Why Obama's Commercial Space Initiative is Not Commercial

One of the selling points of the Obama space policy is that it proposed to enable a commercial space transportation industry. No longer would NASA build expensive, in-house space ships like the shuttle or the proposed Orion/Ares 1.

As it turns out, by "commercial" the Obama administration means something akin to how it has treated the automobile industry, banks, and other sectors of the economy. The government will not only be the principle investor, but it will also be, in the absence of commercial markets for space transportation, the sole customer. This is "commercial" only in the sense that the college professors and political activists who populate the Obama administration would understand.

The dirty little secret was revealed at the recent Space 2010 conference when George Sowers, vice president of business development for United Launch Alliance, spoke about the last time the government tried to enable commercial space transportation, during the development of the Evolved Expendable Launch Vehicle (EELV) in the 1990s. Boeing and Lockheed Martin developed their own versions of the EELV, the Delta IV and the Atlas V respectively, putting up some of their own money in partnership with the Defense Department. The idea was that the DOD would use the EELV to launch its military satellites while Boeing and Lockheed Martin would make money launching constellations of satellites that at the time many thought would be needed to build a satellite cellular communications system.

The problem was, due to changes in technology and economic conditions, the satellite cellular market did not materialize. According to Sowers, the project was a technical success, but a business failure. While at one time Lockheed Martin predicted 15 launches a year for the EELV, the actual launch rate is currently about five a year, mostly for the government.

Fast forward to 2004. The Bush administration proposed a similar arrangement for commercial launch as part of the Commercial Orbital Transportation System program. Companies like SpaceX and Orbital Systems would create space craft capable of taking cargo, at first, but then people to and from the International Space Station. NASA provided about half a billion dollars to help jump start development of those space craft. Commercial companies, though, would be required to invest their own money and to find private markets for their commercial space ships, however. In the meantime, the Orion space craft, to be launched on the Ares 1, would ensure that a public option existed until and unless the commercial space craft became operational.

The Obama administration decided to double down on the commercial space option. The entire Constellation program, including the Orion/Ares 1 space craft, was to be canceled. Now nearly $6 billion would be invested in developing commercial space craft, with Boeing and Lockheed Martin invited to submit proposals.

The reaction to the commercial space initiative was sharp and immediate. Many members of Congress expressed deep misgivings about relying on commercial space companies, some of them like SpaceX that were entrepreneurial and still in the process of creating a business, for the nation's space transportation needs.

But others rebelled at the idea that the government would provide the bulk of the funding for space craft such as the SpaceX Dragon and the space capsule being developed by Boeing. How, they asked, could this arrangement be, in any sense, commercial? Shouldn't companies develop their own space craft on their own dime and then sell services to customers, both government and private? That is how private industry usually works.

But George Sowers, pointing at the EELV experience, let out the dirty secret. Private industry cannot be relied upon to develop their own space craft and then sell space transportation services to private customers.

"Sowers noted the parallels between the EELV and commercial crew debates are 'kind of eerie'. Because of that, he argued, repeating the same approach of the EELV program, with private ventures picking up most of the costs of developing systems on the basis of capturing promised commercial markets, is unwise. 'Assuming the existence of a commercial market to entice or extort the companies to invest is the wrong way to go,' he said. Having the government invest in developing commercial crew capabilities is better for several reasons: the government needs the capability, a commercial approach can reduce costs over an all-government system, and the government can get a long-term benefit as commercial markets do emerge and cost go down as flight rates increase. 'The government should invest' up front, unlike the EELV case, he said, 'and if the government does invest, then a commercial market can be established and then the government can get its return on investment.'"

Of course if the government finances the development of what are called commercial space ships, and a commercial market does not get established, then the tax payers will be stuck with the bill. Also, because launch rates will be less than planned, the cost of operating these "commercial" space craft will be greater than envisioned. Finally, if the government decides that it doesn't need space transportation services any longer, say when the International Space Station ends its life in 2010, then so goes the "commercial" space sector.

That is not to say that there are no potential markets for commercial space transportation. The adventurous and well-heeled can buy rides into orbit on these space craft. If Bigelow Aerospace and/or other companies manage to build commercial space stations, those will need commercial space craft to take people and cargo to and from them.

But Sowers is admitting that these markets may not materialize. That is why the government must pay for the development of commercial space craft. That is also why companies like SpaceX are now suddenly too important to fail. Apollo astronaut Gene Cernan quoted NASA Administrator Charles Bolden as suggesting that he would do what it takes to make sure commercial space companies do not fail, suggesting possible bailouts if they get into trouble and can't deliver in a timely fashion.

The new policy may be the optimum way to ensure American access to space. But truth in advertising suggests that we should not call it "commercial" or even tout all of the competitive and innovative advantages that a true commercial approach suggests. The Obama "commercial" space initiative is a government-centric approach, pure and simple, with all of the dangers and pitfalls that implies.

Source: Commercial crew, EELV, and avoiding repeating history, Jeff Foust, Space Politics, September 5th, 2010