OK, I’ve read this article three times now, and I can’t figure out how they came up with the headline they did. Here’s the lead graf, on which it seems to be based:

Private space companies probably can expect at least 44 paying passengers for trips to orbit in the next 10 years, NASA has told Congress, but the price per seat could be higher than the U.S. government already is paying for rides on Russia’s Soyuz capsule.

So one would expect, in reading the rest of the piece, to see some explanation of that, right? But I can find nothing whatsoever to support it, or even an attempt to do so. The rest of the article is about the recent report that NASA gave Congress on commercial markets for human spaceflight, which the article itself admits doesn’t discuss cost. So what is the basis for the headline and lede, which seem to have no purpose other than to spread Fear, Uncertainty and Doubt (FUD) about commercial crew?

Anyone? Anyone? Bueller?

Anyway, the story did have the effect of piquing my interest, so I went off to read the report. Right off the bat, I found this paragraph in the summary potentially quite disturbing:

NASA plans to follow an alternative business method that allows U.S. industry more design ownership of their space systems and requires those companies to invest private capital to complement Government funds. This is similar to the approach NASA is using for the commercial cargo effort. NASA plans to award competitive, pre-negotiated, milestone-based agreements that support the development, testing, and demonstration of multiple commercial crew systems with a fixed Government investment. NASA also plans to use a unique Government insight/oversight model featuring a core team of sustaining engineering and discipline experts who closely follow the development of the vehicles. Additionally, NASA plans to use tailored human rating requirements, standards, and processes, with NASA providing the final crew transportation system certification.

Emphasis mine.

While later in the report, it clarifies this to indicate that this will be the case only for NASA employees and NASA-sponsored participants, many who read only the summary will think that NASA will be certifying commercial crew vehicles. Words mean things, and we fought and won a battle six and a half years ago to avoid certification of commercial spaceflight (something that the FAA would do, were it to occur, not NASA) in favor of launch licensing and informed consent. It could be a very serious hindrance to the development of the industry if there is a popular perception that vehicles “certified” by NASA are “safe” and those not are not.

We remain at a phase of the industry in which there will have to be a range of safety levels and prices, to allow the market to work. Yes, NASA is extremely risk averse (largely because human spaceflight isn’t important), but there will be others with a much higher risk tolerance, and they shouldn’t be required to pay high prices for excessive “safety” just because NASA wants to overdo it. As George Nield told Congress recently, we need to accept the fact that we may lose people in opening a frontier. What was unjust about the Challenger and Columbia losses was not the deaths of the crews per se, but that they weren’t properly informed of the real risk, and so didn’t have the information needed to make a rational choice. This was particularly the case with Challenger and Christa McAuliffe, who surely didn’t think that the risk was as high as it was (a hundred in one or so chance of dying). She might still have accepted it and flown if she had known that, but she should have been given the choice.

We need to understand that the level of acceptable risk is subjective, not objective, and that if what NASA astronauts were doing was important, we’d accept a much higher risk than we do now. There are people who would be willing to fly on a Falcon 9/Dragon without a launch abort system, and NASA’s insistence on one shouldn’t prevent them from flying. I hope that someone, perhaps Congressman Rohrabacher or George Nield, will push back on this report as written, and make it very clear that NASA is not going to be in charge of industry safety.

Going on, I found this quote, from page 25, a useful and important point that many don’t seem to understand:

Figure 13 only shows NASA’s needs for commercial crew and cargo transportation during the assessment period. NASA has already purchased over 40 crew seats on the Russian Soyuz system for ISS crew transportation and rescue services at a cost of well over $1 billion. Had commercial crew transportation been available to NASA, those 40+ crew seats could have been purchased from U.S. aerospace companies. Additionally, every year that there is a delay in the availability of commercial crew transportation (either because of budget cuts or other delays), some of the seat opportunities shown in Figure 13 will be transferred to Russia for the purchase of even more Soyuz seats.

This doesn’t discuss costs, and still doesn’t clear up the point of the AvLeak article, but it does point out the problem with continued dithering. I’m not generally of a protectionist mindset, but I’m not very happy shipping money overseas to a country that is continuing to wage a Cold War on us when that money could instead be developing an American capability that could reduce costs. I don’t believe that Commercial Crew is going to cost more than our Soyuz purchases, but I would support it even if I did, because I think that it’s in the long-term interest of not only the nation, but of mankind to reduce costs to orbit.

Finally, along those lines, I want to quote the final appendix in full:

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:

1) Cost to develop Falcon 9 using traditional NASA approach, and

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.

Again, emphasis mine. Shorter version: our cost models are busted, and we don’t know how to do cost estimation for this new generation of space development companies. But the costs are a lot lower than most people think, and very promising for the future.