SpaceX And Tax Payer Money

[Chris Bergin]

Could you explain why that's an incorrect opinion? Thanks

Maybe if you sit back and read the posts, you'll learn something. 21 posts - now far less after removing some of the pointless ones - from you already on this thread suggests your trolling. This thread will be deleted if you aren't here to learn why you're wrong.

If you are not here to learn, you won't be here much longer.

[NumbaJuanSpaceFan]

I support SpaceX and the effort of private companies to do this kind of work but this comes at a great cost to tax payers. This is by no means a private company considering the handouts it has received.

NumbaJuanSpaceFan this is an engineering based forum, your going to need to give facts to back up your assertions. 

SpaceX is a contractor who supplies products to NASA, just like Staples that provides them with office supplies and the UPS who ships goods for them.

Can you please give an example of a check that was written to SpaceX that did not have a milestone associated with it?

Here are the links to help you make your case.
http://www.nasa.gov/centers/johnson/pdf/189228main_setc_nnj06ta26a.pdf
https://www.fbo.gov/index?s=opportunity&mode=form&id=230715a3035c3af460f542da1ad80562&tab=core&_cview=0
http://oig.nasa.gov/audits/reports/FY13/IG-13-016.pdf

Please give a specific example of how the the relationship between NASA and SpaceX is different than the relationship NASA has with Florida P&L or Brevard County Water. 

NASA needed new power service (Cargo Services) to a building that they no longer had the ability to power (shut down of the shuttle).  The did a open bid to provide power to the building (COTS), and Florida Power and Light won the contract (SpaceX/Orbital/Kistler).  The companies all stated there would be a set up fee to run the new service (COTS milestones), and a further monthly charge for power (CRS).  NASA agreed, but would only pay for services rendered (The milestone / Not Cost Plus setup of CRS/COTS).  The contractors agreed that they would pay any additional costs outside of the contract out of their pocket.

In the above situation, do you see the money paid to Florida P&L as a handout?

Ah, interesting points. Thanks for the response buddy.

The short answer to your question is no. The long answer to your question is a bit more complex - the power supply is ONLY for a NASA building, whereas the COTS most likely will also be used for private companies. In essence, you have the government subsidizing a private company here which will then turn around and profit off those subsidies.

I don't support this just like I don't support government handouts for oil companies when they decide to drill for oil.

[NumbaJuanSpaceFan]

Could you explain why that's an incorrect opinion? Thanks

Maybe if you sit back and read the posts, you'll learn something. 21 posts - now far less after removing some of the pointless ones - from you already on this thread suggests your trolling. This thread will be deleted if you aren't here to learn why you're wrong.

If you are not here to learn, you won't be here much longer.

Yikes. Okay then...

[Jim]

 whereas the COTS most likely will also be used for private companies.

Wrong, COTS only for the government.  Private companies have no need for a ISS logistics vehicle.

[SpacexULA]

Ah, interesting points. Thanks for the response buddy.

The short answer to your question is no. The long answer to your question is a bit more complex - the power supply is ONLY for a NASA building, whereas the COTS most likely will also be used for private companies. In essence, you have the government subsidizing a private company here which will then turn around and profit off those subsidies.

I don't support this just like I don't support government handouts for oil companies when they decide to drill for oil.

I live at the end of a VERY long road, 15 years ago I had to pay Time Warner to run a cable wire 2 miles out to my house to get service.  Since then more houses have been built on my road, and I am sure that the cable that was originally ran for me was used.

When Cape Canaveral was built in a swamp, the government paid huge amounts of money to build freeways, power lines, sewage, etc to service the facility.  Titusville gets to share the infrastructure that was built for the space center.  It was not a "Handout" to Titusville.

I agree that NOW handouts to oil companies are not needed.  But back in the 1910s, when the nation needed oil and had nowhere near the infrastructure necessary to provide the nation with the oil supplies it needed for defense, the subsidies made perfect since. This is the situation NASA found themselves in.  Russia was gouging us for cargo, NASA didn't want to share launchers with DOD, and could not use the already existing international rockets.

A subsidy can be a handout, or an "instillation fee", depending on the situation.  Oil is pushing toward a handout at this point, but it started out as an instillation fee.

[Asher82]

I support SpaceX and the effort of private companies to do this kind of work but this comes at a great cost to tax payers. This is by no means a private company considering the handouts it has received.

NumbaJuanSpaceFan this is an engineering based forum, your going to need to give facts to back up your assertions. 

SpaceX is a contractor who supplies products to NASA, just like Staples that provides them with office supplies and the UPS who ships goods for them.

Can you please give an example of a check that was written to SpaceX that did not have a milestone associated with it?

Here are the links to help you make your case.
http://www.nasa.gov/centers/johnson/pdf/189228main_setc_nnj06ta26a.pdf
https://www.fbo.gov/index?s=opportunity&mode=form&id=230715a3035c3af460f542da1ad80562&tab=core&_cview=0
http://oig.nasa.gov/audits/reports/FY13/IG-13-016.pdf

Please give a specific example of how the the relationship between NASA and SpaceX is different than the relationship NASA has with Florida P&L or Brevard County Water. 

NASA needed new power service (Cargo Services) to a building that they no longer had the ability to power (shut down of the shuttle).  The did a open bid to provide power to the building (COTS), and Florida Power and Light won the contract (SpaceX/Orbital/Kistler).  The companies all stated there would be a set up fee to run the new service (COTS milestones), and a further monthly charge for power (CRS).  NASA agreed, but would only pay for services rendered (The milestone / Not Cost Plus setup of CRS/COTS).  The contractors agreed that they would pay any additional costs outside of the contract out of their pocket.

In the above situation, do you see the money paid to Florida P&L as a handout?

Ah, interesting points. Thanks for the response buddy.

The short answer to your question is no. The long answer to your question is a bit more complex - the power supply is ONLY for a NASA building, whereas the COTS most likely will also be used for private companies. In essence, you have the government subsidizing a private company here which will then turn around and profit off those subsidies.

I don't support this just like I don't support government handouts for oil companies when they decide to drill for oil.

So you're saying that if NASA paid for the spacecraft and didn't allow anyone else to use it, it wouldn't be a hand out and would therefore be OK?

[PreferToLurk]

Could you explain why that's an incorrect opinion? Thanks

Maybe if you sit back and read the posts, you'll learn something. 21 posts - now far less after removing some of the pointless ones - from you already on this thread suggests your trolling. This thread will be deleted if you aren't here to learn why you're wrong.

If you are not here to learn, you won't be here much longer.

Please don't delete this thread.  If anything lock it down and pin it to the top. Many highly respected members have made excellent posts here that would be very instructive for people with similar concerns in the future.

[Chris Bergin]

So I'll have a go at this....

NASA gets 17-18 billion dollars per year. Out of that NASA has to pay for everything, from Hubble, to the ISS, to Mars Rovers and even airplane safety improvements. All sorts of things.

NASA also used to run the Space Shuttle, something like $4.5 billion per year out of that above funding.

NASA retired the Shuttle fleet, using that money to create a return to exploration plan, with SLS and Orion, and also to hand over Low Earth Orbit to commercial providers.

SpaceX are one of these providers, starting with cargo, eventually with crew. That is vital, because without that, the US has no means of notable NASA upmass, downmass to an ISS the US has mainly paid for, and no hope of getting out of paying a huge amount of money for seats on Soyuz.

The money which goes to the commercial providers is less than a billion or so per year (all the companies, not just SpaceX). Out of that we're getting brand new launch vehicles and spacecraft that they are using to provide services to NASA, along with - eventually crew - at a much cheaper price than sending hundreds of millions of your dollars to Russia.

So first of all you should have a problem with the money going to Russia, if you have a problem with how NASA's money is being spent, as opposed to a domestic company who benefit NASA a heck of a lot more than Roscosmos do.

SpaceX and companies like SNC are increasing their skilled workforce with this work, including a lot of the lost workforce when Shuttle was retired. Not to have that would be a brain drain and it also allows for a new breed of workforce in the space industry, especially seen at SpaceX. I know enough of these young guys personally.

SpaceX are not laughing all the way to the bank via NASA commercial funding. Far from it. They may even be losing some money over it, but they can deal with that as they have their own commercial ops that benefit from the overall picture via the same improving launch vehicles and spacecraft (that is win win for all concerned).

We have to support this because the alternative is far less value for your money if we just keep throwing money at Russia. What would you prefer?

[dante2308]

I support SpaceX and the effort of private companies to do this kind of work but this comes at a great cost to tax payers. This is by no means a private company considering the handouts it has received.

Does this rub anyone else the wrong way?

I need to point out something. It is  true that the government is trying to create a new commercial human and cargo space transportation industry here and it is materially supported by tax receipts. In fact it is true that Tesla, SpaceX, and Solar City have based a large part of their business plans on monetizing incentives or programs designed to spur the generation and adoption of new industries and technologies. This is absolutely the case.

The US government believes that investment in and the mass adoption of certain new and emerging technologies will result in a public good. This perceived public good ranges from cost reductions and increased global competitiveness for existing goods and services to the broadening of and expansion of the general economy into new markets that would otherwise be closed to a high barrier of entry to general improvements in the quality of life for the public. Furthermore,  the government believes that programs like COTS and CCP are an effort to privatize a state monopoly on an industry and that SpaceX and others represent a credible vehicle for privatization.

Here is the real question for the opening poster:

1) Is it a valid exercise for a society to collectively invest in new technologies and opening new markets by allocating tax revenues to organized non-government entities. Why or why not?

My personal opinion is yes. With oversight, an organized society can achieve more focused goals through government investment than through simply relying on the stochastic noise of competitive personal and corporate profit-seeking. Furthermore, I think that investing in entities that have an earnest desire to improve society and giving them an advantage over entities that have no stated desire will result in a net improvement.

2) Is SpaceX a valid vehicle for realizing the collective interest of society? Why or why not?

My personal opinion is yes. Musk has demonstrated significant non-interest in personal profit and has demonstrated a significant track record in trying to use the resources at his disposal to address problems he finds in society. Compared to other entities, SpaceX and Tesla both represent a rare opportunity for realizing societal benefit and it is in the public's interest to see the ventures succeed and thrive.

[Norm38]

The short answer to your question is no. The long answer to your question is a bit more complex - the power supply is ONLY for a NASA building, whereas the COTS most likely will also be used for private companies. In essence, you have the government subsidizing a private company here which will then turn around and profit off those subsidies.

Okay, here is the root of Numba's argument.  He doesn't feel that companies should profit off providing services to the government.  Because that profit becomes a "subsidy" that will allow them to make more profit in the private sector.

But Numba, that situation is in no way unique to NASA or COTS.  You are aware that everytime Boeing sells an aircraft to the government, they make a profit, yes?  If Boeing sells the Feds a fleet of new 747s, Boeing will make a profit on that sale.  Profit is why they're in business.  Now if Boeing turns around and invests some of that profit in 787 development, would you say that the Feds just subsidized the 787 and that's wrong?  That Boeing should pay for that development on their own dime? 

But they did, with profit they earned.  We don't require every company doing business with the government to be a non-profit.  We want to ensure the profit isn't excessive or gouging.  But if there was no profit to be made, no one would provide a service.  The gov't would then have to start it's own aircraft building operation.  And as you said the gov't always makes things more expensive, surely you recognize that it's cheaper in the long run for the gov't to pay a fair profit for 747s than to try and build them itself?

Right now with COTS you're complaining that a $130 Million COTS SpaceX launch isn't cheap enough compared to a $450 Million non-COTS Shuttle flight.  But if you don't allow SpaceX to profit and grow and get launch costs down to $60 Mil, they never will.  $130 is cheaper than $450.  Don't let perfect be the enemy of the good.

[yg1968]

Not that it matters but "taxpayer" is actually one word.  I don't usualy bother people with spelling (I make mistakes too) but when it's in the title of the thread, the error is repeated in every post.

[dante2308]

I think it is a valid concern when companies make a profit off of providing a public good. That extra money, even if in the best case reinvested into making the public good better or cheaper, is going towards an activity not explicitly supported by the public or the intent of the program that paid for the service.

How common the practice is or how much the government can save by using it compared to other options is irrelevant to whether it is good or should continue.

[Dudely]

NASA took some of the money they were spending on the shuttle and gave it to various commercial companies to replace the capability. Halfway through, the ones that did the best got more money to finish their vehicles.

The contracts say, basically, that they have to deliver a certain number of pounds to the ISS. If the vehicle blows up or they wind up making a crappy rocket that needs to be launched twice as often to get the same amount of pounds to the ISS- whatever, doesn't matter- NASA pays the same regardless.


I think you're under the impression that launching a satellite and launching a spacecraft to a space station should cost the same. True, it's mostly the same up until you get to LEO. But after that you've got to do all this extra work getting the thing to the ISS, having it docked for weeks, and bringing it back safely, including a large, expensive operation to retrieve it out of the ocean.

They do all of this extra work for I think something like 40 million. I don't know exactly; do the math yourself .

The COTS program is one of the smartest things NASA has done in years.

[mme]

The short answer to your question is no. The long answer to your question is a bit more complex - the power supply is ONLY for a NASA building, whereas the COTS most likely will also be used for private companies. In essence, you have the government subsidizing a private company here which will then turn around and profit off those subsidies.

I don't support this just like I don't support government handouts for oil companies when they decide to drill for oil.

Airlines frequently pre-order airplanes and work with the manufactures during the design phase to ensure they get an airplane that meets their needs. The manufacturer still gets to sell the new airplane to other airlines. If you want a package shipped overnight, you pay an additional fee. Because doing something faster costs more money.

NASA needed a launch vehicle and spacecraft to get cargo (and people) up and back from ISS. They paid SpaceX to accelerate the development of a launch vehicle and spacecraft that would meet their specific needs. By accelerating the development, NASA saves money. They save a lot of money.

Unlike in the past, the current contract is fixed price. In the past if there were cost overruns, they would be passed on to NASA. With the current contract, NASA has locked in a price for a set number of launches [1]. This is just like buying futures. You may not get the lowest cost in the long run for a specific contract, but you know what you will pay and you are protected from unexpected expenses. If SpaceX underestimated the development and operational costs, they would have to eat it. SpaceX took a risk too.

You seem stuck on the reusability issue. First of all, NASA is not funding reusability. SpaceX is developing that technology themselves. Second of all, SpaceX is not reusing rockets yet and if SpaceX succeeds in developing reusable rockets and NASA chooses to use them in a future contract, NASA will be the beneficiary of that and get an even lower price. Finally, NASA missions will probably always be more expensive than commercial missions because NASA will probably always have special requirements.

[1] Actually, I think it's a set amount of mass up and down.

[Norm38]

Dante:  So when a police department wants to buy new squad cars, Ford and Chevy have to sell them at cost?  And cost by what definition?  If the workers get paid to build the cars, is that profit?
When the government wants to rebuild an interstate, does the construction company have to work at cost?  Workers don't get paid there either?

In the above situations, how long do you expect the government to continue to be able to acquire the services it wants?  What happens when Ford and Chevy say "No profit, no cars!"?  What happens when the roads are crumbling because the workers refuse to toil for scraps?

Honest profit paid to workers and companies for services rendered drives the overall economy and is part of the public good.  The government shouldn't pay more for a service than the private sector pays.  But it shouldn't pay less either.

[dante2308]

Dante:  So when a police department wants to buy new squad cars, Ford and Chevy have to sell them at cost?  And cost by what definition?  If the workers get paid to build the cars, is that profit?
When the government wants to rebuild an interstate, does the construction company have to work at cost?  Workers don't get paid there either?

In the above situations, how long do you expect the government to continue to be able to acquire the services it wants?  What happens when Ford and Chevy say "No profit, no cars!"?  What happens when the roads are crumbling because the workers refuse to toil for scraps?

Honest profit paid to workers and companies for services rendered drives the overall economy and is part of the public good.  The government shouldn't pay more for a service than the private sector pays.  But it shouldn't pay less either.

I just said it was a valid concern and highlighted why it is a concern and some invalid reasons to dismiss the concern. I made no judgement as to what should be done beyond what I said in the longer post.

[BrightLight]

this is an interesting thread. to add my two cents - government defense procurement usually requires about a 1:1 ratio of funds spent to build a widget as on management and oversight.  Every defense related new build over 100 million is over budget and behind schedule - this is a unfortunate but true statement.  SpaceX built the first units with internal money without direct government oversight - spent something like 300 million to get there - congressional estimates say that if NASA were to do the same thing it would be about 1 billion - three times what SpaceX spent.  SpaceX took all the risk, developed the systems and sold a service to NASA.  I recall (no citation here - just hand waving) that Musk was not happy about the amount of paper work involved in govt. activity - welcome to FAR. If SpaceX can sell the service for 130 million to NASA, my guess is that without the required govt. paper work, he might be able to get away with less then 100 million per launch.  The tax payer got a bargain any way you look at it.

[yg1968]

Some of the same arguments have been used by opponents of commercial crew (especially in the House) by saying that the government shouldn't be building an industry and shouldn't be picking winners and losers. They give the example of Solyndra as a case in point where the idea of industry building failed.

I would argue that commercial crew and cargo isn't industry building because NASA is acquiring a capability that it needs. Obviously, NASA should not be funding commercial companies if the only persons that benefits from the agreement is the companies themselves.  However, if NASA is profiting from the arrangement, it then becomes a partnership because NASA is getting something out of it. If commercial crew and cargo wasn't a good deal for NASA, then I agree that it would be a bad idea to pursue it. But that isn't the case. Cost comparaisons show that COTS/CRS has been a very good deal for NASA (and thus to taxpayers in general).

[Elmar Moelzer]

Some of the same arguments have been used by opponents of commercial crew (especially in the House) by saying that the government shouldn't be building an industry and shouldn't be picking winners and losers. They give the example of Solyndra as a case in point where the idea of industry building failed.

As with any high risk investment (any investor will tell you that), you get one winner for 9 loosers. Some are quick to parade about the loosers but the winners will eventually  more than make up for that.

Cost comparaisons show that COTS/CRS has been a very good deal for NASA (and thus to taxpayers in general).

I agree with that.

[yg1968]

Some of the same arguments have been used by opponents of commercial crew (especially in the House) by saying that the government shouldn't be building an industry and shouldn't be picking winners and losers. They give the example of Solyndra as a case in point where the idea of industry building failed.

As with any high risk investment (any investor will tell you that), you get one winner for 9 loosers. Some are quick to parade about the loosers but the winners will eventually  more than make up for that.

Yes but their argument is that the government shouldn't be investing in these companies regardless of whether they are winners or losers. But like I said, this is very different from what is going with commercial crew and cargo where NASA is also fulfilling a need.  The expression public-private partnership captures the essence of this idea.