"A subsidy is a form of financial aid or support extended to an economic sector (or institution, business, or individual) generally with the aim of promoting economic and social policy.Although commonly extended from government, the term subsidy can relate to any type of support – for example from NGOs or as implicit subsidies. Subsidies come in various forms including: direct (cash grants, interest-free loans) and indirect (tax breaks, insurance, low-interest loans, accelerated depreciation, rent rebates).Furthermore, they can be broad or narrow, legal or illegal, ethical or unethical. The most common forms of subsidies are those to the producer or the consumer. Producer/production subsidies ensure producers are better off by either supplying market price support, direct support, or payments to factors of production. Consumer/consumption subsidies commonly reduce the price of goods and services to the consumer. For example, in the US at one time it was cheaper to buy gasoline than bottled water.Whether subsidies are positive or negative is typically a normative judgment. As a form of economic intervention, subsidies are inherently contrary to the market's demands. However, they can also be used as tools of political and corporate cronyism."
That the government is almost the sole customer doesnt change this.
Quote from: Chalmer on 07/14/2017 06:50 amThat the government is almost the sole customer doesnt change this.Says who? The fact that ULA has to pay the government every time they launch a non-government payload totally destroys the claim that it's a subsidy. I really don't understand why anyone wants to claim that ULA's massively expensive launches are somehow subsidized by the government. If they were undercutting, well, ANYONE, I can imagine why you'd want to make that claim, but they're not.
Whether or not we call it a subsidy is not important. That's just a term, and I think we all understand how the ELC works. The actual meat here is whether or not SpaceX is on a level playing field with ULA when it comes to government launches.
Quote from: Next Spaceflight on 07/14/2017 07:27 amWhether or not we call it a subsidy is not important. That's just a term, and I think we all understand how the ELC works. The actual meat here is whether or not SpaceX is on a level playing field with ULA when it comes to government launches.They are. Competitively awarded NSS launches are single, all-in contracts. ULA is not allowed to use any of the ELC funds to support a competitively awarded NSS launch. This rule-of-the-game was implemented to prevent the losing competitor from succesfully suing the USG for not providing a level playing field. In fact, the implementation of this rule-of-the-game is one of several reasons why the lawsuit between USAF and SpaceX (over the ULA block-buy) was eventually settled outside the courtroom in early 2015.ULA subsequently used a minor consequence of this rule-of-the-game as an excuse to refrain from bidding on the first competitively awarded NSS launch. It was their pityfull attempt to have the new rule-of-the-game overthrown. However, it backfired on ULA big time when both USAF and US Congress heavily criticized ULA for not bidding on the contract.
Just noting that the chart that Elon is referring to has a degree of crystal ball gazing for 2017 and pretty much all crystal ball gazing for 2018.As to subsidies, it should be noted that Falcon 9, Dragon, Dragon 2 and Raptor all received subsidies in one way or another during their development. SpaceX is not above taking handouts from the government. Pot, Black, you know the rest.
Would you label all the money SpaceX received as subsidies or also as development costs? NASA wanted a service and sometimes you have to pay for technology to be developed.
The amount ULA pays back to the government when they do a commercial launch is a tiny fraction of the ELC.
The focus on the word "subsidy" is missing the point, you can change it to "contract" if you like, the point is Boeing/Lockheed gets annual government funding even if they don't launch anything, this is not true for SpaceX.
Quote from: jak Kennedy on 07/14/2017 11:14 amWould you label all the money SpaceX received as subsidies or also as development costs? NASA wanted a service and sometimes you have to pay for technology to be developed.I wouldn't label all the money as a subsidy. In the real commercial world, a company funds any new developments out of their own pocket or funds they borrow (which they then pay back from the profits selling the product). If you receive development money with no obligation to pay that money back, then that looks like a subsidy to me.
Quote from: Steven Pietrobon on 07/14/2017 11:01 amJust noting that the chart that Elon is referring to has a degree of crystal ball gazing for 2017 and pretty much all crystal ball gazing for 2018.As to subsidies, it should be noted that Falcon 9, Dragon, Dragon 2 and Raptor all received subsidies in one way or another during their development. SpaceX is not above taking handouts from the government. Pot, Black, you know the rest.The difference here though is that SpaceX have very specific deliverables and milestones to reached on the development of specific pieces of hardware. I'm not sure what the exact deliverables are for the ELC contract.
Quote from: yokem55 on 07/14/2017 01:42 pmQuote from: Steven Pietrobon on 07/14/2017 11:01 amJust noting that the chart that Elon is referring to has a degree of crystal ball gazing for 2017 and pretty much all crystal ball gazing for 2018.As to subsidies, it should be noted that Falcon 9, Dragon, Dragon 2 and Raptor all received subsidies in one way or another during their development. SpaceX is not above taking handouts from the government. Pot, Black, you know the rest.The difference here though is that SpaceX have very specific deliverables and milestones to reached on the development of specific pieces of hardware. I'm not sure what the exact deliverables are for the ELC contract.There are specific deliverables for ELC, including payload and mission integration and analysis, propellant, pad maintenance, etc. Everything required to launch up to a certain number of missions.
BUT... it ought to be included in the launch bid and contract.
If the number of missions launched is less than the 'up to' number, does the government get a credit in the following year? Or does the ELC for that year simply cover fewer launches?
¯\_(ツ)_/¯...Which is very good for assured access to internet drama.
Quote from: woods170 on 07/14/2017 08:58 amQuote from: Next Spaceflight on 07/14/2017 07:27 amWhether or not we call it a subsidy is not important. That's just a term, and I think we all understand how the ELC works. The actual meat here is whether or not SpaceX is on a level playing field with ULA when it comes to government launches.They are. Competitively awarded NSS launches are single, all-in contracts. ULA is not allowed to use any of the ELC funds to support a competitively awarded NSS launch. This rule-of-the-game was implemented to prevent the losing competitor from succesfully suing the USG for not providing a level playing field. In fact, the implementation of this rule-of-the-game is one of several reasons why the lawsuit between USAF and SpaceX (over the ULA block-buy) was eventually settled outside the courtroom in early 2015.ULA subsequently used a minor consequence of this rule-of-the-game as an excuse to refrain from bidding on the first competitively awarded NSS launch. It was their pityfull attempt to have the new rule-of-the-game overthrown. However, it backfired on ULA big time when both USAF and US Congress heavily criticized ULA for not bidding on the contract.Thank you Woods, that is a nice in-depth explanation. I did not know that ELC money cant be used for competitive bids. Furthermore, because it has to be repaid for each launch that is not supported by ELC, it actually has a 0-sum effect on the competition between ULA and SpaceX.Going to some extreme, if ULA would ONLY launch competitive or commercial launches in one year, the entire sum of ELC would have to be given back? Or the other extreme, if ULA would launch no competitive or commercial payload, but at least one NSS payload, could it keep the entire sum of ELC? If that is the case ULAs best strategy would be to do exactly that: no competitive bids, no commercial bids and only launch sole source contracts for the DOD. I cant imagine that this would be true, there must be some mistake in my logic. Yet, that seems to be exactly what ULA tried to do and what we see in development, ULA gets cut off from the commercial market and it tried (as you mentioned) to wiggle out of competitive bids.