Boeing Commercial Crew Pricimg

Yes, I’ll jump on the band wagon. I took some time to do some research and look around. At first blush, people like me think this looks terrible…then, after pondering a bit, it looks a little better and a little worse.

NASA’s Office of the Inspector General (OIG) audited the Commercial Crew Program and determined that they don’t think either of the providers (Boeing or SpaceX) will achieve “final certification” until “summer of 2020”. Fine, no surprise there. It says that the U.S. crew compliment aboard the International Station (ISS) will likely be reduced to 1 during part of 2020. The table below shows in red where these crew compliment issues may arise.

The report also prices the per-seat cost of each program and compares them to the Russian Soyuz.

  • Soyuz — $80,000,000 per seat
  • Boeing — $90,000,000 per seat
  • SpaceX — $55,000,000 per seat

Now this, higher pricing, reflects in part the two companies’ different business focus. Boeing’s being to make as much money as possible from each launch for themselves and for their ULA-built booster, the Atlas V. SpaceX’s being to widen business opportunity in space overall with lower prices and make themselves the leaders of a rapidly growing industry. The later also intends to use that growth, and the many launch opportunities that it provides, to build the funding, reputation, hardware infrastructure, and knowledge base to someday propel them far enough to put humans on Mars.

In addition, NASA and Boeing have negotiated some extended capabilities to address a perceived schedule gap later in the program which will cost NASA an additional $183 million. The OIG found that not only was that schedule gap incorrect, but that NASA agreed to pay Boeing more than necessary for the correction and didn’t offer SpaceX the same opportunity, even though SpaxeX indicated that it was an option. The report also states that Boeing whined for more money and that it was this whining that prompted the adjustment. All of this is in addition to the higher negotiated contract award for Boeing over SpaceX.

SpaceX said very little publicly about this, just responding that things should not be that way.

Boeing of course had a much stronger reaction, implying that the OIG audit results…

  • Incorrectly represented Boeing’s commitment to the Commercial Crew program.
  • Incorrectly represented the added cost of the mission capability extension (shorter lead time) as a price increase, when in fact the option had been written into the original contract and that that extension is worth the price.
  • Inaccurately averaged the $90 million per seat, saying that that average failed to account for cargo carried up with the crew which effectively amounts to a fifth seat.
  • Failed to account for the fact that nearly all risk has been tested out by now so that future schedule slippage at this point is unlikely.
  • Failed to account for Boeing’s capsule being better than SpaceX’s,  and also their much deeper experience in aerospace and spaceflight…so that makes it ok that their flights are more expensive.
  • Failed to note that SpaceX based their design on a capsule that was already in use and human rated and that Boeing had to develop theirs from scratch on the same schedule.

Boeing called on the spaceflight community to defend them on these points, but the community has mostly reacted the opposite way. They have never accepted Boeing’s higher price for the same service, nor their perceived whining for preferential treatment. Whether or not this criticizing is fair depends much on perspective. One fact that I haven’t seen mentioned anywhere with regard to this latest development is that the launcher that is slated to carry Boeing’s crew capsule, ULA’s Atlas V, is significantly more expensive than SpaceX’s Falcon 9 and much of the cost differences between those two providers, as well as any reduced lead time premiums, will probably go to ULA rather than Boeing. Of course, ULA is half-owned by Boeing, so there you go.

The United States Government has treated both SpaceX and Boeing abominably with regards to the Commercial Crew contracts. Congress has never liked the program, seeing it as competition to their precious Space Launch System (also built by Boeing). Congress has downplayed the program, starved it for funds, tried to put SLS on the ISS crew rotation schedule or suggested it as a backup, and tried to down-select Commercial Crew to a single provider. Commercial Crew cuts into the three-way backscratching club in which Congress folk from certain states, along with procurement officials and defence contractors protect one and other’s empires. It’s disgusting. From the earliest days of Commercial Crew until now Congress has cut funding to it in order to drag out the schedule and thereby cause overhead cost overruns…and then whined about schedule slippage and cost overruns and used that as another excuse to continue building that flightless dodo bird, SLS.

Both of these contractors have cost overruns now, but Boeing is a publicly traded corporation that is not structured for as much flexibility as SpaceX. It also traditionally deals with budget shortfalls by going to the Government for more money…it is part of the old culture to which Boeing Defense, Space & Security (BDS) is most accustomed.

All is forgiven if they fly on time and perform. After that, we will see who prices and performs competitively enough to sell future contracts to NASA and any commercial space stations in the works.

~ by Bill Housley on November 19, 2019.

 
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