Working for Space Outside NASA, Part 2: Entrepreneurial Space Launch

In my previous entry, I described the various contractors that, while not direct NASA organizations or employees, help NASA carry out its mission. Today I’ll take you through some parts of space that are considered–sometimes rightly, sometimes wrongly–separate from the U.S. Government’s space activities. Even in this “entrepreneurial space” (a.k.a. “NewSpace”) sector, there is still overlap with government activities. Bottom line: even if you’re in the space business, you’ll cross paths with the government at some point. However, that is not necessarily your first or even second priority. Confused yet? Let’s dig in. Hopefully all will be made clear.

“Old Space” vs. “New Space”

I need to take a brief detour at the start to explain some of the operational and, perhaps, cultural differences between the large legacy companies I described in the last entry and the organizations I’ll be discussing in my next post. There’s been a bit of a rivalry between traditional NASA contractors and the newer firms I’ll be discussing below. It’s been dubbed “Old Space” vs. “New Space” (sometimes “NewSpace” without the space for reasons that elude me). Mind you, some of the companies described as “NewSpace” organizations have been around for a decade or more. SpaceX, for example, was founded 15 years ago, and is now a major NASA contractor. And Orbital Sciences, an up-and-coming aerospace startup in the late ’90s, bought ATK (formerly Alliant Tech Systems, the folks who make the solid rocket boosters for the Space Shuttle and now SLS), one of the “Big Aero” companies. However, much of this “Old/New” labeling derives from  how the two types of companies do business with the government.

The Old Space (or “Big Aero,” if you prefer) companies have operated primarily under large cost-plus contracts managed under the Federal Acquisition Regulations (FAR, usually pronounced, “the far”). “Cost-plus” contracting means that the business building X vehicle for the government is reimbursed for its costs and is–given adequate proof of performance–assured of an incentive or fixed fee. You’ll see these contracts labeled “CPIF” or “CPFF.”

The flip side of getting all this money is that FAR contractors must deliver customer-specific hardware capable of meeting an often-long list of government requirements. And they must comply with the regulations contained within FAR. The FAR is a large catalog of regulations that the federal government enforces to ensure that its contractors are doing things in a uniform manner and making wise use of public funds, like farming out a certain percentage of their work to small businesses, complying with environmental regulations, and not doing business with enemies of the United States. FAR-based contracts often favor large businesses because they’re the only ones that can afford to comply with the FAR.

On the cultural side of things, the large organizations, because they’ve been attached to government customers for a long time, often end up mirroring the government in terms of size and complexity. There are advantages and disadvantages to large organizations, with the primary advantages being more positions to fill and a larger likelihood of steady paychecks and benefits. Startup, small entrepreneurs offer a lot more opportunities for hands-on work and broader responsibilities, but until they’re fully established and cranking out products and services, they can suffer from cash-flow and stability problems.

The legacy contractors have–mostly successfully, but rarely inexpensively–built the hardware NASA has wanted. However, in an effort to cut costs and streamline its paperwork, NASA has been trying to change the game and make space development a speedier, more cost-effective enterprise. These changes have policy and business implications that are still playing out.

Entrepreneurial (“NewSpace”) NASA Launch Contractors

After the Space Shuttle Columbia was lost in 2003, NASA and the White House decided that the Shuttle program needed to be retired once the International Space Station (ISS) was built. The Vision for Space Exploration policy (and the Constellation Program created to execute it) included some language about encouraging private-sector companies to provide launch vehicles (rockets) to carry crew and cargo to low-Earth orbit so that NASA could concentrate on sending humans to the “Moon, Mars, and beyond.” Out of this initiative was born the Commercial Orbital Transportation Services (COTS) program. “COTS” is also an acronym for “commercial-off-the-shelf,” a government term for acquiring already-existing private-sector hardware “off the shelf” without a great deal of new engineering or invention.

The problem was, in 2004, there wasn’t any “off-the-shelf” crew or cargo rocket hardware to be found that could support ISS. That didn’t stop several businesses from trying to build their own, though. These companies included Space Exploration Technologies (SpaceX, founded by PayPal billionaire Elon Musk), Blue Origin (founded by billionaire Jeff Bezos), and Sierra Nevada Corporation (SNC), as well as the large aerospace companies Boeing and Orbital ATK. COTS, then, became a government program to subsidize developing commercial crew and cargo rockets to support ISS.

Once the rockets had been built and proven themselves (under a series of developmental contracts), companies were then contracted to deliver cargo and eventually astronaut crews to ISS under the Commercial Resupply Services (CRS) program. Today, SpaceX and Orbital ATK are shipping cargo to ISS while Blue Origin, Boeing, Sierra Nevada, and SpaceX are continuing to receive development funding to make “human-rated” spacecraft for carrying astronauts. Until those systems prove themselves–hopefully crewed flight tests will occur in 2018-2019–NASA and Russia will send crews to ISS via Russian-built Soyuz rockets.

What makes some of this activity new is that it is not contracted under the FAR, but a much looser contract mechanism called a Space Act Agreement (or SAA). SAAs are unique in that they are more performance based and less closely monitored, managed, or regulated than FAR contracts. In essence, the government pays for a given service (rather than a specific piece of hardware), and the company or companies so contracted are paid based on delivery, regardless of how their vehicle is built. The SAA is subject to a scaled-down set of regulations to ensure safety, legality, and technical compliance. The CRS program is closer to a “firm-fixed-price” (FFP) contract, where the government agrees to pay each participant a specific amount based on their ability to deliver cargo safely to the ISS. If the company delivers and keeps its costs low, they stand to make a profit, at least in theory.

Small Satellites

Organizations like Intelsat continue to launch massive, multi-function communication satellites. However, as Earth-based electronics have improved and shrunk, so too have some satellites. The standard “smallsat” you’ll hear the most about is the “CubeSat,” a standard satellite bus (body) that is–surprise, surprise–approximately cube shaped. It was originally developed as a teaching tool at California Polytechnic State University, San Luis Obispo and Stanford University’s Space Systems Development Lab as a standardized form to give university students a hands-on opportunity to develop space hardware. The standard CubeSat form is 10 centimeters (4 inches) by 10 centimeters by 11 centimeters (4.3 inches) and is referred to as a “1U” unit. There are also 2U, 3U, 6U, 12U, and even 27U smallsats, which are collections of the standard 1U unit built to carry more hardware and thus be more capable.

To make things even more complicated, in addition to the CubeSat shape/form, smallsats can also be classified by mass. NASA describes smallsats in the following weight classes:

  • Minisatellite, 100-180 kilograms (220-397 lbs.)
  • Microsatellite, 10-100 kilograms (22-220 lbs.)
  • Nanosatellite, 1-10 kilograms (2.2-22 lbs.)
  • Picosatellite, 0.01-1 kilograms (.22-2.2 lbs)
  • Femtosatellite, 0.001-0.01 kilograms (.035-.35 ounces)

…and somehow all these smallsats of various size need to get into space to perform science experiments, support communications, or whatever else the entrepreneurs and students of the world can conjure up.

Right now small satellites are launched aboard rockets like ULA’s Atlas V or Delta IV and SpaceX’s Falcon 9 primarily as secondary payloads. The launch industry has been reasonably accommodating to these smaller payloads. Companies like NanoRacks and Spaceflight Industries buy space on upcoming large-spacecraft launches and then build deployment systems that fit somewhere under the payload fairing (as I’ve called it before, “the pointy end of the rocket”) in a way that won’t interfere with the primary payload. The deployment systems eject one or more smallsats from a rocket’s upper stage after the primary payload has been sent on its way and when they’re close to the smallsat’s intended orbit.

Small Satellite Launchers

The problem with these “piggyback” secondary payload arrangements is that it can take a long time to wait for the primary payload/rocket to be ready. This is a real problem if your payload is time-sensitive, and as we all know time = money. Additionally, a ride aboard Atlas V or Falcon 9 is not cheap. (According to a 2011 article by a space writer of mine who would know, secondary payload prices can run $200,000 all the way up to several million dollars. That can be a budget buster if you’re a group of grad students just trying to test something cool. And if you’re a military or intelligence agency hoping to capture images of a developing global “hot spot,” you really can’t afford to wait months or years for a space to open up on one of the big launchers.

As a result, several companies have taken up the cause of developing rockets that cater specifically to the needs of small satellites. These companies include Virgin Orbit, Rocket Lab, Orbital ATK, and Generation Orbit. However, my space-analyst buddy Laura noted there are over 40 different smallsat launchers in development. Of the four companies I listed, only Orbital ATK’s Pegasus rocket is currently flying. (If you’d like to know how the others are doing, you can plunk down around $3,500 to read the report one of Laura’s reports.) The others are in the process of designing, building, or testing their hardware. These providers are advertising or aiming for costs of anywhere from $1 million to $50 million per launch. The smallsat builders would obviously prefer that the cost per launch be on the lower end of that range. There are a lot of challenges to be overcome in the smallsat regime, including proving reliability, ensuring cash flow, and having a solid business model, and other factors. There’s also no guarantee that any or all of these folks are hiring technical writers (I’ll get to that topic another time).

But that’s still not all!

The space launch business is complicated enough. There are other things going on in “entrepreneurial space,” and I’ll take those on in the next posting. Stick with me, folks!

You can find the other entries here: Part 1Part 3, Part 4.

About Bart Leahy

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