Private Sector could do Better than NASA 2017

After President George W. Bush announced a plan to return to the Moon and move on to Mars in 2004, NASA began to consider how best to carry out that vision. Although there were some promising private-sector rockets even then, administrator Michael Griffin set the agency on the course of building its own rockets and spacecraft. Those programs have evolved into the Space Launch System rocket and Orion spacecraft.

These costs can then be compared to the total cost of the entire Apollo program, which featured six separate human landings on the Moon. According to two separate estimates, the Apollo program cost between $100 billion and $110 billion in 2010 dollars. Thus just the development effort for SLS and Orion, which includes none of the expenses related to in-space activities or landing anywhere, are already nearly half that of the Apollo program.

Overhead costs

The new report argues that, given these high costs, NASA should turn over the construction of rockets and spacecraft to the private sector. It buttresses this argument with a remarkable claim about the “overhead” costs associated with the NASA-led programs. These costs entail the administration, management, and development costs paid directly to the space agency—rather than funds spend on contractors actually building the space hardware.

For Orion, according to the report, approximately 56 percent of the program’s cost, has gone to NASA instead of the main contractor, Lockheed Martin, and others. For the SLS rocket and its predecessors, the estimated fraction of NASA-related costs is higher—72 percent. This means that only about $7 billion of the rocket’s $19 billion has gone to the private sector companies, Boeing, Orbital ATK, Aeroject Rocketdyne, and others cutting metal.

By comparison the report also estimates NASA’s overhead costs for the commercial cargo and crew programs, in which SpaceX, Boeing, and Orbital ATK are developing and providing cargo and astronaut delivery systems for the International Space Station. With these programs, NASA has ceded some control to the private companies, allowing them to retain ownership of the vehicles and design them with other customers in mind as well. With such fixed-price contracts, the NASA overhead costs for these programs is just 14 percent, the report finds.

“The government should leave the design work and ownership of the product to the private sector,” the report recommends. “NASA engineers and administrators in turn might be very skilled, but their priorities tend to focus on management and regulation. If NASA or the Air Force require a service they should request it from the private market, becoming a customer like everyone else. This will result in increased competition and performance at a lower cost.”

More at Source: New report: NASA spends 72 cents of every SLS dollar on overhead costs | Ars Technica

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