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Space Race 2.0 : How the Private Sector became USA’s beacon for space exploration

Updated: Aug 17, 2020


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America’s long-awaited arrival of the ‘Age of NewSpace’ (reference “A Hitchhiker’s Guide to the Galaxy”) was marked by SpaceX’s government-backed manned Crew Dragon mission to the ISS, using its Falcon 9 Block 5 Launch Vehicle. However, as the first (and only) country to ever put people on the moon nearly 50 years ago, how did sending humans to outer space revert to become ground-breaking for the USA? And how did SpaceX and not NASA become the face of this journey to the beyond?


A “would-have been” Space Odyssey : In the 1950s, USA’s Space ambitions received little public support, primarily because a war-torn nation was dead against military spending and Space was full of secrets, just like the military. However, popularity began to rise in the early 1960s in the wake of Friendship 7 (USA’s first manned spaceflight) and grew into the low majority with the Apollo 11 moon landing in July, 1969. “That’s one small step for man, one giant leap for mankind”. This ‘famously misquoted’ Neil Armstrong quote could not have better summed what should have been the start of the “Golden Era of Space Exploration” !


After these historic achievements, NASA’s Langley Space Task Group (famously credited as being the brains behind the many, if not all, space flight successes), was commissioned to submit a study to the Nixon administration in order to assess how Apollo-era technology could take the USA forward in space exploration. The team turned in a 3 point “Integrated Program Plan” in Sep, 1969, which even today would seem futuristic to most.


The plan envisioned “reusable and nuclear-powered” space shuttles and tugs, nearly 35 years before SpaceX came into being. The rockets could take people and cargo to lower earth orbit and thereon to the Moon. The plan also had the first ever vision for “Boots on Mars”, estimating that it could be achieved at the earliest by 1982 and latest by 1986, with an estimated budget of around USD 70 billion (in today’s terms).


The “Successful Failure” : Apollo 13, which launched in 1970 as the 3rd instalment of the manned moon landing missions, was aborted due to the failure of a vital component 2 days into the mission. The crew instead of landing on the moon, looped around it and returned safely to Earth 6 days in. This experience with near-loss of life became a sudden reality check to many politicians to focus on social spending and poverty eradication, and it turned political capital against human space exploration.


At the heart of the above political decision was a sway in the public’s support for manned missions. The events leading up to Apollo 13’s return were widely televised, with one estimate suggesting nearly 40 million American’s viewed the live splashdown (30+ million viewed the 6.5 hour broadcast in its entirety), and many more watchful eyes tuned in from outside the USA. Pope Paul VI even led a 10,000 strong congregation to pray for the astronauts’ safe return, and the New York Times hailed that concerns for the astronaut’s safety had brought the world closer amid prevailing tensions of the Cold War.


Long story short, the Space Task Group’s report was tossed and 2 years later the Apollo program was discontinued. The only salient feature that was implemented was the introduction of the “Space Shuttle” Program, which led to the development of the world’s first partially reusable spacecraft.


The river runs dry : NASA’s piece of the US federal budget peaked at 4% in 1965 at the height of the “Space Race”. With its conclusion and post Apollo 13, the shift in political capital prompted the Nixon administration to put space exploration in competition with other federal programs, thereby steadily cutting into NASA’s budget. Clubbed with the Cold War tilting in favour of the USA, this led to the first efforts in co-operative space exploration, with the introduction of the Apollo-Soyuz Test Project. The Space Shuttle became the centrepiece of various manned missions, but was limited to use only in lower earth orbit missions. Shooting for the moon became a thing of the past, the “War on Poverty” became the here and now of American politics.


NASA’s share of the pie eventually sloped down to around 1%, and has stayed there for the last 40 years. A key ingredient in the budget cut decision was the sleuth of financial improprieties revealed by audits disclosed under several 1985 Freedom of Information Act queries. According to an analysis and expose published by the New York Times in 1986, the audits revealed a pattern of roughly 15 years of mismanagement, wastage of billions of dollars and broken promises on costs, schedules and performance. It was also concluded by the print media outlet that NASA cut or delayed crucial safety spending and could have prevented the Challenger Space Shuttle accident in 1986, which killed 7 crew members on board.


With the G-7 nations signing onto the Missile Technology Control Regime in 1987 to prevent proliferation of ballistics and warheads, NASA began collaborating more openly on its projects with other nations, which helped it achieve some targets amid the string of budget cuts. In addition, the collapse of the Berlin Wall began rapid de-escalation of Cold War tensions in 1989. This saw the likes of Mikhail Gorbachev (and later Boris Yeltsin) come to power in Russia, promoting open economies and knowledge exchanges between the USA and USSR.


After the somewhat imperfect launch of the Hubble Space Telescope using the Space Shuttle, NASA’s Freedom program (which was envisaged as a USA only manned lower earth orbit space station) joined hands with the USSR’s Mir2, Europe’s Columbus and Japan’s Kibo programs in 1993, to form what we know today as the International Space Station (ISS). The Space-Shuttle program was to be USA’s servicer-of-choice for all manned and cargo missions to the ISS and the Hubble Space Telescope.


Adversity to opportunity : In 2004, following the Columbia mission accident in 2003, (which killed 7 crew members on board, including India’s mission specialist Kalpana Chawla), NASA was directed by the Bush administration to dismantle the Space Shuttle Program and start sourcing for alternatives. NASA was once again caught at the centre of Congress and media ire, when it was revealed that the problem which led to the failure of the spacecraft was in fact known and had not been corrected for several years.


With the economy only just starting to emerge into stability post the dot-com crash, Congress decided to shift the onus of Space Exploration (and with it, NASA’s cultural and organizational woes) away from the taxpayer. In effect, the space shuttle program was to continue till a set of viable private enterprise alternatives was found. This paved the way for the development of the first phase of the “Commercial Resupply Services” (CRS) program in 2006.


The initiative was started with the intention of bringing space exploration into the regime of fixed-price public private partnerships (PPP), with contracts/concessions similar in style and spirit to PPP infrastructure development projects. It also laid down the turf for routing private capital into space exploration, with funding support from the government. The funding was to be tied to a pre-agreed list of milestones, thus ensuring good governance which would counterbalance the possibility of organizational lapses at NASA. That said, the technical brilliance of NASA was not to be benched and the agency was tasked with evaluating proposals from private enterprises, awarding the contracts and serving as a technical advisor to the winners.


SpaceX and Orbital Sciences (now Orbital ATK, acquired by Northrop Grumman in 2018 for USD 7.8 billion) were awarded the first of the CRS contracts in Dec, 2008 by NASA. The contracts totalled $3.5 billion for 20 missions covering all USA space cargo deliveries to the ISS, up to 2016. In 2010, SpaceX’s Dragon 1 spacecraft, in its maiden flight, became the first commercially built and operated spacecraft to be recovered successfully from orbit. Awarded a USD 1.6 billion contract for its efforts towards CRS, SpaceX was mandated to make 12 cargo deliveries using its Dragon 1 Spacecraft, with the first of the lot scheduled in May, 2012.


The road back to manned missions : The Obama administration took the CRS program a step further and introduced the Commercial Crew Development Program (CCDev). The program, similar to CRS, was to be administered by NASA and welcomed private vendors to develop concepts for crew vehicles to carry American and international astronauts to and from the ISS.


After the launch and return of NASA’s Atlantis mission in 2011, the space shuttle program was finally retired per the 2004 ruling, now that the process of sourcing viable alternatives to the manned space shuttle program were under way. Manned missions to the ISS were operated in collaboration with the Russian Space Agency, flying astronauts in Soyuz capsule launches from Kazakhstan's Baikonur cosmodrome. The CCDev program, in tandem, would pave the road ahead for well governed and cost-conscious manned space exploration, in partnership with private enterprises.


In Sep, 2014, SpaceX and Boeing received the first operational CCDev contracts from NASA, totalling USD 6.8 billion and covering 12 manned trips (split down the middle) to the ISS. With both CRS and CCDev contracts under its belt, SpaceX struck gold when it demonstrated validation on its reusable launch vehicle concept in 2015. The company successfully executed a controlled Falcon 9 booster landing on a ground-pad during one of its private program missions. This proved instrumental in the company winning an extension on its CRS Phase- 1 (in spite of a botched CRS phase-1 mission which ended in catastrophic failure) and subsequent award of CRS Phase-2 contracts in Jan, 2016 (valued at around USD 5 billion for 6 cargo missions using the Cargo Dragon spacecraft). 4 months later, lightning struck twice when they landed the Falcon 9 booster in a controlled fashion on an Autonomous Spaceport Drone Ship (ASDA, christened “Of Course I Still You”), which is controlled by an autonomous robot, with no human intervention whatsoever. Another pioneering moment for the company!


Reusable Rockets - Finally ! : To give you an idea of just how-good-to-be-true the concept of reusable rockets is, let’s look at the fundamentals. A rocket launch is composed of two basic parts. The first part is a launch vehicle (also called a booster rocket), which has sequential stages depending on how far into space one wants to go. The final stage that separates off the launch vehicle is called a spacecraft (interchangeably called a “Space Shuttle”, the NASA version), which carries cargo and/or people, often time referred to as the payload. These two components contribute approximately 70% and 30% respectively of the costs of putting people or cargo in space. An expendable booster rocket implies that about 80% of the cost of the launch would be a non-recoverable/sunken component, and used to be treated as an unavoidable cost of doing business in the industry.


Now to give you a sense of how far behind most enterprises were on developing their own versions of this technology, till SpaceX showed up. When SpaceX validated the reusable booster rocket concept in 2015, even the best in the business only had (and still only have) boosters that were (are) completely expendable (Airbus’ ArianeSpace – Ariane 6, Northrop Grumman – Minotaur, Boing + Lockheed’s United Launch Alliance – ULA Atlas V) and spacecrafts that were (are) at best only partially reusable (NASA’s Space Shuttle, Northrop’s Cygnus). Interestingly, Orbital ATK, which received contracts alongside SpaceX for CRS Phases 1 and 2, to date doesn’t have a tested reusable booster rocket (even after 2 years spent as a subsidiary of Northrop Grumman).


ISRO, with its “RLV-TD”, is the only agency in the world that has successfully test-flown a reusable launch vehicle other than SpaceX. Blue Origin’s “New Shepard” and Virgin Galactic “SpaceShipTwo” have promising prototypes in the works but are definitely a few years away from being operational.

Private sector to fill the gaps of today : Post the discontinuation of the Space Shuttle Program in 2011, NASA had been paying Russia more than USD 90 million per seat on Soyuz missions to transport American astronauts into space. This is one of the key reasons why the SpaceX manned launch is a watershed moment for the USA; it marks a return to control over their own space program. It also marks a tectonic shift in rocket technology. And, it in no part would have been possible without involvement from the private sector.


SpaceX is becoming a force to be reckoned with. The company is one of the few enterprises in this industry that are fully vertically integrated i.e. it designs and builds its own engines, launch vehicles, spacecrafts, avionics and software. This is a crucial factor in their demonstration of a high launch success rate (87 successful launches out of 89 total) and high ASDS success rate (34 successful landings out of 43 attempts). Vertical integration lowers their overall cost of production through control of overheads and agile go-to-market, thereby giving them the needed wiggle-room to audaciously price launches at USD 56.5 million. Compare this to the cost of the 2011 Atlantis mission, estimated at around USD 1.5 billion. An unbelievable 25x reduction at the get-go ! And what’s better, they estimate that once they perfect this technology and make it completely autonomous, the cost per launch will come all the way down to USD 5-7 million. A mind-boggling 250x slashing of costs !


Similarly, RocketLab, another vertically integrated up and comer from New Zealand, is making a name for itself with its low cargo launch prices of USD 5.7 million (c. 40% of SpaceX’s current pricing for the same type of payload). However, their focus is solely on lightweight missions such as Cube, Micro and Nano-Sats (SpaceX has its toes in crewed and heavier missions as well). Using their launch vehicle, “Electron”, they served as the partner-of-choice for NASA on their Elana Nanosat program in 2018.


Companies like SpaceX and RocketLab have also made the ride-sharing model a mainstay of the commercial launch market. The novel introduction of mobility-as-a-service (think Uber) in this industry has allowed discretization of the spacecraft and assignment of each of these discrete units to separate paying customers. This is priced much like a seat on Uber-Pool, in which a seat costs you slightly over 1/3rd the price of hailing the entire taxi. Ride-sharing over time is touted to promote democratization of commercial cargo launches, by enabling innovative companies with short stacks of capital to launch commercial cargo into space at a fraction of the cost of a full launch.

All the aforementioned allowed SpaceX to single-handedly exert unprecedented price pressure on all its peers in the commercial launch space. Airbus’ ArianeSpace started bargaining with its partner nations to increase subsidies and ULA spun into restructuring to reduce launch costs (with an aim to halve their estd. USD 400 million per launch, still 3x as expensive as SpaceX’s current pricing).


The combination effect of both price and success rate made SpaceX the world leader in the commercial launch segment, dominating with c. 65% share by the end of 2018. The mix effect also enabled SpaceX to bring the cost per seat down on their CCDev contracts to USD 55 million for the Crew Dragon, serving as a viable alternative to the Russian Soyuz. Boeing, the other player with CCDev contracts, has seen its CST-100 Starliner’s cost per seat stuck at USD 90 million and additionally sought government funding, owing to its internal struggles over the past few years caused by the 737-Max grounding (horizontal spread in commercial aircrafts) and delays from contract manufacturers.


Momentum from Trump administration : Trivia time – the gender dynamics of America’s moon landings have been 100% skewed towards men (12 astronauts to set foot on the moon, all 12 men). To course correct this, among other things, the Artemis program was launched by the Trump administration in 2017, with an objective to put “The First Woman and Next Man on the Moon by 2024” and establish a sustainable presence there by way of a habitable outpost. However, delays on NASA’s planned SLS Launch vehicle (which has been under development since 2011) have led to cost overruns and a funding gap of USD 1.6 billion, which Congress is currently debating on how to plug.


Private enterprises were immediately activated, with Boeing’s soon-to-be reusable Vulcan (estd. to be ready by 2021) tapped as a potential alternative to the SLS, and received a USD 1.2 billion commitment towards development from the government. The Falcon Heavy also offers a suitable alternative, as it has already been validated for reusability and has been in use 2018 onwards (firing Elon Musk’s own Tesla Roadster, containing the famed “Spaceman”, to orbit permanently around the sun on one of its early test launches). The two are similar options in terms of cost, with Vulcan’s reusable lifetime cost per launch estimated to be around USD 80-100 million, compared to the Falcon Heavy’s current USD 90 million.


“Space Force” : In Dec, 2019 the White House added the US Space Force (USSF) as an official 6th branch of the military. The USSF was created to channel a portion of the USD 700 billion NDAA defence budget towards space exploration and better equip NASA to handle private sector initiatives with the injection of young talent. Given the historically entrenched dual application of space technology, any move that draws out of public coffers and cuts into social spending will predictably be vilified at large, with more than 60% of Americans polling that space exploration can wait, irrespective of their political views. This makes the role of the private sector doubly essential, given that public spending on the vision and mission of space exploration will always carry attached political risk, and may not always be reliable for many years to come.


ULA’s legacy contracts for the Atlas V launch vehicle with the US Air Force were subsumed under the USSF, alongside the 2019 addition of Falcon 9 from SpaceX as an alternative. Both these booster rockets will be used to launch high value military satellites and components into space for the foreseeable future.

To “Infinity and Beyond” : We hope the narrative has given you sufficient context to appreciate fully the happenings of the present day. 8 minutes after the Crew Dragon launched from Cape-Canaveral launch on May 27th (SpaceX’s site 39-A), the Falcon 9 booster landed successfully on the ASDS “Of Course I Still You” (yet another first for manned missions). The Crew Dragon commandeered by Doug Hurley (who was also first-in-command aboard the 2011 Atlantis mission – a classic demonstration of continuity), successfully (and autonomously) docked on the ISS on May 31st, 4 days after launch. And the internet blew up with hoots and praises. Rightfully so, no feat in space is by any means small, especially when the journey to get back here has been particularly arduous for the USA. NASA Administrator Jim Bridenstine however, while thrilled at the accomplishment, acknowledged that this was just a small step in a grand scheme of things to come.


The 2024 timeline of the Artemis would take a great deal of ownership, involvement and co-investment from private sector players like SpaceX and Blue Origin. With SpaceX, Blue Origin and Dynetics being tapped as the partners of choice for the 2024 Artemis Lunar Lander mission, and receiving federal grants to the tune of USD 1 billion, the grand plans of the administration to put “Boots on the Moon” seem to be on track.


Elon Musk’s long-term vision however is much grander. SpaceX, earlier this May, inked a deal with Axiom Space, a space logistics management company, to enable 3 tourists (at c. USD 20 million per seat) to enjoy the world’s first fully private space-cation to the ISS in late 2021. In a recent corporate email, the genius-billionaire (among other things) urged his SpaceX employees to focus completely on bringing “Starship” to life by 2021. Although Starship will be an integral part of SpaceX’s involvement in the Artemis program, Musk’s endgame for Starship revolves around and lands on Mars.


“We’ve got the potential for an incredibly exciting future in space, with a base on the moon and having a self-sustaining city on Mars”. In similar fashion, Musk has frequently voiced his dream of interplanetary travel and the colonization of Mars, to varying kinds of reception. Starship, once fully operational, will support the world’s most powerful booster rocket and combine it with a novel approach to keep a c. 100 strong crew in a habitable environment for long periods in space. It has been touted by NASA to provide ample crew and mass capabilities for sustainable moon travel. Musk predicts that by 2035 latest, there will be thousands of ships ferrying people and cargo between the Earth and Mars. And he is willing to bet that Starship will be the gateway to this futuristic vision.


Seems like a deja-vu from almost 50 years ago doesn’t it? Only this time, the central figures influencing where we’ll go from here are self-made billionaires and not governments. Paraphrasing from Andrew Carnegie’s “Gospel of Wealth”, the wealthy should dedicate their acumen and efforts towards reshaping the fundamental order of society, on behalf of those who cannot do so for themselves. And if you happen to know a thing or two about the Musks and Bezos’ of the world, you can bet your bottom dollar that they will do what it takes to take society with them on their journey to the stars !


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