tSpace

clark · 2005-06-22 05:37:44

Well, Griffin smackd T/Space around.

http://www.spaceref.com/news/viewnews.h … ml?id=1034

What are some characteristics of the deal that we might be willing to make? Despite the wishes and entreaties of those who would like me to dump $400-500 million on their enterprise (hopefully) - or on some enterprise - and then just stand back and wait to see if the results come in - that's not going to happen.
If you are familiar with true commercial space arrangements, both sides have to have "skin" in the game. If I am a provider of a communications satellite capability to a firm that really only wants to make money, and, from their point of view, the satellite is just a transponder on a tall telephone pole, there is a very healthy tension that operates. The satellite owner has to pick a satellite provider. It doesn't have the money to go out and pick two or three. It might have a leader-follower - or be carrying a couple [of companies] along, but by in large has to pick one in fairly short order and get on with it.
But, having picked a provider for a couple-of-hundred-million-dollar procurement, even in commercial terms it is a little bit like the joke about owing money to a bank i.e. if you owe $10,000 to a bank you've got a problem; if you owe $10 million to a bank they have a problem. Once I bet on you, if I am a commercial communications satellite procurer, I am now stuck. So I need to make sure that both sides have skin in the game.

But this was good to hear:

[You should] look for us to conduct such a competitive procurement - and [you should] look for us to pick a "leader" with whom we will get started - and also to fund a couple of "followers" at the study level in case the leader falls off the track. Because, the leader is only going to continue to get his money if progress continues to be met. We will set up verifiable milestones, agreed upon in the deal, the way that any commercial deal would be done. When the terms and conditions are met, the money will be provided.
[You should] look for us to conduct our contracting on a fixed price basis. This is the way people buy things out in the world. I don't go out and buy a car or an airplane or (pretty much) anything else on the basis of "why don't you build me this car - and tell me how much it costs when you are done." That's not the way we are going to do things.
In exchange for that [you should] look to be required to provide a commitment to sell at a specified price if I provide a commitment to buy - at a specified number. Those are the kinds of commercial terms that people insist on. When you close a deal you usually have an option to buy a certain number of units at a certain price. There won't be balloon payments at the end and there won't be "get well" arrangements if you screw up. On the other hand, there will be fairly substantial rewards for people who can deliver.

SpaceNut · 2005-06-22 05:58:22

But these are the lines to which I find most interesting in that we need to get out of the contractor mode and really push for true commercialization.

As someone who has listened to innumerable NASA presentations on what NASA thinks "commercialization" means, I had all but lost hope that someone from the real world - with hands-on commercial experience - would show up at NASA and not only enlighten the NASA/contractor community about what happens in the real world - but, moreover, try and steer the agency and its contractors in that direction.
For the moment, however, based on actual product delivered, I have to consider that mostly noise - with not much signal. Because real competitive businesses develop their own business plan, find their own money, they acquire a team, they produce a product, and they try to see if it will sell. That is what real businesses do. They don't come to the government saying "set aside some money for us - and trust us - and watch us perform." That's not how it works. I guess some people try to do that but it is not a notably successful approach. That is not [in the] the spirit of American industrial and economic competition.

clark · 2005-06-22 06:15:47

So what do you think it all means?

BWhite · 2005-06-22 21:12:50

Well, Griffin smackd T/Space around.
http://www.spaceref.com/news/viewnews.h … ml?id=1034
What are some characteristics of the deal that we might be willing to make? Despite the wishes and entreaties of those who would like me to dump $400-500 million on their enterprise (hopefully) - or on some enterprise - and then just stand back and wait to see if the results come in - that's not going to happen.
If you are familiar with true commercial space arrangements, both sides have to have "skin" in the game. If I am a provider of a communications satellite capability to a firm that really only wants to make money, and, from their point of view, the satellite is just a transponder on a tall telephone pole, there is a very healthy tension that operates. The satellite owner has to pick a satellite provider. It doesn't have the money to go out and pick two or three. It might have a leader-follower - or be carrying a couple [of companies] along, but by in large has to pick one in fairly short order and get on with it.
But, having picked a provider for a couple-of-hundred-million-dollar procurement, even in commercial terms it is a little bit like the joke about owing money to a bank i.e. if you owe $10,000 to a bank you've got a problem; if you owe $10 million to a bank they have a problem. Once I bet on you, if I am a commercial communications satellite procurer, I am now stuck. So I need to make sure that both sides have skin in the game.
But this was good to hear:
[You should] look for us to conduct such a competitive procurement - and [you should] look for us to pick a "leader" with whom we will get started - and also to fund a couple of "followers" at the study level in case the leader falls off the track. Because, the leader is only going to continue to get his money if progress continues to be met. We will set up verifiable milestones, agreed upon in the deal, the way that any commercial deal would be done. When the terms and conditions are met, the money will be provided.
[You should] look for us to conduct our contracting on a fixed price basis. This is the way people buy things out in the world. I don't go out and buy a car or an airplane or (pretty much) anything else on the basis of "why don't you build me this car - and tell me how much it costs when you are done." That's not the way we are going to do things.
In exchange for that [you should] look to be required to provide a commitment to sell at a specified price if I provide a commitment to buy - at a specified number. Those are the kinds of commercial terms that people insist on. When you close a deal you usually have an option to buy a certain number of units at a certain price. There won't be balloon payments at the end and there won't be "get well" arrangements if you screw up. On the other hand, there will be fairly substantial rewards for people who can deliver.

Smacked around? Nah. He's negotiating. Look, I am a real estate lawyer by profession. Griffin talks like a business man.

= = =

"We wont' pay $500 million up front. Build your rocket and tell us how much to LEO for 5 or 6 astronauts. da' stick will be maybe $100 million each. Charge $70 million and you got a deal."

Gump proposed NASA pay $500 million and buy flights at $20 million each. Maybe NASA pays $100 million (or zero) and buys flights at $60 million which is still less expensive than the SRB + J2 upper stage.

Pay to develop EELV CEV? Then NASA has too much sunk cost to ever buy t/Space.

Thiokol SRB + J2 at $90M or $100M is still a great price for medium lift cargo shots.

Edited By BWhite on 1119496465

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