Private Companies Are Powering the Future of Aerospace | Citizens Against Government Waste

Private Companies Are Powering the Future of Aerospace

The WasteWatcher

American aerospace has long been dominated by a handful of entrenched firms, enabled by institutional biases and preferentially written contracts.  The end result has too often been inflated prices and a lack of innovation.  Fortunately, vast private sector investment has begun to change the status quo. 

While the push for competition in space seems relatively new, the idea has been around at least since the 1984 President’s Private Sector Survey on Cost Control under President Reagan, better known as the Grace Commission.  The commission’s recommendations included an increase in private participation in the commercial uses of space and a shift in responsibility to private industry for launch vehicles.  Since then, the cost overruns and delays in programs managed by legacy contractors have helped to open the door for greater competition in the space launch market. 

The commercial space industry reached several critical milestones in 2020.  On April 30, the National Aeronautics and Space Administration (NASA) announced that three private companies – Blue Origin, Dynetics, and SpaceX – were selected to design and develop lunar landing systems for the agency’s Artemis program.  In addition, on May 30, SpaceX successfully launched American astronauts from U.S. soil for the first time since the retirement of the Space Shuttle in 2011.  NASA had previously been relying on the Russian Soyuz program to deliver astronauts to the International Space Station (ISS).  At $55 million per astronaut, SpaceX costs 36 percent less than the $86 million charged by Russia. 

NASA has awarded contracts to convey astronauts to the ISS over the next decade to SpaceX and Boeing, which has long dominated the space launch industry.  According to a November 14, 2019 NASA Office of Inspector General (OIG) report, NASA will pay Boeing $90 million per astronaut for a ride to the ISS, or $4 million more than it was paying to Russia. 

Beyond providing savings, SpaceX has proven more reliable.  During its December 20, 2019 maiden launch to the ISS, Boeing’s unmanned Starliner crew capsule was unable to dock.  On February 6, 2020, a NASA safety review panel found that Boeing averted a “catastrophic failure” unrelated to its failure to dock.  On April 6, 2020, Boeing stated that it would rerun the test flight prior to transporting astronauts.  One month earlier, SpaceX successfully completed its 20th ISS resupply mission.

SpaceX has become a major player in the National Security Space Launch program (NSSL), which carry satellites into orbit for the country’s security agencies.  However, it was initially blocked from bidding, and only an April 2014 lawsuit opened up the competition.  The company is one of four being considered in the next round of NSSL launch contracts, with two winners set to split 34 launches over five years.  Joining SpaceX in the competition are Blue Origin, Northrop Grumman, and United Launch Alliance, a joint venture between Boeing and Lockheed Martin.

The lunar lander competition was not only noteworthy for its award to three private companies, but also because NASA eliminated Boeing from consideration.  Out of the three firms chosen for the 10-month selection process, Blue Origin received a majority of the initial funding.  Remarkably, the entirety of Blue Origin’s development costs thus far have been covered privately.

While Boeing is not going to build the lunar lander, the company is responsible for developing the Space Launch System, the rocket that will transport the lander and crew to the Moon.  Unfortunately, a March 10, 2020 NASA OIG report found costs could balloon from the initial estimate of $35 billion to more than $50 billion as a result of a litany of technical problems.  Making matters worse, Boeing has a cost-plus contract, meaning taxpayers are responsible for additional expenses. 

The main argument for the old guard of aerospace had long been reliability, but this no longer holds water.  The successes of SpaceX and the inclusion of new entrants in NSSL contracts and lunar lander development are positive signs for the future of U.S. spaceflight.  Unlike agreements with legacy contractors, where the government paid a significant portion of development costs, these companies should be allowed to maintain control over their intellectual property. 

Additional steps should be taken to remove remaining barriers to entry in all future contracts in order to achieve maximum cost savings and performance.  In this new era of U.S. aerospace, the stars are the limit, and the savings could be astronomical, as long as the federal government continues to let the private sector thrive and innovate.

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