On February 6, 2018, I was sitting in the American Airlines Admirals Club at the Austin–Bergstrom International Airport, getting a snack prior to boarding a flight. CNN was playing on the club's large TV screens.
When I looked up, I happened to see blastoff video of the first SpaceX Falcon Heavy rocket, capable of putting much larger payloads into orbit than the workhorse Falcon 9. That first launch was the one that sent into a solar orbit a Tesla convertible with a dummy astronaut sitting behind the wheel.
A bit later, when I looked up again, I saw two of the three Falcon first-stage boosters come in for perfect vertical landings at Cape Canaveral. I confess I had tears in my eyes, thinking, "Robert Heinlein, you should be alive to see this today."
I grew up reading Heinlein's science fiction, starting in fifth grade and continuing through my young adulthood. One of my favorites was his 1950 novella The Man Who Sold the Moon. To the best of my knowledge, it was the first time any mainstream science fiction author had portrayed a privately financed space venture. From the 1950s onward, respectable analysts took it for granted that space was far too expensive for anyone but tax-supported governments to explore.
The successful Apollo moon landing program seemed to confirm that assumption. NASA spent $25 billion, equivalent to roughly $177 billion today, on the seven Apollo missions. Subsequent NASA endeavors reinforced the idea that space travel had to be financed by the government.
Post-Apollo, a reusable launch vehicle sounded sensible. After all, we don't build airliners for a single trip and then scrap them. So NASA created a new program to build and operate the space shuttle, intended as "the national launch vehicle" for all space missions. The agency ended up building five vehicles, of which only the orbiters were reusable. The total cost to build them was about $257 billion in current dollars. Taking into account support infrastructure and personnel, each launch cost about $2 billion in current dollars. NASA concealed that cost, charging customers a small fraction of the real amount to launch satellites.
In the last 15 years, however, an investor-financed space industry has made that exorbitant approach obsolete by slashing the cost of launching payloads to orbit. Its modus operandi is dramatically different from NASA's traditional way of doing things.
One Best Way
Under the old model, NASA engineers figure out the "one best way" to define a new vehicle. Then they pay aerospace contractors to meet NASA's specs. To ensure broad-based congressional support for the needed budget, NASA's prime contractors rely on an army of subcontractors across a majority of the 50 states. Because NASA is very risk averse, its engineers and bureaucrats insist on endless testing and revisions of the one-best-way concept. This operating procedure generally means repeated schedule delays and large cost overruns, as occurred with the space shuttle, the International Space Station (ISS), and the current very late and grossly over-budget Space Launch System (SLS).
An alternative began to emerge in the late 1970s, when the German startup OTRAG pioneered a modular approach to a proposed family of launch vehicles, as I described in a July 1978 Reason cover story. That effort was killed when East German propaganda spread the lie that OTRAG was developing cruise missiles. The publicity fed French fears of a threat to taxpayer-funded Arianespace, and OTRAG's funding dried up.
There were at least half a dozen serious space-launch start-ups in the 1980s and '90s, including American Rocket Company, Kistler Aerospace, Rotary Rocket, and XCOR. Some were based on innovative concepts such as new kinds of rocket motors and novel launch methods. But raising venture capital was very difficult, partly because, as a January 1985 Reason article documented, companies got negative reviews when potential investors sought validation from NASA. I knew people at three of these startups and shared their frustration as potentially good ideas were shot down and left largely unfunded.
That changed by the turn of this century. The loss of two space shuttles, which cost 14 astronauts' lives, damaged NASA's credibility, and angel investors started showing up at the annual space development conferences. Startup rocket developers began getting money to develop prototypes of small rockets to launch a new generation of small satellites. And with the space shuttles' retirement, which ended NASA's monopoly on launching crews into orbit, the United States had to rely on Russia to launch astronauts to the ISS at outrageous prices.
Billionaire Microsoft co-founder Paul Allen provided the first large-scale private investment for human spaceflight. Allen invested an estimated $25 million in aircraft designer Burt Rutan's Scaled Composites company, which was developing a rocket plane that could take passengers to the von Kármán line 100 kilometers (62 miles) from Earth's surface, which by convention marks the edge of space. Rutan, who has designed 46 aircraft during his career, conceived the idea of a two-stage spaceplane. The first stage was jet-powered to reach a normal cruising altitude, at which point it released the rocket-powered second stage to reach the von Kármán line.
I toured Rutan's company around 2000 but was not allowed to enter a hangar where a secret project was underway. It turned out to be SpaceShipOne, which won the Ansari X Prize in 2004. That prize, funded by entrepreneur Peter Diamandis, offered $10 million for the first reusable vehicle that could transport people to the edge of space several times within a month. Sadly, I missed the X Prize–winning launch due to a speaking engagement, but I did get a commemorative cap from Scaled Composites.
Meanwhile, two other billionaires had founded space launch companies. Amazon's Jeff Bezos quietly started Blue Origin in 2000, and Elon Musk began Space Exploration Technologies (SpaceX) in 2002. As wealthy individuals, neither had to rely on angel investors or venture capitalists. Both were able to attract highly skilled engineers and managers, some of whom had worked on privately funded projects that had come to naught at other companies.
Three key concepts inspired Bezos and Musk in their quest to build space launch vehicles: modularity, incremental development, and reusability. Modularity—building larger rockets from bundles of proven smaller ones—dated all the way back to OTRAG. Incremental development, exemplified especially by SpaceX, involves continually trying new materials and component concepts and revising earlier designs. NASA's one-best-way approach, by contrast, locks in a favored design early on, forcing it into existence even when it does not fully meet expectations.
The most important innovation is reusability, an area where SpaceX continues to set new records. From the outset, its Falcon 9 was largely reusable. The first-stage boosters fly back to either the launch site or an offshore recovery barge. Some Falcon 9 boosters have been reused 10 times, and the company is aiming for 15 times as it gets better and faster at refurbishing returned boosters for new missions. The company's Dragon cargo carriers, launched by Falcon 9s, are reusable and return to Earth. So do the more advanced Crew Dragons that take NASA astronauts (and, more recently, paying tourists) to the ISS and back.
Several years ago, NASA compared the cost of Falcon 9 to what the agency would have spent to develop and build equivalent launch vehicles using its traditional procurement contracts. Even assuming no cost overruns or schedule slips, NASA found, the publicly financed versions would have cost three times as much.
SpaceX will soon offer the world's largest-ever launch vehicle: Starship and its Super Heavy booster, both intended to be fully reusable. The targeted payload is 220,000 pounds to low Earth orbit, compared to 154,000 pounds for NASA's new Space Launch System.
NASA's Sea Change
How did NASA go from dismissing commercial space to embracing it? The first changes began during the Reagan administration.
White House speechwriter Dana Rohrabacher, later a California congressman, championed the cause of would-be space entrepreneurs. So did Reps. Robert Walker (R–Pa.), Ed Zschau (R–Calif.), and Daniel Akaka (D–Hawaii). With strong drafting assistance from space commercialization expert James Bennett and aerospace consultant Courtney Stadd, the legislators crafted what became the Commercial Space Launch Act (CSLA) of 1984.
Instead of requiring a would-be private launch company to obtain permits from more than a dozen agencies, the CSLA made the Department of Transportation the one-stop shop for such applicants. Stadd brought his space entrepreneurial experience to the department as an early director of this new customer-friendly office.
In the wake of the 1986 Challenger disaster, President Ronald Reagan and Congress decided that the space shuttles would no longer be allowed to launch commercial satellites. That opened the door to existing aerospace companies, which could offer a range of competing satellite launchers. There were not yet any commercial space companies ready to do such launches, but now there was a growing stream of customers, sometimes including NASA itself.
Subsequent amendments to the CSLA addressed the question of liability for accidents and deaths resulting from commercial space launches. By analogy with the risky early days of barnstorming aviation, the basic rule was that a launch company would be liable for damage to property and innocent bystanders on the ground, but any human passengers were presumed to have understood and accepted the risks of flying in the new launch vehicles.
The 1990s saw further progress for commercial space, egged on by another key player, Lori Garver. She was executive director of the National Space Society, created by the merger of the space-entrepreneur-friendly L5 Society and the National Space Institute. Garver, who served on the incoming Clinton administration's NASA transition team, was hired in 1996 as a special assistant to NASA Administrator Daniel Goldin. She later became NASA's associate administrator for the Office of Policy and Plans.
Goldin, who was appointed by President George H.W. Bush in 1992 and remained in that position for nearly a decade, was NASA's longest-serving administrator. Under his mantra of "faster, better, cheaper," he was determined to change NASA's approach to space launches. With Garver's assistance, NASA invited commercial science experiments on the ISS and started competitive programs for reusable launch vehicles, yielding the promising X-33 and DC-X projects.
Those projects were public-private partnerships, encouraging innovation rather than following NASA's traditional, highly centralized procurement process. Such programs were authorized by a 1985 amendment to the National Aeronautics and Space Act that encouraged NASA to enter into cooperative agreements based on performance requirements rather than detailed specifications.
There was one bureaucratic setback during the Clinton administration, which moved the space licensing office from the transportation secretary's office to the very cautious and bureaucratic Federal Aviation Administration (FAA). The commercial space community feared the worst. "Many of us in the industry," Stadd tells me, "lamented relocating the office to FAA, where our concept of 'performance-based regulation' risked being stifled by an agency used to dealing with 16 million flights per year, rather than a relative handful of commercial space launches per year." But over the years, the FAA's space office has earned a reputation of working well with the industry's entrepreneurial M.O.
Garver left NASA in 2000, and the George W. Bush administration was a mixed bag for commercial space. On the bad side, NASA traditionalists came up with a proposed replacement for the space shuttle: a huge three-stage launch vehicle, none of it reusable, named Constellation, which was aimed at supplying the ISS, returning astronauts to the moon, and eventually carrying humans to Mars.
On the good side, the administration's space policy directed NASA to "pursue commercial opportunities" to support the ISS and "exploration missions beyond low earth orbit." NASA Administrator Michael Griffin supported the idea of seeking competitive launch services to resupply cargo for the space station. Although he probably expected the competitors to be traditional aerospace companies, fledgling SpaceX threw its hat into the ring.
SpaceX had received modest funding from the Defense Advanced Research Projects Agency in 2003 to help develop its initial Falcon 1, which succeeded after three failed launches, leading the way to developing the much larger (and partially reusable) Falcon 9. When NASA held the first procurement for commercial orbital transportation services in 2004, the contract was awarded solely to Kistler Aerospace. SpaceX filed a protest, which was upheld, so NASA rescinded that noncompetitive award. Financially shaky Kistler was acquired by Rocketplane Limited. Both Rocketplane Kistler and SpaceX won cargo contracts in 2006, but Kistler was unable to deliver and subsequently went bankrupt. NASA eventually awarded contracts to SpaceX (for 12 flights to and from the ISS) and Orbital Sciences (for eight one-way flights).
Commercial space companies pushed hard for a follow-on program to transport people between Earth and the ISS, but Griffin was staunchly opposed. That breakthrough was left to the Obama administration.
In 2009, an expert review committee headed by retired aerospace executive Norman Augustine concluded that Constellation would require a huge funding increase and would not be worth busting NASA's budget. Garver, who had served on the Obama NASA transition team, became the agency's deputy administrator. Her boss as administrator was former astronaut Charles Bolden, a NASA traditionalist. The White House and its Office of Management and Budget (OMB) agreed with the Augustine committee's recommendation to scrap Constellation. But NASA's supporters in Congress went ballistic, and so did the program's aerospace contractors.
As a Plan B, the Senate commerce committee directed NASA to replace Constellation with the SLS, a supposedly less costly heavy-lift booster using leftover space shuttle engines and a new version of the Apollo capsule (Orion) to carry astronauts. Within commercial-space circles, the SLS was dubbed the Senate Launch System. Since its inception in 2011, the SLS has absorbed $12 billion in taxpayer funds, plus another $14 billion for two Orion capsules and $3.6 billion for new launch facilities at Cape Canaveral—a total of nearly $30 billion before its first test launch.
Bolden was not keen on commercial space. But Garver worked with selected staffers and outside experts to carve out room in NASA's budget for a program called Commercial Crew, which aimed to exploit the capabilities of SpaceX, Blue Origin, and a growing number of other launch companies. The White House and the OMB strongly supported Commercial Crew, while SpaceX's record of successful cargo missions (and returned and reused boosters) enhanced the industry's reputation.
Members of Congress repeatedly tried to cut or eliminate funding for Commercial Crew. It was not until 2014 that significant contracts were awarded to SpaceX ($2.6 billion) and Boeing ($4.2 billion). So far SpaceX has conducted four NASA crew missions to the ISS plus one private mission, while Boeing has not managed any. In August 2022, NASA announced that it would expand SpaceX's commercial crew missions to 14 and limit Boeing's to its original six.
What's Ahead for Commercial Space
The new commercial space paradigm has made much deeper inroads into NASA's way of doing business than most people realize. The new model of purchasing results has clear advantages over NASA's highly centralized cost-plus model, which depends on very expensive aerospace and defense contractors.
NASA will not replace the ISS as it reaches the end of its useful life in 2030. Instead, it will lease space for various research and testing operations from one or more competing space facilities. One of those is a joint venture of Blue Origin and Sierra Space called Orbital Reef. Aviation Week reports that at least three other teams are working on such outposts, with NASA as a potential customer or anchor tenant.
For its Artemis return-to-the-moon program, NASA still plans to use the SLS as its launch vehicle for astronauts. But it plans to contract with SpaceX to deliver astronauts from lunar orbit to the surface, using the company's huge Starship/Super Heavy launch system (assuming it is ready in time). A new lunar rover is being developed by Lockheed Martin and General Motors under a similar purchase-of-services model. Although NASA will be the initial user, the Lockheed Martin and General Motors team will own the rover and serve anyone who wants to purchase its services. The same is true of the vehicle that NASA wants to use for excursions to the lunar South Pole. As with the rover, NASA is not paying to produce the vehicle. Whoever wins the competition (for which several other teams are being formed) will own the vehicle and be paid by NASA and other customers when they use it.
Even spacesuits are no longer following the traditional NASA model. Competitors have proposed their own designs, including different ones for zero-G operations and for lunar work. NASA has selected teams led by Axiom Space and Collins Aerospace under a similar public-private partnership model.
Ironically, the current NASA administrator is former Sen. Bill Nelson (D–Fla.), a longtime champion of traditional NASA programs. Nelson opposed the CSLA as a member of the House Space Subcommittee and championed the SLS as ranking member of the Senate commerce committee while opposing NASA's Commercial Crew and Commercial Cargo programs. When President Joe Biden appointed Nelson to head NASA last year, many commercial-space supporters worried he would continue that pattern. But the evident success of the new paradigm has persuaded Nelson this is where the future lies.
Who would have predicted, several decades ago, that privatization of space transportation and development would be happening by the second decade of the 21st century, and with NASA's support? Robert Heinlein would be delighted.
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