NASA Places $500 Million Bet on Two Very Different Firms

NASAAdministrator Mike Griffin does not mince words when he calls the CommercialOrbital Transportation Services (COTS) demonstration effort a gamble, albeitone with the potential to pay off big time if the entrepreneurial sectordelivers.

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

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

The twowinners of the COTS demonstration contracts NASA awarded Aug. 18 -- SpaceExploration Technologies Corp. (SpaceX) and Rocketplane Kistler -- both intendto develop new kerosene-fueled rockets to launch their proposed crew and cargomodules on confidence-building test flights before shooting for theinternational space station.

Both SpaceXand 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 outfor the awards.

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

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

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

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

SpaceX hasa reputation for shunning the traditional aerospace contractors and doingnearly everything in house. Rocketplane Kistler has long-establishedrelationships with the big contractors and in fact is contracting out most ofthe K-1 development work to Dulles, Va.-based Orbital Sciences Corp. and anetwork of top-tier subcontractors.

Shootingfor 2008

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

Brinkleysaid the company is working several possibilities with government agencies andother contractors, including Woodland Hills, Calif.-based ConstellationServices International, a former COTS contender that proposed a Russian-builtcargo module that could launch on a variety of rockets and would be retrievedand ferried to the space station by a Russian Progress resupply spacecraft. Constellation Services International President Charles Miller confirmeddiscussions 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 coulddeliver 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 spacestation program manger, said the actual K-1 cargo module would not go to thespace station itself until the second flight. A third and final spacestation-bound K-1 flight, he said, would be conducted in spring 2009.

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

NewYork-based investment banker Jeffries Quarterdeck has been retained to leadadditional financing rounds. Brinkley would not specify how much money RocketplaneKistler needs to complete the K-1 and conduct the required demonstrationsbeyond: "It's a two-for-one investment in terms of our [contributions] and thefunds NASA has contributed."

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

In additionto overseeing the final development and production of the K-1 system, OrbitalSciences also will manage K-1 flight operations.

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

RocketplaneKistler's other major teammates include Northrop Grumman, which is the leadcontractor on the K-1 structure, and Lockheed Martin's New Orleans-based Michoudoperation, which is building the K-1's fuel tanks and will be the site for theintegration and assembly of the vehicle. Sacramento, Calif.-based Aerojet issupplying the four kerosene-fueled engines needed for each K-1 vehicle. Aerojethas an inventory of more than 50 NK-33 engines, recently renamed the AJ-26 todownplay their Russian origin.

Proving theFundamentals

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

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

The thirdflight will be an actual cargo delivery mission that also will demonstrate thatDragon can bring discarded cargo back to Earth.

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

The March24 debut of the smaller Falcon 1 rocket on which Falcon 9 is based did not goas SpaceX had hoped. A fuel leak caused the rocket's main stage engine to catchfire shortly after liftoff, ending the flight well before second-stage ignition.SpaceX expects to attempt its next Falcon 9 demonstration launch in earlyDecember.

Musk hasinvested a little more than $100 million in SpaceX to date. In addition to theNASA COTS money, Musk expects to spend $100 million for Dragon and roughly anadditional $100 million for the Falcon 9.

Musk saidhe intends to hold off on seeking outside capital until SpaceX has achieved itsfirst successful satellite launch, which could come as soon as early next yearwhen it attempts to launch the Pentagon's TacSat-1.

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

"There isthis 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 doeverything ourselves. We would rather do less in house but we need supplierswho are really cost efficient."

"The spacesupply chain is so freaking expensive that if we were to subcontract out largesubsystems we wouldn't be able to make our cost number." Musk said. "We arequite vertically integrated out of necessity."

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

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

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Editor-in-Chief, SpaceNews

Brian Berger is the Editor-in-Chief of SpaceNews, a bi-weekly space industry news magazine, and SpaceNews.com. He joined SpaceNews covering NASA in 1998 and was named Senior Staff Writer in 2004 before becoming Deputy Editor in 2008. Brian's reporting on NASA's 2003 Columbia space shuttle accident and received the Communications Award from the National Space Club Huntsville Chapter in 2019. Brian received a bachelor's degree in magazine production and editing from Ohio University's E.W. Scripps School of Journalism.