Comments on: COTS Thoughts

By: How to Improve COTS « The Four Part Land

How to Improve COTS « The Four Part Land — Fri, 06 Mar 2009 16:09:09 +0000

[...] How to Improve COTS Selenian Boondocks » Blog Archive » COTS Thoughts [...]

By: Jonathan Goff

Jonathan Goff — Fri, 27 Feb 2009 16:08:41 +0000

Steve,
Having hardware-based milestones doesn’t necessarily imply having no milestones for a long time and then a big rush at the end. Especially if you don’t have an Elon Musk funding you, you have to find a way to spread the milestones out more evenly. I think this can be done, it just requires a more incremental development process than the “we’ll design everything, review everything, then build everything, and then we’ll demonstrate how smart we are” approach that NASA prefers…

~Jon

By: Steve Allen

Steve Allen — Fri, 27 Feb 2009 12:08:14 +0000

I think that one reason for the watering down is that NASA staff in are focussed primarily on spending their budget, and hopefully increasing it in the following years.
High-risk and long term COTS contracts represent a lot of personal career risk for such individuals working in NASA. What happens if SpaceX negotiates a true (un-watered down) COTS contract, spends a couple of years developing paper designs and technologies, then changes their mind and pulls out, not pursuing the expensive and difficult developments parts of the contract. Would this not lead to a mad rush where NASA tries to spend this budget somewhere else, quite possibily in a non-COTS program, managed by a competiting bureaucrat in NASA?

By: What’s Working - and Not Working - in NASA’s COTS Program at Parabolic Arc

Fri, 27 Feb 2009 00:29:20 +0000

[...] post is rather lengthy and nuanced, so it’s difficult to summarize. I personally think we [...]

By: Jonathan Goff

Jonathan Goff — Thu, 26 Feb 2009 20:29:05 +0000

Vladislaw,

1. Not sure how much would be needed, but somewhere in the $500M-1B range should get you enough to fund at least 2 main efforts, and maybe one or two backup study efforts (in case one of the main efforts hits snags early on). Might be doable with less, but I’m not really sure.

2. I’d like to see two or three primary ones, and maybe some small ~$10-20M secondary ones (especially if the secondary ones have some high-risk/high-payoff approaches they would be maturing as part of that $10-20M). But at least two teams. This is higher risk, and part of the way of mitigating that risk is by having redundancy. And unlike the “cargo to space station” market, the people to orbit market has a lot more potential room for growth. Bigelow for instance would really like to have two options, and quite frankly I think NASA ought to as well. That way, if a) something goes wrong with one supplier’s launch vehicle or capsule, there’s still at least one backup that can be leaned on while the problem is getting sorted out, b) it’s much easier to on-ramp new providers. If you’re already buying services from two providers, it’s much easier to bring on a third if they’re better than it is if you have a sole-provider.

3. Making the rules/incentives such that it doesn’t disincentivize using existing launch vehicles would be a good idea. Just making a crew capsule that can fly on an existing LV is a lot lower risk than building a whole new launch system. But we shouldn’t bias it away from innovative approaches either. If someone wants to propose a small 2-person RLV, they should still have a fair shot at it.

~Jon

By: Vladislaw

Vladislaw — Thu, 26 Feb 2009 20:06:07 +0000

Jon,

For a fully funded COTS-D program, what kind of numbers do you think would be needed?

How many teams would you believe would be needed to make it competitive? Personally I would like to see a bigger field of companies and more ideas then just one or two.

Should COTS-D allow someone to just design the crew capsule and buy and off the shelf launcher, like building a capsule then using the Falcon 9?

By: Bob Steinke

Bob Steinke — Wed, 25 Feb 2009 16:16:14 +0000

I think the main point of #2 was that skin-in-the-game requirements need to be well matched to the risk-adjusted net present value of potential revenue sources. If the contract payment for reaching the hard technical milestone is enough to pay for the technical development all by itself then there’s no conflict between #2 and #3.

It’s only when you expect companies to pay for part of the development by raising money based on potential revenue from other markets, and those markets are insufficient, that you crowd new players out of the competition. And that’s true whether the milestones are hard or soft.

By: Rick Boozer

Rick Boozer — Wed, 25 Feb 2009 16:14:48 +0000

Jon,
Your points all make sense to me. What I want to know now is:
1) How do we go about getting these ideas to the right people in government who can make a difference?
2) How do we go about convincing said government officials of the validity of these concepts against the entrenched influence of NASA vested interests?

By: Jonathan Goff

Jonathan Goff — Wed, 25 Feb 2009 15:17:14 +0000

Eric,
Oh, I agree that paying only on technical milestones (after a first kickoff payment to “prime the pump”) does put some sort of skin-in-the-game requirements. The difference is that you’re raising much smaller chunks of money, and instead of raising it to meet some currently unproven market, you’re raising it to make it to the next milestone of a firmly negotiated contract. It’s a lot easier to get a “line of credit” setup to help keep cash reserves while carrying out a government or commercial contract than it is to raise enough equity to do a full development program on speculation.

I wasn’t saying skin-in-the-game was entirely evil, I was just pointing out that it was taken overboard in a dangerous way.

~Jon

By: Eric Collins

Eric Collins — Wed, 25 Feb 2009 12:11:56 +0000

In a way, your comments on #2 and #3 seem a little at odds. First you say that the “skin in the game” provision kept out a number of competitors because they couldn’t raise sufficient private capital, but then you also claim that NASA shouldn’t even give up it’s matching funds until the company has achieved nearly all of it’s design, review, development, and manufacturing milestones. How exactly does this latter situation encourage more companies to take on the risk of developing new systems, especially if many of them can’t even raise enough money up front to match NASA’s eventual contribution?