CCDev to CCiCAP to CCtCAP Discussion Thread

[Elmar Moelzer]

This is not a new idea, and contrary to popular opinion, is exactly how cost-plus contracts work as far as incentives in order to keep cost and schedule per the baseline as outlined in a Statement of Work. 

Yeah, because cost plus has worked so well for NASA in the past 35 years (sarcasm). IIRC one of the drivers behind the COTS and commercial crew (as it was originally envisioned) was to get away from cost plus.

[joek]

This is not a new idea, and contrary to popular opinion, is exactly how cost-plus contracts work as far as incentives in order to keep cost and schedule per the baseline as outlined in a Statement of Work. 

Yeah, because cost plus has worked so well for NASA in the past 35 years (sarcasm). IIRC one of the drivers behind the COTS and commercial crew (as it was originally envisioned) was to get away from cost plus.

Please, let's not start this again.  The error is in misapplication of contract types, not any inherent goodness or evil of a particular contract type.

1. If the government wants/needs unobtainium and no rational group would bid on it because no one knows enough to estimate the risks and costs (and thus insane to commit to firm-fixed-price), then cost-plus would be appropriate.  Can you imagine Apollo or the Manhattan project being acquired solely on firm-fixed-price basis?  Not.

2. If a large enough group feels confident they understand risks and costs, and there is demonstrable reason to believe so (that is, not just one loony), then cost-plus is inappropriate, and firm-fixed-price is more inappropriate.  Can you imagine NASA acquiring toilet paper or pencils solely on a cost-plus basis?  Not.

Are we at (2) with commercial cargo?  Demonstrably yes.  Are we at (2) with commercial crew?  Arguably yes, and IMHO CCDev and CCiCap have been instrumental in getting us there.  The path has not been soley a question of which type of contract vehicle, but the appropriate contract vehicle at a point in time.

Moreover, this is (to paraphrase NASA), something of a grand experiment, and everyone is still figuring out the best path forward.   Personally, I think NASA and the potential providers have done a stellar job of trying to make this work and ensure the experiment is successful.  So please, let's cut everyone some slack?

[Lar]

Enough orion/apollo in a thread about commercial crew. Thread trimmed.  Perhaps a bit hard. If I trimmed your post a bit too vigorously, then post again without the pounce on typos etc.

[ChrisWilson68]

1. If the government wants/needs unobtainium and no rational group would bid on it because no one knows enough to estimate the risks and costs (and thus insane to commit to firm-fixed-price), then cost-plus would be appropriate.  Can you imagine Apollo or the Manhattan project being acquired solely on firm-fixed-price basis?  Not.

This is a very widely shared view.  But I think it is incorrect.  Private industry deals with unknown risks all the time.  Venture capitalists do nothing else.

It's definitely not insane for a private company to bid just because the risks are hard to quantify.

Contracts can be written with firm fixed prices for milestones and still have outs that let the contractors bail out if it turns out to be too difficult to reach some of those milestones.  So the liabilities of the contractors don't have to be unlimited.

It's not something all companies would be comfortable with.  But the more the government started doing contracting this way, the more companies would learn how to operate in these kinds of environments.

Letting the private sector figure out the risk-adjusted cost would let the political decision makers make their decisions based on realistic cost estimates, in addition to the incentives being set up right to make the execution efficient.

[ChrisWilson68]

Just for the record, from 2009 to 2014 the Commercial crew was slated to get 3.052 billion, the program received 1.949 billion.

And as a result the first flight slipped from 2015 to 2017. Under-funding has already resulted in a two year delay. The 2017 date only holds IF commercial crew is funded at the requested levels from FY2014 forward. The fact that for FY2014 there is again under-funding, respective to the requested amount, leads me to expect that we will see a delay into 2018 being announced this year.

Not quite true.  The requested funding is shooting for multiple parnters for competition.  It is possible that one partner could reach 2017 with the current funding (won't say how likely but possible).

As soon as you downselect, most benefits of commercial approach are lost. The winner has zero incentive to keep schedule and budget.

That's only true for prices beyond the period the selectee is required to commit to.  If you force bids for the downselect to include commitments to schedule and price for the full time that you need the service, all the incentives to keep to schedule and budget are still there.

[Lurker Steve]

We already tried throwing money at some of these vendors for "risk reduction" activities to move the schedule to the left, but that didn't work.

Just for the record, from 2009 to 2014 the Commercial crew was slated to get 3.052 billion, the program received 1.949 billion.

That doesn't sound to me like we "threw money" at anybody. Instead it sounds like we contracted for a product and then shortchanged the contractor.

Actually, what happened is that someone at NASA wanted enough money to kick-start an entire LEO spaceflight industry and Congress said no. Congress will pay for commercial crew to go to the ISS. Many people are saying there aren't enough flights to support more than 1 or 2 vendors. Why pay to develop a vehicle that won't earn a NASA crew rotation contract ?

There were NEVER 3 Billions dollars worth of contracts. Just the fact that Excalibur Almaz and ATK's capsule design from a back of a napkin were funded at any level at all just goes to show the program needed some type of oversight.

[Elmar Moelzer]

Yeah that someone had vision, congress did not.

[guckyfan]

Actually, what happened is that someone at NASA wanted enough money to kick-start an entire LEO spaceflight industry and Congress said no. Congress will pay for commercial crew to go to the ISS. Many people are saying there aren't enough flights to support more than 1 or 2 vendors. Why pay to develop a vehicle that won't earn a NASA crew rotation contract ?

Wasn't it a publicly declared aim of the program to "kick-start an entire LEO spaceflight industry"?

[clongton]

Actually, what happened is that someone at NASA wanted enough money to kick-start an entire LEO spaceflight industry and Congress said no. Congress will pay for commercial crew to go to the ISS. Many people are saying there aren't enough flights to support more than 1 or 2 vendors. Why pay to develop a vehicle that won't earn a NASA crew rotation contract ?

Wasn't it a publicly declared aim of the program to "kick-start an entire LEO spaceflight industry"?

Absolutely yes it was. That was the whole idea. NASA's stake in it was to be ISS cargo/crew but the aim was, as you said, "an entire LEO spaceflight industry". It was to go far beyond NASA, just as the aircraft industry went far beyond the military.

[Star One]

Actually, what happened is that someone at NASA wanted enough money to kick-start an entire LEO spaceflight industry and Congress said no. Congress will pay for commercial crew to go to the ISS. Many people are saying there aren't enough flights to support more than 1 or 2 vendors. Why pay to develop a vehicle that won't earn a NASA crew rotation contract ?

Wasn't it a publicly declared aim of the program to "kick-start an entire LEO spaceflight industry"?

Absolutely yes it was. That was the whole idea. NASA's stake in it was to be ISS cargo/crew but the aim was, as you said, "an entire LEO spaceflight industry". It was to go far beyond NASA, just as the aircraft industry went far beyond the military.

Well no wonder Congress knocked them back for that kind of pie in the sky thinking. A whole industry was never going to just spring up because of this & I am shocked that someone in NASA thought it was going to. Maybe more of the blame for the delays in this process should be aimed at NASA rather than Congress for that kind of thinking.

[clongton]

Actually, what happened is that someone at NASA wanted enough money to kick-start an entire LEO spaceflight industry and Congress said no. Congress will pay for commercial crew to go to the ISS. Many people are saying there aren't enough flights to support more than 1 or 2 vendors. Why pay to develop a vehicle that won't earn a NASA crew rotation contract ?

Wasn't it a publicly declared aim of the program to "kick-start an entire LEO spaceflight industry"?

Absolutely yes it was. That was the whole idea. NASA's stake in it was to be ISS cargo/crew but the aim was, as you said, "an entire LEO spaceflight industry". It was to go far beyond NASA, just as the aircraft industry went far beyond the military.

... I am shocked that someone in NASA thought it was going to ...

NASA does not make its own policies. NASA carries out the policies of the Administration. It was/is the President's vision.

[Go4TLI]

This is a very widely shared view.  But I think it is incorrect.  Private industry deals with unknown risks all the time.  Venture capitalists do nothing else.

It's definitely not insane for a private company to bid just because the risks are hard to quantify.

Contracts can be written with firm fixed prices for milestones and still have outs that let the contractors bail out if it turns out to be too difficult to reach some of those milestones.  So the liabilities of the contractors don't have to be unlimited.

It's not something all companies would be comfortable with.  But the more the government started doing contracting this way, the more companies would learn how to operate in these kinds of environments.

Letting the private sector figure out the risk-adjusted cost would let the political decision makers make their decisions based on realistic cost estimates, in addition to the incentives being set up right to make the execution efficient.

It's not incorrect at all.  Can it be done on fixed-price?  Of course, but not the smartest way. 

If something is in development, etc when the scope/requirements of the project/program could possibly change, technical issues arise, etc then the fixed price offer that any sound company is going to submit will be filled with contingency dollars and schedule for "just in case" purposes. 

In addition, if no or little problems are encountered or anything like that, then the govt or whatever company is still obligated to pay the fixed price of the contract because that is what they signed up to, not necessarily what the true cost of said product was. 

In addition, on a fixed price contract, a very defined SOW is required with specific and agreed upon terms and conditions.  Change the requirements, the SOW gets invalidated or at the very least the work is disrupted until the SOW is renegotiated.  This brings me right back to my point above about high contingency dollars and lots of schedule margin. 

So, I know it is in fashion to proclaim all problems can be solved if there was no such thing as cost-plus contracts.  The reality is that is far from true and cost-plus is widely used in industry when appropriate. 

In summary, some things really do make more sense to cost-plus contracts.  Others it makes more sense to be fixed price. 

[Elmar Moelzer]

Well no wonder Congress knocked them back for that kind of pie in the sky thinking. A whole industry was never going to just spring up because of this & I am shocked that someone in NASA thought it was going to. Maybe more of the blame for the delays in this process should be aimed at NASA rather than Congress for that kind of thinking.

Considering the knock back from congress it has still worked pretty well so far. We have one new GEO launch provider, 2 new launchers, 2 new space craft, with another 2 on the way. Plus a whole bunch of new startups that are piggy backing on the commercial space trend. I would call that pretty good for the little money congress provided to the commercial space program.
If you are really serious about space development and expanding space exploration, the presidents vision is a good way to do it. Programs like the SLS wont get us anywhere in the long term. They may (and that is a big, huge may) be able to do a footprints and flags kind of mission. Anything beyond that is not going to be affordable. That sort of mission is not what I am interested in though. We did it once, it did not get us anywhere.

[Chris Bergin]

Small trim:

No one is allowed to be rude on the internet. If you're not civil, you will lose your post.

[Star One]

Well no wonder Congress knocked them back for that kind of pie in the sky thinking. A whole industry was never going to just spring up because of this & I am shocked that someone in NASA thought it was going to. Maybe more of the blame for the delays in this process should be aimed at NASA rather than Congress for that kind of thinking.

Considering the knock back from congress it has still worked pretty well so far. We have one new GEO launch provider, 2 new launchers, 2 new space craft, with another 2 on the way. Plus a whole bunch of new startups that are piggy backing on the commercial space trend. I would call that pretty good for the little money congress provided to the commercial space program.
If you are really serious about space development and expanding space exploration, the presidents vision is a good way to do it. Programs like the SLS wont get us anywhere in the long term. They may (and that is a big, huge may) be able to do a footprints and flags kind of mission. Anything beyond that is not going to be affordable. That sort of mission is not what I am interested in though. We did it once, it did not get us anywhere.

I don't think it will work there just isn't enough available public money in these times of austerity to successfully seed this kind of growth.

[Robotbeat]

Well no wonder Congress knocked them back for that kind of pie in the sky thinking. A whole industry was never going to just spring up because of this & I am shocked that someone in NASA thought it was going to. Maybe more of the blame for the delays in this process should be aimed at NASA rather than Congress for that kind of thinking.

Considering the knock back from congress it has still worked pretty well so far. We have one new GEO launch provider, 2 new launchers, 2 new space craft, with another 2 on the way. Plus a whole bunch of new startups that are piggy backing on the commercial space trend. I would call that pretty good for the little money congress provided to the commercial space program.
If you are really serious about space development and expanding space exploration, the presidents vision is a good way to do it. Programs like the SLS wont get us anywhere in the long term. They may (and that is a big, huge may) be able to do a footprints and flags kind of mission. Anything beyond that is not going to be affordable. That sort of mission is not what I am interested in though. We did it once, it did not get us anywhere.

I don't think it will work there just isn't enough available public money in these times of austerity to successfully seed this kind of growth.

That's the opposite of true.

[Star One]

Well no wonder Congress knocked them back for that kind of pie in the sky thinking. A whole industry was never going to just spring up because of this & I am shocked that someone in NASA thought it was going to. Maybe more of the blame for the delays in this process should be aimed at NASA rather than Congress for that kind of thinking.

Considering the knock back from congress it has still worked pretty well so far. We have one new GEO launch provider, 2 new launchers, 2 new space craft, with another 2 on the way. Plus a whole bunch of new startups that are piggy backing on the commercial space trend. I would call that pretty good for the little money congress provided to the commercial space program.
If you are really serious about space development and expanding space exploration, the presidents vision is a good way to do it. Programs like the SLS wont get us anywhere in the long term. They may (and that is a big, huge may) be able to do a footprints and flags kind of mission. Anything beyond that is not going to be affordable. That sort of mission is not what I am interested in though. We did it once, it did not get us anywhere.

I don't think it will work there just isn't enough available public money in these times of austerity to successfully seed this kind of growth.

That's the opposite of true.

We will see when in ten years time there still isn't any kind of major competitive industry to LEO, perhaps people will then wake up and realise that. Even something like Dream Chaser, which I have a lot time for, I believe will struggle to move outside the taxi to ISS stage within this timespan.

SLS has for all its faults marginally more of a chance of doing something significant in that timeframe than all this commercialism of LEO people think is going to happen.

[Robotbeat]

You misunderstand me. I was saying there's plenty of money available now, more than there is during a boom, if measured by the effect of public spending.

[QuantumG]

We will see when in ten years time there still isn't any kind of major competitive industry to LEO, perhaps people will then wake up and realise that.

I assume you mean flying people.. as there's already a competitive industry for satellites and (arguably) for ISS cargo.

I doubt anyone will see the light when it comes to government interference.. the idea that government can "kickstart" an industry is too seductive.

The SLS comments are offtopic.

[Lurker Steve]

We will see when in ten years time there still isn't any kind of major competitive industry to LEO, perhaps people will then wake up and realise that.

I assume you mean flying people.. as there's already a competitive industry for satellites and (arguably) for ISS cargo.

I doubt anyone will see the light when it comes to government interference.. the idea that government can "kickstart" an industry is too seductive.

The SLS comments are offtopic.

Government Interference ? Yes, there are some basic safety rules. Other than that, I'm sure the FAA will approve a license for anyone who is ready to launch people into space. Do you think folks like VG or XCOR receive much feedback from any part of the government other than the FAA with regards to their launch vehicle development ? Other than the CCDev project, BO probably doesn't get much direction from NASA either.

SpaceX, Boeing, and SNC are developing space craft that are intended to meet a specific NASA need. These same spacecraft may have other purposes, but NASA needs to be specific with regards to the requirements for the CTS contract. NASA has a consistent problem delivering the full set requirements at the proper time, which increases risk on the vendor's side and adds costs.

Also, the current administration has a bad record trying to jump start industries. See how poorly the green energy business is doing.