SpaceX Just Beat Out Competition For A New Contract — And That’s Not Great

There’s an emerging reality about NASA’s pursuit of commercial contracts that’s becoming increasingly difficult to escape: Companies not named SpaceX are struggling with NASA’s approach to awarding fixed-price contracts for space services.

This belief is confirmed by the recent award of an $843 million contract to SpaceX to build a heavily modified Dragon spacecraft that will be used to deorbit the International Space Station by 2030.

Recently released Source Selection Statement The process of managing NASA’s space operations chief, Ken Bowersox, reveals that the competition was fierce. SpaceX faced only one serious competitor in the process, Northrop Grumman. And in all three categories—price, mission fit, and past performance—SpaceX was significantly outperformed.

While it’s great that NASA has a great contractor in SpaceX, having too few credible competitors is not healthy in the long run. Moreover, a close reading of the source selection statement reveals that NASA had to work hard to get any competition at all.

“I was really pleased that we got proposals from the companies that we pitched,” Bowersox said during a conference call last week. “The companies that sent us proposals are great companies, and it was great to see that interest. I would have expected more companies to send proposals.” [proposals]Honestly, but I was very happy to get the one we got.”

Business initiatives struggle

NASA’s push into “commercial” space began nearly two decades ago with a program to deliver cargo to the International Space Station. The space agency initially selected SpaceX and Rocketplane Kistler to develop the rockets and spacecraft to accomplish this, but after Kistler failed to make any significant progress, the company was replaced by Orbital Sciences Corporation. The cargo delivery program was largely successful, resulting in the SpaceX Dragon and Orbital Sciences Cygnus cargo vehicles. The program continues to this day.

A commercial approach generally means that NASA pays a “flat” price for the service rather than paying a contractor’s costs plus a fee. It also means that NASA hopes to become one of many customers. The idea here is that NASA, as a first mover, helps stimulate a market where its flat-rate contractors can also sell their services to other entities—both private companies and other space agencies.

Since then, NASA has expanded this commercial approach to crew, with SpaceX and Boeing winning major contracts in 2014. However, only SpaceX has flown operational astronauts, while Boeing remains in the development and testing phase, with crewed flight testing underway. While SpaceX has sold a half-dozen private crewed flights on Dragon, Boeing has yet to announce any.

This commercial approach has also been tried with the delivery of cargo to the Moon through the Commercial Lunar Payload Services program, as well as larger lunar landers (the Human Landing System), next-generation spacesuits, and commercial space stations. Each of these programs has a mixed record at best. For example, NASA’s inspector general has been highly critical of the lunar cargo program. In a recent reportOne of the spacesuit manufacturers, Collins Aerospace, recently pulled out because it could not fulfill its fixed-price contract.

Some of NASA’s most important traditional space companies, including Lockheed Martin, Boeing, and Northrop Grumman, have said they are reconsidering whether to participate in future fixed-price contract competitions. For example, Northrop CEO Kathy Warden said: He said last August“We are becoming more disciplined going forward in ensuring that we work with the government to ensure the appropriate use of fixed-price contracts.”

So the traditional big space companies don’t like fixed-price contracts, and many new space companies are struggling to survive in this environment.