Is It Time To Auction Off the ISS/Shuttle?

[Editor’s Note: This post has been lingering in my drafts folder for almost three months now, and I feel it’s time to air it out and try to finish it again.]

Here’s an interesting thought experiment:

What if NASA say decided to auction off it’s share of the ISS to any legitimate buyer (ie either US firms, or firms located in any of the ISS participant countries), and the proceeds of that auction to pay “damages” to ISS partners whose hardware we would no longer be launching. If NASA wanted to use ISS for future projects, they could rent space from whoever the new owner was. That would allow NASA to then end the shuttle program and the ISS program, thus freeing up a bunch of money per year (as mentioned in my previous post).

If they went a step further, and auctioned off the shuttles and their requires support infrastructure (or at least offered to lease that infrastructure at a reasonable rate), that might be even better. With the fact that there are some ISS payloads (as well as the Hubble repair mission and a few other missions) that really would be very expensive if not impossible to do without the Shuttle, that company would have at least some firm demand in the near term. Since they’d now be a real private company instead of just being a NASA contracting firm, they could likely restructure their workforce to whatever made the most sense (ie likely being able to fire off a lot of the dead-weight, cut things back to single shifts, etc). I wouldn’t be surprised if the cost per flight went up to $1B per launch, but if the Russians, Japanese, and Europeans want all of their modules flown (including ones that won’t fly anyway under NASA’s current definition of “completion” for the ISS), they would then have the ability to do so. They’d have to spend some of their own money in the process, but at least this way they could guarantee their stuff would fly. If NASA is no longer paying the yearly maintenance costs for the Shuttle program, and is only having to pay the marginal cost for the launches that they would specifically need (say for a Hubble repair mission), then it wouldn’t really matter if the Shuttle were still flying in 2020 let alone 2010.

Ian Kluft of Stratofox was mentioning to me that in addition to the ISS mission control centers in Moscow and at JSC, there is one additional place already setup to handle ISS mission control functions–Onizuka AFB (aka the Blue Cube for Silicon Valley residents). Fortuitously, this place is not only on an AFB that has been on the BRAC list for a while, but is also located within about of 5 minute drive of Google’s campus in Mountain View. Even if Onizuka couldn’t be sold or leased outright to a commercial ISS operator, they’re right in the heart of Silicon Valley, so coming up with some way to tie-into that facility’s communication system in such a way to allow the ISS operator to securely control their portion of the ISS from their company’s own campus is probably doable. Not to mention that a private company is likely going to find a much more efficient way of doing the earthside “mission control” functions than the current NASA method.

Here are a few additional miscelaneous thoughts:

  • NASA probably ought to make the auction deal contingent on them funding the COTS program to completion, because that would both help decrease the marginal cost if NASA ever wants/needs to do future projects on the space station after the auction, and it would also sweeten the pot on the auction since it would make the station a lot cheaper to operate and maintain. NASA would have a huge incentive to finish COTS because without commercial crew/cargo transfer, any usage of the station after this auction would either end up having to pay the full cost of a shuttle flight (which would be expensive), or require a renegotiation of the Iran Nonproliferation Act. If NASA is having to pay the price of each shuttle flight on a marginal base, they’re likely to only use it when they absolutely have to. And when stuck with a choice between funding US companies or buying foreign services, I think there’s a very good chance that the COTS providers would win.
  • With NASA no longer owning a stake in the ISS, the “Visiting Vehicles” rules could likely be rewritten in a more reasonable manner. If all the vehicles that currently service the station have to be “grandfathered” in because they don’t meet all the rules, the rules are probably unrealistically restrictive. While many of the current rules may actually make sense, I think the ISS partnership countries wouldn’t mind revisiting and rerationalizing the rules.

The problems with commercializing the space station are similar to the problems that sent the LEO comsat companies into bankruptcy: high development costs, expensive and unreliable transportation, and badly bungling the actual customer end of the program. There’s no way that NASA will ever recoup the full cost of the space station development. It just costs far more than it’s ever been worth. What NASA really needs to turn the station program around is the something like the bankruptcy option that Iridium and several of the LEO comsat companies used. If they sold the station and access to required support infrastructure on the market, even if they only got pennies on the dollar for their original investment, and if the commercial operator were free to renegotiate the Visiting Vehicles rules, and operate the station in the most efficient manner possible, with NASA not having any more say in how things are run than any other customer would…then there might just be a chance to make something useful out of our investment.

ISS and the Shuttle were badly executed ideas. They’ve cost far more than they are really worth, and the only way going forward that I can see to really tap what value is left in them is some sort of “bankruptcy” style auction. What do you all think?

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Jonathan Goff

Jonathan Goff

President/CEO at Altius Space Machines
Jonathan Goff is a space technologist, inventor, and serial space entrepreneur who created the Selenian Boondocks blog. Jon was a co-founder of Masten Space Systems, and is the founder and CEO of Altius Space Machines, a space robotics startup in Broomfield, CO. His family includes his wife, Tiffany, and five boys: Jarom (deceased), Jonathan, James, Peter, and Andrew. Jon has a BS in Manufacturing Engineering (1999) and an MS in Mechanical Engineering (2007) from Brigham Young University, and served an LDS proselytizing mission in Olongapo, Philippines from 2000-2002.
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16 Responses to Is It Time To Auction Off the ISS/Shuttle?

  1. Nathan Koren says:

    The problem I see with this is that it’s difficult for me to imagine anybody actually paying for this. The ISS, especially in its present form, is very expensive to maintain, and has very little actual capability. There’s a possibility that it could someday be expanded into something useful, but right now, if I had billions of dollars between my couch cushions that I wanted to spend on a space station, I’d far rather go talk to Bigelow Aerospace.

    So, the station needs to be finished — or at least developed further — before it’s worth anything. I’d do it with prizes. Traditionally, the strength of prizes — that they reward the development of new ideas and new players — is also one of their critics’ prime arguments: who can guarantee that these new ideas and new players will actually work? Why not just stick with what we already know works? (Never mind that, actually, it doesn’t).

    In this case, however, that argument doesn’t hold water. The amount of money required to fund the Shuttle through ISS completion is so stupendously huge, that it could be used to create prizes lucrative enough to attract the major players — Boeing, Lockheed-Martin, JAXA, Arianespace, all the ISS partners — as well as the more traditionally prize-oriented entrepreneurial upstarts.

    Here’s what I’d do:

    1.) Launch the Interim Control Module, phased somewhat behind the ISS. This will be a “proving ground” for proximity ops.

    2.) Any entity from an ISS-participating country that can launch an ISS module’s mass worth of water, and demonstrate proximity ops by safely berthing it to the ICM, gets $500 million for doing so.

    3.) Any group that successfully completes the above, gets an equal share of the remaining launches to the ISS, also at $500 million each.

    These are hefty enough prizes that there shouldn’t be much doubt about their successful completion. It should make the ISS partners happy, if they can compete, because the only thing better than a free launch is a free launch + buckets of cash. And after it’s all over, you’ll incidentally have a marvelous orbital fuel depot, which I suppose might be useful for that whole Moon, Mars, & Beyond business. And all of this would STILL be cheaper than flying the &*(#!$ing Shuttle.

  2. kert says:

    well, this all ignores a very simple variable that drives everything: jobs.

  3. Nathan Koren says:

    Sorry Kert, was that a typo? I think it’s spelled “congressional districts”. “Jobs” is something else entirely, and my scheme would create plenty of them.

    Seriously, yeah, I know it’ll never happen. There’s no relationship between what is politically feasible and what makes sense. But still, in a sane world…

  4. Joseph Mahaney says:

    NASA is not the sole ‘owner/operator’ of the ISS however.

    Is not NASA obligated to pay for most of the ISS launch costs?

    Nevertheless the option of auctioning the Shuttle System makes some sense in that NASA should not be in the business of regular operation of LEO systems. Seems like NASA suffers from the ‘no one can do it better than us’ syndrome. Of course, it is not entirely NASA’s fault. Congress persons do not make good engineers.

  5. Chris Mann says:

    I’ll start the bidding at 25 cents.

  6. Pete Lynn says:

    I was wondering just what it would take to launch the rest of the ISS on commercial launch vehicles allowing the shuttle to be retired now. An orbital tug for rendezvous and a little extra delta v? A bit of module stripping with some stripped out components coming up on other launches?

    Would this be cheaper and safer than another four years of the Shuttle?

  7. Anonymous says:

    Just a thought, and maybe someone can clarify, but does NASA really OWN the Shuttle? What is the relationship between NASA, Boeing, Lockheed, etc. Who owns the IP on the Shuttle tech, designs, etc. (I know the shuttle is old, but companies have a habit of tweaking designs to maintain some IP). And all the people in the ‘jobs’ don’t work for NASA. So could NASA, having sold you the Shuttle for 25c force the companies to hand over the designs, facilities, employees, etc. to you or would you just become the prime contractor?
    What contractual limits are there and more importantly what compensation will be paid to Boeing for ‘lost work’? $1-3bn for the next five years…

    Nice idea, but I see no mention of the one thing America is well known for .. lawyers!


  8. Jon Goff says:

    I’ll admit that such an auction is a relative long-shot. But then again, maybe not. You have to realize that when you’re talking about purchasing existing physical assets, that you may no longer be trapped only in the world of equity financing. I don’t have much experience with large scale debt financed deals, but I know people who are, and if the auction price came low enough, and if they could get the maintenance costs compared to potential revenues to come into alignment, I could see someone putting together a deal.

    [Hint, I’m talking sub-$1B for the US portion of the station, possibly as low as the $50-150M range.]

    The problem with buying a Bigelow module now is that they don’t exist yet, and will be at least another 6-8 years before they will. At that point, sure. But for now, if NASA were willing to accept a low enough auction price, I could see several groups trying to put together a deal.

    The big key though is going to be figuring out how to handle the marketing side so that you could actually make a reasonable ROI for the investment. I don’t know if it’s possible, but I wouldn’t dismiss it out of hand. Iridium and several of the LEO comsat companies are now profitable–once they were able to restructure their financial situation. Writing off a large past investement (several billion now for ISS) as a dead loss and going from there may suck, but it’s sometime the reality in life.


  9. Jon Goff says:

    Yeah, NASA isn’t the only one running the space station. They just own part of it, and kind of take the lead. I was mostly talking about having them sell their stake, and having whoever gets their stake renegotiate operations with the other stake holders. Russia, the EU, and Japan might actually prefer working with a good, solid, for-profit venture, instead of a fellow bureaucracy when it comes to station operations.


  10. Jon Goff says:

    Modifying most ISS modules to be launched on anything other than shuttle would be a royal pain in the backside. Not impossible, just very, very tough. Many of the modules are just barely launchable by shuttle, which has one of the highest LEO delivery masses of any existing launch vehicle. Add to that the fact that most of the modules are designed to take their structural loading through trunnions connecting the sides of the modules to the bay (instead of through the bottom like most satellites and ELV payloads), and that they need a lot of the power, environmental, and other services that the shuttle provides, and you basically end up needing a huge amount of excess mass brought up with each module in order to avoid having to do extensive redesign on them.

    Basically, other than an HLLV, with a tug, you’re going to be hard pressed to launch most of those modules. Shuttle sucks bad, but is still the best choice for a lot of those modules at the moment. I don’t know if the other countries really value their modules enough to pay the full commercial price of a flight on an auctioned off shuttle, but you never know. Once you’ve put $1B or more into a project, the Sunk-Cost-Fallacy becomes a lot harder to argue with (even if it is still a fallacy).


  11. Pete Lynn says:

    With the Shuttle and ISS as parents, I suppose there is little hope for any viable commercial offspring. My general ignorance of things NASA is largely due to my just not seeing any future in NASA derived architecture, an ignorance that yet again seems justified.

    I keep coming back to the seemingly complete lack of ‘new space’ station modules being developed for the small scale launchers – the COTS type vehicles. A marriage that seems necessary for the opening up of the space frontier. Such small payload low cost space station modules appear far cheaper than any other alternative. This might at least enable the ISS to be sold for its scrap value – surely the solar cells would be worth something…

    Bigelow, to my knowledge the only new space company working on the other half of the problem, is still stuck in the old ELV/Shuttle launch class, a class that SpaceX also seems to be being drawn into. The low cost launch future is in the smaller, openly new space competitive launch class. If only Bigelow would modularise their inflatable habitat designs accordingly, such a wasted opportunity. Doing so would create a far greater market incentive than the $50 million Bigelow prize.

    Perhaps there is some hope that some of the multitude of ‘new space’ capsule developers will start coming out with variants that might be cobbled together into very low cost space stations. This has some very interesting market possibilities. I suspect they will be the future, not Bigelow.

  12. Paul Dietz says:

    Is not NASA obligated to pay for most of the ISS launch costs?

    Operationally, what could this mean? There’s no law to compel the US government to continue to launch to ISS, should congress and the president decide otherwise. It might piss off the partners, but given what an albatross this has been, that would be a good thing, IMO.

  13. Nathan Koren says:


    I do see your point; it’s just hard for me to imagine anybody being able to get maintenance costs within an order of magnitude of revenue, even if all the “debt” was written off. As somebody who has dabbled with space station designs, I have to say that it would be impossible for me to design something more idiosyncratic and expensive to maintain if I tried. I know that people thought they could turn Mir into a viable commercial resource, but Mir was the epitome of streamlined functionality, compared to the ISS (if nothing else). If somebody (far) more creative than I can figure out how to generate revenue with it, then that would be fantastic. I just can’t imagine doing so myself.

    Pete: Actually, I think that this is a blind spot for the alt.spacers, and not for Bigelow. Unlike satellites or bulk goods, the usability of habitats is driven by their volume; the weight is driven by their surface area. The relationship between these two is not linear, but exponential. So if you’re docking multiple modules together, it’s not as if you can replace the functionality of a single 60,000 lbs module with four 15,000 lbs modules — eight or sixteen would be more like it. Even with cheaper smaller launch vehicles and factory-line modules, this can make your economics go south *very* quickly. It is one of the reasons, for example, why Skylab delivered so much more bang-for-the buck than the ISS.

    So, you need modules of a certain size in order to create a useful habitat. In the models I’ve worked with, 25,000 lbs is pretty close to a minimum useful size, and Bigelow’s 50,000 lbs is much less marginal than that. So I think they’ve got it more or less right. In the long term, when you’re doing orbital manufacturing of habitat vessels from bulk materials, rather than docking pre-fabricated modules, the economic model will be different. But for the foreseeable future, that’s what we’ve got to live with.

    (On a related note, one thing I’ve been musing about lately is the fact that there are three different “economies of scale”. One is the economy of operational scale; one is the economy of manufacturing scale; one is the economy of physical scale. Everybody seems to assume that all three are mutually exclusive. NASA and the Zubrinites generally come down in favor of the physical scale, as do I in this one particular case (although in no other case). Jon *used* to be an “manufacturing scale” kinda guy, but now he’s an “operational scale” kinda guy. Fair enough. But why only settle for one kind of scale? In the long term, there will certainly be a place for vehicles that can be cheaply mass-produced, fly routinely, and carry motherhuge payloads. Is this really so impossible? Entrepreneurial spacers need to be focused not just on optimizing their one favorite economy of scale, but on capturing other economies of scale as well.)

    (This is one of the reasons that I am fond of Masten’s evolutionary path: their basic concept can scale up *very* large, when needed, would still be easy to operate routinely. and manufacturing costs need not be intrinsically high, either. That’s all three economies of scale, right there. There’s no reason that they can’t be launching Bigelow modules, 8 or 10 years down the line.)

  14. Pete Lynn says:

    On reflection the weight of small non inflatable habitat modules would indeed mostly scale with surface area, not volume as per most pressure vessels. Minimum gauge constraints, thermal and micro meteor protection would start to dominate, but this does not seem prohibitive. It would seem to me that if smaller launch vehicles were even slightly cheaper or more convenient, then this would still be worth doing. Compared to the total mass of a space station, this does not seem that significant.

    The Bigelow approach is to launch everything, including the kitchen sink, in one go. This necessitates a very heavy rigid core that serves little other useful purpose and which severely restricts and complicates the design. They also need to forget the foam, (very poor strength to mass ratio and a packing nightmare), and use a much larger many layered sticked tent – but that is another issue.

    An approach that is possible with the inflatable designs is to launch and dock in shells. This adds far greater redundancy, flexibility and maintainability to the design. It also allows, for example, modules larger than the Bigelow module to be quickly docked from compact sub 1000 kg payloads.

    Taking this one step further, larger inflatable hangers should be practical. There are very quick ways or hooking pressure net shells together, on orbit, into even larger shells that could be passed outside. There are also ways of making non rigid hanger doors of very large diameter.

    I still do not see a compelling argument for large launch vehicles based on habitat module size.

  15. Jon Goff says:

    Lots of good points. I’ll just leave a few quick comments.

    1. I wrote this post mostly to try and question the conventional wisdom that the STS/ISS is impractically expensive for commercial use. I’m not convinced that it isn’t too expensive, I just don’t like unchallenged assumptions going around, especially when they fit my personal biases so well. If NASA no longer had a stake in the ISS, I think there is a chance that a well-run consortium might be able to turn around its operations and make it efficient enough that they could make the thing profitable. I was just interested in noodling out the idea, and finding out what things would need to be done if that were possible at all.

    2. It’s also to be remembered that I suggested auctioning the ISS off not just to American companies, but to any public or private (or combination) entity from any of the ISS member states. Even if it turns out that NASA’s chunk of the ISS is so commercially useless that giving it away for free couldn’t make it profitable, doesn’t mean that the EU, or Japan, or maybe even some group that isn’t currently represented in ISS wouldn’t be interested in buying NASA’s stake for prestige, or for their own research purposes. Especially if NASA were to commit to funding COTS to completion as part of the contract. With much lower cost assured commercial access, the ISS becomes a lot more valuable, even in its partially completed state.

    3. Regarding optimal size of station module, I think that the answer is complicated, and depends a lot on the current state of the transportation market. It doesn’t matter if 50,000lb would be the most ideal size to launch if launch were free and constantly available. What matter is which will yield the most useful station for the lowest amount of time, money, and hassle? When you work out the compromises, my gut instinct is that building blocks of 10-20klb are a lot more valid at this early date, maybe even less if SpaceX doesn’t deliver its Falcon V/IX.

    4. Regarding the three sorts of economies of scale, it turns out that there can sometimes be diseconomies of scale. It’s really easy to design, rapidly prototype, test, and iterate with small rocket engines. Once you get past a certain size though, it becomes harder and harder to get material in the sizes you need, and it becomes rapidly more expensive. Once you get past a certain tank size, manufacturability becomes much harder. Once you get past a certain takeoff thrust, noise becomes a huge issue. Once you get past a certain vehicle size, keeping E-sub-C down low enough and your MPL low enough to be able to afford to fly becomes tough….

    Basically the reality is that for most systems there are real diseconomies of scale past a certain point, and particularly this early on in the development of reusable rocket vehicles, I think trying to focus on the smallest economically useful vehicle is a much better investment of money.

    Will there ever be a day when RLVs are taking 50-60klb payloads to orbit on a daily basis? I hope so. I just don’t think it’ll be any time soon, so I tend to try and think what can be done with smaller vehicles first.


  16. Sam Dinkin says:

    Shuttle would likely not sell. Who wants a 10-20k/lb 50,000 lb launched payload?

    ISS likely would, but only for the $100 million or so it would be worth as 4 Bigelow tourist hotels.

    Foreigners could be bought out of our obligations by giving them a small portion of the money we would have spent on ISS and Shuttle. Congressional districts could too for that matter.

    The rhetorical trick of using the phrase “auction the shuttle” and “auction the ISS” is to force proponents onto the defensive to produce a valuable reason to keep these in Government hands and to force the question on their commercial (or prestige) value.

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