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NASA To Pay More For Less Cargo Delivery To the Space Station (arstechnica.com) 172

A new report from NASA's inspector general, Paul Martin, finds that NASA will pay significantly more for commercial cargo delivery to the ISS in the 2020s rather than enjoying cost savings from maturing systems. "NASA will likely pay $400 million more for its second round of delivery contracts from 2020 to 2024 even though the agency will be moving six fewer tons of cargo," reports Ars Technica. "On a cost per kilogram basis, this represents a 14-percent increase." From the report: One of the main reasons for this increase, the report says, is a 50-percent increase in prices from SpaceX, which has thus far flown the bulk of missions for NASA's commercial cargo program with its Dragon spacecraft and Falcon 9 rocket. This is somewhat surprising because, during the first round of supply missions, which began in 2012, SpaceX had substantially lower costs than NASA's other partner, Orbital ATK. SpaceX and Orbital ATK are expected to fly 31 supply missions between 2012 and 2020, the first phase of the supply contract. Of those, the new report states, SpaceX is scheduled to complete 20 flights at an average cost of $152.1 million per mission. Orbital ATK is scheduled to complete 11 missions at an average cost of $262.6 million per mission.

But that cost differential will largely evaporate in the second round of cargo supply contracts. For flights from 2020 to 2024, SpaceX will increase its price while Orbital ATK cuts its own by 15 percent. The new report provides unprecedented public detail about the second phase of commercial resupply contracts, known as CRS-2, which NASA awarded in a competitively bid process in 2016. SpaceX and Orbital ATK again won contracts (for a minimum of six flights), along with a new provider, Sierra Nevada Corp. and its Dream Chaser vehicle. Bids by Boeing and Lockheed Martin were not accepted.

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NASA To Pay More For Less Cargo Delivery To the Space Station

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  • How much would it have cost if NASA did it themselves ? I am also wondering if there isn't enough competition yet for this kind of thing.

    • Re: (Score:2, Funny)

      by Anonymous Coward

      Time to put a nail in the "the private sector can do it cheaper" argument.

      It only happens when there is competition, and in order for there to be competition there needs to be at least 6 arms-lengh-unrelated choices. In any competative market where the choices have been reduced below six, prices go up, substantially.

      Gas stations. At one point in time every city had several brands of gas station. Now all gas comes from one of two sources, and prices just go up. Internet service, the only place with competiti

      • Re:comparison (Score:5, Informative)

        by galabar ( 518411 ) on Friday April 27, 2018 @03:37AM (#56511903)
        Nope. Read the whole article. Prices are still cheaper because of the private sector's involvement.
        • And for those who think all the extra money just goes towards a mansion for the CEO... actually, that's true. A mansion on Mars, for his retirement. Not that I mind, though.

      • Re: (Score:1, Insightful)

        by Opportunist ( 166417 )

        The private sector cannot do it cheaper. By definition. If the private sector can, you're not working at Capitalist terms.

        The private sector and the public sector have fundamentally different goals when doing something. For the private sector, whatever is produced or provided is a means to the end, i.e. profit. For the public sector, the produced good or service IS already the end. No profit needed.

        Now, all other aspects identical, there is no way a private enterprise can offer anything at the same price as

        • by galabar ( 518411 )
          Hahahahahaha!!!! Thank you for that. You made my day!
        • by meglon ( 1001833 )

          Usually, when you see a private enterprise offering something cheaper, you also lose an aspect the public provider takes into account that the private one doesn't give a fuck about.

          Or they're relying on public subsidies to cover their costs and profit margin.

        • by Anonymous Coward
          Interesting theory. Too bad we have never had a public provider. NASA has not built a major rocket. They've all been built by the private sector.
        • Lol. You completely failed to account for government incompetence and bureaucratic inertia. They absolutely drive prices through the roof. And why not? Nobody gets fired for screw ups. Hell they can't be fired for very much at all.
          • Re: comparison (Score:4, Insightful)

            by Opportunist ( 166417 ) on Friday April 27, 2018 @05:13AM (#56512139)

            You act as if the private sector was in any way more competent. I am "blessed" with the chance to play with the security of a large international corporation. Incompetence and bureaucracy are rampart here. Being fired is possible up to a certain echelon, and up to that level there are actually fairly competent people working, simply because the incompetent ones get fired. Once you get to a certain level, though, you notice that incompetent idiots don't get fired. They get shuffled around. Mostly 'cause firing them is simply too expensive, or because they know either someone, or something about someone.

            • You act as if the private sector was in any way more competent. I am "blessed" with the chance to play with the security of a large international corporation. Incompetence and bureaucracy are rampart here.

              If you are going to call people incompetent, you should check to make sure the word you are using means what you think it means.

        • by gtall ( 79522 )

          Nice academic argument, except you left out some rather pertinent facts. The government does not have any manufacturing facilities. They have to buy on the open market just like everyone else. Those suppliers make a profit on government buys or they wouldn't sell to the government.

          Just to make things interesting, if the government is spending money on goods and services, Congress-critters will want to make sure their states and districts get a cut of the pie. So the government cannot simply contract out to

        • The opposite argument could also be done :

          A private sector company can cut their cost by integrating as much as possible themselves the production pipe-line, and only relying upstream on common of-the-shelf parts.
          (SpaceX isn't smelting their own aluminum ore, nor making their own silicon for embed electronics, but pretty much handle a lot above that).

          This gives some significant cost reduction due to being lean, that they can pass of in the form of slightly reduced price compared to the competition, in the h

          • Governments on the other hand have much bigger bargaining power. Government contracts are lucrative, even if you happen to have a government that doesn't just throw out money but is actually working sensibly (yes, astonishing as it may be for some, such a thing exists). Selling to the government means that you WILL get paid (well, provided you're not selling to Somalia). Since as a company you're usually in a position where you owe money to the government, be it for taxes, fees or even fines, even if they f

            • by Sarten-X ( 1102295 ) on Friday April 27, 2018 @10:41AM (#56513387) Homepage

              I'm curious what government contracts you've worked... Those comments don't reflect my experience in the field at all.

              Government contracts are lucrative

              Government contracts are indeed high-value, but they also carry far more restrictions than B2B contracts. You must have these demographics on your team, you must use these standards nobody else uses, and you must do all of this vetting and paperwork for your suppliers... Sure, the price tag is high, but the costs and logistics are high, too. I've seen far more profit per contract on B2B deals, where the client doesn't care how something's done, just so long as they don't have to do it themselves.

              Selling to the government means that you WILL get paid

              ...as long as your product passes acceptance and hits milestones. Otherwise, you get a "stop work" order, and your project sits in limbo for a year while the lawyers try to figure out whose fault it is. Eventually, the budget gets cut, your company is accused of never delivering the product, and the whole matter is dropped (without payout), because the company wants to keep the client happy for future business.

              you'll have a way to get your money, if only by not paying taxes in return to not getting paid (and if your country doesn't let you do that, well, find a better country).

              Please clarify precisely what countries allow you to violate tax law to settle a contract dispute.

              government don't go out of business and leave you sitting on raw materials for a contract that you suddenly can't sell anymore and they rarely cancel contracts.

              That's adorable. Not only do they often cancel contracts at the whim of politicians, the requirements change in a heartbeat, and you're usually left holding the unused components. As an example, I was working a government contract when encryption requirements rolled out, just after the customer had approved designs including a SAN that didn't support on-disk encryption. A new part was spec'd, new designs approved... and $500K of equipment sits in a rack in a warehouse, with no customer willing to pay for it, because it no longer meets the contract requirements.

              you simply don't have to deal with risks you're usually facing when dealing with private enterprises or (worse) consumers.

              The risks are different, but there are still risks.

        • by Tanon ( 5384387 )
          Alternatively (and, incidentally, in the real world), the public sector has no incentive to provide better, or more efficient services, as the removal of a profit motive necessitates the removal of competition - the only known and established mechanism of creating efficiency (we know it works, because it's been operating in nature for hundreds of millions of years - see "process of natural selection"). Yes, you can claim some kind of altruistic, higher moral calling to do right by one's fellow man/woman, b
          • It has little to do with altruism. But a government that fails to provide what its constituents want will not govern for long.

            Many places in Europe have shown that it can work. Provided you keep the rest of the world out, that is...

        • Usually, when you see a private enterprise offering something cheaper, you also lose an aspect the public provider takes into account that the private one doesn't give a fuck about.

          It's the other way around. It's the public provider that doesn't care about an aspect, and that aspect is cost-efficiency.

          • Because that's a secondary concern. For the public sector, the product IS the main concern. Providing one that can fulfill the role it has to fill perfectly is the goal. Cost is secondary. For the private sector, the product only has to be good enough to fulfill the specs, what matters is doing it with as much profit as possible.

            • Re: (Score:2, Insightful)

              by swillden ( 191260 )

              Because that's a secondary concern. For the public sector, the product IS the main concern. Providing one that can fulfill the role it has to fill perfectly is the goal. Cost is secondary. For the private sector, the product only has to be good enough to fulfill the specs, what matters is doing it with as much profit as possible.

              This is flatly untrue, and it's untrue for exactly the same reason that Marx's value theory of labor is wrong: It ignores the value of information or, equivalently, it presumes that all players have exactly the same information and knowledge. I'll grant that this was actually true for most of human existence, but it hasn't been true since well before Karl Marx was born.

              The reality is that knowledge is never equal, and the competitor that develops more and better knowledge during their production process w

              • Unfortunately competition is on the way out and monopolies are what we're heading for. And if I only have the choice between a corporate monopoly and a state monopoly, I choose the latter.

                • Unfortunately competition is on the way out and monopolies are what we're heading for. And if I only have the choice between a corporate monopoly and a state monopoly, I choose the latter.

                  I demolished your argument so now you set up a strawman to knock down. Man up and get some intellectual honesty.

      • only nasa could design a whole space station costing $200b, but had no design for a resupply ship, and relied on a over priced shuttle, that they thought would never be shut down.

        • > relied on a over priced shuttle, that they thought would never be shut down.
          This is wrong on a bunch of different levels.

          1. NASA warned Congress repeatedly that scope creep and R&D spending cuts were dramatically increasing the initial shuttle cost and continuing operational costs.
          2. NASA warned Congress about the need for a shuttle replacement in hearings and in public budget requests for more than a decade before the Shuttle EOL.
          3. Despite 2, Shuttle replacement programs have been repeatedly kill

          • by bongey ( 974911 )
            For once congress got something right, killing those over budget, behind schedule bloated POS projects, hopefully SpaceX will get their BFR launched much soon, so there's a reason to cancel that bloat POS called SLS.
      • by nasch ( 598556 )

        It only happens when there is competition, and in order for there to be competition there needs to be at least 6 arms-lengh-unrelated choices. In any competative market where the choices have been reduced below six, prices go up, substantially.

        I'm curious - where did you find that number?

    • by galabar ( 518411 )
      From the article: Even so, the report is not all bad news for SpaceX. In comparing prices, the inspector general said that SpaceX should receive credit for the capacity to return cargo to Earth, a capability that Orbital ATK’s Cygnus spacecraft does not have. The company, along with NASA, were also credited with lowering costs in the overall launch market by pushing through development of the Falcon 9 rocket. “Officials believe competition has contributed to lower prices for NASA launches,
    • by bongey ( 974911 )
      Do you not understand NASA has never built a rocket themselves, they hnly subcontract out, which has been done since their very existence.
      • Re: (Score:2, Interesting)

        by Anonymous Coward

        Historically though they were far more involved in the design, development, construction and operations though. There was also the issue with cost plus contracts which effectively encouraged massive cost overruns. The "new" setup is to award fixed price contracts with fixed requirements which are almost entirely ran by the contractor with only a (comparatively) little assistance/monitoring from NASA.

    • by jythie ( 914043 )
      NASA does not really do anything 'themselves'. The new batch of private companies operate a bit differently, but NASA has always contracted out the actual manufacture of their vehicles.
    • How much would it have cost if NASA did it themselves ? I am also wondering if there isn't enough competition yet for this kind of thing.

      It's an interesting question--what does it really mean for NASA to "do it themselves"? NASA has a very long history of contracting out the development and construction of launch vehicles. Remember, for the Apollo program the Command and Service Module was built by North American Aviation (as was the Saturn V second stage), the Lunar Module was built by Grumman, the Saturn V first stage (S-1C) was built by Boeing, the third stage was built by Douglas, the F-1 and J-2 main engines were designed and built by

  • Unexpected Costs (Score:5, Insightful)

    by im_thatoneguy ( 819432 ) on Friday April 27, 2018 @03:20AM (#56511875)

    Translated: SpaceX thought they needed to charge a premium to deal with bureaucracy but wildly underestimated just how much bureaucracy is required to interact with a multi multi billion dollar internationally operated property.

    • Re: (Score:2, Informative)

      by ilguido ( 1704434 )

      Translated: SpaceX thought they needed to charge a premium to deal with bureaucracy but wildly underestimated just how much bureaucracy is required to interact with a multi multi billion dollar internationally operated property.

      Not really. SpaceX were cheap only if you ignore the truckload of money that NASA paid them to develop their rockets and the fact that NASA bought 12 flights to carry supplies to the ISS, but the first two were basically test launches with very light payloads (CRS-1 and CRS-2).

      • Re:Unexpected Costs (Score:5, Informative)

        by Anonymous Coward on Friday April 27, 2018 @05:50AM (#56512211)

        Yeah, or not. NASA invested $454M up-front in SpaceX, less than what they spent on the space shuttle in a year, and as a result got dramatically cheaper per-flight costs - saving billions [nasa.gov]:

        The most significant improvement, beyond even the improvements of 2-3X times reviewed to here, was in the
        development of the Falcon 9 launch system, with an estimated improvement at least 4X to perhaps 10X times over
        traditional cost-plus contracting estimates, about $400 million vs. $4 billion

      • by Ksevio ( 865461 )
        Isn't that generally how these sorts of programs work? The government invests in companies developing technologies they want and it works out cheaper in the long run
        • Re: (Score:3, Informative)

          by ilguido ( 1704434 )
          My point is that it never was cheap as advertised. It never was $60 million per launch: NASA paid $1.6 billion for 12 missions, $133+ million per launch, but two of those 12 missions were really tests with very light payloads, so it was something closer to $160 million per launch. Now they're saying that the cost per mission is $152 million and someone is surprised. I am not.
          • by Ksevio ( 865461 )
            The light payload doesn't change the cost of the launch by that much.

            Overall, it's still pretty cheap compared to the alternatives
          • Re:Unexpected Costs (Score:5, Interesting)

            by K. S. Kyosuke ( 729550 ) on Friday April 27, 2018 @10:08AM (#56513225)
            You're mixing up Falcon launches with Dragon launches. With Falcon launches, you get a Falcon. With Dragon launches, you get a Falcon, a Dragon, and mission control until berthing at the ISS, and after unberthing from the ISS. Of course the latter costs more. Furthermore, the original cost of $133M per Dragon launch translates to something like $148M per flight or so when accounting for the inflation since 2008. So an argument could be made that the price hasn't actually changed at all.
      • Re:Unexpected Costs (Score:5, Informative)

        by swillden ( 191260 ) <shawn-ds@willden.org> on Friday April 27, 2018 @07:53AM (#56512555) Homepage Journal

        Translated: SpaceX thought they needed to charge a premium to deal with bureaucracy but wildly underestimated just how much bureaucracy is required to interact with a multi multi billion dollar internationally operated property.

        Not really. SpaceX were cheap only if you ignore the truckload of money that NASA paid them to develop their rockets and the fact that NASA bought 12 flights to carry supplies to the ISS, but the first two were basically test launches with very light payloads (CRS-1 and CRS-2).

        SpaceX was only expensive if you can't do simple arithmetic.

        For the first round of 20 flights, SpaceX is 20 * ($262.6M - $152.1M) = $2.2B cheaper than ULA. Subtracting out the $454M up-front investment, that still leaves a net savings of $1.75B. Even if you consider the time-value of the money by adding, say, 6% compound interest on the initial outlay all the way through 2020 (which is ridiculous), NASA will still have saved $1.18B vs ULA. And that's assuming ULA didn't get any development funding, which is false since both Boeing and Lockheed Martin built their spacegoing capability largely on NASA dollars, mostly under the old cost plus model (vastly more expensive).

        NASA's own analysis [nasa.gov] looks even better for SpaceX, estimating the cost savings of launch system development alone (not considering operational savings) at over $3.5B. Of course, they were comparing to their traditional model.

        And, frankly, continuing to undercut the competition by such a large margin would just be bad business. If your price is 42% lower than your nearest competitor's -- for the same quality of service, etc. -- you're leaving money on the table. Moreover, since NASA refuses to contract only a single supplier, it's not necessary to beat everyone, only to beat enough of them to stay in the group of contract recipients. This higher price will provide more capital to fund Musk's real goal: building a Mars transport system. Or to generate larger returns for its investors, which is totally fair since they put up as much as NASA did, and while we don't know how much they've taken out (if any), it can't be very much so far. Certainly far less than NASA's "profit" as compared to other launch options. But I think most of it will go into funding the Mars plans.

    • I am not sure what planet you are from. On earth any large contract comes with significant oversight costs whether you are public or private sector. If the oversight costs are low you get sold the Brooklyn bridge or a death trap. Apparently in the real world an organization can be good or bad whether it is in the private or the public sector but your indoctrination fails to allow for that fact.

  • by hyades1 ( 1149581 ) <hyades1@hotmail.com> on Friday April 27, 2018 @04:00AM (#56511961)

    At least they rejected the bids from Lockheed Martin and Boeing. Dear lord, what a zillion-dollar clusterf^ck THAT would have been!

  • by RhettLivingston ( 544140 ) on Friday April 27, 2018 @04:34AM (#56512039) Journal

    The Dragon 2 can carry almost as much back as it takes up. Orbital ATK can't bring anything back. Also, Orbital ATK can't carry crew members. That's not exactly a small difference.

    And for an encore, they still undercut the price while flying on American-made rocket engines as opposed to Antares' Russian design.

    So why are these being compared? Just because they both carry cargo to the same place on occasion?

    • by Rockoon ( 1252108 ) on Friday April 27, 2018 @04:44AM (#56512067)
      Because that narrative is that Elon Musk is evil.

      They are spinning up the good news that SpaceX will continue to do it cheaper than anyone else (ever), as something bad.
      • Impossible! Who would do such a thing!

      • You're right, of course. Sometimes it's best to just split with the diplomacy and say it. Personally, I see anything NASA gives to SpaceX as money well spent. SpaceX will do more with it - maybe even get us to Mars first.
    • And for an encore, they still undercut the price while flying on American-made rocket engines as opposed to Antares' Russian design.

      The non-American partner of Orbital in the Antares [yuzhnoye.com] rocket program is Yuzhnoye [yuzhnoye.com], a Ukrainian company. Big difference. It's partly because of a de facto Russian invasion of Ukraine that Russia was first placed under US-led economic sanctions. Perhaps you meant that Antares evolved from Soviet-era rocket technology? Not all "Soviets" were Russians, since the Soviet Union was more like a confederation of independent states, even if they were ruled by force and united by common fear of the West (much like a matry [wikipedia.org]

    • by ceoyoyo ( 59147 )

      It's a reasonable comparison. NASA needs to get cargo to the ISS. SpaceX and Orbital ATK both have systems to do that.

      The SpaceX system can also do things like bring stuff back, and that's kind of nice on occasion, but not really what NASA needs most of the time. SpaceX will also be able to transport people (they can't right now), which I'm sure is of great interest to NASA.

      SpaceX can do the present job cheaper than the competition, so they win the short-term analysis. They're also ploughing their profi

  • I think one the problems is that re-usability of rockets has only relatively small cost savings for a launch company.

    SpaceX now has over 7000 employees (https://twitter.com/jeff_foust/status/931087032830582784) who require salaries, medical insurance, pensions and infrastructure. This expense is not offset by the savings from reusing rockets, particularly in the age of CNC manufacturing.

    Much is made of the fact that fueling a rocket with RP-1 and LOX is a negligible expense ($300,000 per Falcon 9 laun
    • You need to divide the number of people by the number of yearly launches to get a more useful metric.

    • you forget constructing rockets takes lots of warehouses and space and people too, storage isnt cheap for giant rockets.

  • https://news.slashdot.org/stor... [slashdot.org]

    Coincidence? I think not.

  • The price increase SpaceX announced was what it hopes to charge in the 2020s. But by then they will be competing with many other providers. NASA will actually pay less.

  • Have they tried using Amazon "Prime"? No, wait. Bezos isn't doing deliveries to ISS. Never mind.
  • Is that SpaceX has the lowest $/kg cost by far. Both oatk and SNC would have to cut their prices by ~35% to come close to dragon. But what is important, is that there will now be 3 cargo AND 3 manned crafts in the western fleet. Basically , we will not lose space access again.

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