Part 1: Appendix B
] The Commercial Market Assessment for Crew and Cargo Systems report is a report that is required by law. Public law. Public Law 111-267 is the NASA law which earmarks billions of dollars for the Senate’s Space Launch System. The report is modest in its findings and is a very good and quick read. But buried at the end is Appendix B. If you read nothing else of this report, read Appendix B. Senators Nelson, Shelby, and Hutchison do not want CNN, Fox, and MSNBC to report on Appendix B. Senators Nelson, Shelby, and Hutchison do not want the New York Times, the Washington Post, or the LA Times to report on Appendix B. Senators Nelson, Shelby, and Hutchison do not want Drudge, the Daily Kos, or Politico to report on Appendix B
Not only does Appendix B prove that the partnership between government agencies and commercial companies work, but it exposes, in all its glory, the 10 billion dollar earmark these senators snuck by congress and the president.
What is Appendix B?
Appendix B is titled – Discussion of Cost Effectiveness of Commercial Cargo Effort. In it, NASA talks about how much it would cost NASA to build the Falcon (it is no longer called Falcon 9) rocket using government contracting. Here is the appendix in total, unedited in anyway:
Appendix B – Discussion of Cost Effectiveness of Commercial Cargo Effort
NASA recently conducted a predicted cost estimate of the Falcon 9 launch vehicle using the NASA-Air Force Cost Model (NAFCOM). NAFCOM is the primary cost estimating tool NASA uses to predict the costs for launch vehicles, crewed vehicles, planetary landers, rovers, and other flight hardware elements prior to the development of these systems.
NAFCOM is a parametric cost estimating tool with a historical database of over 130 NASA and Air Force space flight hardware projects. It has been developed and refined over the past 13 years with 10 releases providing increased accuracy, data content, and functionality. NAFCOM uses a number of technical inputs in the estimating process. These include mass of components, manufacturing methods, engineering management, test approach, integration complexity, and pre-development studies.
Another variable is the relationship between the Government and the contractor during development. At one end, NAFCOM can model an approach that incorporates a heavy involvement on the part of the Government, which is a more traditional approach for unique development efforts with advanced technology. At the other end, more commercial-like practices can be assumed for the cost estimate where the contractor has more responsibility during the development effort.
For the Falcon 9 analysis, NASA used NAFCOM to predict the development cost for the Falcon 9 launch vehicle using two methodologies:
2) Cost using a more commercial development approach.
Under methodology #1, the cost model predicted that the Falcon 9 would cost $4.0 billion based on a traditional approach. Under methodology #2, NAFCOM predicted $1.7 billion when the inputs were adjusted to a more commercial development approach. Thus, the predicted the cost to develop the Falcon 9 if done by NASA would have been between $1.7 billion and $4.0 billion.
SpaceX has publicly indicated that the development cost for Falcon 9 launch vehicle was approximately $300 million. Additionally, approximately $90 million was spent developing the Falcon 1 launch vehicle which did contribute to some extent to the Falcon 9, for a total of $390 million. NASA has verified these costs.
It is difficult to determine exactly why the actual cost was so dramatically lower than the NAFCOM predictions. It could be any number of factors associated with the non-traditional public-private partnership under which the Falcon 9 was developed (e.g., fewer NASA processes, reduced oversight, and less overhead), or other factors not directly tied to the development approach. NASA is continuing to refine this analysis to better understand the differences.
Regardless of the specific factors, this analysis does indicate the potential for reducing space hardware development costs, given the appropriate conditions. It is these conditions that NASA hopes to replicate, to the extent appropriate and feasible, in the development of commercial crew transportation systems.
Falcon 1 played a substantial roll
As Appendix B clearly points out, NASA needs to utilize the TEA Party core values in their business, economic, and research models. Where is the fiscal responsibility? Where is the limited government? Where is the access to free markets? All we can do is compare and contrast the reality of the actual cost development of the Falcon rocket verified by NASA and the projected costs of development provide by NASA. It is important, very important, to realize how the business, economic, and research and development models utilized by SpaceX affect the bottom line.
…approximately $90 million was spent developing the Falcon 1 launch vehicle which did contribute to some extent to the Falcon 9…
The Falcon rocket directly benefits from the design, fabrication, testing, integration, and launching of Falcon 1. SpaceX grew slowly and built an indigenous structure that does not rely on third parties for major components of its vehicles. Moreover, SpaceX is not burdened with governmental bureaucracy that plagues NASA. Finally, the company structure is very flat and centrally located which allows for quick decisions which effect design, safety, and the bottom line of the ledger. The first flight of Falcon 1 was a failure. A bolt exposed to the tropical salt air corroded casing the vehicle to fail 30 seconds into flight. The rocket subsequently lost power and crashed into the lagoon. This failure cost SpaceX roughly 7 million dollars. If it would have been a Falcon rocket it would have been a 56 million dollar error. Falcon 1 had three unsuccessful flights before complete successes with Falcon 1, flights four and five. Subsequently, the nine engine Falcon rocket has had two successful test flights. Some critics of SpaceX and their vehicles point to the three failures of Falcon 1 as proof that only a government program can design and operate vehicles. This is inherently untrue. The first example is United Launch Alliance (ULA). Their vehicles, while subsidized via the U.S. Air Force, prove that the private sector is more than capable of designing and operating vehicles for the United States. Not only are Delta IV and Atlas V safe vehicles, but ULA continues to look for ways to save money in the design, construction, integration, and flight of their vehicles. The second example is this video: Early NASA Failures If you critically look at how far SpaceX has come in such a short time and with so few government dollars, the only logical conclusion is that to this point SpaceX and their business, economic, and research model is a success. In part 2 we will look at the numbers and answer this statement that NASA cannot:
It is difficult to determine exactly why the actual cost was so dramatically lower than the NAFCOM predictions.
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