31 thoughts on “Shelby’s Poison Pill”

  1. Now that NASA and the Old Space Guard has SpaceX hooked on government money, and committed to big projects like rebuilding Pad39A for Dragon 2, its just natural they want to complete the assimilation and bring them over to the dark side of the force. This is just the first attempt. If it fails there will be more.

    The question is if SpaceX will be able to resist the pull of the dark side. The same thing happened with Orbital Sciences and SpaceHab. SpaceX only real long term hope is to bail and focus on becoming a firm that focuses on real commercial business. Mr. Bigelow is waiting for his space taxi. The biotechs are waiting for DragonLab.

    1. Whether or not they bail, it’s important that the government believe they are *willing* to bail. Without that, the contractor has no leverage in negotiations.

      Right now, the government believes (probably correctly) that SpaceX will continue to pursue the CCDEv contract no matter what new terms the government imposes.

      This has been the history of “NewSpace.” Time and time again, they have threatened to walk away from Alt Access/COTS/CCDev if certain conditions were not met. Each time, the government has called their bluff, and each time, NewSpace did a fast 180 and proclaimed that the new contract terms were the greatest thing since sliced bread. From the government’s point of view, there is every reason to believe that will happen again and zero reason to believe they will be held politically accountable for their actions.

      The refusal of NewSpace groups like SFF to entertain any sort of “Plan B” reinforces this view.

    2. So why didn’t SpaceX compete for CCDEV Round 1? By your logic they would have competed, but they didn’t.

    3. Well, Elon wants EELV Capability money and that is going to be the poison pill.
      The USAF is going to want to know costs for making Falcon 9 and Falcon Heavy
      available, and that is going to be the terms of the deal.

      If he wants to fly the occasional flight he can stay with COTS pricing but, if he
      wants “Capability Money”, then, that’s going to have strings.

      1. The USAF is going to want to know costs for making Falcon 9 and Falcon Heavy available, and that is going to be the terms of the deal.

        Only if they’re stupid, like you. All they should care about is the price.

      2. Elon is not looking for “capability money” and I have no idea why you should think he is. He’s just looking for vendor certification so he can start bidding for EELV missions. On the contrary, he has publicly blasted the so-called “capability” money that ULA already gets, suggesting that it should, at the very least, be accounted for as part of the effective price per launch that ULA charges. As Rogozin’s recent Lucy-with-the-football trick with the RD-180 shows, years of such “capability” money hasn’t bought any actual “capability” so I’d say Elon has a pretty good point.

        As to the Air Force knowing costs, that seems to be one of the enduring mysteries of ULA’s tenure as a monopoly supplier. The Air Force never seems to have known precisely what it was going to have to pay for a launch – other than “a lot!” and “more than last time!” Elon is willing to provide hard bids with no Dance of the Seven Veils involved and no on-going surprises.

        If the Air Force procurement corps conceived of its job as getting the best deal for the American taxpayer rather than defending the opacity and special privileges of the incumbent supplier against promises of post-retirement employment in sinecure jobs for the procurement grandees then things would already be different. But they’re not. Burning down the “customary graft” associated with launch procurement has become a critical-path item and Elon deserves a lot of credit for taking it on squarely and with both fists.

        Nor is he alone in this fight. Orbital wants to follow the trail SpaceX is blazing toward certification as an EELV new-entrant. It is, doubtless, providing whatever sub rosa help it can to its rival on this matter where their interests strongly coincide.

        Orbital seems to have accommodated itself, long ago, to being a middling, second-tier outfit in the establishment club of defense/space vendors. The rise of SpaceX seems to have Orbital’s brass getting back at least a bit of that heady entrepreneurial zest they had back in the early Pegasus days – those of them that were around then, anyway. They seem to see an opportunity, now, to move up in class. Not surprising. Even I can see it from here. Orbital, I think, can now actually see a path that could lead to their assisting in bumping off ULA, pushing both Boeing and LockMart to the margins in the space business and at least coming out a strong number two in launch services as they will also have a nice piece of Stratolaunch’s business in addition to Antares and their older vehicles. Dulles just might be getting to be a fun place to work again.

        What we’ve got here is pretty much a garden-variety instance of an established service monopoly(ULA)/oligopoly(Boeing, LockMart) and their political allies in Congress and the relevant “regulatory” bureaucracy doing their usual circle-the-wagons act when a new player shows up who wants into what the incumbents think of as their private club.

        It’s no different, except in scale and national security implications, from what Uber and Lyft are going through right now in many American cities over launching their car-sharing services. Twenty years ago the shuttle van companies faced similar opposition from established taxi firms and bureaucrats. Now, the shuttle companies, having become insiders in the interim, are allies of their former antagonists in fighting the latest wave of disruptive entrepreneurialism in the personal transport services market.

        So it goes. Perhaps the same will happen to SpaceX and Orbital. I’m inclined to doubt that in the specific case of SpaceX, given Elon’s grand ambitions, but Matula could be right, Lord preserve us. NewSpace could “go over to the Dark Side.” If it does, and I’m still around, I’ll be cheering from the sidelines for whatever NewNewSpace outfits rise up to take down their predecessors.

  2. One thing non-profits do to meet transparency obligations is split.

    The ‘SpaceX-Crew’ not-for-profit says “Dear NASA, for exactly $90 million, we’ll provide 7 crew a lift to ISS and back. It will cost -us- exactly $91 million as that’s exactly what our sole vendor SpaceX-Rockets will bill -us- for every single required thing (rockets, capsules, pads, controllers, pensions, etc.). This will be a loss of $1 million. This price forecast will hold for 2014, 2015, 2016 (and any other years we need to forecast to meet the requirements).”

    Probably tick Shelby off though.

    1. It almost certainly wouldn’t work in this case. According to the latest Space Access posting on the subject, one of the maddening things about “certified cost and pricing data” under the FARs is that prime contractors have to provide the same detailed numbers for all their subcontractors as they do for their own in-house work.

    2. Yeah, the threshold for making subcontractors also do full cost-plus accounting is $700,000. I’d guess someone else already tried that dodge…

  3. Perhaps SpaceX should open a facility in Alabama for a few years or fund a campaign to primary Shelby.

    1. Perhaps SpaceX should open a facility in Alabama for a few years or fund a campaign to primary Shelby.

      Hmmm, opening another private SpaceX spaceport in Alabama to enable more launches might kill two birds with one stone wrt the Soviet Shelby Problem.

    2. Actually looking at his from the viewpoint of business strategy this is a good opportunity for Elon Musk to cash out of SpaceX.

      Basically would he could do is setup a new firm dedicated to serving space commerce needs like Mr. Bigelows and his own goal of going to Mars. Call it MarsX for sake of argument. Make sure it has the IP rights to all of the Dragon and Falcon technology and the sole right to use it to serve non-government markets while also having a solid agreement to purchase Falcons and Dragons from SpaceX for those markets as needed on an agreed on price formula. Then once the creative part of SpaceX is moved to “MarsX” he could cash out of SpaceX with an IPO and allow it to turn into a cost-plus NASA contractor. This would free him to work on projects like Grasshopper and Red Dragon without the strait-jacket of NASA rules, regulations and cost accounting.

  4. Useless to send money to him. SpaceX has facilities in Texas and Florida already and it hasn’t helped there either. Besides spreading the pork around would only increase costs even further and turn SpaceX into a money sinkhole like ULA already is. No. What SpaceX has to do is diversify its client base so they cannot be hold hostage by imbecile requirements like this.

    What someone should do is press Shelby on why does he want to impose regulatory requirements on US companies that are not done on Russian companies. Does he want the US to continue using the Russians as the sole source for US crew transport to space?

    There is nothing preventing ULA from using more cost effective ways to compete as well if they wanted to. It seems they prefer to lobby for laws that favor them and lock competition out instead.

    1. What would be awesome is if SpaceX management decides to say scew this, complete Dragon2 ahead of schedule and fly up to ISS proximity without anyones permission ( apart from range, of course )

      And then tell them – it’s our way or highway.

      In real life, that will never happen.

  5. How large is the ISS ‘exclusion zone’? That is “I’m not going to the ISS, how close can I go without any major permission/interaction with NASA?”

      1. That… sounds a little weird orbitally. There should be spots on the 2km ‘great circle’ that are collision courses, but ‘dead ahead’ and’ directly behind’ should be much more likely to never, ever intersect. I’d want the zone to be 2km along the orbital track and 4km in the ‘perpendicular’ plane.

        Or is my understanding of orbital mechanics way off base?

    2. What exactly is NASA going to do if they get closer than that ? Throw used underwear at them ?

      1. Sue them. Not to mention the lawsuits brought by the other ISS partners. Lock them out of any further government contracts with any of the ISS partner nations. And if the ISS gets damaged in any way, no more SpaceX. So not worth it.

      1. As I said, not directly related. But the argument will that this sort of lax accounting is endemic to NASA programs….

  7. Shelby’s poison pill language can still be removed from the bill in conference as it doesn’t appear in the House version (lots of other detail differences to be worked out too). I think the key to getting this done is probably Orbital Sciences. ATK, formerly a rabid and unalloyed Shelby ally in the SLS caucus, is now a subsidiary of Orbital. Shelby’s most recent little ploy doesn’t just aim at Commercial Crew, it also targets CRS. That’s Orbital’s rice bowl. Now that they’re part of Orbital, it’s ATK’s too. A collateral reason for Orbital to oppose Shelby is that they are looking to follow SpaceX and get certified for EELV launches. They want to pick off the low-end NASA/DoD/USAF/NRO payloads that ULA used to fly on Delta 2’s. That puts Orbital on a second collision course with Shelby, who, in addition to being the Senator from SLS, is also the Senator from ULA. It probably won’t hurt Orbital’s case to point out that they are also now owners of ATK’s contract to provide SLS solid boosters. All Orbital has to do to scupper SLS completely is walk away from said contract. Given the ever-stretching SLS schedules and ever-shrinking likely production rates involved, Orbital might just have some legal basis for opting out without penalties. Such a decision might be still easier if Orbital elects to re-engineer the Antares around a new ATK solid first stage to replace the AJ-26/NK-33’s. This isn’t exactly an ideal solution from an engineering standpoint, but it would get Orbital out from under both its Russian engine and Ukrainian first stage structure supply chain issues at a single stroke. It would also give their new subsidiary large solids operation something non-trivial to chew on that’s meatier than the one-per-year average production pace of putative future SLS solid boosters. Stay tuned, folks. This ain’t over yet by a long shot.

    1. OTOH, it’s possible that Orbital/ATK might prefer Shelby’s language, which could give them them a competitive advantage over SpaceX. (Their accounting system is already set up for this.) There’s also the Ares I “Liberty” rocket, which hasn’t been heard from in a while. That might come back into play, if SpaceX has to pull out.

      1. Not sure that such a surmise is valid. SpaceX is hugely more vertically integrated than Orbital. If the majority of the nuisance value of having to supply “certified cost” data is tied up in having to wangle suitable numbers from an army of subcontractors, SpaceX has a much smaller army than Orbital. SpaceX probably has the option of bringing yet more of its subcontracted work in-house if doing so would minimize reporting costs. Besides, anything that slows down or disrupts or raises the cost of NASA’s acquisition of services Orbital currently provides damages Orbital’s bottom line and puts additional stress on NASA’s budgets. I think Orbital will look at the certainty of damage versus the quite speculative possibility of “competitive advantage” and decide to go with a damage-limiting approach.

        I don’t see Liberty being any kind of factor in all this. Ginning it up to front-burner status would require a lot of collaboration with Arianespace and they’ve got plenty of other distractions at the moment. With plans for both the Ariane 5ME and Ariane 6 increasingly unsettled, I doubt they’d be interested in spending the non-trivial up-front money that would be required to, for instance, make the Vulcain engine in-flight startable, which it currently isn’t.

  8. More interesting stories on that at Arstechnicaa
    http://arstechnica.com/science/2014/06/senates-nasa-budget-bill-may-hamper-commercial-space-craft-makers/
    and the Houston Chronicle
    http://blog.chron.com/sciguy/2014/06/nasa-budget-bill-could-include-a-poison-pill-for-spacex-other-commercial-companies/#22787101=0 and
    http://www.houstonchronicle.com/news/houston-texas/houston/article/NASA-budget-may-contain-a-nasty-surprise-for-5534818.php
    with a hat-tip to instapundit for the arstechnica pointer.

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