NASA Places $500 Million Bet on Two Very Different Firms

NASA Administrator Mike Griffin does not mince words when he calls the Commercial Orbital Transportation Services (COTS) demonstration effort a gamble, albeit one with the potential to pay off big time if the entrepreneurial sector delivers.

"I've said many times that I think -- obviously by the fact that I'm gambling a half-billion dollars here -- commercial space has a pretty strong supporter in me as NASA administrator," Griffin said in a recent interview. "If it doesn't work, I've frankly made the wrong bet ... with a good amount of money that we could have used for other purposes if the entrepreneurial sector is, in fact, not able to step up."

That $500 million wager has been placed on two very different firms that both have the same goal: building a vehicle that will meet NASA's need for a new way to deliver supplies to the international space station after the space shuttle fleet is retired in 2010.

The two winners of the COTS demonstration contracts NASA awarded Aug. 18 -- Space Exploration Technologies Corp. (SpaceX) and Rocketplane Kistler -- both intend to develop new kerosene-fueled rockets to launch their proposed crew and cargo modules on confidence-building test flights before shooting for the international space station.

Both SpaceX and Rocketplane Kistler have a considerable amount of hardware already on hand -- more, in fact, than any of the four other COTS finalists the pair beat out for the awards.

Both companies intend to combine the money they receive from NASA -- SpaceX is getting $278 million and Rocketplane Kistler $207 million -- with additional private investment. Both companies also plan to berth their cargo modules to the international space station with the aid of the outpost's giant robot arm.

But that is pretty much where the big similarities between the two competitors end.

El Segundo, Calif.-based SpaceX was founded just four years ago by thirty-something whiz kid Elon Musk who made a fortune building and selling two Internet businesses before setting his sights on space.

Rocketplane Kistler, at least the Kistler portion of the Oklahoma City-based company, has been trying to field the fully reusable K-1 rocket for nearly 15 years and is led by an industry veteran who has held top jobs at Boeing and NASA.

SpaceX has a reputation for shunning the traditional aerospace contractors and doing nearly everything in house. Rocketplane Kistler has long-established relationships with the big contractors and in fact is contracting out most of the K-1 development work to Dulles, Va.-based Orbital Sciences Corp. and a network of top-tier subcontractors.

Shooting for 2008

Rocketplane Kistler is shooting for late 2008 to conduct its first flight of the K-1 and its cargo module on a mission to rendezvous and demonstrate close proximity operations with a space station stand-in. Because the K-1's upper stage is the reusable cargo module, Rocketplane Kistler President Randy Brinkley said the company is looking for some other "non-ISS entities" to serve as the stand-in for the demonstration.

Brinkley said the company is working several possibilities with government agencies and other contractors, including Woodland Hills, Calif.-based Constellation Services International, a former COTS contender that proposed a Russian-built cargo module that could launch on a variety of rockets and would be retrieved and ferried to the space station by a Russian Progress resupply spacecraft. Constellation Services International President Charles Miller confirmed discussions with Rocketplane Kistler. "We'd be happy to help Kistler out," Miller said, "and we have given them more than one option on how they could deliver cargo to [the international space station] on the very first mission." He declined to provide further details.

Brinkley, the former Boeing Satellite Systems president and past NASA international space station program manger, said the actual K-1 cargo module would not go to the space station itself until the second flight. A third and final space station-bound K-1 flight, he said, would be conducted in spring 2009.

Rocketplane Kistler, which was formed in February when Rocketplane Chief Executive and President George French bought the previously bankrupt Kistler Aerospace, plans to finance the restart of K-1 development with financial assistance from teammate Alcatel Alenia Space of Turin, Italy, and Orbital Sciences Corp., which previously announced it would sign on as the K-1 prime contractor and pump about $10 million into the project in the event of a COTS win.

New York-based investment banker Jeffries Quarterdeck has been retained to lead additional financing rounds. Brinkley would not specify how much money Rocketplane Kistler needs to complete the K-1 and conduct the required demonstrations beyond: "It's a two-for-one investment in terms of our [contributions] and the funds NASA has contributed."

Kistler Aerospace raised and spent more than $500 million before declaring Chapter 11 bankruptcy in 2003. At the time, Kistler executives estimated that the company had on the order of $500 million more to spend to complete the K-1.

In addition to overseeing the final development and production of the K-1 system, Orbital Sciences also will manage K-1 flight operations.

All three COTS flights, Brinkley said, would be conducted out of the company's long-planned Woomera, Australia facility. Rocketplane Kistler is considering establishing a second launch site in the United States, probably either at Cape Canaveral, Fla., or NASA's Wallops Flight Center on Virginia's Eastern Shore.

Rocketplane Kistler's other major teammates include Northrop Grumman, which is the lead contractor on the K-1 structure, and Lockheed Martin's New Orleans-based Michoud operation, which is building the K-1's fuel tanks and will be the site for the integration and assembly of the vehicle. Sacramento, Calif.-based Aerojet is supplying the four kerosene-fueled engines needed for each K-1 vehicle. Aerojet has an inventory of more than 50 NK-33 engines, recently renamed the AJ-26 to downplay their Russian origin.

Proving the Fundamentals

SpaceX's first COTS flight, targeted for late 2008 or early 2009, is intended to "prove out the fundamentals" and not much more, Musk said in an interview. "It's going to go to orbit, do orbital maneuvering and then return to Earth," he said.

On the second COTS demo flight, using the Falcon 9's spent upper stage as a stand in for the space station, the 3.8-meter diameter Dragon capsule will demonstrate that it can safely and accurately maneuver within grapple range of the station's robotic arm and then maintain position.

The third flight will be an actual cargo delivery mission that also will demonstrate that Dragon can bring discarded cargo back to Earth.

The first three flights of the Dragon spaceship should be flights four, five and six for the Falcon 9 rocket, which is slated to make its debut in early 2008 launching for a U.S. government customer that SpaceX has said it is not at liberty to identify. SpaceX has two more Falcon 9 launches planned for 2008: a second-quarter launch for MDA Corp. of Canada to loft the Cassiope space weather and communications experiment satellite; and a fourth-quarter launch for Bigelow Aerospace to put up an inflatable space module for the North Vegas, Nev.-based company.

The March 24 debut of the smaller Falcon 1 rocket on which Falcon 9 is based did not go as SpaceX had hoped. A fuel leak caused the rocket's main stage engine to catch fire shortly after liftoff, ending the flight well before second-stage ignition. SpaceX expects to attempt its next Falcon 9 demonstration launch in early December.

Musk has invested a little more than $100 million in SpaceX to date. In addition to the NASA COTS money, Musk expects to spend $100 million for Dragon and roughly an additional $100 million for the Falcon 9.

Musk said he intends to hold off on seeking outside capital until SpaceX has achieved its first successful satellite launch, which could come as soon as early next year when it attempts to launch the Pentagon's TacSat-1.

Musk said SpaceX also expects to maintain its tradition of keeping most of the project in house.

"There is this perception out there -- and it's a reality born of necessity actually -- that SpaceX does everything itself," Musk said. "It's not because we want to do everything ourselves. We would rather do less in house but we need suppliers who are really cost efficient."

"The space supply chain is so freaking expensive that if we were to subcontract out large subsystems we wouldn't be able to make our cost number." Musk said. "We are quite vertically integrated out of necessity."

SpaceX does, however, have several partners for its COTS effort. MacDonald Dettwiler is providing an automated-last-mile guidance system that will help controllers on the ground maneuver Dragon within reach of the station's robot arm. Other SpaceX teammates include Houston-based Spacehab, which is lending its space station logistics expertise, ARES Corp. of Burlingame, Calif., Odyssey Space Research of Houston, and Paragon Space Development Corp., a Tucson, Ariz.-based firm that also is helping Lockheed Martin with its Crew Exploration Vehicle life-support system design.

While successfully completing the COTS demonstration on time would put both SpaceX and Rocketplane Kistler in good position to win space station re-supply contracts and gain NASA's confidence that it can even trust sending crews up on the vehicles, there is no guarantee of any NASA business beyond the demonstration. NASA intends to hold a second open competition the actual service contracts.