Understanding how NASA does business is important because it defines how we can get more space moving forward for the same amount of money. We’ll get to all that in due time. Here, I’ll describe two ways to do space—Old Space and New Space.
Old Space
Old Space is the term I use to describe the way NASA typically manages and operates programs—past and present.
It’s the way we did Apollo and Shuttle. It’s the way we’re doing the in-house design of the Space Launch System (SLS). It’s also the way we did the Constellation design before it was canceled in 2010.
In a nutshell, Old Space was the only way we got space stuff done until SpaceX and others joined the space party.
In Old Space, NASA defines a detailed set of requirements of what we want, completes a long, tedious competitive procurement process, and awards contracts to the companies with the best proposals. This process usually takes years to complete.
In Old Space, NASA also takes the lead in managing and operating the vehicle once it’s designed and built.
Let’s look at an example.
In the case of the Space Shuttle, Rockwell (now Boeing) was the prime contractor and built the orbiter. Morton Thiokol (now a part of Northrop Grumman) built the solid rocket boosters. Martin Marietta (now Lockheed Martin) built the external tank. And Rocketdyne (now Aerojet Rocketdyne) built the three liquid rocket engines.
On Shuttle, the program manager, chief engineer, and engineering support teams were led by civil servants. The astronauts were civil servants. The Launch Director at KSC was a civil servant. The Flight Director at JSC was a civil servant.
So were the senior leaders who pulled the pieces together and made go-no-go calls on whether the vehicle was ready to fly.
In Old Space, NASA drives the bus and selects the route. They make the programmatic and engineering decisions—with the help of the contractors who design and manufacture the components. In other words, NASA buys the components/services and owns the technology the companies used to build them.
New Space
New Space is the term I use to describe a fresh new movement in the space community that’s radically different than what we’ve done in the past.
It’s a new group of companies launching stuff into space without NASA being in the middle. It’s a new trend in the way NASA is doing contracts. It’s a new way of partnering with private-sector aerospace companies.
Two of the most well-known examples of companies doing New Space are Blue Origin, founded by Jeff Bezos in 2000, and SpaceX, founded by Elon Musk in 2002. But it doesn’t stop there. Orbital, Sierra Nevada, Rocket Lab, The Spaceship Company, Scaled Composites, ARCA, Bigelow Aerospace, Virgin Galactic, and others are also a part of the New Space movement.
Contract Types
New Space is more than just new companies. It’s a change in the types of contracts NASA is attempting to use moving forward.
In general, NASA contracts come in two flavors:
- Cost-plus type contracts where the company providing services is reimbursed for all of their costs plus a fee (profit) for managing the work. This fee is usually a certain percentage of total costs.
- Firm-fixed-price type contracts where the company agrees to design and build the hardware per the requirements for a fixed agreed to price.
No worries. I’ll unpack cost-plus type contracts versus firm-fixed-price type contracts in other articles. Even without going into all the details here, it certainly doesn’t take a rocket scientist to see that cost-plus type contracts have the potential for cost and schedule growth.
With these types of contracts, companies make more profit when they have cost overruns. They also make more profit when the task they’re doing takes longer to complete.
At best, with cost-plus type contracts, there’s no motivation to control costs.
Cost overruns and schedule slips have plagued NASA for years. Without question, a dependence on cost-plus type contracts is one of the reasons why. Unfortunately, aerospace companies have perfected the task of milking these contracts.
In 2008, NASA took a different approach and awarded two contracts to carry supplies to ISS using firm-fixed-price contracts. I’ll explain the ISS launch services contracts (supplies and then crew) in future articles.
A Fresh Approach
New Space is also about NASA working with private sector space companies in new ways. One of these ways is by using Space Act Agreements (SAA). I’ll cover this more in future articles, but here I’ll make the quick point that SAAs are different than traditional contracts because they allow agreements outside the painfully time-consuming Federal Acquisition Regulations (FAR) process.
SSAs are also a great way to get public monies into private sector hands to develop new technologies—better, faster, cheaper.
The best way to explain SAAs is to describe how we used them on ISS. Stay tuned.
New Ways of Doing Business
Before we wrap up this topic, let me make one more distinction. New Space is more than new companies, new contract types, and SAAs.
New Space is a new way of doing space business—a new mindset.
New Space is Old Space companies working together in new ways.
New Space is Boeing and ULA working together to carry crew to ISS.
New Space is Sierra Nevada working with ULA to carry supplies to ISS.
New Space is Orbital hauling supplies to ISS.
New Space is Old Space aerospace companies laying off managers so they can be more cost competitive.
New Space is SpaceX and Blue Origin (independently) working on a vehicle capable of carrying astronauts to Mars, even though NASA hadn’t asked for one—yet.
Build it, and they will come is a New Space concept.
New Space is companies developing new technologies to make their stuff more reliable and less expensive to fly, knowing this is the best way to be more competitive in the future.
But New Space is even bigger. It’s an ATTITUDE.
The most powerful aspect of New Space is that it brings a fresh perspective—a quiet confidence of sorts—from young engineers and startup companies that believe anything is possible.
New Space is twenty-year-old engineers sticking up their MIDDLE FINGER at Old Space engineers who said flying back first-stage boosters to reuse was impossible.
NOTE: Throughout these articles, I use the terms New Space, Commercial Space, and Private Sector Space interchangeably to describe the concepts in this article.
David Mixson writes about Old Space and New Space. He worked as an engineer at NASA for more than thirty years and is the author of three books.
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