NASA Analysis: Falcon 9 Much Cheaper Than Traditional Approach

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SpaceX's Falcon 9 on the pad at Cape Canaveral. (Credit: Chris Thompson/SpaceX)

SpaceX's Falcon 9 on the pad at Cape Canaveral. (Credit: Chris Thompson/SpaceX)

A NASA analysis shows that it cost significantly less for SpaceX to develop the Falcon 9 using the COTS private-partnership approach than it would have under NASA’s traditional approach to contracting.

Under methodology #1, the cost model predicted that the Falcon 9 would cost $4.0 billion based on a traditional approach. Under methodology #2, NAFCOM predicted $1.7 billion when the inputs were adjusted to a more commercial development approach. Thus, the predicted the cost to develop the Falcon 9 if done by NASA would have been between $1.7 billion and $4.0 billion.

SpaceX has publicly indicated that the development cost for Falcon 9 launch vehicle was approximately $300 million. Additionally, approximately $90 million was spent developing the Falcon 1 launch vehicle which did contribute to some extent to the Falcon 9, for a total of $390 million. NASA has verified these costs.

The conclusion is included in Appendix B of the recently released Commercial Market Assessment for Crew and Cargo Systems report. Read the full appendix after the break.

Commercial Market Assessment for Crew and Cargo Systems
Appendix B – Discussion of Cost Effectiveness of Commercial Cargo Effort

NASA recently conducted a predicted cost estimate of the Falcon 9 launch vehicle using the NASA-Air Force Cost Model (NAFCOM). NAFCOM is the primary cost estimating tool NASA uses to predict the costs for launch vehicles, crewed vehicles, planetary landers, rovers, and other flight hardware elements prior to the development of these systems.

NAFCOM is a parametric cost estimating tool with a historical database of over 130 NASA and Air Force space flight hardware projects. It has been developed and refined over the past 13 years with 10 releases providing increased accuracy, data content, and functionality. NAFCOM uses a number of technical inputs in the estimating process.
These include mass of components, manufacturing methods, engineering management, test approach, integration complexity, and pre-development studies.

Another variable is the relationship between the Government and the contractor during development. At one end, NAFCOM can model an approach that incorporates a heavy involvement on the part of the Government, which is a more traditional approach for unique development efforts with advanced technology. At the other end, more commercial-like practices can be assumed for the cost estimate where the contractor has more responsibility during the development effort.

For the Falcon 9 analysis, NASA used NAFCOM to predict the development cost for the Falcon 9 launch vehicle using two methodologies:

1) Cost to develop Falcon 9 using traditional NASA approach, and
2) Cost using a more commercial development approach.

Under methodology #1, the cost model predicted that the Falcon 9 would cost $4.0 billion based on a traditional approach. Under methodology #2, NAFCOM predicted $1.7 billion when the inputs were adjusted to a more commercial development approach. Thus, the predicted the cost to develop the Falcon 9 if done by NASA would have been between $1.7 billion and $4.0 billion.

SpaceX has publicly indicated that the development cost for Falcon 9 launch vehicle was approximately $300 million. Additionally, approximately $90 million was spent developing the Falcon 1 launch vehicle which did contribute to some extent to the Falcon 9, for a total of $390 million. NASA has verified these costs.

It is difficult to determine exactly why the actual cost was so dramatically lower than the NAFCOM predictions. It could be any number of factors associated with the non-traditional public-private partnership under which the Falcon 9 was developed (e.g., fewer NASA processes, reduced oversight, and less overhead), or other factors not directly tied to the development approach. NASA is continuing to refine this analysis to better understand the differences.

Regardless of the specific factors, this analysis does indicate the potential for reducing space hardware development costs, given the appropriate conditions. It is these conditions that NASA hopes to replicate, to the extent appropriate and feasible, in the development of commercial crew transportation systems.

  • James

    DUH!

  • JohnHunt

    Ditto

  • John

    But has there been any indication of how much NASA has spent supporting and tracking the development of the Falcon, or any projection of cost for both NASA and SpaceX to certify the system to fly to ISS? I would hope test flights would have been part of the cost built into the model.

  • I think NASA’s original plan was to spend $500 million on COTS. Funding for milestones broke down to:

    SpaceX: $278 million
    OSC: $170 million
    Total: $448 million

    NASA added $300 million to COTS this year for risk reduction activity with these milestone payments:

    SpaceX: $118 million
    OSC: $118 million
    Total: $236 million

    From this I would surmise:

    Milestone Payments: $684 million
    NASA Program Costs: $116 million
    Total Cost: $800 million

  • TomB

    Please fix the headline. It should read: “NASA Analysis: Falcon 9 Much Cheaper Than Government-Funded Approach”

  • Fred

    The whole point of the shuttle program was that it would be cheaper than launching rockets. Was that a lie?

  • Paul451

    Makes me wonder what could be done with the budget of the SLS program if you ran it like the COTS/CCDev programs.

  • Marcelo Pacheco

    The reasons Falcon 9 development costs were so much cheaper:

    All options were taken using the lowest cost that fits the bill road.

    Not once they did something the more expensive way because it was prettier, easier, cozier, more in line with obscure NASA or third party interests

    By doing a clean sheet design, totally open minded philosophy, SpaceX managed to attract talent that were just too bright for traditional companies, people that think out of the box, whose minds can’t fit the narrow confines of traditional corporations. But their ideas were kept in check by philosophy of cost control. The ultimate lowest cost highest results with high risks method.

  • Marcelo Pacheco

    Much of the SLS program will be superseeded by SpaceX Falcon Heavy and follow on designs with a Methane 2nd stage. Falcon XX would be similar to the SLS 90 ton to LEO launcher.
    Of course many in NASA tasked with the SLS program won’t admit to that. It’s my own conclusion – but a pretty obvious one.

  • Knowles2

    not when it was originally said. Engineers who said it didn’t know that the shuttle project would put pork barrel politics above good design and practical considerations. That Nasa would spend years having it budget drastically cut back so was unable or unwilling to invest in the platform development.

  • Dave Algonquin

    If it wasn’t a lie, it may as well have been. They promised $12 million shuttle launches and ended up with $1.5 billion launches. That’s more than a little slippage.

  • Dave Algonquin

    This is the single greatest argument for SpaceX. Any development program has delays and overruns, but the fact that they developed Falcon 9 for $400 million is an achievement unmatched by anyone else. Compare that to the marginal cost of launching a shuttle….over $1 billion on a system developed decades ago.