-
ULA prices
by
georgesowers
on 20 May, 2014 14:01
-
Yesterday at the National Space Symposium in Colorado Springs, ULA revealed the following pricing information. I think it will greatly inform the ongoing debate and aleviate a lot of pointless speculation.
1. If you take the complete contract value of all of ULA's backlog missions and the total block buy inclusive of the capability contracts (which many on this forum like to call a subsidy---incorrectly) and divide by the total number of missions you get an average mission price of $225M. This includes all missions, DOD, NASA commercial, Atlas V 401 thru Delta IV heavy.
2. Within the current block buy, the total price of an Atlas V 401 (comparable to a Falcon 9 1.1) is $164M. This number is arrived at by taking the incremental price as spelled out in the contract and adding an allocation of the capability cost. The allocation was on a simple per mission basis.
3. The incremental price of an Atlas V 401 is less than $100M. This is the cost to the USG to increase the block buy from 26 missions to 27. We are not giving the specific number at this time.
All of these numbers are based on committed, negotiated, contractual values---not marketing brochures or internet pages. These are our current prices, but ULA is embarked on an agressive cost reduction program with very challenging future targets. More to come about that.
-
#1
by
edkyle99
on 20 May, 2014 14:11
-
I'll have to understand how this meshes with the 2014 GAO number for the EELV program, which is $63.9237 billion over 152 launches, for an average of $420.551 million per launch.
Quite a discrepancy.
- Ed Kyle
-
#2
by
SWGlassPit
on 20 May, 2014 14:16
-
What I had read in another article (don't remember where) is that the $420M price tag actually includes USAF's certification costs for the F9 and other costs not directly related to ULA.
-
#3
by
Lee Jay
on 20 May, 2014 14:16
-
... inclusive of the capability contracts (which many on this forum like to call a subsidy---incorrectly) ...
I don't know enough about these contracts to characterize them. Perhaps you could provide a more correct characterization?
-
#4
by
JBF
on 20 May, 2014 14:41
-
... inclusive of the capability contracts (which many on this forum like to call a subsidy---incorrectly) ...
I don't know enough about these contracts to characterize them. Perhaps you could provide a more correct characterization?
It is a direct payment by the government to maintain private facilities. The very definition of a subsidy.
sub·si·dy noun \ˈsəb-sə-dē, -zə-\
: money that is paid usually by a government to keep the price of a product or service low or to help a business or organization to continue to function
-
#5
by
sublimemarsupial
on 20 May, 2014 14:44
-
Thanks for taking the time to share and answer questions Dr. Sowers. Can you please clarify how exactly the ELC is included in your quoted Atlas V price of $164 million? If I take the publicly available figure of ~$1 billion for the ELC in 2013 and divide by 11 mission that is $90 million per mission, or just over 50% of the per mission cost, is this correct?
-
#6
by
Lee Jay
on 20 May, 2014 14:54
-
... inclusive of the capability contracts (which many on this forum like to call a subsidy---incorrectly) ...
I don't know enough about these contracts to characterize them. Perhaps you could provide a more correct characterization?
It is a direct payment by the government to maintain private facilities. The very definition of a subsidy.
sub·si·dy noun \ˈsəb-sə-dē, -zə-\
: money that is paid usually by a government to keep the price of a product or service low or to help a business or organization to continue to function
I would prefer the answer of Dr. Sowers, however I would point out that this is not as cut-and-dried as you are claiming. For example, it could be to maintain facilities or equipment that would otherwise not be necessary for a commercial enterprise to maintain if not for special requirements put in place by the government.
-
#7
by
jtok202
on 20 May, 2014 15:26
-
All of these numbers are based on committed, negotiated, contractual values---not marketing brochures or internet pages. These are our current prices, but ULA is embarked on an agressive cost reduction program with very challenging future targets. More to come about that.
These numbers are based upon negotiated contractual values that nobody can seem to justify or discuss.
From GAO report on EELV
"The ELC cost-reimbursement contract was not transparent according to DOD officials, who had limited understanding of the activities funded under this contract. Additionally, minimal insight into contractor cost or pricing data meant DOD may have lacked sufficient knowledge to negotiate fair and reasonable launch prices."
It seems a bit hypocritical to take a jab at SpaceX's prices as both of you are non-specific about the final cost.
It's great that you want to engage with the community at large but this stuff just comes across as you trying to sell a lemon.
I would prefer the answer of Dr. Sowers, however I would point out that this is not as cut-and-dried as you are claiming. For example, it could be to maintain facilities or equipment that would otherwise not be necessary for a commercial enterprise to maintain if not for special requirements put in place by the government.
In no way is the ELC not a subsidy, and it seems pretty obvious to me that this is an attempt to focus the language around it in a way that doesn't have negative connotations. If I feared that my primary customer was going to pull significant business from me, I also wouldn't be eager to have a portion of our services considered a subsidy.
3. The incremental price of an Atlas V 401 is less than $100M. This is the cost to the USG to increase the block buy from 26 missions to 27. We are not giving the specific number at this time.
Perhaps I am reading this portion wrong? It sounds like there is a large step between this $100M incremental price and the average mission price of $225M. I hope this means the hardware itself is $100M and the total cost is only 2.25 times more.
I work with large construction projects and numbers all the time, anytime somebody quotes me numbers and goes don't worry we got it right I have serious concerns.
Jacob
-
#8
by
woods170
on 20 May, 2014 15:31
-
I'll have to understand how this meshes with the 2014 GAO number for the EELV program, which is $63.9237 billion over 152 launches, for an average of $420.551 million per launch.
Quite a discrepancy.
- Ed Kyle
There is a number of billions of US dollars in the "almost 64 billion" figure that is 'sunk cost', and thus not charged in mission prices. Taking the entire cost of the EELV program and dividing it by the number of launches assumes amortization of development and other non-refundable costs thru launches. However, it does not work that way.
-
#9
by
Jim
on 20 May, 2014 15:39
-
I'll have to understand how this meshes with the 2014 GAO number for the EELV program, which is $63.9237 billion over 152 launches, for an average of $420.551 million per launch.
EELV program encompasses more than ULA costs. There are costs of running the program office, Aerospace support, other contractor support, heck even Spacex certification costs are part of the EELV program costs.
-
#10
by
LouScheffer
on 20 May, 2014 15:43
-
1. If you take the complete contract value of all of ULA's backlog missions and the total block buy inclusive of the capability contracts [...] and divide by the total number of missions you get an average mission price of $225M. This includes all missions, DOD, NASA commercial, Atlas V 401 thru Delta IV heavy.
I'll have to understand how this meshes with the 2014 GAO number for the EELV program, which is $63.9237 billion over 152 launches, for an average of $420.551 million per launch.
Quite a discrepancy.
In particular, 152 missions at $225M each is $34.2 billion. Where does the additional $29.7 billion in the GAO estimate go?
Also, if the Atlas is cheap, but the average is $225M, then the Delta must be hellishly expensive.
-
#11
by
edkyle99
on 20 May, 2014 15:45
-
I'll have to understand how this meshes with the 2014 GAO number for the EELV program, which is $63.9237 billion over 152 launches, for an average of $420.551 million per launch.
Quite a discrepancy.
- Ed Kyle
There is a number of billions of US dollars in the "almost 64 billion" figure that is 'sunk cost', and thus not charged in mission prices. Taking the entire cost of the EELV program and dividing it by the number of launches assumes amortization of development and other non-refundable costs thru launches. However, it does not work that way.
So the presentation ignored about half of the real total cost of the program to the government?
- Ed Kyle
-
#12
by
su27k
on 20 May, 2014 15:59
-
3. The incremental price of an Atlas V 401 is less than $100M. This is the cost to the USG to increase the block buy from 26 missions to 27. We are not giving the specific number at this time.
I'm going to hazard a guess that we're supposed to compare this less than $100M number to Elon Musk's quote of $90M for a USAF F9 v1.1 flight? But if Atlas V 401 and F9 v1.1's price difference is less than $10M, how come F9 v1.1 has more than 20 commercial launches in its manifest while Atlas V 401 has none?
-
#13
by
Jim
on 20 May, 2014 16:02
-
while Atlas V 401 has none?
No, 3
-
#14
by
AJW
on 20 May, 2014 16:28
-
while Atlas V 401 has none?
No, 3
The GAO report also raised the concern that when ULA sold launches to other customers using facilities and infrastructure paid for by the EELV program, the reimbursements were too small.
In just two months we went from the GAO reporting "little insight into EELV launch costs", and now we are given numbers but no details on how the numbers were determined. Even if the numbers are fabricated, competition, or at least the fear of it, is clearly starting to have an impact.
-
#15
by
woods170
on 20 May, 2014 17:15
-
I'll have to understand how this meshes with the 2014 GAO number for the EELV program, which is $63.9237 billion over 152 launches, for an average of $420.551 million per launch.
EELV program encompasses more than ULA costs. There are costs of running the program office, Aerospace support, other contractor support, heck even Spacex certification costs are part of the EELV program costs.
I find it somewhat incredible that the items you listed would be responsible for a nearly 30 billion US dollar gap from the GAO report. Is the program office hellishly expensive? Hell yeah, I will believe that. Is Aerospace support hugely expensive? Hell yeah, I will believe that. Is other contractor support very expensive? Hell yeah, I will believe that. Those things combined explain 30 billion US dollars? Sorry, no, not gonna believe that. Too big a pile of money for that.
-
#16
by
R7
on 20 May, 2014 17:31
-
I'm going to hazard a guess that we're supposed to compare this less than $100M number to Elon Musk's quote of $90M for a USAF F9 v1.1 flight? But if Atlas V 401 and F9 v1.1's price difference is less than $10M, how come F9 v1.1 has more than 20 commercial launches in its manifest while Atlas V 401 has none?
a)
commercial price difference is greater?
b) Atlas V has less right-shifting?
c) gremlins?
-
#17
by
Jim
on 20 May, 2014 17:36
-
I'll have to understand how this meshes with the 2014 GAO number for the EELV program, which is $63.9237 billion over 152 launches, for an average of $420.551 million per launch.
EELV program encompasses more than ULA costs. There are costs of running the program office, Aerospace support, other contractor support, heck even Spacex certification costs are part of the EELV program costs.
I find it somewhat incredible that the items you listed would be responsible for a nearly 30 billion US dollar gap from the GAO report. Is the program office hellishly expensive? Hell yeah, I will believe that. Is Aerospace support hugely expensive? Hell yeah, I will believe that. Is other contractor support very expensive? Hell yeah, I will believe that. Those things combined explain 30 billion US dollars? Sorry, no, not gonna believe that. Too big a pile of money for that.
Those aren't ULA's or DOD's numbers, but GAO's
-
#18
by
Jim
on 20 May, 2014 17:37
-
I'm going to hazard a guess that we're supposed to compare this less than $100M number to Elon Musk's quote of $90M for a USAF F9 v1.1 flight? But if Atlas V 401 and F9 v1.1's price difference is less than $10M, how come F9 v1.1 has more than 20 commercial launches in its manifest while Atlas V 401 has none?
Because those prices are associated and enabled by the block buy.
-
#19
by
rcoppola
on 20 May, 2014 17:42
-
We were losing billions of dollars worth of critical payloads. Shuttle turned out not to be the answer. And so, yes, the USG spent billions to mitigate against further unacceptable risk and ensure a successful launch capability. The subsequent EELV program has been an amazing success. And anybody who lived through the sequence of 90s launch failures would be genuinely suspect of rapid change after the expenditure of so much effort, time and money. But we have indeed reached an inflection point. As things always do.
As exemplified by the recent posts of Dr. Sowers and the public engagement WTR pricing transparency from Mr. Gass, I'd say we are seeing proof positive that competitive forces are doing what they do best...drive change. And in this case, that's a good thing.
I look forward to a post block-buy world, when SpaceX is fully certified, fully capable of vertical integration, Atlas V engine configuration is stable/predictable and the USG competes launches on a new and competitive open domestic launch market. It's coming.
I especially look forward to future communications from Dr. Sowers wrt the following:
1. Atlas V Engine stabilization and/or replacement strategy
2. Mitigation wrt Capability Contract reductions (inevitable post block-buy)
3. What are you forecasting as the appropriate future mix of USG and Commercial launches to mitigate a potential reduction in USG launches? (The original concept was 70% commercial and 30% USG?)
4. What is the one or two most exciting innovations that ULA is working on to help position it for the next 20 years?
-
#20
by
woods170
on 20 May, 2014 18:26
-
I'll have to understand how this meshes with the 2014 GAO number for the EELV program, which is $63.9237 billion over 152 launches, for an average of $420.551 million per launch.
EELV program encompasses more than ULA costs. There are costs of running the program office, Aerospace support, other contractor support, heck even Spacex certification costs are part of the EELV program costs.
I find it somewhat incredible that the items you listed would be responsible for a nearly 30 billion US dollar gap from the GAO report. Is the program office hellishly expensive? Hell yeah, I will believe that. Is Aerospace support hugely expensive? Hell yeah, I will believe that. Is other contractor support very expensive? Hell yeah, I will believe that. Those things combined explain 30 billion US dollars? Sorry, no, not gonna believe that. Too big a pile of money for that.
Those aren't ULA's or DOD's numbers, but GAO's
That is one way to talk yourself out of a tight spot...
You are just a hair away from stating that the GAO numbers are not factual.
-
#21
by
Jim
on 20 May, 2014 18:30
-
That is one way to talk yourself out of a tight spot...
You are just a hair away from stating that the GAO numbers are not factual.
I don't know the basis for their estimates
Actually, it was done by the SecDef office of Cost Assessment and Program Evaluation and they only have a 50% confidence in their own numbers.
-
#22
by
Jim
on 20 May, 2014 18:53
-
Some of the numbers don't make sense.
year flights cost
2015 8 2715.5
2016 8 3030.5
2017 8 2929.1
2018 8 3268.1
2019 7 3605.3
2020 6 2727.7
2021 4 2875.0
2022 5 2919.6
2023 7 3621.6
2024 4 2866.2
2025 7 4292.4
2026 4 3149.9
2027 4 3620.8
2028 2 2719.2
2029 -- 2078.2
2030 -- 2174.4
-
#23
by
mmeijeri
on 20 May, 2014 20:25
-
It is a direct payment by the government to maintain private facilities. The very definition of a subsidy.
No, it is a direct payment to give the USG the option to launch a certain number of payloads a year at fixed prices. This is something that it really needs and which at the time only ULA was able to offer. It is 100% legitimate, and not at all a subsidy. All you can say is that it acts as a cross-subsidy on the commercial market, though that is a side-effect and not a main goal. It doesn't even appear to be very successful in that regard.
Given SpaceX's recent accomplishments it is becoming clear that the ELC will have to be renegotiated / recompeted sooner or later. Just like CRS by the way.
-
#24
by
clongton
on 20 May, 2014 21:34
-
Given SpaceX's recent accomplishments it is becoming clear that the ELC will have to be renegotiated / re-competed sooner or later. Just like CRS by the way.
Or perhaps in an effort to level the playing field, SpaceX, once certified for DoD payloads, will also get $1 billion a year to "maintain their launch capability". I see the ELC either becoming inclusive or non-existent.
-
#25
by
TrueGrit
on 20 May, 2014 23:05
-
Just want to point out what was said in the Senate hearing... Due to government issues with delivery of satellites and their desired launch order ULA without cost or any contract negotiation moved 4 launches around. All in one meeting between the brass and the various impacted parties. Just said and done... In a fixed price world the government would open up contract renegotiation with ULA in order to do this. For those of you unfamiliar with large complex contract negotiations these take months to renegotiate and costs lots of money to do so. ELC give the government the flexibility to do it without any of this. ULA and the EELV program saw a need for this due to actual history... The program since its inception has had to deal with multiple year delays in satellite deliveries as program after program as undergone cost overruns and schedule delays. ELC is there not as a subsidy, buy buys flexibility in the program that ends up being the dogs wagging rear end to all the program delays on every other space program out there. Thee are different ways to do this going forward, but please realize that it actually buys something... Just as a retainer for a lawyer buys something... Or fire insurance actually buys something...
-
#26
by
georgesowers
on 21 May, 2014 03:22
-
Thanks for taking the time to share and answer questions Dr. Sowers. Can you please clarify how exactly the ELC is included in your quoted Atlas V price of $164 million? If I take the publicly available figure of ~$1 billion for the ELC in 2013 and divide by 11 mission that is $90 million per mission, or just over 50% of the per mission cost, is this correct?
Pretty close. We were a little more sophisticated and segregated costs that are clearly Delta versus those that are clearly Atlas before we did the division. But the simple math gets you in the ball park.
-
#27
by
georgesowers
on 21 May, 2014 04:00
-
A couple of general points.
1. Regarding the GAO numbers, we don't have enough insight into their methodololgy to do a detailed reconciliation. But a couple of remarks. The GAO is attempting to project costs to 2030, far beyond any existing contracts. Their projections do not take acount of the block buy contract or project the effects of that kind of buying practice into the future. The cost represents all program costs including USG and ceta contractor, not just the prime contractor. The costs are in "then year" dollars, so some inflation assumption to 2030 is built in. Jim is on the right track. Costs in the out years are unreasonable. But surely one can't hold ULA accountable for cost projections of a USG agency 15 years into the future. The numbers I cited are fact backed up by the actual contracts in the present.
2. The division of the EELV program into two complementary contracts is a convenient choice mutually agreed to by the USG and ULA which provides benefits to both parties. That is the nature of good contracting practice. All the costs on the capability side of the contract are legitimate costs that have been TINA certified by ULA and audited by the USG. In the future, ULA expects that the USG will go back to a more commercial contracting approach and the capability contract will be discntinued. In that case those costs will be reflected in the mission prices.
-
#28
by
georgesowers
on 21 May, 2014 04:15
-
3. The incremental price of an Atlas V 401 is less than $100M. This is the cost to the USG to increase the block buy from 26 missions to 27. We are not giving the specific number at this time.
I'm going to hazard a guess that we're supposed to compare this less than $100M number to Elon Musk's quote of $90M for a USAF F9 v1.1 flight? But if Atlas V 401 and F9 v1.1's price difference is less than $10M, how come F9 v1.1 has more than 20 commercial launches in its manifest while Atlas V 401 has none?
The AF can buy another launch at the incremental price and so it is legitimate for them to compare ULA's incremental price to the SpaceX price when figuring the cost to the USG of another mission.
My understanding is that SpaceX has been offering very low prices into the commercial market. Time will tell if that practice is sustainable.
-
#29
by
deltaV
on 21 May, 2014 06:20
-
The AF can buy another launch at the incremental price and so it is legitimate for them to compare ULA's incremental price to the SpaceX price when figuring the cost to the USG of another mission.
For the duration of the block buy it's reasonable to use ULA's incremental costs when comparing to SpaceX's costs, and SpaceX has little or no cost advantage with that apples-to-oranges comparison. Once SpaceX gets certified to launch all payloads (including Falcon Heavy) it makes more sense to compare SpaceX's prices (which presumably include fixed costs) with ULA's prices that include fixed costs also (e.g. Dr. Sower's $164 million figure).
-
#30
by
woods170
on 21 May, 2014 11:15
-
OK, so if I take this:
Thanks for taking the time to share and answer questions Dr. Sowers. Can you please clarify how exactly the ELC is included in your quoted Atlas V price of $164 million? If I take the publicly available figure of ~$1 billion for the ELC in 2013 and divide by 11 mission that is $90 million per mission, or just over 50% of the per mission cost, is this correct?
Pretty close. We were a little more sophisticated and segregated costs that are clearly Delta versus those that are clearly Atlas before we did the division. But the simple math gets you in the ball park.
and this:
2. The division of the EELV program into two complementary contracts is a convenient choice mutually agreed to by the USG and ULA which provides benefits to both parties. That is the nature of good contracting practice. All the costs on the capability side of the contract are legitimate costs that have been TINA certified by ULA and audited by the USG. In the future, ULA expects that the USG will go back to a more commercial contracting approach and the capability contract will be discntinued. In that case those costs will be reflected in the mission prices.
then the general outcome is that the Atlas V per-mission price-tag will jump up from $164 million to somewhere close to $230-ish million the minute the capabilities (ELC) contract goes away. (taking into account that Delta is probably responsible for a larger part of the ELC contract value than Atlas is)
Correct?
-
#31
by
woods170
on 21 May, 2014 11:18
-
That is one way to talk yourself out of a tight spot...
You are just a hair away from stating that the GAO numbers are not factual.
I don't know the basis for their estimates
Actually, it was done by the SecDef office of Cost Assessment and Program Evaluation and they only have a 50% confidence in their own numbers.
Meaning that the GAO numbers basically are DoD numbers, in direct contradiction to what you stated earlier:
Those aren't ULA's or DOD's numbers, but GAO's
-
#32
by
Jim
on 21 May, 2014 12:45
-
That is one way to talk yourself out of a tight spot...
You are just a hair away from stating that the GAO numbers are not factual.
I don't know the basis for their estimates
Actually, it was done by the SecDef office of Cost Assessment and Program Evaluation and they only have a 50% confidence in their own numbers.
Meaning that the GAO numbers basically are DoD numbers, in direct contradiction to what you stated earlier:
Those aren't ULA's or DOD's numbers, but GAO's
That is why I posted it, hence the "Actually"
-
#33
by
AncientU
on 21 May, 2014 13:26
-
3. The incremental price of an Atlas V 401 is less than $100M. This is the cost to the USG to increase the block buy from 26 missions to 27. We are not giving the specific number at this time.
I'm going to hazard a guess that we're supposed to compare this less than $100M number to Elon Musk's quote of $90M for a USAF F9 v1.1 flight? But if Atlas V 401 and F9 v1.1's price difference is less than $10M, how come F9 v1.1 has more than 20 commercial launches in its manifest while Atlas V 401 has none?
The AF can buy another launch at the incremental price and so it is legitimate for them to compare ULA's incremental price to the SpaceX price when figuring the cost to the USG of another mission.
My understanding is that SpaceX has been offering very low prices into the commercial market. Time will tell if that practice is sustainable.
Why is it that the incremental cost, which only exists at this level because of the block buy, is able to be bid in competitive procurements? Seems this is double counting... volume pricing for competition while the customer (USAF/taxpayer) is paying premium to position ULA for competition. A more appropriate method would be to simply bid 26/27ths of the block buy cost. Using your suggested approach should make the 26th launch 'incremental' cost slightly over $100M, right?
-
#34
by
jongoff
on 21 May, 2014 13:34
-
OK, so if I take this:
Thanks for taking the time to share and answer questions Dr. Sowers. Can you please clarify how exactly the ELC is included in your quoted Atlas V price of $164 million? If I take the publicly available figure of ~$1 billion for the ELC in 2013 and divide by 11 mission that is $90 million per mission, or just over 50% of the per mission cost, is this correct?
Pretty close. We were a little more sophisticated and segregated costs that are clearly Delta versus those that are clearly Atlas before we did the division. But the simple math gets you in the ball park.
and this:
2. The division of the EELV program into two complementary contracts is a convenient choice mutually agreed to by the USG and ULA which provides benefits to both parties. That is the nature of good contracting practice. All the costs on the capability side of the contract are legitimate costs that have been TINA certified by ULA and audited by the USG. In the future, ULA expects that the USG will go back to a more commercial contracting approach and the capability contract will be discntinued. In that case those costs will be reflected in the mission prices.
then the general outcome is that the Atlas V per-mission price-tag will jump up from $164 million to somewhere close to $230-ish million the minute the capabilities (ELC) contract goes away. (taking into account that Delta is probably responsible for a larger part of the ELC contract value than Atlas is)
Correct?
Not necessarily at all. There's nothing that says a company has to evenly distribute its overhead between product lines. If I had two product lines, and the one that could sell to commercial and gov't customers was lower overhead than one that only sold to the gov't, I'd probably keep spreading the overhead costs unevenly between those two product lines, even if the gov't wasn't directly picking up some of the fixed costs anymore.
~Jon
-
#35
by
deltaV
on 21 May, 2014 21:36
-
2. Within the current block buy, the total price of an Atlas V 401 (comparable to a Falcon 9 1.1) is $164M. This number is arrived at by taking the incremental price as spelled out in the contract and adding an allocation of the capability cost. The allocation was on a simple per mission basis.
According to NASA's ELV Performance tool (
http://elvperf.ksc.nasa.gov/elvMap/) Falcon 9 v1.1 is neck in neck with Atlas 411 to GTO and has more capacity than Atlas 511 for any elliptical orbit. (Falcon 9 has a 5 m fairing.) According to
http://en.wikipedia.org/wiki/Atlas_V#Variants there have been 21, 3, 5, and 0 launches of Atlas 401, 411, 501, and 511 respectively, so Atlas 401 is the best single comparison vehicle, but it would be nice if we had analogous price data for Atlas 411, 501 and 511 too.
-
#36
by
deltaV
on 21 May, 2014 21:51
-
then the general outcome is that the Atlas V per-mission price-tag will jump up from $164 million to somewhere close to $230-ish million the minute the capabilities (ELC) contract goes away.
Nope, as I understand Dr. Sower's message the $164 million figure already includes a share of the ELC money. Once ELC goes away the price will be $164 million (or more if ULA has to spread its fixed costs over fewer launches than currently).
-
#37
by
clongton
on 22 May, 2014 00:01
-
Thank you Dr Sowers.
This is now the 3rd time I have posed these 3 questions and I believe they are reasonable and fair, yet you have not addressed the first 2. I thank you for the pricing information you provided in this thread (my question #3). Here's another opportunity to respond to my 1st 2 questions. Below is my original post in its entirety. Thank you for your consideration.
-Chuck Longton
Thank you Dr. Sowers for taking the time to write and carefully edit your op-ed. I appreciate that. It is refreshing to actually hear from officials within ULA delineating the situation from their pov.
With all due respect, without providing what the "statement of work and requirements" you spoke of [in your original op ed] covers, this [airport] analogy lacks justification. Are you stating that the "capability contract" pays for the operation of the launch pads and associated facilities and personnel from which the EELVs fly? If so then please so state and provide what details to us that seem appropriate to you to demonstrate that.
1. If what I suggested is correct, then shouldn't SpaceX also be provided a similar "capability contract" for the launch facilities and personnel it uses for the Falcon 9 launches of DoD payloads?
2. If what I suggested is not correct, then please provide some tangible justification for why ULA should receive $1B+ per year for a capability contract to which SpaceX is not entitled an equivalent.
3. Please estimate for us the delta of what the launch costs to the USG of your vehicles would be with and without that capability contract.
Again, thank you for taking the time to communicate with us and express ULA's position. I have always appreciated the candid way you have answered questions in the past.
-
#38
by
kevin-rf
on 22 May, 2014 00:39
-
Can I make an observation from the sidelines.
If you only have one customer (which ULA pretty much does) it makes more sense to have two contracts.
One to pay the fixed costs, maintaining the pads, factories, capability.
A second to pay for the incremental cost of each launch.
Otherwise you have to guess at your flight right and divide your fixed costs by it and then add it to your incremental launch costs to come up with a best guess at how much to charge for each launch. All this in an environment where the customer will argue every dime.
It has been implied that ULA's customer has had all sorts of schedule slips with the payloads that have wrecked havoc on the schedules throwing the traditional guess at flight rate when predicting a launch cost right out the window.
In the case of spaceX this won't work. Why because they really have multiple customers (ISS, DOD, Multiple Commercial comapnies). This means they have to do the more difficult divining the flight rate, dividing it into the fixed costs and adding it the incremental costs, coming up with the number they will charge for a launch. SpaceX can not go to all of it's potential customers and go we need this much a year, please split the bill among yourself.
SpaceX's danger is if they are over optimistic in predicting the flight rate, the fixed costs will eat them alive. Even though they will be earning more each flight than the incremental costs.
My memory is foggy, but part of ULA's justification in the past has been the DOD has been an unreliable partner on providing payloads to launch and they ended up with lower flight rates. Thus the fixed costs ate them alive.
-
#39
by
Targeteer
on 22 May, 2014 02:48
-
-
#40
by
woods170
on 22 May, 2014 12:56
-
then the general outcome is that the Atlas V per-mission price-tag will jump up from $164 million to somewhere close to $230-ish million the minute the capabilities (ELC) contract goes away.
Nope, as I understand Dr. Sower's message the $164 million figure already includes a share of the ELC money. Once ELC goes away the price will be $164 million (or more if ULA has to spread its fixed costs over fewer launches than currently).
The statement by Dr. Sowers is clear: In case the ELC contract goes away then the costs associated with the capabilities side of the contract will be reflected in the per mission cost. I read that as: the per mission cost will rise to adjust for the fact that ULA no longer gets ELC money.
But, I think Dr. Sowers will have the final word on this.
-
#41
by
baldusi
on 22 May, 2014 14:01
-
I would like to ask Dr Sowers about that 100M marginal cost to a 401. In particular, regarding the commercial implications. Up to now, Atlas V commercial business have been quite limited. The las commercial win, the Mexican satellite, is a very interesting case. The satellite had to go to an inclined (15deg) GSO orbit, thus, it couldn't ride on Ariane 5 without executing a plane change back to inclined. It didn't fit into a Falcon 9, and apparently Proton-M and Sea Launch's reliability record is worse than what the Mexican Army can tolerate (it is a national security payload, after all).
Yet, LM Stated that they had to offer a 20% discount on that contract to get it. As we are (apparently) at the end of the cheap insurance cycle, which might push clients to the more reliable launchers, and when combined with the improved costs of the block buy plus Fleet Standardization Program, do you expect further commercial wins? Ariane 5 seems to be lacking enough small payloads for dual launch and thus there must be some excess demand for bigger than Falcon 9 payloads where Atlas V should be able to compete.
Also, with the current push for extra Delta IV long lead items, should the Atlas V propulsion issues be solved, could push for some commercial win for boeing?
And last, will you implement Common Centaur on Delta IV 4m?
-
#42
by
WindnWar
on 22 May, 2014 17:29
-
-
#43
by
kirghizstan
on 22 May, 2014 17:45
-
http://www.bizjournals.com/denver/blog/boosters_bits/2014/05/ulas-per-launch-costs-rival-spacex-and-its-a.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A
ULA's per-launch costs rival SpaceX and it's a better overall value, CEO says
I am confused, from that article the block buy is 36 cores over 5 years for $11 billion. That works out to $305 million a core. In addition that does not appear to include the ELC cost of an average $1 billion a year, which would add another $5 billion over 5 years. If that is the case you end up with $444 million per core.
Either someway or somehow the figures presented are wrong or the claimed cost per launch simply isn't valid. Even if the $11 billion figure includes the ELC cost, $305 million a core is still a lot higher then the numbers being claimed.
What am I missing? 
you are missing ULA spin or at least creative accounting. of course they all do this so i don't blame them
-
#44
by
Lars_J
on 22 May, 2014 17:45
-
http://www.bizjournals.com/denver/blog/boosters_bits/2014/05/ulas-per-launch-costs-rival-spacex-and-its-a.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A
ULA's per-launch costs rival SpaceX and it's a better overall value, CEO says
I am confused, from that article the block buy is 36 cores over 5 years for $11 billion. That works out to $305 million a core. In addition that does not appear to include the ELC cost of an average $1 billion a year, which would add another $5 billion over 5 years. If that is the case you end up with $444 million per core.
Either someway or somehow the figures presented are wrong or the claimed cost per launch simply isn't valid. Even if the $11 billion figure includes the ELC cost, $305 million a core is still a lot higher then the numbers being claimed.
What am I missing?
I'm wondering the same... It just doesn't seem to add up.
-
#45
by
RocketGoBoom
on 22 May, 2014 17:50
-
I am confused, from that article the block buy is 36 cores over 5 years for $11 billion. That works out to $305 million a core. In addition that does not appear to include the ELC cost of an average $1 billion a year, which would add another $5 billion over 5 years. If that is the case you end up with $444 million per core.
Either someway or somehow the figures presented are wrong or the claimed cost per launch simply isn't valid. Even if the $11 billion figure includes the ELC cost, $305 million a core is still a lot higher then the numbers being claimed.
What am I missing?
I would like to echo this remark. From all of the articles and sources, the average still appears to be well above $300 million each. Once we add back in the $90 million average ELC, that George Sowers confirmed as being in the ballpark, it gets into the $400 million range.
Maybe there is something about government math that I am unaware of. But the basic info seems to confirm that ULA is roughly 3X to 4X more expensive than SpaceX. Even in a best case scenario for ULA with an apples to apples comparison, it is still likely that ULA is 2X more expensive for Atlas vs Falcon.
-
#46
by
ChrisWilson68
on 22 May, 2014 17:53
-
http://www.bizjournals.com/denver/blog/boosters_bits/2014/05/ulas-per-launch-costs-rival-spacex-and-its-a.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A
ULA's per-launch costs rival SpaceX and it's a better overall value, CEO says
I am confused, from that article the block buy is 36 cores over 5 years for $11 billion. That works out to $305 million a core. In addition that does not appear to include the ELC cost of an average $1 billion a year, which would add another $5 billion over 5 years. If that is the case you end up with $444 million per core.
Either someway or somehow the figures presented are wrong or the claimed cost per launch simply isn't valid. Even if the $11 billion figure includes the ELC cost, $305 million a core is still a lot higher then the numbers being claimed.
What am I missing? ???
I'm wondering the same... It just doesn't seem to add up.
What it adds up to is desperation on the part of ULA.
-
#47
by
Jim
on 22 May, 2014 18:23
-
2. Within the current block buy, the total price of an Atlas V 401 (comparable to a Falcon 9 1.1) is $164M. This number is arrived at by taking the incremental price as spelled out in the contract and adding an allocation of the capability cost. The allocation was on a simple per mission basis.
According to NASA's ELV Performance tool (http://elvperf.ksc.nasa.gov/elvMap/) Falcon 9 v1.1 is neck in neck with Atlas 411 to GTO and has more capacity than Atlas 511 for any elliptical orbit. (Falcon 9 has a 5 m fairing.) According to http://en.wikipedia.org/wiki/Atlas_V#Variants there have been 21, 3, 5, and 0 launches of Atlas 401, 411, 501, and 511 respectively, so Atlas 401 is the best single comparison vehicle, but it would be nice if we had analogous price data for Atlas 411, 501 and 511 too.
401 beats F9 V1.1 except for LEO
-
#48
by
clongton
on 22 May, 2014 21:14
-
then the general outcome is that the Atlas V per-mission price-tag will jump up from $164 million to somewhere close to $230-ish million the minute the capabilities (ELC) contract goes away.
Nope, as I understand Dr. Sower's message the $164 million figure already includes a share of the ELC money. Once ELC goes away the price will be $164 million (or more if ULA has to spread its fixed costs over fewer launches than currently).
The statement by Dr. Sowers is clear: In case the ELC contract goes away then the costs associated with the capabilities side of the contract will be reflected in the per mission cost. I read that as: the per mission cost will rise to adjust for the fact that ULA no longer gets ELC money.
But, I think Dr. Sowers will have the final word on this.
That's what I suspect. If true then that means that the cost of maintaining the launch infrastructure is *not* included in the per-launch costs charged to the USGov, while SpaceX's is. That effectively zeros out a ULA major cost per-launch, while SpaceX has to pay that cost in their per-launch costs charged to the USGov. So if we think ULA's prices are higher than SpaceX now, just wait until they no longer get that ELC money and have to increase their prices to cover their launch infrastructure.
So I'm wondering, if ULA gets to keep the ELC contract for USGov launches, shouldn't SpaceX also get an ELC contract for USGov launches? Why should the USGov pay for ULA's launch infrastructure and not SpaceX's? Isn't that the very definition of actively fostering anti-competition?
-
#49
by
deltaV
on 22 May, 2014 22:04
-
401 beats F9 V1.1 except for LEO
The NASA Launch Services Program Launch Vehicle Performance Website states otherwise. Can you explain why you're right and they're wrong?
-
#50
by
Jim
on 22 May, 2014 22:22
-
The NASA Launch Services Program Launch Vehicle Performance Website states otherwise. Can you explain why you're right and they're wrong?
Because it is a tool and not a perfect comparison.
-
#51
by
Excession
on 22 May, 2014 22:34
-
A marginal cost of less than a hundred million for the 401 is all well and good, but what's it like when you add a five-meter fairing or strap-on boosters? A 401 is only competitive with the Falcon to GTO and it has a substantially smaller payload fairing.
-
#52
by
Lars_J
on 22 May, 2014 22:53
-
401 beats F9 V1.1 except for LEO
The NASA Launch Services Program Launch Vehicle Performance Website states otherwise. Can you explain why you're right and they're wrong?
That NASA page uses data that predates the first F9v1.1 flights by several months. It also does not take into account performance that SpaceX reserves for first stage reuse. (although SpaceX can forego some of that when performance is needed - they already do that for some commercial flights)
-
#53
by
Jim
on 22 May, 2014 22:58
-
A marginal cost of less than a hundred million for the 401 is all well and good, but what's it like when you add a five-meter fairing or strap-on boosters? A 401 is only competitive with the Falcon to GTO and it has a substantially smaller payload fairing.
a. Most spacecraft in that class don't need a five meter fairing. Just wasted rattle space that makes some parts of ground ops harder.
b. What's the point of comparing with SRB's? F9 can't perform any those missions.
-
#54
by
Excession
on 22 May, 2014 23:44
-
That NASA page uses data that predates the first F9v1.1 flights by several months.
It also agrees nicely (conservatively, even!) with Shotwell's mention that they're already reserving 30% of the performance for first-stage reuse. Given that they're clearly willing to give up that margin for payload, I don't think we should ignore that extra performance.
I also suspect that the NLS page is on the conservative side, since the performance data is what the launch provider is contractually obligated to deliver.
A marginal cost of less than a hundred million for the 401 is all well and good, but what's it like when you add a five-meter fairing or strap-on boosters? A 401 is only competitive with the Falcon to GTO and it has a substantially smaller payload fairing.
a. Most spacecraft in that class don't need a five meter fairing. Just wasted rattle space that makes some parts of ground ops harder.
b. What's the point of comparing with SRB's? F9 can't perform any those missions.
A: Most, yes. Nevertheless, that's a capability the Falcon has that the 401 does not.
B: As per the NLS payload tool, Atlas needs three SRBs to match the Falcon's payload to LEO. Granted, there haven't been many LEO missions that made use of the solid boosters, but there have been a few. And, even if you completely discount the extra performance beyond the Falcon's advertised payload, the Falcon still has an advantage of a couple of tonnes over the 401.
-
#55
by
bberkey
on 23 May, 2014 03:03
-
Dr. Sowers
I assume the $100M figure covers a relatively simple AV401 mission (something like the Thaicom launch), with extra fees added on top of this for more complicated missions (exotic propellants, cryogenics, tighter security clearances, etc).
Assuming this is the case what fraction of ULA's 401 manifest fits into this vanilla spacecraft category? Are these fees are large percentage of the total USG expenditure for any launches?
Thanks you for bringing some insight into this discussion. You had a beautiful flight yesterday and I look forward to another one in July
-
#56
by
Jim
on 23 May, 2014 03:12
-
B: As per the NLS payload tool, Atlas needs three SRBs to match the Falcon's payload to LEO. Granted, there haven't been many LEO missions that made use of the solid boosters, but there have been a few.
Only one mission, so it is an irrelevant comparison. So any relevant comparisons would be at high energy missions, which number over 17.
the F9 can't do some of the GTO and HEO missions that a 401 can do.
-
#57
by
deltaV
on 23 May, 2014 05:03
-
the F9 can't do some of the GTO and HEO missions that a 401 can do.
What's your source of that info?
-
#58
by
Jim
on 23 May, 2014 11:15
-
the F9 can't do some of the GTO and HEO missions that a 401 can do.
What's your source of that info?
work
-
#59
by
georgesowers
on 23 May, 2014 13:00
-
http://www.bizjournals.com/denver/blog/boosters_bits/2014/05/ulas-per-launch-costs-rival-spacex-and-its-a.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A
ULA's per-launch costs rival SpaceX and it's a better overall value, CEO says
I am confused, from that article the block buy is 36 cores over 5 years for $11 billion. That works out to $305 million a core. In addition that does not appear to include the ELC cost of an average $1 billion a year, which would add another $5 billion over 5 years. If that is the case you end up with $444 million per core.
Either someway or somehow the figures presented are wrong or the claimed cost per launch simply isn't valid. Even if the $11 billion figure includes the ELC cost, $305 million a core is still a lot higher then the numbers being claimed.
What am I missing?
What you are missing is that the block buy contract includes support to a large quantity of backlog missions. In other words, the denominator is wrong in your calculation. That is why we gave the $225M number which is arrived at by adding up the value of all our contracts (numerator) and dividing by the total number of missions represented in those contracts (denominator). Your calculation is off because the capability contract, which represents most of the cost in the block buy is an annual cost, not a per mission cost. It takes knowledge of the annual launch rate to determine a reasonable allocation of those costs to an individual mission. That is what I provided to get the $164M total price of a AV 401.
For example, the two missions we launched within the last week were supported by launch site labor that was charged to this year's capability contract (part of the block buy) even though neither was part of the 36 cores.
-
#60
by
LouScheffer
on 23 May, 2014 15:06
-
http://www.bizjournals.com/denver/blog/boosters_bits/2014/05/ulas-per-launch-costs-rival-spacex-and-its-a.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A
ULA's per-launch costs rival SpaceX and it's a better overall value, CEO says
I am confused, from that article the block buy is 36 cores over 5 years for $11 billion. That works out to $305 million a core. In addition that does not appear to include the ELC cost of an average $1 billion a year, which would add another $5 billion over 5 years. If that is the case you end up with $444 million per core.
Either someway or somehow the figures presented are wrong or the claimed cost per launch simply isn't valid. Even if the $11 billion figure includes the ELC cost, $305 million a core is still a lot higher then the numbers being claimed.
What am I missing?
What you are missing is that the block buy contract includes support to a large quantity of backlog missions. In other words, the denominator is wrong in your calculation. That is why we gave the $225M number which is arrived at by adding up the value of all our contracts (numerator) and dividing by the total number of missions represented in those contracts (denominator). Your calculation is off because the capability contract, which represents most of the cost in the block buy is an annual cost, not a per mission cost. It takes knowledge of the annual launch rate to determine a reasonable allocation of those costs to an individual mission. That is what I provided to get the $164M total price of a AV 401.
For example, the two missions we launched within the last week were supported by launch site labor that was charged to this year's capability contract (part of the block buy) even though neither was part of the 36 cores.
Thank you, George, for supplying some official numbers and what they mean.
I believe the number of most interest is the total cost ($ out of pocket by the govt) / (total launches), by year. As I understand you are saying the grand average number is $225M. My question is then over what launches and contracts were you averaging to get this number? All Atlas-V and Delta-IV launches to date, plus those planned? Or some more recent subset?
I ask since the block buy seems higher than this number. If the true total cost per mission is $225M, then the 27 missions of the block buy should be about $6.1B including BOTH hardware and capability for those missions. This means the remaining $4.9B is being used to provide capability for other missions, as you stated above. But assuming 2 years of missions already in the queue that are not covered by the block buy, at 1 launch per month, $4.9B/24 is $204M for capability alone, per mission. This does not seem compatible with a total mission cost of $225M.
So what other missions, and other contracts, did you average to arrive at your figure of $225M?
-
#61
by
WindnWar
on 23 May, 2014 15:21
-
What you are missing is that the block buy contract includes support to a large quantity of backlog missions. In other words, the denominator is wrong in your calculation. That is why we gave the $225M number which is arrived at by adding up the value of all our contracts (numerator) and dividing by the total number of missions represented in those contracts (denominator). Your calculation is off because the capability contract, which represents most of the cost in the block buy is an annual cost, not a per mission cost. It takes knowledge of the annual launch rate to determine a reasonable allocation of those costs to an individual mission. That is what I provided to get the $164M total price of a AV 401.
For example, the two missions we launched within the last week were supported by launch site labor that was charged to this year's capability contract (part of the block buy) even though neither was part of the 36 cores.
So how large is this quantity of backlog missions, 2? 10? 20?
This is part of what makes it impossible to find the real costs involved. In addition, why wouldn't those backlogged missions have been paid for under a previous contract, since prior to this each mission was sold on a case by case basis. If those missions are now included into this contract, is only the services for the missions included or are the cores included too? Does the ELC contract cover any of these expenses?
Not trying to be a pest but the info has so many gaps in it.
-
#62
by
savuporo
on 23 May, 2014 18:19
-
This is part of what makes it impossible to find the real costs involved.
I dont think it will ever work. Shuttle program is over, flights done, money paid, and there is still little agreement over what a flight actually cost. Some people look at it one way - "we paid $2B a year for the joy of having a Shuttle capability" and then the flight cost varied between $50M to $300M depending on the year. Other people take blunt total program cost divided by the number of the launches over the life of the program and come to a different figure.
-
#63
by
RocketGoBoom
on 23 May, 2014 21:13
-
For example, the two missions we launched within the last week were supported by launch site labor that was charged to this year's capability contract (part of the block buy) even though neither was part of the 36 cores.
I think if your cadence of launches remains roughly the same over the years (10 per year) then that will average out. For example, at the end of this current block buy, some cores may carry over into years beyond 5 years, so they will charged in years also not counted in this batch. So it is fair to still assign an average number of $90 million to $100 million for each launch.
Using an "incremental" number for Atlas V 401 to compare to Falcon 9 v1.1 is not really legitimate because that ignores the capability contract that is already paying your fixed costs. That doesn't appear to assign any amount extra for the capability subsidy to that extra incremental launch.
Or have I misread your explanation?
-
#64
by
Will
on 23 May, 2014 23:12
-
For example, the two missions we launched within the last week were supported by launch site labor that was charged to this year's capability contract (part of the block buy) even though neither was part of the 36 cores.
I think if your cadence of launches remains roughly the same over the years (10 per year) then that will average out. For example, at the end of this current block buy, some cores may carry over into years beyond 5 years, so they will charged in years also not counted in this batch. So it is fair to still assign an average number of $90 million to $100 million for each launch.
Using an "incremental" number for Atlas V 401 to compare to Falcon 9 v1.1 is not really legitimate because that ignores the capability contract that is already paying your fixed costs. That doesn't appear to assign any amount extra for the capability subsidy to that extra incremental launch.
Or have I misread your explanation?
For the near term decision between SpaceX and ULA, incremental is the right measure. SpaceX can't launch the whole DoD manifest, even if Falcon 9 v1.1 was certified, which it isn't. Since DoD has to keep the whole ULA capability in place, it's stuck with the overhead in any case. If they *do* buy some SpaceX launches, the overhead just shifts to the remaining ULA launches. Musk is exaggerating the potential savings of switching DoD payloads to SpaceX, if any, and I'm pretty sure he's smart enough that's what he's doing.
-
#65
by
ChrisWilson68
on 23 May, 2014 23:29
-
For example, the two missions we launched within the last week were supported by launch site labor that was charged to this year's capability contract (part of the block buy) even though neither was part of the 36 cores.
I think if your cadence of launches remains roughly the same over the years (10 per year) then that will average out. For example, at the end of this current block buy, some cores may carry over into years beyond 5 years, so they will charged in years also not counted in this batch. So it is fair to still assign an average number of $90 million to $100 million for each launch.
Using an "incremental" number for Atlas V 401 to compare to Falcon 9 v1.1 is not really legitimate because that ignores the capability contract that is already paying your fixed costs. That doesn't appear to assign any amount extra for the capability subsidy to that extra incremental launch.
Or have I misread your explanation?
For the near term decision between SpaceX and ULA, incremental is the right measure. SpaceX can't launch the whole DoD manifest, even if Falcon 9 v1.1 was certified, which it isn't. Since DoD has to keep the whole ULA capability in place, it's stuck with the overhead in any case. If they *do* buy some SpaceX launches, the overhead just shifts to the remaining ULA launches. Musk is exaggerating the potential savings of switching DoD payloads to SpaceX, if any, and I'm pretty sure he's smart enough that's what he's doing.
That isn't consistent with ULA's claim that the block buy saved $4 billion. Ask yourself where that $4 billion in savings from a block buy comes from if most of ULAs costs are fixed and the marginal costs of churning out another rocket are low.
The supposed $4 billion block buy savings implies that with the block buy ULA will be making a huge fixed investment to bring down the marginal cost of each unit, and that that investment won't be worth making if the block buy doesn't happen. So, really, that huge investment should be considered a marginal cost when comparing block buy against no block buy.
-
#66
by
Will
on 24 May, 2014 00:10
-
For example, the two missions we launched within the last week were supported by launch site labor that was charged to this year's capability contract (part of the block buy) even though neither was part of the 36 cores.
I think if your cadence of launches remains roughly the same over the years (10 per year) then that will average out. For example, at the end of this current block buy, some cores may carry over into years beyond 5 years, so they will charged in years also not counted in this batch. So it is fair to still assign an average number of $90 million to $100 million for each launch.
Using an "incremental" number for Atlas V 401 to compare to Falcon 9 v1.1 is not really legitimate because that ignores the capability contract that is already paying your fixed costs. That doesn't appear to assign any amount extra for the capability subsidy to that extra incremental launch.
Or have I misread your explanation?
For the near term decision between SpaceX and ULA, incremental is the right measure. SpaceX can't launch the whole DoD manifest, even if Falcon 9 v1.1 was certified, which it isn't. Since DoD has to keep the whole ULA capability in place, it's stuck with the overhead in any case. If they *do* buy some SpaceX launches, the overhead just shifts to the remaining ULA launches. Musk is exaggerating the potential savings of switching DoD payloads to SpaceX, if any, and I'm pretty sure he's smart enough that's what he's doing.
That isn't consistent with ULA's claim that the block buy saved $4 billion. Ask yourself where that $4 billion in savings from a block buy comes from if most of ULAs costs are fixed and the marginal costs of churning out another rocket are low.
The supposed $4 billion block buy savings implies that with the block buy ULA will be making a huge fixed investment to bring down the marginal cost of each unit, and that that investment won't be worth making if the block buy doesn't happen. So, really, that huge investment should be considered a marginal cost when comparing block buy against no block buy.
You seem to assume that variable costs are insensitive to volume. This is incorrect.
Consider. Suppose you own a bakery, and your biggest customer has concluded that he absolutely must have some undetermined number of pastries in the next five years. He agrees to pay the fixed cost of your building, kitchen, oven and management, even if he orders nothing at all.
Even so, you can still give him a better incremental price per cookie for 5,000 cookies per year than for 500, because your variable cost per cookie is less.
-
#67
by
Avron
on 24 May, 2014 00:16
-
For example, the two missions we launched within the last week were supported by launch site labor that was charged to this year's capability contract (part of the block buy) even though neither was part of the 36 cores.
I think if your cadence of launches remains roughly the same over the years (10 per year) then that will average out. For example, at the end of this current block buy, some cores may carry over into years beyond 5 years, so they will charged in years also not counted in this batch. So it is fair to still assign an average number of $90 million to $100 million for each launch.
Using an "incremental" number for Atlas V 401 to compare to Falcon 9 v1.1 is not really legitimate because that ignores the capability contract that is already paying your fixed costs. That doesn't appear to assign any amount extra for the capability subsidy to that extra incremental launch.
Or have I misread your explanation?
For the near term decision between SpaceX and ULA, incremental is the right measure. SpaceX can't launch the whole DoD manifest, even if Falcon 9 v1.1 was certified, which it isn't. Since DoD has to keep the whole ULA capability in place, it's stuck with the overhead in any case. If they *do* buy some SpaceX launches, the overhead just shifts to the remaining ULA launches. Musk is exaggerating the potential savings of switching DoD payloads to SpaceX, if any, and I'm pretty sure he's smart enough that's what he's doing.
That isn't consistent with ULA's claim that the block buy saved $4 billion. Ask yourself where that $4 billion in savings from a block buy comes from if most of ULAs costs are fixed and the marginal costs of churning out another rocket are low.
The supposed $4 billion block buy savings implies that with the block buy ULA will be making a huge fixed investment to bring down the marginal cost of each unit, and that that investment won't be worth making if the block buy doesn't happen. So, really, that huge investment should be considered a marginal cost when comparing block buy against no block buy.
You seem to assume that variable costs are insensitive to volume. This is incorrect.
Consider. Suppose you own a bakery, and your biggest customer has concluded that he absolutely most have some undetermined number of pastries in the next five years. He agrees to pay the fixed cost of your building, kitchen, oven and management, even if he orders nothing at all.
Even so, you can still give him a better incremental price per cookie for 5,000 cookies per year than for 500, because your variable cost per cookie is less.
What does the customer pay all up.. that what counts .. all the excuses, reasons, bull .. is meaningless unless its an insider deal, or some plan to defraud .. hiding behind national defense etc to delay the inevitable just achieves that at taxpayer and national cost.. net.. there is little win , even to the shareholder
-
#68
by
FuseUpHereAlone
on 24 May, 2014 00:17
-
For example, the two missions we launched within the last week were supported by launch site labor that was charged to this year's capability contract (part of the block buy) even though neither was part of the 36 cores.
I think if your cadence of launches remains roughly the same over the years (10 per year) then that will average out. For example, at the end of this current block buy, some cores may carry over into years beyond 5 years, so they will charged in years also not counted in this batch. So it is fair to still assign an average number of $90 million to $100 million for each launch.
Using an "incremental" number for Atlas V 401 to compare to Falcon 9 v1.1 is not really legitimate because that ignores the capability contract that is already paying your fixed costs. That doesn't appear to assign any amount extra for the capability subsidy to that extra incremental launch.
Or have I misread your explanation?
For the near term decision between SpaceX and ULA, incremental is the right measure. SpaceX can't launch the whole DoD manifest, even if Falcon 9 v1.1 was certified, which it isn't. Since DoD has to keep the whole ULA capability in place, it's stuck with the overhead in any case. If they *do* buy some SpaceX launches, the overhead just shifts to the remaining ULA launches. Musk is exaggerating the potential savings of switching DoD payloads to SpaceX, if any, and I'm pretty sure he's smart enough that's what he's doing.
That isn't consistent with ULA's claim that the block buy saved $4 billion. Ask yourself where that $4 billion in savings from a block buy comes from if most of ULAs costs are fixed and the marginal costs of churning out another rocket are low.
The supposed $4 billion block buy savings implies that with the block buy ULA will be making a huge fixed investment to bring down the marginal cost of each unit, and that that investment won't be worth making if the block buy doesn't happen. So, really, that huge investment should be considered a marginal cost when comparing block buy against no block buy.
You seem to assume that variable costs are insensitive to volume. This is incorrect.
Consider. Suppose you own a bakery, and your biggest customer has concluded that he absolutely most have some undetermined number of pastries in the next five years. He agrees to pay the fixed cost of your building, kitchen, oven and management, even if he orders nothing at all.
Even so, you can still give him a better incremental price per cookie for 5,000 cookies per year than for 500, because your variable cost per cookie is less.
Agreed. The market favors stability. The only thing that the block buy’s $4 billion savings implies is that it will COST $4 billion less than the way the government has been buying launches. This is true in any market, especially one with a huge industrial base required to build a rocket. The block buy allows the industrial base to restart and sustain production efficiently. This involves every level of production, such as keeping ULA’s friction stir welding machines operating on a regular basis; and all the way down to the foundry being able to reuse their specialized crucible they bought to pour Inconel 718 ingot. ULA may not have been very transparent about their cost, but at least they’ve been consistent when they say that it will allow them to stabilize their industrial base.
-
#69
by
ChrisWilson68
on 24 May, 2014 00:28
-
For example, the two missions we launched within the last week were supported by launch site labor that was charged to this year's capability contract (part of the block buy) even though neither was part of the 36 cores.
I think if your cadence of launches remains roughly the same over the years (10 per year) then that will average out. For example, at the end of this current block buy, some cores may carry over into years beyond 5 years, so they will charged in years also not counted in this batch. So it is fair to still assign an average number of $90 million to $100 million for each launch.
Using an "incremental" number for Atlas V 401 to compare to Falcon 9 v1.1 is not really legitimate because that ignores the capability contract that is already paying your fixed costs. That doesn't appear to assign any amount extra for the capability subsidy to that extra incremental launch.
Or have I misread your explanation?
For the near term decision between SpaceX and ULA, incremental is the right measure. SpaceX can't launch the whole DoD manifest, even if Falcon 9 v1.1 was certified, which it isn't. Since DoD has to keep the whole ULA capability in place, it's stuck with the overhead in any case. If they *do* buy some SpaceX launches, the overhead just shifts to the remaining ULA launches. Musk is exaggerating the potential savings of switching DoD payloads to SpaceX, if any, and I'm pretty sure he's smart enough that's what he's doing.
That isn't consistent with ULA's claim that the block buy saved $4 billion. Ask yourself where that $4 billion in savings from a block buy comes from if most of ULAs costs are fixed and the marginal costs of churning out another rocket are low.
The supposed $4 billion block buy savings implies that with the block buy ULA will be making a huge fixed investment to bring down the marginal cost of each unit, and that that investment won't be worth making if the block buy doesn't happen. So, really, that huge investment should be considered a marginal cost when comparing block buy against no block buy.
You seem to assume that variable costs are insensitive to volume. This is incorrect.
Consider. Suppose you own a bakery, and your biggest customer has concluded that he absolutely most have some undetermined number of pastries in the next five years. He agrees to pay the fixed cost of your building, kitchen, oven and management, even if he orders nothing at all.
Even so, you can still give him a better incremental price per cookie for 5,000 cookies per year than for 500, because your variable cost per cookie is less.
But that's my whole point -- the cost of expanding the bakery is a cost that the government would only have to pay if it buys lots of rockets from ULA. The supposedly low incremental cost when comparing with SpaceX is omitting that cost of expanding the bakery, which wouldn't have to happen if they bought more from SpaceX.
-
#70
by
kevin-rf
on 24 May, 2014 00:35
-
The other thing it allows them to do with a just in time system is buy the parts from other vendors in lots larger than onies and twoies . They will get a better deal if they buy 36 RL-10's, RS-68's, RD-180's, NK-33's, and all the metal they need to machine and bend up front. If they send the purchase order for all those parts each time they win a contract they not only incur the part cost, but the cost of setting up to make the part, and cost of the PO each time.
I think that is the $4 billion they are saving.
-
#71
by
FuseUpHereAlone
on 24 May, 2014 00:36
-
For example, the two missions we launched within the last week were supported by launch site labor that was charged to this year's capability contract (part of the block buy) even though neither was part of the 36 cores.
I think if your cadence of launches remains roughly the same over the years (10 per year) then that will average out. For example, at the end of this current block buy, some cores may carry over into years beyond 5 years, so they will charged in years also not counted in this batch. So it is fair to still assign an average number of $90 million to $100 million for each launch.
Using an "incremental" number for Atlas V 401 to compare to Falcon 9 v1.1 is not really legitimate because that ignores the capability contract that is already paying your fixed costs. That doesn't appear to assign any amount extra for the capability subsidy to that extra incremental launch.
Or have I misread your explanation?
For the near term decision between SpaceX and ULA, incremental is the right measure. SpaceX can't launch the whole DoD manifest, even if Falcon 9 v1.1 was certified, which it isn't. Since DoD has to keep the whole ULA capability in place, it's stuck with the overhead in any case. If they *do* buy some SpaceX launches, the overhead just shifts to the remaining ULA launches. Musk is exaggerating the potential savings of switching DoD payloads to SpaceX, if any, and I'm pretty sure he's smart enough that's what he's doing.
That isn't consistent with ULA's claim that the block buy saved $4 billion. Ask yourself where that $4 billion in savings from a block buy comes from if most of ULAs costs are fixed and the marginal costs of churning out another rocket are low.
The supposed $4 billion block buy savings implies that with the block buy ULA will be making a huge fixed investment to bring down the marginal cost of each unit, and that that investment won't be worth making if the block buy doesn't happen. So, really, that huge investment should be considered a marginal cost when comparing block buy against no block buy.
You seem to assume that variable costs are insensitive to volume. This is incorrect.
Consider. Suppose you own a bakery, and your biggest customer has concluded that he absolutely most have some undetermined number of pastries in the next five years. He agrees to pay the fixed cost of your building, kitchen, oven and management, even if he orders nothing at all.
Even so, you can still give him a better incremental price per cookie for 5,000 cookies per year than for 500, because your variable cost per cookie is less.
But that's my whole point -- the cost of expanding the bakery is a cost that the government would only have to pay if it buys lots of rockets from ULA. The supposedly low incremental cost when comparing with SpaceX is omitting that cost of expanding the bakery, which wouldn't have to happen if they bought more from SpaceX.
The bakery is already built; there is no need to invest in more capital. ULA isn't implying that it needs to make investments to bring down the costs of their rockets; they just need to stabilize and more efficiently use the industrial base they already have.
-
#72
by
Will
on 24 May, 2014 00:52
-
For example, the two missions we launched within the last week were supported by launch site labor that was charged to this year's capability contract (part of the block buy) even though neither was part of the 36 cores.
I think if your cadence of launches remains roughly the same over the years (10 per year) then that will average out. For example, at the end of this current block buy, some cores may carry over into years beyond 5 years, so they will charged in years also not counted in this batch. So it is fair to still assign an average number of $90 million to $100 million for each launch.
Using an "incremental" number for Atlas V 401 to compare to Falcon 9 v1.1 is not really legitimate because that ignores the capability contract that is already paying your fixed costs. That doesn't appear to assign any amount extra for the capability subsidy to that extra incremental launch.
Or have I misread your explanation?
For the near term decision between SpaceX and ULA, incremental is the right measure. SpaceX can't launch the whole DoD manifest, even if Falcon 9 v1.1 was certified, which it isn't. Since DoD has to keep the whole ULA capability in place, it's stuck with the overhead in any case. If they *do* buy some SpaceX launches, the overhead just shifts to the remaining ULA launches. Musk is exaggerating the potential savings of switching DoD payloads to SpaceX, if any, and I'm pretty sure he's smart enough that's what he's doing.
That isn't consistent with ULA's claim that the block buy saved $4 billion. Ask yourself where that $4 billion in savings from a block buy comes from if most of ULAs costs are fixed and the marginal costs of churning out another rocket are low.
The supposed $4 billion block buy savings implies that with the block buy ULA will be making a huge fixed investment to bring down the marginal cost of each unit, and that that investment won't be worth making if the block buy doesn't happen. So, really, that huge investment should be considered a marginal cost when comparing block buy against no block buy.
You seem to assume that variable costs are insensitive to volume. This is incorrect.
Consider. Suppose you own a bakery, and your biggest customer has concluded that he absolutely most have some undetermined number of pastries in the next five years. He agrees to pay the fixed cost of your building, kitchen, oven and management, even if he orders nothing at all.
Even so, you can still give him a better incremental price per cookie for 5,000 cookies per year than for 500, because your variable cost per cookie is less.
But that's my whole point -- the cost of expanding the bakery is a cost that the government would only have to pay if it buys lots of rockets from ULA. The supposedly low incremental cost when comparing with SpaceX is omitting that cost of expanding the bakery, which wouldn't have to happen if they bought more from SpaceX.
You misunderstand. The hypothetical bakery can produce, say, up to 5,000 cookies a year with no investment in additional plant. Additional investment in the facility is not an issue.
Within the production range, even once fixed costs are paid, variable costs depend on volume.If you bake only one cookie a year, the variable, incremental or non-fixed costs will be high, even after the fixed costs are paid. heating up the oven, bringing in a baker for one cookie, and paying retail for your ingredients will be costly, especially if you don't use all of them. For 5,000 cookies a year, your variable costs per cookie will be much less.
-
#73
by
clongton
on 24 May, 2014 00:53
-
Ok Dr Sowers. Let me ask my question again in a different way (this is my 4th try).
1. If the annual $1 billion capabilities contract goes away, how much will the per-launch cost for DoD payloads increase, on average?
2. Why is ULA entitled to a $1 billion dollar annual capabilities contract for launching DoD payloads and, when also launching DoD payloads, SpaceX is not? That appears to be a real bone of contention here that you keep side-stepping.
-
#74
by
Will
on 24 May, 2014 01:43
-
Ok Dr Sowers. Let me ask my question again in a different way (this is my 4th try).
1. If the annual $1 billion capabilities contract goes away, how much will the per-launch cost for DoD payloads increase, on average?
2. Why is ULA entitled to a $1 billion dollar annual capabilities contract for launching DoD payloads and, when also launching DoD payloads, SpaceX is not? That appears to be a real bone of contention here that you keep side-stepping.
I'm not Dr. Sowers, but it seems to me that one obvious difference between SpaceX and ULA is that ULA can launch every payload that the DoD wants to launch but SpaceX can't.
-
#75
by
kevin-rf
on 24 May, 2014 02:14
-
The other is ULA only has one customer, while SpaceX has several and such a contract would require every customer to pay into the capabilities contract, not just the DOD.
-
#76
by
RocketGoBoom
on 24 May, 2014 02:37
-
Ok Dr Sowers. Let me ask my question again in a different way (this is my 4th try).
1. If the annual $1 billion capabilities contract goes away, how much will the per-launch cost for DoD payloads increase, on average?
2. Why is ULA entitled to a $1 billion dollar annual capabilities contract for launching DoD payloads and, when also launching DoD payloads, SpaceX is not? That appears to be a real bone of contention here that you keep side-stepping.
I'm not Dr. Sowers, but it seems to me that one obvious difference between SpaceX and ULA is that ULA can launch every payload that the DoD wants to launch but SpaceX can't.
So does the capability subsidy go away after Falcon Heavy is certified?
Or is there another type of payload that would still prevent full competition for every launch? Is there anything else on the DOD manifest that is outside the projected capabilities of both Falcon 9 and Falcon Heavy?
I think we all assume that Falcon Heavy will likely be certified within the next 5 years, so is that when there is true head to head competition with no capability subsidy?
-
#77
by
RocketGoBoom
on 24 May, 2014 02:39
-
The other is ULA only has one customer, while SpaceX has several and such a contract would require every customer to pay into the capabilities contract, not just the DOD.
Most business just call that fixed overhead and just build it into their prices. Nobody is going to insist that SpaceX penalize their commercial customers merely because ULA does not choose to spread their costs over more customers.
The capabilities contract likely dies completely after the current block buy is done. Just my opinion on what is likely to happen.
-
#78
by
QuantumG
on 24 May, 2014 02:40
-
I believe the ULA argument against Falcon Heavy for GTO payloads is simply that it won't be cheaper.
-
#79
by
savuporo
on 24 May, 2014 02:42
-
Or is there another type of payload that would still prevent full competition for every launch? Is there anything else on the DOD manifest that is outside the projected capabilities of both Falcon 9 and Falcon Heavy?
I think it's pretty easy to predict USAF answers to this question: yes, and yes, and further details are classified.
-
#80
by
clongton
on 24 May, 2014 03:27
-
Ok Dr Sowers. Let me ask my question again in a different way (this is my 4th try).
1. If the annual $1 billion capabilities contract goes away, how much will the per-launch cost for DoD payloads increase, on average?
2. Why is ULA entitled to a $1 billion dollar annual capabilities contract for launching DoD payloads and, when also launching DoD payloads, SpaceX is not? That appears to be a real bone of contention here that you keep side-stepping.
I'm not Dr. Sowers, but it seems to me that one obvious difference between SpaceX and ULA is that ULA can launch every payload that the DoD wants to launch but SpaceX can't.
That difference is pretty obvious but if you read the question in the context of the original questions it's apparent that I was speaking of SpaceX
future capability, not present. Dr. Sowers doesn't seem to think SpaceX will be entitled to a similar arrangement when they become so certified and I want to understand why he thinks that. Perhaps there's a good reason, perhaps not. I don't know. What I do know is I've asked that question, respectfully, 4 times now with no response.
-
#81
by
Linze
on 24 May, 2014 04:30
-
The capabilities contract likely dies completely after the current block buy is done. Just my opinion on what is likely to happen.
Which gets interesting if the courts invalidate the block buy and stipulate that SpaceX be given an opportunity to bid.
-
#82
by
georgesowers
on 24 May, 2014 13:05
-
Ok Dr Sowers. Let me ask my question again in a different way (this is my 4th try).
1. If the annual $1 billion capabilities contract goes away, how much will the per-launch cost for DoD payloads increase, on average?
2. Why is ULA entitled to a $1 billion dollar annual capabilities contract for launching DoD payloads and, when also launching DoD payloads, SpaceX is not? That appears to be a real bone of contention here that you keep side-stepping.
I'm not Dr. Sowers, but it seems to me that one obvious difference between SpaceX and ULA is that ULA can launch every payload that the DoD wants to launch but SpaceX can't.
ULA is not "entitled" to anything. As is any contractual arrangement, the capability contract is a mutual agreement between the parties. The benefit the USG obtains from it is worth the price (to them). Will brings up an important point. The original EELV competitors had to provide the capability to launch the full range of USG missions up through the heavy. Some of those missions are infrequent, but the capability needs to be maintained nonetheless. The capability contract provides a lot of flexibility in how the government can move missions around to meet their needs without having to worry about contract changes and delay penalties.
Should the USG have a capability contract with SpaceX? That would be up to them and if they think there would be value in such a contract. My expectation is that in the next phase of EELV there will be no capability contract for anyone and the USG will return to a more commercial-like buying practice. That was how the EELV program started in the late 1990's. ULA is comfortable either way.
My advice to SpaceX fans is focus on launching, certification and improving the capability of your system. The USG has a wide range of mission needs that only ULA is capable of meeting. Unless your price is less than ULA's incremental price, the USG will not save a dime switching a mission. And, OBTW, the USG can not tolerate month long delays every mission.
-
#83
by
kevin-rf
on 24 May, 2014 13:44
-
And, OBTW, the USG can not tolerate month long delays every mission.
Dr. Sowers, While I admire your willingness to answer questions head on, that is sinking to a bit low.
While you launch vehicle are mature and the recent launch rate shows it. Did not the recent RL-10 leak, the Centaur valve leak a few years back, the Delta IV Heavy cavitation on the first flight, the cracked Delta IV pad due to a LOX leak, and the Delta IV's past anemic launch rate impact the EELV launch schedule?
One thing I have admired is ULA's taking the high road to date.
One thing you seem to imply is the USG has not been reliable getting payloads to the pad on time and the capability contract really is covering this uncertainty. Hence is it a late fee not labeled a late fee?
-
#84
by
clongton
on 24 May, 2014 15:37
-
1. If the annual $1 billion capabilities contract goes away, how much will the per-launch cost for DoD payloads increase, on average?
2. Why is ULA entitled to a $1 billion dollar annual capabilities contract for launching DoD payloads and, when also launching DoD payloads, SpaceX is not? That appears to be a real bone of contention here that you keep side-stepping.
ULA is not "entitled" to anything. As is any contractual arrangement, the capability contract is a mutual agreement between the parties. The benefit the USG obtains from it is worth the price (to them). Will brings up an important point. The original EELV competitors had to provide the capability to launch the full range of USG missions up through the heavy. Some of those missions are infrequent, but the capability needs to be maintained nonetheless. The capability contract provides a lot of flexibility in how the government can move missions around to meet their needs without having to worry about contract changes and delay penalties.
Should the USG have a capability contract with SpaceX? That would be up to them and if they think there would be value in such a contract. My expectation is that in the next phase of EELV there will be no capability contract for anyone and the USG will return to a more commercial-like buying practice. That was how the EELV program started in the late 1990's. ULA is comfortable either way.
Thank you Dr. Sowers for answering my questions.
I appreciate it.
-
#85
by
rcoppola
on 24 May, 2014 17:13
-
My advice to SpaceX fans is focus on launching, certification and improving the capability of your system. The USG has a wide range of mission needs that only ULA is capable of meeting. Unless your price is less than ULA's incremental price, the USG will not save a dime switching a mission. And, OBTW, the USG can not tolerate month long delays every mission.
I heartily agree with launching. Certification is out of their hands now. And while I fully respect and appreciate the incredible work ULA has done with regards to implementing successful years long launch services, the reason SpaceX has so many proponents is exactly because of their current and future planned capabilities. i.e..Their vertically integrated domestic engine, structures and systems design and production, F9R, Cargo Dragon, Crewed Dragon, etc...
As for what the USG will and will not tolerate...It would seem they are becoming much less tolerant of the use of a non-domestic engine for NS payloads. You're client is no longer satisfied with a key part of your product. Will you invest and develop an alternative? Or do you expect the USG to pay for that? Because the last time I looked, your future main competitor is doing a next generation engine development program on their own. So yes, there are many such tolerance metrics to go around. (Honest question btw, not trying to score points. And lest we point out the efforts with domestic RD-180 production, that solution would still need to be licensed, a non-starter from various voices in the USG but maybe they'll warm to it. I doubt it though.)
-
#86
by
Jim
on 24 May, 2014 18:59
-
As for what the USG will and will not tolerate...It would seem they are becoming much less tolerant of the use of a non-domestic engine for NS payloads.
Not all are concerned. There seems to be all of handwaving. Also, there are many non NS govt payloads and they have no issue with RD-180's
-
#87
by
RocketGoBoom
on 24 May, 2014 19:16
-
As for what the USG will and will not tolerate...It would seem they are becoming much less tolerant of the use of a non-domestic engine for NS payloads. You're client is no longer satisfied with a key part of your product. Will you invest and develop an alternative? Or do you expect the USG to pay for that? Because the last time I looked, your future main competitor is doing a next generation engine development program on their own. So yes, there are many such tolerance metrics to go around. (Honest question btw, not trying to score points. And lest we point out the efforts with domestic RD-180 production, that solution would still need to be licensed, a non-starter from various voices in the USG but maybe they'll warm to it. I doubt it though.)
I think eventually the political RD-180 issues gets resolved long before ULA runs out of their 2 year supply of engines. ULA will likely be able to keep using those as long as they want. Two years from now Ukraine and Crimea will likely be forgotten.
The issue really comes back to ULA prices in a competitive environment.
1) Will ULA be competitive without the $1 billion annual capability subsidies?
2) Let's say hypothetically in the future (2017-2020 time frame) that ULA gets 50% of the USG launches and SpaceX gets 50% of the USG launches. Then ULA has to spread those fixed capability costs over fewer launches per year, perhaps only 4-6 annually. What happens to Atlas and Delta pricing if ULA only has 50% market share of USG launches? My guess is that average cost per launch increases by a significant amount.
3) SpaceX costs per launch likely decline somewhat because they can spread their fixed costs over many more customers including commercial, NASA and USG.
4) Is there a solution for ULA if SpaceX takes 50% of the USG launch market? If so, what?
Many companies that loose 30% of their revenue can start hemorrhaging money on a cash flow basis. It typically requires a significant restructuring in order to get costs back in line with new revenue projections. We are not talking about nibbles around the edges to save money by adjusting the employee health plan. We are talking cutting headcount by a hefty amount.
Now I am going to guess that the current block buy mostly goes into effect and that ULA can continue mostly with business as usual for another 3-4 years. Maybe a bone is tossed to SpaceX and they get somewhere between 7-14 of the next 50 launches with SpaceX likely starting in 2017 with their first USAF/DOD launches.
But come 2017-2018.... ULA needs to have a new game plan. Because this train looks ugly. The pricing power of ULA looks compromised in the absence of a new game plan. I don't think they can fix this with just minor efficiency improvements in the single digit percentage range. If there were a pure play way to short the stock of ULA, I would do so. (don't mention BA or LMT, not a pure play)
-
#88
by
Coastal Ron
on 24 May, 2014 19:45
-
My advice to SpaceX fans is focus on launching, certification and improving the capability of your system.
SpaceX fans, as well as fans of all other launch systems, play no part in launching, certification or anything else. That's why we're "fans", and not employees like you. As such we can indeed cheer on whoever we want, regardless what stage they are at or roadblocks they may have hit.
But I do want to point out that "SpaceX" fans might also be "ULA" fans too, since when it comes down to hardware there is a lot of great hardware out there to admire. Personally I have a long-term fondness for the Atlas family, for a number of reasons, and I think Lockheed Martin made a gutsy call in using the RD-180, and it's only now that politics is interfering with an elegant business arrangement.
However there is a difference between admiring hardware and admiring business tactics, which is really the crux of the debate regarding ULA. From that standpoint, I would imagine some are cheering on SpaceX not so much because they prefer the Falcon family, but because they prefer the competition and innovation SpaceX leadership is providing.
Just thought I'd point that out.
The USG has a wide range of mission needs that only ULA is capable of meeting.
No doubt true, but that is also part of the debate - providing enough opportunity for a new entrant to show what they can do. And the upside for the U.S. Taxpayer is pretty big if it turns out they can do the job, which is why this is so important.
Unless your price is less than ULA's incremental price, the USG will not save a dime switching a mission.
That is assuming the Block Buy stays in place. Coming from a manufacturing operations background, which includes low and high volume government contracts, I have no doubt ULA could have been ordering material in advance of contracts using demand forecasting, which is what companies do in a commercial marketplace. And ULA would have had far less risk than other companies, since you have been the sole-source provider for the Air Force till now. In other words, I think you could have been offering lower prices based on volume pricing without a formal Block Buy contract, but chose not to.
So the real question is not whether SpaceX has to beat the incremental price that you would offer for the incremental 37th core (I think they would), but whether ULA would be able to offer competitive pricing if the Block Buy quantity is reduced or is not approved. We have to take the long view here, and it remains to be seen what ULA's future will be beyond this current Block Buy - and THAT is what everyone is waiting to see.
And, OBTW, the USG can not tolerate month long delays every mission.
Hoping that an up-and-coming competitor stumbles can be business strategy, but we're all hoping that ULA has a more proactive plan for being more competitive in the future than that...
-
#89
by
Linze
on 24 May, 2014 23:51
-
As for what the USG will and will not tolerate...It would seem they are becoming much less tolerant of the use of a non-domestic engine for NS payloads.
Not all are concerned. There seems to be all of handwaving. Also, there are many non NS govt payloads and they have no issue with RD-180's
That you believe Putin's going to honor the non NS exception is just adorable.
There won't be any more RD-180's shipped, for any reason, for any payloads until the US lifts sanctions, IMHO.
-
#90
by
Jim
on 25 May, 2014 14:20
-
There won't be any more RD-180's shipped, for any reason, for any payloads until the US lifts sanctions, IMHO.
It is even more naive that you think this, they would miss the cash
-
#91
by
jg
on 25 May, 2014 14:38
-
There won't be any more RD-180's shipped, for any reason, for any payloads until the US lifts sanctions, IMHO.
It is even more naive that you think this, they would miss the cash
If Putin et. al. were only concerned about money, they would not have chosen their recent courses of action.
-
#92
by
ncb1397
on 25 May, 2014 14:53
-
There won't be any more RD-180's shipped, for any reason, for any payloads until the US lifts sanctions, IMHO.
It is even more naive that you think this, they would miss the cash
8 launches in 2013 at 10 million per engine is about 80 million in revenue. Russian GDP is 1.86 trillion and so this represents a ratio of 1:23250 of national income. It is roughly equivalent to a middle class person buying a candy bar.
-
#93
by
Jim
on 25 May, 2014 15:02
-
8 launches in 2013 at 10 million per engine is about 80 million in revenue. Russian GDP is 1.86 trillion and so this represents a ratio of 1:23250 of national income. It is roughly equivalent to a middle class person buying a candy bar.
Not for EnergoMash
-
#94
by
Lar
on 25 May, 2014 15:14
-
Putin's motivations? veering off-topic just a bit. Word to the wise.
-
#95
by
Will
on 25 May, 2014 15:16
-
There won't be any more RD-180's shipped, for any reason, for any payloads until the US lifts sanctions, IMHO.
It is even more naive that you think this, they would miss the cash
8 launches in 2013 at 10 million per engine is about 80 million in revenue. Russian GDP is 1.86 trillion and so this represents a ratio of 1:23250 of national income. It is roughly equivalent to a middle class person buying a candy bar.
There's some reason to think that the most recent contract is for more than $10 million an engine.
-
#96
by
edkyle99
on 25 May, 2014 16:02
-
An enlightening story at fool.com includes this tidbit:
"... the launch of payloads into space is worth a significant amount for both Lockheed and Boeing -- in 2013, ULA accounted for 29% of Lockheed's $1.04 billion space systems' operating profits; and in 2013 Boeing reported $171 million in equity earnings from its ULA joint venture share. Obviously, SpaceX wants a piece of that pie."
http://www.fool.com/investing/general/2014/05/25/why-elon-musks-in-hot-water-with-the-head-of-air-f.aspxThe story also suggests that SpaceX has ticked off a four star general with its lawsuit, among other things.
- Ed Kyle
-
#97
by
clongton
on 25 May, 2014 17:09
-
An enlightening story at fool.com includes this tidbit:
"... the launch of payloads into space is worth a significant amount for both Lockheed and Boeing -- in 2013, ULA accounted for 29% of Lockheed's $1.04 billion space systems' operating profits; and in 2013 Boeing reported $171 million in equity earnings from its ULA joint venture share. Obviously, SpaceX wants a piece of that pie."
http://www.fool.com/investing/general/2014/05/25/why-elon-musks-in-hot-water-with-the-head-of-air-f.aspx
The story also suggests that SpaceX has ticked off a four star general with its lawsuit, among other things.
- Ed Kyle
Ed, a small but not insignificant nit.
SpaceX did not file a lawsuit. They filed a bid protest, which is a *completely* different thing.
Many, many MANY companies file bid protests all the time. It is sop.
LM & Boeing have both filed their own fair share of them themselves.
A lot of things have spun out of control sense then, mostly because of the way the media has stirred the pot.
But SpaceX filed a standard protest - not a lawsuit.
-
#98
by
rayleighscatter
on 25 May, 2014 18:11
-
If it's filed in court, it's a lawsuit.
-
#99
by
Lar
on 25 May, 2014 18:46
-
If it's filed in court, it's a lawsuit.
I'm not sure that's correct. Also, whether a bid protest is a lawsuit or not is off topic anyway.
-
#100
by
Coastal Ron
on 26 May, 2014 02:24
-
The story also suggests that SpaceX has ticked off a four star general with its lawsuit, among other things.
I wonder if that same four star general was ticked off when Boeing and ULA sued the Air Force for $385M just two years ago:
http://www.spacenews.com/article/boeing-ula-suing-air-force-385-millionSeems like $385M is nothing to sneeze about, whereas the beef SpaceX has with the Air Force boils down to saving money, not paying more.
Just thought I'd provide that perspective...
-
#101
by
Linze
on 26 May, 2014 18:23
-
Price doesn't matter if the product isn't available for purchase.
"The convergence of a Russian threat to cut off RD-180 supply, SpaceX’s impending certification to compete with the Falcon 9v1.1 and the lawsuit filed by SpaceX April 28 claiming ULA’s sole-source deal with the U.S. Air Force was anticompetitive has put so much pressure on the Atlas V that it is unlikely to survive, the source says."http://m.aviationweek.com/space/support-grows-new-us-rocket-engine
-
#102
by
Will
on 26 May, 2014 23:09
-
The story also suggests that SpaceX has ticked off a four star general with its lawsuit, among other things.
I wonder if that same four star general was ticked off when Boeing and ULA sued the Air Force for $385M just two years ago:
http://www.spacenews.com/article/boeing-ula-suing-air-force-385-million
Seems like $385M is nothing to sneeze about, whereas the beef SpaceX has with the Air Force boils down to saving money, not paying more.
Just thought I'd provide that perspective...
If I was a customer, I'd be pretty ticked off if a supplier filed a legal complaint against me as deceptive, misleading and disingenuous as the one SpaceX filed against the Air Force. And of course the claim that giving SpaceX what they want would save the AF money comes entirely from SpaceX, and is deceptive, misleading, disingenuous and also self-serving.
-
#103
by
LouScheffer
on 26 May, 2014 23:24
-
[...] That is why we gave the $225M number which is arrived at by adding up the value of all our contracts (numerator) and dividing by the total number of missions represented in those contracts (denominator). [...]
This is indeed a reasonable way to calculate costs. However, many folks believe this number to be much higher (wrongly, in your opinion). What numbers did you use for the denominator (total value of all contracts) and the numerator (total number of missions)?
-
#104
by
Jim
on 27 May, 2014 00:03
-
Price doesn't matter if the product isn't available for purchase.
And smart people see through the hype and know that this isn't an issue.
-
#105
by
clongton
on 27 May, 2014 00:51
-
The story also suggests that SpaceX has ticked off a four star general with its lawsuit, among other things.
I wonder if that same four star general was ticked off when Boeing and ULA sued the Air Force for $385M just two years ago:
http://www.spacenews.com/article/boeing-ula-suing-air-force-385-million
Seems like $385M is nothing to sneeze about, whereas the beef SpaceX has with the Air Force boils down to saving money, not paying more.
Just thought I'd provide that perspective...
If I was a customer, I'd be pretty ticked off if a supplier filed a legal complaint against me as deceptive, misleading and disingenuous as the one SpaceX filed against the Air Force. And of course the claim that giving SpaceX what they want would save the AF money comes entirely from SpaceX, and is deceptive, misleading, disingenuous and also self-serving.
It helps to actually read the legal brief and then compare it with the known facts. SX is not a boy scout here but is a long, long way from the villain you described.
-
#106
by
a_langwich
on 27 May, 2014 01:02
-
The story also suggests that SpaceX has ticked off a four star general with its lawsuit, among other things.
I wonder if that same four star general was ticked off when Boeing and ULA sued the Air Force for $385M just two years ago:
http://www.spacenews.com/article/boeing-ula-suing-air-force-385-million
Seems like $385M is nothing to sneeze about, whereas the beef SpaceX has with the Air Force boils down to saving money, not paying more.
Just thought I'd provide that perspective...
If I was a customer, I'd be pretty ticked off if a supplier filed a legal complaint against me as deceptive, misleading and disingenuous as the one SpaceX filed against the Air Force. And of course the claim that giving SpaceX what they want would save the AF money comes entirely from SpaceX, and is deceptive, misleading, disingenuous and also self-serving.
If you don't see how $90 million (the number SpaceX claims for one of their launches, singly) is less than $164 million (the number ULA claims for an Atlas launch above, after the discounts of the block buy are taken into account), there's not much hope for you. I suspect a conflict of interest, in which case your post is disingenuous and self-serving.
As far as USAF being a customer ticked off at lawsuits, it seems like at least a few of the acquisition personnel have managed to soothe their ruffled feelings by cashing in on sweet industry positions. It might be helpful to remember these acquisition people are (supposed to be) serving the American people, and I don't believe the American people are as well served by a "too big to let fail" launch supplier as they are by open competition.
-
#107
by
Will
on 27 May, 2014 01:25
-
The story also suggests that SpaceX has ticked off a four star general with its lawsuit, among other things.
I wonder if that same four star general was ticked off when Boeing and ULA sued the Air Force for $385M just two years ago:
http://www.spacenews.com/article/boeing-ula-suing-air-force-385-million
Seems like $385M is nothing to sneeze about, whereas the beef SpaceX has with the Air Force boils down to saving money, not paying more.
Just thought I'd provide that perspective...
If I was a customer, I'd be pretty ticked off if a supplier filed a legal complaint against me as deceptive, misleading and disingenuous as the one SpaceX filed against the Air Force. And of course the claim that giving SpaceX what they want would save the AF money comes entirely from SpaceX, and is deceptive, misleading, disingenuous and also self-serving.
If you don't see how $90 million (the number SpaceX claims for one of their launches, singly) is less than $164 million (the number ULA claims for an Atlas launch above, after the discounts of the block buy are taken into account), there's not much hope for you. I suspect a conflict of interest, in which case your post is disingenuous and self-serving.
As far as USAF being a customer ticked off at lawsuits, it seems like at least a few of the acquisition personnel have managed to soothe their ruffled feelings by cashing in on sweet industry positions. It might be helpful to remember these acquisition people are (supposed to be) serving the American people, and I don't believe the American people are as well served by a "too big to let fail" launch supplier as they are by open competition.
Apples and oranges. SpaceX will quote you a price of $90 million, as long as you buy a payload in the limited range they can launch, and accept their limited flight history. DoD pays extra for ULA because they have agreed to launch everything the DoD wants to launch, most of which SpaceX can't launch, and also they've got a better history of launch success.
-
#108
by
IslandPlaya
on 27 May, 2014 01:42
-
Except if despite 1$ billion per year they can't assure access to space...
-
#109
by
Will
on 27 May, 2014 01:59
-
The story also suggests that SpaceX has ticked off a four star general with its lawsuit, among other things.
I wonder if that same four star general was ticked off when Boeing and ULA sued the Air Force for $385M just two years ago:
http://www.spacenews.com/article/boeing-ula-suing-air-force-385-million
Seems like $385M is nothing to sneeze about, whereas the beef SpaceX has with the Air Force boils down to saving money, not paying more.
Just thought I'd provide that perspective...
If I was a customer, I'd be pretty ticked off if a supplier filed a legal complaint against me as deceptive, misleading and disingenuous as the one SpaceX filed against the Air Force. And of course the claim that giving SpaceX what they want would save the AF money comes entirely from SpaceX, and is deceptive, misleading, disingenuous and also self-serving.
It helps to actually read the legal brief and then compare it with the known facts. SX is not a boy scout here but is a long, long way from the villain you described.
I've read the "not a lawsuit" complaint, and compared it with known facts. Still not impressed.
-
#110
by
Linze
on 27 May, 2014 04:48
-
Price doesn't matter if the product isn't available for purchase.
And smart people see through the hype and know that this isn't an issue.
Those closest to an industry are often the most blind to outside forces. The storm hitting Atlas is much bigger than Atlas, it's bigger than the entire industry. Atlas is collateral damage. It isn't vital enough to wag the dog of US sanctions.
-
#111
by
ChrisWilson68
on 27 May, 2014 05:21
-
Apples and oranges. SpaceX will quote you a price of $90 million, as long as you buy a payload in the limited range they can launch, and accept their limited flight history. DoD pays extra for ULA because they have agreed to launch everything the DoD wants to launch, most of which SpaceX can't launch, and also they've got a better history of launch success.
The longer flight history is a legitimate advantage to list for ULA over SpaceX.
But your argument about Falcon 9's more limited payload is utterly without merit. SpaceX isn't complaining about payloads that they can't launch. They're not saying the Air Force should stop all buys from ULA. They're just saying that the payloads they can launch they should be allowed to compete for.
And the block buy limits the ability of not just Falcon 9 but also Falcon Heavy to compete, because it goes so far into the future.
It baffles me why ULA proponents would mix in their one legitimate argument -- of a longer flight history giving greater confidence of reliability -- with various kinds of nonsense. It just taints the whole ULA cause.
-
#112
by
HIP2BSQRE
on 27 May, 2014 05:45
-
When company starts to talk about average price, then I as a customer should start to get worried. Should not ULA be able to say the total price and how many launches that price is spread across. The next question I have when people start saying average, what is the variance, what is does it include and not include? This is from the GAO when it talks about ULA costs:
http://www.gao.gov/assets/670/661330.pdf...the GAO Summary number 4 makes for interesting reading.
-
#113
by
georgesowers
on 27 May, 2014 14:59
-
OK, I think this thread has run its course. Hopefully, most of you now recognize that ULA's prices are not over $400M as has been claimed, but far less. The full price of an Atlas V 401 is $164M while the incremental price is less than $100M. Thanks to those who participated in the discussion. While I don’t always reply, I do read every post.
To those skeptical of my veracity, think hard. For me to go on the record publically with false data given all the scrutiny ULA is under would be incredibly stupid. The pricing data I started the thread with is factual, reflected in contracts and can be verified by USG inspection.
I don't apologize for pointing out SpaceX's miserable record of on time launches. The data speak for themselves. However, I much prefer to do my talking on the launch pad and ULA has launched twice since SpaceX took their latest rocket down.
As many have pointed out, the real contest begins in the future. There is only one company in the present that is certified and can perform all the USG missions. ULA is working hard to transform itself for a future commercial competitive market. We have been there before and can return. In future posts, I will provide more detail of what we are doing to reduce cost, some of the very cool innovations we are pursuing, propulsion alternatives, etc. Stay tuned!
-
#114
by
woods170
on 27 May, 2014 15:20
-
In future posts, I will provide more detail of what we are doing to reduce cost, some of the very cool innovations we are pursuing, propulsion alternatives, etc. Stay tuned!
Interesting. Most interesting.
-
#115
by
gospacex
on 27 May, 2014 15:40
-
In future posts, I will provide more detail of what we are doing to reduce cost, some of the very cool innovations we are pursuing, propulsion alternatives, etc.
Personally I would be more interested in hearing why ULA prices went up despite earlier promises at ULA formation time that they would go down.
I would be more interested in hearing why it took 5 years and $500M to upgrade RS-68 to RS-68A (~6% thrust upgrade, +4 seconds Isp). This is glacial pace. I take it the longer it is and the more expensive it is, the better. Taxpayer is paying, so why worry.
Not holding my breath, though.
-
#116
by
Jim
on 27 May, 2014 15:48
-
1. Personally I would be more interested in hearing why ULA prices went up despite earlier promises at ULA formation time that they would go down.
2. I would be more interested in hearing why it took 5 years and $500M to upgrade RS-68 to RS-68A (~6% thrust upgrade, +1 second Isp). This is glacial pace. I take it the longer it is and the more expensive it is, the better. Taxpayer is paying, so why worry.
1. Because subcontracted hardware increased due to the shutdown of the shuttle program
2. Because of the NRO involvement and mission assurance aspects
-
#117
by
Chris Bergin
on 27 May, 2014 15:59
-
OK, I think this thread has run its course.
Copy that!
Locked.
