NASA Looks to Extend SpaceX, Orbital Commercial Cargo Contracts for Two Year

12 Comments

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NASA intends to extend its Commercial Resupply Services (CRS) contracts with Orbital Sciences Corporation and SpaceX by up to two years, according to a pre-solicitation notice posted on the Federal Business Opportunities website.

The notice said the extensions until December 2017 would be done at no cost to the government. NASA awarded both contracts in December 2008 for cargo delivery to the International Space Station (ISS) with not to exceed values of $3.1 billion apiece.

The contract extensions, which would be done one year at a time, would involve a delay in the new round of commercial cargo contracts, known as CRS2, which NASA intends to open for competitive bidding.

“This extension is expected to be executed one year at a time so that if a new provider competing for the above mentioned CRS2 contract can demonstrate their ability to deliver cargo early then it would be possible to award CRS2 contracts such that the second year of the extension would not be required,” the notice states.

Blue Origin, Boeing and Sierra Nevada Corporation are all developing orbital spacecraft that could compete to fly cargo to the space station.  All of the spacecraft are several years from flying.

  • windbourne

    If I read this right, it is basically, extending the length of time for the current contract to be completed, nothing more. If so, makes sense.

  • therealdmt

    I’d think SpaceX would want to
    1) raise their rates somewhat, as they’re performing more service (down mass, more flights total) than Orbital for much less money, and
    2) get permission to reuse their Dragon capsules. The current contract specifies a new Dragon capsule for each flight, even though SpaceX went to a lot of work to design them to be reusable.

    Meanwhile, I’d think NASA would want to at least try to negotiate for a lower price from Orbital.

  • mattmcc80

    It’s not as simple as just comparing the price tags, downmass or not, and flight count, there are more factors if you’re trying to judge if the contracts should be higher or lower. The two companies have different overhead expenses and different profit margin desires. And while Dragon does have downmass capability, Cygnus isn’t nearly as volume limited. Extended Cygnus will have nearly three times the volume of Dragon.

    If all you look at is the dollars, sure, Orbital was paid more, but their overhead and expenses are virtually guaranteed to be quite a bit higher than SpaceX. They outsource virtually all of both the rocket and the spacecraft, after all.

    As for reusing Dragons, AFAIK SpaceX owns the CRS capsules, so they can fly them for in-house testing to validate that they actually are fit to be flown more than once. NASA would be insane to allow reusing capsules before SpaceX demonstrates that, and they should do it on their own dime. If they do that in time for the next round of supply contracts (Now possibly as late as 2018) then SpaceX could have a strong bargaining chip: substantially cheaper unit cost (refurbishing instead of new construction) over other bidders.

  • windbourne

    Why do you think that this is MORE flights?
    From what I read of it, it sounds like the contract is simply extended so that the same number of flights will simply take longer to finish.

    Or have I misread this?

  • BeanCounterFromDownUnder

    I read this the same way.
    Interesting but I would say that the current NASA contract pays for a minimum amount of cargo across a certain number of flights. Minimum being the operative word here. If they can put more cargo up and down on those existing flights it probably explains why they can extend out the contract without incurring increased costs. Certainly F9 and Dragon have both undergone substantial upgrades which allow increased capability.

  • Paul451

    The two companies have different overhead expenses and different profit margin desires. […] their overhead and expenses are virtually guaranteed to be quite a bit higher than SpaceX. They outsource virtually all of both the rocket and the spacecraft, after all.

    As a customer, I shouldn’t care the slightest bit about this. Price on the docket, capacity delivered. That’s it.

    If Orbital can offer a greater value to NASA, then they should receive more, great. If they can’t, why should NASA pay for the company’s poor choices?

    We have to start moving away from the model that rewards bad decisions and inefficient projects.

    NASA would be insane to allow reusing capsules before SpaceX demonstrates that, and they should do it on their own dime.

    Do you not see the double standard here? Oh, SpaceX should fund their own development, and Grrr if they get paid for it. But every other contractors gets paid for their upgrades and development work; and if they don’t get guaranteed payment, they never do the work themselves.

  • Hug Doug

    NASA doesn’t really care about their overhead and expenses, but Orbital and SpaceX certainly do. those are the things they considered when they submitted their COTS bid to NASA. NASA simply accepted both bids, that’s all. and remember, SpaceX was a considerable risk at the time, having 3 failed launches to 1 successful launch.

  • windbourne

    Actually, NASA does in a way.
    They want these companies to compete and drop their prices in the future.
    Now, OSC has no way of doing that since they own neither iP or the manufacturing of those rockets.
    BUT, NASA’s motivation with OSC was not about costs, but getting a guaranteed launch system. However, NASA needs lower costs on all of their launch systems so that they can focus on other items and be able to afford it.

  • mattmcc80

    SpaceX was paid for their development work that NASA needed. NASA doesn’t need reusable capsules.

  • delphinus100

    1. SpaceX sets their prices according to what they think is an acceptable profit margin. If they can do so, while providing more than the competition in the process…this is a good thing.

    2. They can re-fly a Dragon any time they want, just not for NASA. This is what he customer wants, but in time, they won’t be the only Dragon customer…

  • therealdmt

    ” The two companies have different overhead expenses and different profit margin desires”

    This is bizarre.

  • therealdmt

    It’s true that they should (and are) providing the customer with what it wants (new capsules each time). What I’m saying is, they should lobby to have NASA accept reused capsules so as to both lower SpaceX’s expenses AND lower their prices, saving NASA money.

    Dragon capsules were designed to be reusable. It’s like NASA buying a flight on a commercial space shuttle, using it once, and then insisting that they will only fly on a new shuttle for the next flight. Okay, the supplier could do that, but it’s probably time to have a little sit down with the customer and explain the whole concept of what is being offered here.