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#20
by
woods170
on 20 May, 2014 18:26
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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.
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#21
by
Jim
on 20 May, 2014 18:30
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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.
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#22
by
Jim
on 20 May, 2014 18:53
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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
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#23
by
mmeijeri
on 20 May, 2014 20:25
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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.
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#24
by
clongton
on 20 May, 2014 21:34
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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.
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#25
by
TrueGrit
on 20 May, 2014 23:05
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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...
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#26
by
georgesowers
on 21 May, 2014 03:22
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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.
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#27
by
georgesowers
on 21 May, 2014 04:00
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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.
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#28
by
georgesowers
on 21 May, 2014 04:15
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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.
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#29
by
deltaV
on 21 May, 2014 06:20
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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).
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#30
by
woods170
on 21 May, 2014 11:15
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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?
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#31
by
woods170
on 21 May, 2014 11:18
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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
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#32
by
Jim
on 21 May, 2014 12:45
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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"
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#33
by
AncientU
on 21 May, 2014 13:26
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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?
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#34
by
jongoff
on 21 May, 2014 13:34
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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
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#35
by
deltaV
on 21 May, 2014 21:36
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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.
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#36
by
deltaV
on 21 May, 2014 21:51
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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).
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#37
by
clongton
on 22 May, 2014 00:01
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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.
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#38
by
kevin-rf
on 22 May, 2014 00:39
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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.
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#39
by
Targeteer
on 22 May, 2014 02:48
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