-
Block buy launch costs - Motley Fool article
by
FutureSpaceTourist
on 30 Mar, 2015 19:57
-
This article has been mentioned in another
thread but not with a focus on block buy launch costs:
http://www.fool.com/investing/general/2015/03/29/can-spacex-cut-cost-of-space-travel-75-percent.aspxThe article, with key input from Tony Bruno, attempts to determine what individual launch costs under the block buy are (and thus resolve whether SpaceX's repeated claims of $400M per launch stand scrutiny).
The article believes $225M per launch is a more accurate figure, although that number appears to take no account of the annual $1B EELV Launch Capability payment.
-
#1
by
rayleighscatter
on 30 Mar, 2015 20:55
-
The article believes $225M per launch is a more accurate figure, although that number appears to take no account of the annual $1B EELV Launch Capability payment.
It seems to:
Launching the cores -- which costs about $1 billion a year, to send up an estimated 10 missions per year. This $1 billion "EELV Launch Capability" or "ELC" payment is the annual "retainer," or "subsidy," that ULA is often accused of receiving from the government.
-
#2
by
FutureSpaceTourist
on 30 Mar, 2015 23:28
-
Here's the derivation of the $225M from the article:
As Bruno explained, there are at least three parts to the Air Force "block buy" in question:
- Manufacture of 36 "new" rocket cores -- which costs $10 billion.
- Manufacture of 42 "heritage" cores previously ordered by the Air Force but not yet launched. These will cost $6.6 billion in addition to the $11 billion "block buy."
- Launching the cores -- which costs about $1 billion a year, to send up an estimated 10 missions per year. This $1 billion "EELV Launch Capability" or "ELC" payment is the annual "retainer," or "subsidy," that ULA is often accused of receiving from the government.
Put it all together, and ULA estimates the total cost of building and launching 78 rocket cores for the Air Force will approximate $17.6 billion, or about $225 million per core.
So depending what the additional $1B to the 36 new cores in the block buy is for, there's at most one year's worth of the ELC payment for 78 launches!
-
#3
by
Lars-J
on 31 Mar, 2015 03:30
-
So depending what the additional $1B to the 36 new cores in the block buy is for, there's at most one year's worth of the ELC payment for 78 launches!
I've read this sentence multiple times - backwards and forwards - and it still makes no sense. Can you clarify?
-
#4
by
pippin
on 31 Mar, 2015 03:53
-
What he's saying is that while the launch capability subsidy is about 1B$ _per year_ they only add one billion (one year) in the article.
That said: as I understand it the launch capability contract is being re-negotiated every year so one can't really say how high it will be in the years to come.
-
#5
by
su27k
on 31 Mar, 2015 03:55
-
Yeah, only one year worth of ELC is included in the $225 million figure, which makes the number suspect since you can't possibly launch all the cores in one year. The only way the $225 million number works is ELC will be removed after one year. If we assume ELC is still in effect and assume 10 launches per year, then the price per core is ($10 billion + $6.6 billion)/(36+42) + $1 billion / 10 = $313 million, not that far from $400 million is it.
Also
- Manufacture of 36 "new" rocket cores -- which costs $10 billion.
- Manufacture of 42 "heritage" cores previously ordered by the Air Force but not yet launched. These will cost $6.6 billion in addition to the $11 billion "block buy."
Why does heritage core cost less than new ones?
-
#6
by
FutureSpaceTourist
on 31 Mar, 2015 04:19
-
Yes, apologies for being too terse, pippin & su27k are correct.
It's hard to accept the $225M as a true (average) cost per launch, unless the ELC payments really aren't needed ...
As for the heritage cores being cheaper, my take is that some of their costs (raw materials?) have already been paid for so the $6.6B is a cost to complete rather than a total cost. Of course that raises more questions about why that money has been spent if there's no commitment yet to actually use those cores.
-
#7
by
jongoff
on 31 Mar, 2015 05:10
-
Yes, apologies for being too terse, pippin & su27k are correct.
It's hard to accept the $225M as a true (average) cost per launch, unless the ELC payments really aren't needed ...
As for the heritage cores being cheaper, my take is that some of their costs (raw materials?) have already been paid for so the $6.6B is a cost to complete rather than a total cost. Of course that raises more questions about why that money has been spent if there's no commitment yet to actually use those cores.
It's also possible that the article had some of their facts garbled. It wouldn't be the first time I saw a report on a technical topic screw up information. The fact that ULA is saying $225M suggest that number is right and something else in the math or logic is wrong somewhere, because I doubt Bruno would intentionally lie on something easily detected like that.
Personally my bet is on, either they screwed up somewhere in the reporting on the numbers, or ULA is expecting or asking for the ELC to go away after one more year and thus they only budgeted for one year of ELC in the total.
~Jon
-
#8
by
woods170
on 31 Mar, 2015 07:58
-
Yes, apologies for being too terse, pippin & su27k are correct.
It's hard to accept the $225M as a true (average) cost per launch, unless the ELC payments really aren't needed ...
As for the heritage cores being cheaper, my take is that some of their costs (raw materials?) have already been paid for so the $6.6B is a cost to complete rather than a total cost. Of course that raises more questions about why that money has been spent if there's no commitment yet to actually use those cores.
It's also possible that the article had some of their facts garbled. It wouldn't be the first time I saw a report on a technical topic screw up information. The fact that ULA is saying $225M suggest that number is right and something else in the math or logic is wrong somewhere, because I doubt Bruno would intentionally lie on something easily detected like that.
Personally my bet is on, either they screwed up somewhere in the reporting on the numbers, or ULA is expecting or asking for the ELC to go away after one more year and thus they only budgeted for one year of ELC in the total.
~Jon
The numbers from the article are false by definition, thanks to the inclusion of only one year of ELC. It is correct that ELC is on the way out; that is being looked in right now. But, the current scenario sees a decline of yearly ELC payment, spread out over several years. If that scenario becomes reality, than (reduced) ELC could be in play for as many as five more years.
-
#9
by
Lobo
on 31 Mar, 2015 18:14
-
Yes, apologies for being too terse, pippin & su27k are correct.
It's hard to accept the $225M as a true (average) cost per launch, unless the ELC payments really aren't needed ...
As for the heritage cores being cheaper, my take is that some of their costs (raw materials?) have already been paid for so the $6.6B is a cost to complete rather than a total cost. Of course that raises more questions about why that money has been spent if there's no commitment yet to actually use those cores.
It's also possible that the article had some of their facts garbled. It wouldn't be the first time I saw a report on a technical topic screw up information. The fact that ULA is saying $225M suggest that number is right and something else in the math or logic is wrong somewhere, because I doubt Bruno would intentionally lie on something easily detected like that.
Personally my bet is on, either they screwed up somewhere in the reporting on the numbers, or ULA is expecting or asking for the ELC to go away after one more year and thus they only budgeted for one year of ELC in the total.
~Jon
The numbers from the article are false by definition, thanks to the inclusion of only one year of ELC. It is correct that ELC is on the way out; that is being looked in right now. But, the current scenario sees a decline of yearly ELC payment, spread out over several years. If that scenario becomes reality, than (reduced) ELC could be in play for as many as five more years.
@this.
I can't imagine the ELC goes away after one year. And probably hangs around in some full or reduced manner for several years. I'd think probably more like $5 billion should have been added into the total number for the ELC component rather than just $1 billion. That'd cover 5 years at current rates or 7 years or so at a reducing rate (more likely I'd think).
If we're talking 78 total cores at about 10 cores per year being launched (and assuming 4 of those launches are D4H), that's about 7 years worth of launch operations. Is there any reason to believe that the ELC portion for the next 7 years would be significantly lower than $5 billion?
So that'd be more like $21.6 billion rather than $17.6 billion. Or about $277million per launch average.
-
#10
by
marsman2020
on 31 Mar, 2015 18:26
-
Here's the derivation of the $225M from the article:
As Bruno explained, there are at least three parts to the Air Force "block buy" in question:
- Manufacture of 36 "new" rocket cores -- which costs $10 billion.
- Manufacture of 42 "heritage" cores previously ordered by the Air Force but not yet launched. These will cost $6.6 billion in addition to the $11 billion "block buy."
- Launching the cores -- which costs about $1 billion a year, to send up an estimated 10 missions per year. This $1 billion "EELV Launch Capability" or "ELC" payment is the annual "retainer," or "subsidy," that ULA is often accused of receiving from the government.
Put it all together, and ULA estimates the total cost of building and launching 78 rocket cores for the Air Force will approximate $17.6 billion, or about $225 million per core.
So depending what the additional $1B to the 36 new cores in the block buy is for, there's at most one year's worth of the ELC payment for 78 launches!
The only way that the "heritage" cores are cheaper is if the USAF has already paid some of the costs of those cores under other contracts, and they are being rolled into the block buy now at a partly completed state. Not having the remainder of the information on those cores, they should not be considered in the calculation.
Also, I am pretty sure the ULA block buy is $11 billion which covers 36 cores to be used in 28 flights.
Lets think about only the "new" cores being added in the block buy. You end up with:
-ELC payment - $1 billion / approx 10 flights = $100 million/flight * 28 flights = $2.8 billion
-NEW cores - $11 billion for 36 cores
-Subtotal $13.8 billion
-Cost of the 28 flights with the current ELC cost structure -> $13.8 billion/28 = $492 million per flight
Seems like "$400 million" to me!
-
#11
by
Lars-J
on 01 Apr, 2015 00:14
-
It's also possible that the article had some of their facts garbled. It wouldn't be the first time I saw a report on a technical topic screw up information. The fact that ULA is saying $225M suggest that number is right and something else in the math or logic is wrong somewhere, because I doubt Bruno would intentionally lie on something easily detected like that.
If it isn't lying, it is called something else - misleading? - Because as far as I can tell all numbers cited by Bruno and ULA *always* exclude the yearly ELC payment/contract.
-
#12
by
joek
on 01 Apr, 2015 01:34
-
This is utter crap. Someone made a serious error. Including the 42 "heritage" cores in the cost calcuation is hugely distorting; to call it "misleading" is beyond charitable. Someone appers to have been counting--and worse averaging--since the inception of the EELV program (or close to it) for stuff long ago bought and launched.
There are a few of those "heritage" cores under acquisitions prior to the FY2013 block buy still to launch; there are nowhere near 42 (there might be 4). Not only is there no budget for purchase of those hypothetical 42 cores, there are nowhere near enough payloads to make use of them without budget commitments well beyond 2020 (which there are not).
From the USAF FY2016 budget request, the ELC cost through FY2016-2020 is projected to be ~$3B. ELC pays and provides for 8 launches/year (or did), not "approximately 10". NRO pays an additional 25%, so the total for USAF+NRO is ~$4B.
Present and future EELV $400M unit launch cost is much closer to the truth than $225M.
-
#13
by
woods170
on 01 Apr, 2015 10:15
-
This is utter crap. Someone made a serious error. Including the 42 "heritage" cores in the cost calcuation is hugely distorting; to call it "misleading" is beyond charitable. Someone appers to have been counting--and worse averaging--since the inception of the EELV program (or close to it) for stuff long ago bought and launched.
There are a few of those "heritage" cores under acquisitions prior to the FY2013 block buy still to launch; there are nowhere near 42 (there might be 4). Not only is there no budget for purchase of those hypothetical 42 cores, there are nowhere near enough payloads to make use of them without budget commitments well beyond 2020 (which there are not).
From the USAF FY2016 budget request, the ELC cost through FY2016-2020 is projected to be ~$3B. ELC pays and provides for 8 launches/year (or did), not "approximately 10". NRO pays an additional 25%, so the total for USAF+NRO is ~$4B.
Present and future EELV $400M unit launch cost is much closer to the truth than $225M.
The 42 heritage cores might not be the correct number, but a certain number of heritage cores still will be needed in the equation. You see, the first cores from the infamous block-buy are scheduled for delivery in late 2017.
In between the public announcement of the block-buy contract signing (early 2014) and launch of the first cores from the block-buy is a period of approximately four (4) years. With an average launch rate of 8 missions per year (for USAF and NRO) that adds up to at least 32 cores (not counting any additional cores due to the Delta IV-H configuration).
Even if we use today's date as starting point there will still be the need for at least 24 (and possibly more) heritage cores to cover USAF and NRO launch needs until the first cores of the block buy are put into action:
Having a look over at Gunter's space page I see the need for at least 10 Delta IV cores up to late 2017 and no less than 14 Atlas 5 cores up to late 2017.
So, assuming that the 42 "heritage" cores don't belong in the equation is (at least partially) wrong IMO.
-
#14
by
Chalmer
on 01 Apr, 2015 11:31
-
Well lets try and look only on the launches under the new block buy.
36 cores, or 28 flights at $11 Billion
Assuming 7 USAF/NRO flights per that is 4 years of flights at 1 billion per year. Of course more flights per year will make it cheaper per flight since ELC is divided over more launches.
$11B +$ 4B = $15 billion
$15B / 28 = $535 Million
Per core price is then $15B / 36 = $428 Million
Even completely ignoring the ELC payment, and averaging over the cores and not per flight you get
$11B / 36 = $305 Million.
So the only way to get to $225M as stated, the cores already ordered must be a lot cheaper than the cores in the block buy, which seems to be true at only $6.6B for 42 cores. That is a heritage core price of;
$6.6B / 42 = $157 Million
Now all this is kind of weird since multiple rocket families and variations are included but as an average it is still true.
Funny enough: ((42*157)+(36*305) ) / (36+42) = 225
That is the average cost of all 78 cores, and must be what Tony Bruno is referring too. Then add ELC payment of $1 Billion x Years to launch all those 78 cores. Then you will get the nominal average price. I dont know how many years we are talking about though.
-
#15
by
woods170
on 01 Apr, 2015 12:25
-
Even completely ignoring the ELC payment, and averaging over the cores and not per flight you get
(Current block-buy)
$11B / 36 = $305 Million.
("Heritage" cores)
$6.6B / 42 = $157 Million
I know this view of things is probably way too simple, but, just for the sake of fun, let's assume that the above numbers are correct. After all, they are based on an article that supposedly had direct input from mr. Bruno himself.
The first question that comes to my mind is this: How the h*ll did the average core become nearly twice as expensive between the current block-buy and the previously bought cores?
The second thing that comes to mind is this:
From public reports, based on ULA information, the block-buy is supposed to have saved the tax payer $4.4B.
In other words: if the $4.4B savings had not been there, the cost of buying the 36 cores could potentially have been as expensive as $11B + $4.4B = $15.4B, or $427 Million per core.
Meaning that the per-core price would almost be triple that of the "heritage" cores. WTF? What the [bleep] changed to make the cores that much more expensive? I mean, twice as expensive is - IMO - silly, but triple would have been - IMO - ludicrous.
I can very much see where all the congressional complaints about the exploding cost of the EELV program is coming from.
-
#16
by
Nomadd
on 01 Apr, 2015 13:04
-
I take it that anybody who wasted 5 minutes reading that article isn't too familiar with pretty much everything Motley Fool has ever put out. It was about as bad as their financial advice.
-
#17
by
joek
on 01 Apr, 2015 16:30
-
Attached shows the actual and projected EELV $. Someone is double counting and discounting the cost of those "heritage" cores. Note that quantities are launches not cores.
edit: added second spreadsheet which shows only ELS (launch services) and ELC (EELV launch capability) costs for earlier years (FY2010 is included in prior years).
-
#18
by
Kabloona
on 01 Apr, 2015 16:50
-
Thanks for the spreadsheet, joek.
Edit per Jim's post below: How much of that "EELV" line item goes to ULA and how much is Air Force program office funding?
-
#19
by
Jim
on 01 Apr, 2015 16:54
-
EELV program costs does not equate to money given to ULA. And despite what Spacex has said, the NRO will be funding some sort of ELC for F9 launches to deal with the security.