NASA's COTS Contract: They've Named the Winners, But What Does it Mean?

In considering the significance of Space Exploration Technologies (SpaceX) and Rocketplane Kistler winning $500 million, the first award from NASA's Commercial Orbital Transportation Services (COTS) demonstration program, it serves to look into the future and consider each of two possible headlines of August 21, 2009:

"First Successful Flights of NASA COTS winners Herald New Era in Commercial Space"

"Bankruptcy; Failure in Flight of COTS Contenders Reinforces Traditional NASA/Aerospace Industrial Model"

The headlines underscore the promise as well as the risks associated with this new way of doing business with NASA for so called "New Space" companies.

The promise is huge. A private, American capability to take cargo and eventually humans to the International Space Station (ISS) in the beginning, and later to a private space station such as is the one under development by Bigelow Aerospace. Indeed, it may be that the COTS winners newly formed capability encourages Robert Bigelow to accelerate his own efforts. It is entirely possible that by 2011 that we could have ISS and a Bigelow space station being serviced by our intrepid COTS teams.

With ISS and a Bigelow station as markets it is entirely possible that the great space tourism industry becomes a reality. With two space stations in orbit with regular service the long moribund microgravity research market is reinvigorated. It has always been the case that American industrial and research enterprises who wanted to use the capability of the Shuttle had as their bitter lament that frequent and reliable access was needed for investment. The Shuttle never fulfilled this promise and unless the COTS players reach their goals it is unlikely that ISS ever will either. With frequent and affordable access to ISS and a Bigelow station available it is likely that industry will return to the field, providing a further return on investment for the COTS winners.

Frequent and affordable access by humans and cargo to orbit has the potential to facilitate entirely new markets such as orbital debris removal and orbital servicing of commercial and DoD assets. Beyond this, it may be that orbital assembly facilities and a staging point for commercial missions to GEO and even to the Moon could move from the realm of science fiction to a thriving business. However, there is much work to be done before these glorious dreams are achieved.

First of all the teams have to get their systems built! This is not a trivial task. In the entire history of man only three nations have accomplished this task with resources far in excess of COTS contenders. Each and every day everyone associated with these efforts should wake up afraid that they have missed something or have overlooked a trivial yet crucial bit of data. The hopes of a generation of space enthusiasts ride on their success and it cannot be underestimated how high the stakes are for the New Space movement.

Beyond the internal challenges that these companies face, there are external forces to contend with as well. The government is a fickle and unreliable customer who's way of breaking contracts would cause lawsuits between any two private companies and who has left uncounted corporate corpses with a change of political wind direction. Space advocates are the best allies as we can scream bloody murder at the first threat of this, as long as the companies meet their milestones.

There is another thing that space advocate organizations can do, support the development of new markets. What is needed is a fair climate for new space companies to flourish. In the late 1990's California congressman Dana Rohrabacher introduced the "Zero G, Zero Tax" bill, which would exempt from taxes profits made by companies that do business in space beyond the current communications and remote sensing companies.

Work on this bill fizzled when the Congressional Budget Office scored the bill at $10 billion in lost revenue over its twenty year life. It was never followed up on but an immediate comment is that in order to "lose" $10 billion in revenue, almost $30 billion in profits have to be made! This is pretty good for an industry that today generates exactly zero dollars in profits or revenue. The Internet flourished because of a tax holiday and such incentives are the push that is needed to help create the new orbital markets to reward the huge risk that SpaceX, Rockeplane Kistler, Bigelow, and others are making or are ready to make should conditions become favorable.

It is space advocacy's dream that both companies make it. It is likely that a form of one or the other of the headlines will be the case in 2009. This is what a very good 2016 headline could read should they be successful:

"Consortium of Private Space Companies Expand Lunar Polar Base"

• SpaceX, Rocketplane Kistler Win NASA COTS Competition
• Special Report: The New Space Race
• Elon Musk: SpaceX Rocket Plans Outlined
• Competition Heats Up for NASA's Space Cargo Contract
• NASA to Seek Bids for ISS Cargo Deliveries

Dennis Wingo is CEO of Skycorp Inc of Huntsville AL and the author of Moonrush.

NOTE: The views of this article are the author's and do not reflect the policies of the National Space Society.

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