
: "non-traditional" acquisition methods. As I have said in other
: venues, my use of the words "non-traditional" here is somewhat
: tongue-in-cheek, because what we are talking about is completely
: traditional in the bulk of our economy which is not driven by
: government procurement. In this larger economy, when there exist
: customers with specific needs and the financial resources to
: satisfy these needs, suppliers compete avidly to meet them. We need
: more of this in the space enterprise.

: But the "highways" themselves are not, and are not supposed to be,
: the interesting part. What is interesting are the destinations and,
: particularly to the point of the present discussion, the service
: stations, hotels, and other businesses and accommodations that we
: will find at the "exit ramps" of our future "interstate highways"
: in space. It is here that a robust commercial market can develop to
: support our exploration goals, and eventually to go beyond them. I
: think we are at the start of something big, somewhat akin to what
: we saw with the personal computer 25 years ago.

: But the building blocks of our architecture could easily be used to
: accomplish much more, with the right leverage from commercial
: providers.

: By the time we are ready to return to the Moon, the ISS will have
: been completed and will be in receipt of routine commercial
: resupply and crew rotation service for, we hope, several years. So,
: if the plan for stimulating the development of ISS commercial crew
: rotation capability is successful, it becomes possible to envision
: the crew launch phase of the lunar mission being carried out on
: commercial systems. This would be a service we could purchase
: commercially, leaving the very heavy lift requirements to the
: government system, for which it is less likely that there will be
: other commercial applications during this period.

: The value of such a commercially operated fuel depot in low Earth
: orbit at that time is easy to estimate. Such a depot would support
: at least two planned missions to the Moon each year.

: If a commercial provider can supply fuel at a lower cost, both the
: government and the contractor will benefit. This is a non-trivial
: market, and it will only grow as we continue to fly. The value of
: fuel for a single Mars mission may be several billion dollars by
: itself. Once industry becomes fully convinced that the United
: States, in company with its international partners, is headed out
: into the solar system for good, I believe that the economics of
: such a business will attract multiple competitors, to the benefit
: of both stockholders and taxpayers.

: The government does not need to have oversight, or even insight,
: into the quality and reliability of the fuel delivery service. If
: fuel is not delivered, the loss belongs to the operator, not to the
: government. If fuel is delivered and maintained in storage, the
: contractors are paid, whether or not the government flies its
: intended missions. If long-term delivery contracts are negotiated,
: and the provider learns to effect deliveries more efficiently, the
: gain is his, not the government's. Since fuel is completely
: fungible, it can be left to the provider to determine the optimum
: origin, size and method of a delivering it. And finally, though I
: would rather not do it, it is even possible that we could develop
: such a market in stages, with the first fuel tank provided by the
: government, and then turned over to a commercial provider to store
: and maintain fuel for future missions, and to expand the tank farm
: as warranted by the market.

: To maintain and operate the fuel depot, periodic human support may
: be needed. Living space in Earth orbit may be required; if so, this
: presents yet another commercial opportunity for people like Bob
: Bigelow, who is already working on developing space habitats. So
: the logistics needs of the fuel depot may provide more of the same
: opportunities that we will pioneer with ISS.

: Fuel and other consumables will not always be most needed where
: they are stored. Will orbital transfer and delivery services
: develop, with reusable "space tugs" ferrying goods from centralized
: stockpiles to other locations?

: In the course of conducting many fuel replenishment missions and
: associated operations, commercial launch and orbital systems of
: known and presumably high reliability will be developed and
: evolved. Government mission planners will be able to take advantage
: of these systems, which will become "known quantities" by virtue of
: their track record rather than through the at best mixed blessings
: of government development oversight.

: There will also be a private sector role in supporting a variety of
: lunar surface systems and infrastructure, including lunar habitats,
: power and science facilities, surface rovers, logistics and
: resupply, communications and navigation, and in situ resource
: utilization equipment. There may or may not be gold on the Moon
: – I'm not sure we care – but we may well witness a 21st century
: gold rush of sorts when entrepreneurs learn to roast oxygen from
: the lunar soil, saving a major portion of the cost of bringing fuel
: to the lunar surface. Will a time come when it is more economical
: to ship liquid oxygen from the lunar surface to low Earth orbit,
: then to bring it up from Earth?

: This will all start to become "really real" in 10 years or so. As I
: see it, these are exactly the kinds of enterprises to which
: government is poorly suited, but which in the hands of the right
: entrepreneur can earn that person a cover on Fortune magazine. But
: it will take enlightened government management to bring it about,
: management as much in the form of what not to do, as to do. In the
: coming years and decades, NASA must focus on its core government
: role as a provider of infrastructure broadly applicable to the
: common good, and too expensive for any single business entity to
: develop. NASA must remain on the frontier, and must conscientiously
: architect its plans to favor the inclusion of entrepreneurs through
: arms-length transactions wherever possible, restricting the use of
: classic "prime contracts" to situations where they are the right
: tool, not the default tool.

: And the number of people who will be engaged in such activity will
: grow by leaps and bounds if we in government are faithful in
: executing our role in helping the private sector to step up to
: these new opportunities. I hope there are many entrepreneurs in
: this audience who have the vision to help us help them pioneer the
: commercial space frontier. You, and all those engaged in the quest
: that we are undertaking, have my sincere thanks and appreciation.

--
Mark Reiff <markreiff@xxxxxxxxxxxxx>

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