European satellite operators are pressing Arianespace to find ways to immediately reduce the cost of launching satellites on now Ariane 5 and in the future on Ariane 6.


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European satellite operators are pressing Arianespace to find ways to immediately reduce the cost of launching satellites on now Ariane 5 and in the future on Ariane 6.

And why are they doing this? To quote them:

“What is sure is that Europe deserves and requires a [reorganized launcher sector] ahead of 2019, the letter says. “[C]onsiderable efforts to restore competitiveness in price of the existing European launcher need to be undertaken if Europe is [to] maintain its market situation.

“In the short term, a more favorable pricing policy for the small satellites currently being targeted by SpaceX seems indispensable to keeping the Ariane launch manifest strong and well-populated.” [emphasis mine]

It seems that they take very seriously the competitive challenge being presented by SpaceX.

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21 comments

  • Kelly Starks

    Ok so on the one hand the costs are artificially boosted by gov policies to increase expenditures, employment, and general pork.
    The inflated costs are then lowered a bit to be competitive with competitor launchers.
    So to keep their current customers from going from their pork driven/gov subsidized launcher, to a US pork driven/gov subsidized launcher, they underwrite it with further gov supports.

    …and most of their customers are likely other EU gov supported sat missions..

    %{

  • Pzatchok

    I think you have government subsidized mixed up with the government is a customer.

    Our government is paying for a service and nothing more.
    Any company can step in and buy the services just like the US government.
    And any company can offer the same services to the US government.
    At any point the US Government can walk away and the company will continue on selling services to other groups.

    The EU directly gives funds to Ariane so that Ariane will continue using EU companies as their contractors.

  • Dick Eagleson

    This is an example of what is known in the psychiatry profession as projection.

  • Kelly Starks

    >..Our government is paying for a service and nothing more.

    Where? The closest would be the EELVs, where the bulk of the dev costs were paid by investors who are paid back from sales. All the US launchers in current use (and every other one I can think of) had its development at least partly funded by Gov subsidies. In COTS all the dev costs for the craft and then some, were paid by NASA. (SpaceX’s fee for “COTS specific development” was actually more then all COTS related R&D and all R&D expenses since the company formed. COTS contract as defined originally couldn’t be met by any commercial firm.)

    > Any company can step in and buy the services just like the US government.

    Anyone can step in and by a Ariane launch to. But all those Launches are partly subsidized by gov grants/subsidize. Its like buying drugs in Canada. You pay less at the check out counter – but its not that the drugs cost less, its because the gov picks up most of the cost of all retail sales. So American’s who by drugs in Canada are subsidized by Canadian tax payers.

    > And any company can offer the same services to the US government.
    > At any point the US Government can walk away and the company will continue on selling services to other groups.

    Not really. Only the companies that wing the gov contracts get the funding to support them developing and paying for the stuff they develop to sell to the gov. Afterwards the gov pays a lot of the costs of the launches. For example with SpaceX they report they charge NASA $140m a flight, but when you add in the funds NASA provided upfrount to support their development, and then per launch support costs NASA spends, the total comes up to $440M a flight. So the real cost to a commercial customer, at least is partly supported by past subsidizes– as to how much of the future commercial launch is funded by gov subsidizes. Gets complicated. For Arianne I gather the gov subsidizes each launch so the provider can afford to pay inflated costs from other gov preferred/supported providers.
    ;/

  • Kelly Starks

    Given your demonstrated ignorance of what I do etc, your ability to deduce “projection” is highly suspect.

  • Your webmaster is now stepping in to tell you both, Kelly and Dick, to cool it. I will not have these kinds of playground name-calling spats on my website. Here I expect people to act like civilized adults, using facts and thoughtful ideas in their arguments.

    If it doesn’t stop, you know that I have the ability and the right to ban you both, as much as I’d hate to do it. Please don’t go force me to go there.

  • Edward

    Kelly,

    I’m not sure about your definition of subsidy. It sounds like you would consider a government purchase of a fleet of Ford cars to be a subsidy.

    We know that Ariane’s launches are subsidized by Europe, since the cost of the program exceeds the revenues and the difference is made up through payments by European governments, but SpaceX does not receive subsidies to launch its rockets.

    The government pays SpaceX to launch payloads to the ISS, a service, and Falcon 9 was developed to perform that service, but the government did not dictate the design requirements of the rocket, as they did with many other rockets, such as the Deltas, Atlases, and the now retired Titans. The government owned these three families of rockets, and non-government organizations have to receive permission from the government to launch on them. SpaceX owns the Falcon family.

    You seem to consider the seed money to be a subsidy, but I consider part of the service — the government wanted something made available to them and paid for it, like a retainer. Just because a government contract allows for profits, and those profits are used for R&D, does not mean that the product resulting from that R&D is subsidized.

    Perhaps you can clarify your definition of subsidy. Mine is similar to the above explanation of the Ariane subsidy.

    >> And any company can offer the same services to the US government.
    >> At any point the US Government can walk away and the company will continue on selling services to other groups.

    > Not really. Only the companies that wing the gov contracts get the funding to support them developing and paying for the stuff they develop to sell to the gov.

    This is does not contradict Pzatchok’s statement. Any company can offer services to the government, but (unlike health insurance in the US) there is no obligation to sign a contract.

    Please redo your math. NASA paid SpaceX $278 million in seed money to develop the rocket and $1,600 million for the service to take 12 payloads to ISS. $1,900m/12 = $160 million, not $440 million. Your math says that Space X will eventually receive $5.3 billion for the service.

  • Kelly Starks

    > I’m not sure about your definition of subsidy. It sounds like you would consider a government purchase
    > of a fleet of Ford cars to be a subsidy.

    If they were purchasing them for no reason then to give money to Ford yes, though that’s not what I’m referring to.

    >..SpaceX does not receive subsidies to launch its rockets.

    Given the gov paid almost all the development cost for the vehicles, and pays most of the cost of the launches (the total cost per launch is 3 times what SpaceX is paid)

    > The government pays SpaceX to launch payloads to the ISS, a service, and Falcon 9 was developed
    > to perform that service, but the government did not dictate the design requirements of the rocket,
    > as they did with many other rockets, such as the Deltas, Atlases, and the now retired Titans…

    Not true. Certainly all were developed at least partly to fit various gov requirements, and all are (or were offered for commercial customers, indeed most of the Current Atlas and Delta fleet intended customers were to be commercial customers, and the bulk of the funding was from the commercial investors.

    >…You seem to consider the seed money to be a subsidy,..

    When the gov paid virtually all the development costs since SpaceX was founded, and until this year was virtually the only sales, I’d hardly call that “seed money”. Really, the insistence that the Falcons are commercial, but the EELV siblings are gov subsidized seems ridiculous. Similarly the Ariane is far more subsidized, but certainly in commercial busness.

    >…Just because a government contract allows for profits, and those profits are used for R&D, does not
    > mean that the product resulting from that R&D is subsidized.

    But that’s not what happened. SpaceX was granted funds for R&D, which exceeded all R&D expenses the company ever spent.

    >>> And any company can offer the same services to the US government.
    > >> At any point the US Government can walk away and the company will continue on selling services to other groups.

    >> Not really. Only the companies that win the gov contracts get the funding to support them developing
    >> and paying for the stuff they develop to sell to the gov.

    > This is does not contradict Pzatchok’s statement. Any company can offer services to the government,
    > but (unlike health insurance in the US) there is no obligation to sign a contract.

    > Please redo your math. NASA paid SpaceX $278 million in seed money to develop the rocket
    > and $1,600 million for the service to take 12 payloads to ISS. $1,900m/12 = $160 million, not $440 million. …..

    The $440 million per flight is the total program cost to NASA of each SpaceX launch to the ISS, not just the fees directly paid to SpaceX, as calculated by the CBO. Same as the way the total program cost of a shuttle flight was calculated.

    I’ve posted the URL to the CBO report on http://behindtheblack.com/behind-the-black/points-of-information/an-official-of-spacex-announced-today-that-the-company-plans-on-its-first-manned-launch-by-2015-and-that-the-astronauts-will-be-its-employees-not-nasas

    —–
    In May 2011 Congress issued a report listing $850 million (more then the total dev cost of both Falcons and
    Dragon, according to SpaceX)
    congressional document
    “Commercial Cargo Will Cost More Than Shuttle-Delivered Cargo Says Congressional Document”
    http://science.house.gov/sites/republicans.science.house.gov/files/documents/hearings
    /052611_Charter%20CommCargo.pdf

    SpaceX got
    $278 million for three demonstration flights of the Falcon 9 launch vehicle and Dragon capsule,
    $258 million in milestone payments for completing 18 of 22 COTS milestones. Please see Appendix 1 for SpaceX’s schedule milestone chart.
    $185.6 million for milestones tied to four CRS missions
    $128 million toward additional risk reduction‖ milestones
    Or SpaceX had receaved $850 for COTS as of May 11 (NASA only spent $1.25B in total COTS!!)
    CCDev 2 awards
    $75 million as part of to develop a revolutionary launch escape system and SuperDraco engine (
    http://www.spacex.com/press.php?page=20110419 ; http://www.nasa.gov/offices/c3po/home/ccdev2award.html
    http://www.spacex.com/press.php?page=20120201)
    Now SpaceX’s press release 5-14-12 ( http://www.spacex.com/downloads/COTS-2-Press-Kit-5-14-12.pdf) on
    page 3 states “..To date, SpaceX has received $381 million for completing 37 out of 40 milestones..” Which is
    another $132 million since the above congressional report said them were paid $258m for 18 of 20 COTS
    milesstones. I.E. about $132m for the Dragon to ISS test flights.
    note http://spaceflightnow.com/falcon9/003/120518commercial/
    said “paid SpaceX $381 million in an agreement to help pay for the design, development, and testing of the
    Falcon 9 rocket and Dragon spacecraft.. SpaceX has spent $1.2 billion to date, including public and
    private capital.”
    They seem to be just refering to the COTS milestone payments, not all the other fees / Awards paid to spaceX for
    the development adn testing of the Falcon’s & Dragon’s, but whats interesting is the $1.2B number.
    Totaling up the above, SpaceX has received $1.057B total from NASA as of May 2012
    SpaceX money confusion — HELP! http://mail.aol.com/36478-111/aol-6/en-us/mail/PrintMessage.aspx
    1 of 2 6/30/12 11:26 AM
    Musk said total dev costs for Falcon and dragon were $800 M and the SpaceFlight now article says “SpaceX has
    spent $1.2 billion to date”, and Musks quoted as having invested $100m of his money in SpaceX. That implies
    hes only gotten about a $100M in investor money?
    They might actually have gotten a lot less then that given they must have gotten some money in advance fees
    from the launch contracts they got (Bellow) which I can’t sort out.
    So is this all SpaceX has gotten from the feds? Itcertainly doesn’t sound commercial!
    Am I missing something.
    Kelly
    http://science.house.gov/sites/republicans.science.house.gov/files/documents/hearings

  • Edward

    Wow, Kelly. Our definitions of subsidy are greatly different. I present the following to help clarify the differences between your apparent definition and my definition.

    You seem to include any government purchase as a subsidy. I consider subsidies as government money handed out even though no value is returned. The former is free market capitalism (efficient companies survive with a profit to show for it, inefficient ones don’t survive), the latter is crony capitalism (favoring inefficient companies that cannot survive on their own).

    You seem to include profit as a subsidy.

    > > I’m not sure about your definition of subsidy. It sounds like you would consider a government purchase
    > > of a fleet of Ford cars to be a subsidy.
    > If they were purchasing them for no reason then to give money to Ford yes, though that’s not what I’m referring to.

    This explains much of what you mean by subsidy. Ford has production costs in providing these cars, and Ford provides valuable goods (whether the government chooses to use those goods is a different point), so the only subsidy, by your definition, would be the profit made on the cars.

    When Europe subsidizes Ariane V, they are paying to make up the difference between the cost of all the launches (commercial and government) and the payments received from customers for those launches. This is money above and beyond any contracts for valuable goods and services, and Europe receives no additional goods or services than they already received at the agreed-upon price.

    > Given the gov paid almost all the development cost for the vehicles, and pays most of the cost of the launches (the total cost per launch is 3 times what SpaceX is paid)

    This does not make sense. SpaceX is not subsidized if it is paid less than its costs, it would be losing money and would need to do better contract work. When it is paid more than its costs, that is profit. All customers pay for development costs, even if they are government customers. That is how business works; someone pays for the development, which was my point about R&D. In the case of SpaceX, they had a contract to perform that development; the contract was not a subsidy (although you seem to think so), as the government received what it paid for. SpaceX, unlike Ariane, did not come back later and say that they couldn’t remain in business if they didn’t get extra money (which many government defense contractors do, by the way, but that is not necessarily part of my definition of subsidy, sometimes development costs more than was originally estimated – as do many home improvement projects).

    > > The government pays SpaceX to launch payloads to the ISS, a service, and Falcon 9 was developed
    > > to perform that service, but the government did not dictate the design requirements of the rocket,
    > > as they did with many other rockets, such as the Deltas, Atlases, and the now retired Titans…

    > Not true. Certainly all were developed at least partly to fit various gov requirements, and all are (or were offered for commercial customers, indeed most of the Current Atlas and Delta fleet intended customers were to be commercial customers, and the bulk of the funding was from the commercial investors.

    There is nothing certain about that at all, and fitting government requirements is different than designing to a requirements document. They also fit various commercial customer requirements, too. US government agencies usually require payloads to be vertically integrated, but SpaceX did not design their rockets or their operations that way. SpaceX wanted horizontal integration to reduce pad time. SpaceX designed their rockets to accomplish many things that the government neither required nor desired for ISS resupply misisons: mount points on the first stage for future landing legs in order to reuse the stage, man-rated safety for future manned launches, cargo capsules that could easily be modified for manned missions, among other features that commercial customers desire.

    > When the gov paid virtually all the development costs since SpaceX was founded, and until this year was virtually the only sales, I’d hardly call that “seed money”. Really, the insistence that the Falcons are commercial, but the EELV siblings are gov subsidized seems ridiculous. Similarly the Ariane is far more subsidized, but certainly in commercial busness.

    We agree that Ariane is subsidized, and I don’t claim that EELV or other rockets are subsidized (they were made on government contracts to government requirements, and the rockets and tooling are government owned). But just because a company has only one customer does not mean that the product is subsidized by that customer. I disagree emphatically with such a definition of subsidy. That gets us back to defining all Fords to have been subsidized by Ford’s customers. The customers don’t subsidize by virtue of purchase. They buy at an agreed price, which includes the R&D costs for that product (or for the next product, depending upon the outstanding loans the company has), and includes a profit, neither of which should be seen as a subsidy. Expending income on R&D and making a profit are how business operates.

    > SpaceX was granted funds for R&D, which exceeded all R&D expenses the company ever spent.

    SpaceX had a contract to perform a specific service. It was not a “grant.” The service was performed. In America, and most or all other free market societies, the excess is called “profit.” Profit is a good thing, as it is the reward a company receives for increasing efficiency and for innovation, creating a popular product at an affordable price. SpaceX achieved both and the profit/reward was deserved. For additional examples, please reference profits that Apple Computer makes on its innovative and popular products (the profit, sometimes referred to with the word “margin,” can seem quite large for individual products, but a lot of money goes into R&D and into developing products that don’t make it to market).

    In case you think that the profit was excessive, please realize that fixed price contracts are risky things in the world of development. As I mentioned earlier, estimates can end up being lower than the actual expenses, and with a fixed price contract that extra cost is covered by the vender, not the customer. Profit is the reward for efficiency (I can’t emphasize that enough, as few people are taught that philosophy – most are taught that profit is a bad excess and that the product or service should have been priced lower).

    > The $440 million per flight is the total program cost to NASA of each SpaceX launch to the ISS, not just the fees directly paid to SpaceX, as calculated by the CBO. Same as the way the total program cost of a shuttle flight was calculated.

    It is not fair to lump in the moneys paid to other companies (e.g. Orbital Sciences) or the internal costs to NASA as a subsidy to SpaceX. Decades ago, I was told, at the place I worked, that a purchase request cost $200. When I bought $100 worth of material, it would have been absurd to suggest that the extra $200 was a subsidy to the vendor, or that a purchase from a second vendor was also a subsidy to the first vendor.

    If NASA spends huge amounts of money in order to manage its vendors, that is neither a subsidy to SpaceX nor is it fair to consider it a cost of a launch – SpaceX has no control over any “overhead” that NASA chooses to expend on its own, and such overhead is not fair to consider as subsidies of other customers’ launches. Those other customers have their own (presumably lower) internal costs for managing their launch vendors. If NASA is cost ineffective, that should not detract from the effectiveness or efficiency of its vendors or the other customers of those vendors. If Ariane (ESA vendor) is cost ineffective and Europe pays the difference, *that* is a subsidy. Ariane should find a way to be more efficient, should charge more per launch, or go out of business. That is how free markets work. Subsidies are not free market capitalism but are crony capitalism.

    As to your referenced previous post:
    Milestone payments are not subsidies, they are standard operating procedure. A contractor on an improvement to your house gets paid on a schedule, often 30%, 30%, 30%, and (presumably the profit) 10% (for finishing the punch list). Even commercial satellites are built with milestone payments made, sometimes or often with bonus payments for making the milestone on schedule. I have worked hard to complete tasks on time in order to earn such bonuses for the companies I worked for.

    SpaceX charges a fair market price for its launch services, and the government pays that price. The government does not send extra cash to SpaceX to keep them in business, just as my previous employer did not send extra cash to its vendors. However, the fair market price includes profit and future R&D spending, which should not be confused with subsidies. (BTW, unfortunately, some of the links in your post are broken.)

  • Kelly Starks

    > Wow, Kelly. Our definitions of subsidy are greatly different. I present the
    >following to help clarify the differences between your apparent definition and my definition.

    Ok

    > You seem to include any government purchase as a subsidy.

    Incorrect.

    > I consider subsidies as government money handed out even though no value is
    > returned. The former is free market capitalism (efficient companies survive with
    > a profit to show for it, inefficient ones don’t survive), the latter is crony
    > capitalism (favoring inefficient companies that cannot survive on their own).

    I essentially agree with your definition, though I’d extend it to include subsidizing the costs of a product to give it a unfair edge in the market. Like farm price supports, or say the EU underwriting much of the cost of Arianne to lower the cost they can charge to customers.

    Ergo when some of the final cost of a product offered commercially, is paid by the gov, to give said product a edge in the market over un-(or less)- subsidized competition.

    > You seem to include profit as a subsidy.

    Not at all.

    >>> I’m not sure about your definition of subsidy. It sounds like you would consider a government purchase
    >>> of a fleet of Ford cars to be a subsidy.

    >> If they were purchasing them for no reason then to give money to Ford yes, though that’s not what I’m referring to.

    > This explains much of what you mean by subsidy. Ford has production costs in providing
    > these cars, and Ford provides valuable goods (whether the government chooses to use those
    > goods is a different point), so the only subsidy, by your definition, would be the profit made on the cars.

    No you’ve completely misunderstood what I said.

    If the gov needs a fleet of SUVs and buys Ford Explorers in a reasonable bid, and Ford make a profit on the sale – that is profit – not a subsidy.

    If the gov needs SUVs, and buys high priced Explorers rather then lower priced Jeeps or something, because they want Ford specifically to get the money and grow as a company, that’s a subsidy.

    Or if the gov has no need for SUVs at all, wants to give Ford money, and rather then giving them a grant buys a bunch of Explorers and scraps them as soon as they are delivered (like is done in some farm subsidizes) that’s a subsidy.

    > When Europe subsidizes Arianne V, they are paying to make up the difference between the cost
    > of all the launches (commercial and government) and the payments received from customers for
    > those launches. This is money above and beyond any contracts for valuable goods and services,
    > and Europe receives no additional goods or services than they already received at the agreed-upon price.

    Which is a subsidie to artificially give Arianne a edge in the market. Similar to NASA covering all of SpaceX’s R&D and other costs even though its not related to anything done to develop a good for NASA.

    >> Given the gov paid almost all the development cost for the vehicles, and pays most of the
    >> cost of the launches (the total cost per launch is 3 times what SpaceX is paid)

    > This does not make sense. SpaceX is not subsidized if it is paid less than its costs, …

    I assume your referring to “(the total cost per launch is 3 times what SpaceX is paid)” What I’m saying is the total cost of the launch is 3 times what’s included in SpaceX “launch fees” [I.E. the $140 m you referred to]. NASA pays the total $440, not just the $140m.

    >… In the case of SpaceX, they had a contract to perform that development;

    no they had a contract to pay for development of COTS unique dev costs. Had NASA paid that plus some fraction that would be as you say a customer paying for services rendered to it. But instead NASA paid to cover all R&D costs for all R&D projects SpaceX had ever done since their founding plus a profit. Thats a subsidy, since NASA paid up underwrite products developed for unrelated markets and services, some already discontinued.


    >> Not true. Certainly all [SpaceX, EELV, etc] were developed at least partly to fit various gov requirements, and all are
    >> (or were offered for commercial customers, indeed most of the Current Atlas and Delta fleet intended
    >> customers were to be commercial customers, and the bulk of the funding was from the commercial investors.

    > There is nothing certain about that at all, and fitting government requirements is different than designing
    > to a requirements document. ..

    ???

    > ….They also fit various commercial customer requirements, too. …

    True for all of them.

    > ….US government agencies usually require payloads to be vertically integrated,

    No, its just generally been customary for most all booster designs (commercial or gov) since it allows lighter weight boosters, and the pads at about all launch facilities are designed to support that.

    >… SpaceX designed their rockets to accomplish many things that the government neither required nor desired for ISS
    > resupply missions: mount points on the first stage for future landing legs in order to reuse the
    > stage, man-rated safety for future manned launches, cargo capsules that could easily be modified
    > for manned missions, among other features that commercial customers desire.

    The Atlas’s and deltas were also designed to be man rated should a market arrive. The addition of landing systems certainly isn’t a gov requirement – nor is it certain it will offer any customer advantage – but the point is all the boosters have feature not developed to answer a gov request.

    As I stated my big problem is NASA and DOD have paid for virtually everything SpaceX has ever done adn spent even though very little of it was in any sence for their needs.

    >… I don’t claim that EELV or other rockets are subsidized (they were made on government contracts
    > to government requirements, and the rockets and tooling are government owned). ..

    No actually they wern’t. They were developed and built predominantly on commercial investor money for later sale to gov or commercial buyers. (the point of the EELV contract was to piggyback gov flights on a improved craft developed for commercial and gov markets.) The commercial market never materialized which cratered most launcher programs of that era, but they were designed to serve it and the fed market.

    > But just because a company has only one customer does not mean that the product is subsidized by that customer.

    Completely agree.

    ..
    >> SpaceX was granted funds for R&D, which exceeded all R&D expenses the company ever spent.

    > SpaceX had a contract to perform a specific service. ..

    And had they been paid just for that service, and expenses related to that service, plus a agreed upon profit margin etc, I’ld see no problem. But when those services involved a $100m or two of R&D (as originally projected) and NASA pays for ALL R&D they ever did for anything +….

    >.. please realize that fixed price contracts are risky things in the world of development….

    Yeah I know, I work in the industry after all.

    >> The $440 million per flight is the total program cost to NASA of each SpaceX launch to the
    >> ISS, not just the fees directly paid to SpaceX, as calculated by the CBO. Same as the way the
    >> total program cost of a shuttle flight was calculated.

    > It is not fair to lump in the moneys paid to other companies (e.g. Orbital Sciences)
    > or the internal costs to NASA as a subsidy to SpaceX.

    They were calculating all costs of the launch (not other launches like orbital), same as for shuttle. Certainly that includes other services provided by NASA to SpaceX (pad, integration, management), other payments to SpaceX related to the contract etc (R&D, transport, etc). But thatsa also the basis for the “Space Shuttles launches cost $1.2B each”, that SpaceX supporters compare $140M Dragon/Falcomnlaunches cost against. So its completly fair to use the same cryteria for both.

    Its also worth noting under the SAR rules SpaceX’s contract is run under, the overhead etc for SpaceX’s launches is 1/4th what they would be under the FAR rules Shuttle launches (or all other previous launches) were under. Space SpaceX gets a HUGE cost advantage under those rules, yet still isn’t competitive.

    >… such overhead is not fair to consider as subsidies of other customers’ launches. …

    When it covers the others customers costs it is.

    >…If Arianne (ESA vendor) is cost ineffective and Europe pays the difference, *that* is a subsidy.
    > Arianne should find a way to be more efficient, should charge more per launch, or go out of business.
    > That is how free markets work. Subsidies are not free market capitalism but are crony capitalism.

    Exactly the problem for Arianne (and shuttle or other NASA programs). The gov demand inefficiency specifically to increase jobs under the contract to increase public support (even at the cost of increased risk to human life in NASA’s case). This makes them ridiculously overly expensive. So the gov then picks up some of the costs to allow them to market at bellow actual costs against competitors.

    >.. SpaceX charges a fair market price for its launch services, and the government pays that price.
    > The government does not send extra cash to SpaceX to keep them in business, ..

    That’s actually under some debate. Business analysts have noted given the scale of the workforce, cost of materials and other purchases they make, etc… the total comes up to a lot higher then what SpaceX charges per flight. Certainly in the case of COTS/CRS etc and AF contracts, the govs paying a lot more then for “services rendered” which can cover red ink in the commercial sales (dumping on the market), but its not at all clear how even including that plus the stated charges per launch, add up to enough to come near covering their expenses.

  • Edward

    Kelly, you still don’t seem to recognize a profit when you see one. Examples that I gave as profits, you are claiming are not profits but subsidies.

    At no time, has government sent SpaceX a lump of cash to keep it in business, as Europe has done for Ariane. This is the basic difference between your definition (which in all your examples included profit as a subsidy) and my definition (which acknowledges profit as the proper reward for innovation and efficiency).

    Frankly, if someone is going to put a lot of money into these risky ventures, if they don’t stand a chance of getting even their investment back, much less an additional return, then what is the point of starting one of these companies? Profit has to cover the investors’ upfront investment and costs, otherwise you will not get investors in this industry.

    Apple Computer made so much profit that it was able to expand rapidly in its early years, and it does well today. Apple’s investors are not still waiting to get their money back from the development of the Apple II, they got rewarded for that investment decades ago. Commercial space companies must be afforded the same freedom to recover their investment and to expand, otherwise commercial space will die an early death.

    It isn’t as though success is guaranteed. The industry is littered with the carcasses (literally, it turns out) of startups such as Armadillo (whose hardware is up for sale, last I heard) and Rotary Rocket (whose rocket sits prominently out front of the Mojave Air and Space Port terminal building). There still are no guarantees that Virgin Galactic or XCOR will succeed.

    Even SpaceX was close to running out of money, but it was developing a product that the government wanted. Consider it and Orbital Sciences the right companies at the right place at the right time. Consider it, Sierra Nevada, Boeing, and Blue Origin the right companies at the right place at the right time.

    A return on investment is necessary for the commercial space companies to attract investors. Don’t gripe about it.

    The rest of this overly-long post is just a point-by-point refutation of most or all of those statements of yours that were incorrect (which is likely a pointless exercise, since you are convinced that SpaceX’s profits are subsidies) (to save space, I didn’t comment on where we agree; if that is rude, I’m sorry for the rudeness). Take all the comments together, because they are almost all related to each other. Unfortunately they are scattered, making the point hard to recognize, hence the summary, above.

    > I essentially agree with your definition, though I’d extend it to include subsidizing the costs of a product to give it a unfair edge in the market. Like farm price supports,

    Farm price supports are exactly my definition: government money handed out even though no value is returned. The government does not buy the crops for the farmer to make a profit, they just hand out money to the farmers.

    > Ergo when some of the final cost of a product offered commercially, is paid by the gov, to give said product a edge in the market over un-(or less)- subsidized competition.

    Except that this is not the case in COTS or in CCDev2. The government has not subsidized any company in either of these programs under that part of your definition. They are *NOT* giving an edge in the market, they are funding programs that they want to use in the future. There was a bidding process to provide the goods and/or services that the government wants.

    Under this definition of yours, every government purchase is a subsidy, since the government chose to “subsidize” the company that it is buying from and giving them an advantage over those companies that it did not buy from. E.g. this definition would make every rocket subsidized.

    > No you’ve completely misunderstood what I said.

    I understood completely what you said. You said that the government buys a product and the profit is a subsidy, but only because the government chose to buy something it did not use. That is not a subsidy, that is misallocation of funds/crony capitalism.

    > Which is a subsidie to artificially give Arianne a edge in the market. Similar to NASA covering all of SpaceX’s R&D and other costs even though its not related to anything done to develop a good for NASA.

    No. The R&D was done to complete the contract. If you mean the profit was used on other R&D projects for future rockets, then once again, you are talking about profit as a subsidy.

    > But instead NASA paid to cover all R&D costs for all R&D projects SpaceX had ever done since their founding plus a profit.

    Are you accusing SpaceX of mischarging? Either they performed to the contract, and you are claiming that an unfair profit was made under the terms of the contract, or you are saying that SpaceX fooled the government into giving it more money to cover more work than the contract was for, which is mischarging.

    > the pads at about all launch facilities are designed to support that.

    Which is why it is a requirement. The government takes its traditions and makes them requirements. It takes what was made before and generates requirements from them. I once worked on a telescope in which we were using a CCD at the focal plane, but the requirements document specified that we use the same detector used in the previously designed and flown telescope. They were trying to tell us how to build it, because they lack imagination and flexibility. When they only have equipment for vertical integration then that is what they put in the requirements documents. They are not creative people, and they don’t take innovation or change well. This is why we haven’t gotten out of LEO in four decades, or yet had successful commercial space companies, and it is why everyone doubts that our commercial space companies will succeed, because government is there to impede them, not help them. But we digress.

    > As I stated my big problem is NASA and DOD have paid for virtually everything SpaceX has ever done adn spent even though very little of it was in any sence for their needs

    They needed the Falcon 9, the Dragon, and all that goes with them. They needed several launches to the ISS, these they are getting. SpaceX is using the profit for R&D on their next projects. Once again, you are saying that profit is subsidy, or you are saying that SpaceX is mischarging the govnerment.

    At no time, has government sent SpaceX a lump of cash to keep it in business, as Europe has done for Ariane. This is the basic difference between your definition (which in all your examples included profit as a subsidy) and my definition (which acknowledges profit as the proper reward for innovation and efficiency).

    > They [EELV or other rockets] were developed and built predominantly on commercial investor money for later sale to gov or commercial buyers.

    Now you are trying to have it both ways. Musk and his investors spent their own money developing, testing, and launching three rockets (not all made it to orbit) before they received their first government contract. SpaceX spent its own investor money developing and testing the Merlin engine, the Falcon rocket, and their processes, procedures, and facilities. Earlier you were claiming that the government subsidized SpaceX and paid for all these things.

    My point is: just as with EELV and other rockets that were funded by investors or loans (also investors), *PROFITS* repaid those expenditures. That is how free markets work. I went to great lengths to try to explain this, but you missed it. This is why I think that this reply is futile (I earlier used the word “pointless”).

    > And had they been paid just for that service, and expenses related to that service, plus a agreed upon profit margin etc, I’ld see no problem. But when those services involved a $100m or two of R&D (as originally projected) and NASA pays for ALL R&D they ever did for anything +….

    Same as my previous comment. You seem to refuse to let investors make back their investment, otherwise it is a subsidy. Risk taken, reward refused? This sounds socialist, to me.

    >>> The $440 million …

    All your comments from this point forward are complaints that SpaceX makes a profit – that its investors are rewarded for the risk that they took.

  • Kelly Starks

    > Kelly, you still don’t seem to recognize a profit when you see one. Examples that I gave as profits, you
    > are claiming are not profits but subsidies.

    Obviously I disagree

    > At no time, has government sent SpaceX a lump of cash to keep it in business, as Europe has done for Ariane.

    Incorrect. For example paying a inflated price for a product, after inflating the price for gov requirements for higher expense (ie unrelated to anything required for the product or service) would count. Also when you change the rules of a bid to pay a company more (or at all) to keep them funded/in the bid.

    >..my definition (which acknowledges profit as the proper reward for innovation and efficiency).

    The problem is your assuming pork payments are profit as reward for innovation and efficiency. Instead they are often just kickbacks. The central problem is that ridiculously inflated fees virtually paying off all expenses since the company was founded, are considered by you as reasonable profits.

    >..Even SpaceX was close to running out of money, but it was developing a product that the government wanted…

    Actually the congress wanted them in business, so the rules were changed to fund dev work unrelated to the contracted COTS services to keep them in business. Then in a couple cases after rejected by the gov customer, congress ordered them “reconsidered” for the contract.

    >> I essentially agree with your definition, though I’d extend it to include subsidizing the costs of a product
    >> to give it a unfair edge in the market. Like farm price supports,

    > Farm price supports are exactly my definition: government money handed out even though no value is
    > returned. The government does not buy the crops for the farmer to make a profit, they just hand out money to the farmers.

    Agree

    >> Ergo when some of the final cost of a product offered commercially, is paid by the gov, to give said
    >> product a edge in the market over un-(or less)- subsidized competition.

    > Except that this is not the case in COTS or in CCDev2. The government has not subsidized any
    > company in either of these programs under that part of your definition. They are *NOT* giving an
    > edge in the market, they are funding programs that they want to use in the future. There was a
    > bidding process to provide the goods and/or services that the government wants.

    Incorrect. Were that true I would agree with you.

    >> No you’ve completely misunderstood what I said.

    > I understood completely what you said. You said that the government buys a product and the profit
    > is a subsidy, but only because the government chose to buy something it did not use.
    > That is not a subsidy, that is misallocation of funds/crony capitalism.

    Not buying that they didn’t wind up using, but buying what they never had a intention of using – merely buying it to pay the money to the seller. Like buying far products to destroy just to pay the farmers.

    >> Which is a subsidie to artificially give Arianne a edge in the market. Similar to NASA covering all of
    >> SpaceX’s R&D and other costs even though its not related to anything done to develop a good for NASA.

    > No. The R&D was done to complete the contract.

    All the R&D ever done by SpaceX, about 2/3rds of all the funds ever spent by SpaceX, was done for the contract? Again the R&D costs stated by SpaceX for the Contract were about $100m or so, but the provided fee was $850m.

    > If you mean the profit was used on other R&D projects for future rockets,..

    More like past discontinued and all other rockets.

    >> But instead NASA paid to cover all R&D costs for all R&D projects SpaceX had ever done since their founding plus a profit.

    > Are you accusing SpaceX of mischarging? ..

    No, NASA mispaying.

    >> the pads at about all launch facilities are designed to support that.

    > Which is why it is a requirement.

    No, though its generally cheaper if you don’t require them to build new pads for you. So its hard to be competitive with those extra costs taged onto your bid. In this case that was waved since SpaceX wasn’t compatible.

    >> As I stated my big problem is NASA and DOD have paid for virtually everything SpaceX has ever
    >> done and spent even though very little of it was in any sence for their needs

    > They needed the Falcon 9, the Dragon, and all that goes with them.

    Why did they need the inferior F-9? Why did they need to pay for everything the company ever did even if it was unrelated to anything they wanted?

    >…Once again, you are saying that profit is subsidy, or you are saying that SpaceX is mischarging the govnerment.

    Wrong on both counts.

    > At no time, has government sent SpaceX a lump of cash to keep it in business, as Europe has done for Ariane.

    False.

    >> They [EELV or other rockets] were developed and built predominantly on commercial investor
    >> money for later sale to gov or commercial buyers.

    > Now you are trying to have it both ways. Musk and his investors spent their own money developing,
    > testing, and launching three rockets (not all made it to orbit) before they received their first government contract…

    Your not counting the grants? Agencies forced to contract to them for studies?

    No, little of the R&D costs of the falcons were paid by investors. That is my primary point. Most off the EELV dev costs were paid up frount by investors, most of the Falcon and Dragon dev costs were paid upfrount by NASA and DOd. And the rules of the COTS contracts weer altered to include doing that funding to allow SpaceX in, while not allowing EELV’s in.

    > .. You seem to refuse to let investors make back their investment,

    If they make it back from sales of products and services, no problem, that’s how capitalism works. When they get it paid back by political pressure altering contracts to get them in, then offering big grants to pay off their bills , etc. That’s crony capttalism or subsidizes.

  • Edward

    > Obviously I disagree

    Except that your reply reinforces my conclusion that the whole discussion is futile and pointless. You still refuse to allow companies to make back their initial investment, as though you expect investors to throw away their money without hope of reward for the high risk that they took (how many new NewSpace companies do you expect under such poor business practice?). You even seem to reject that there was any investment for a return to be made, and you definitely deny that COTS and CEDev2 are sales, that you have redefined NewSpace sales as subsidies, just as you define our hypothetical Ford sales as subsidies.

    It sounds like you chose to dislike that NewSpace companies might make a profit and get a return on their initial investments, and you won’t admit that this is allowed under US laws, contracts, and business practices. There is just no pleasing you.

  • Kelly Starks

    >..You still refuse to allow companies to make back their initial investment, ..

    NO, NO, NO!! I have no problem with companies earning a profit, and expect them to need to have that exceed all investments and expenses if they are going to survive much less grow and prosper. That profit should come from the sales of services and products NOT FROM GOV GRANTS OR CRONY KICK BACKS.

    >..you definitely deny that COTS and CEDev2 are sales..

    Wrong again.

    >.. as you define our hypothetical Ford sales as subsidies.

    For the last time.
    If the gov buys Fords, computers, corn, etc, because it wants/needs them – that’s a sale.
    If the gov buys Fords, computers, corn, etc, that it never intends to use (and often immediately throws away) because it wants wants to give money or otherwise subsidize that industry – that’s a subsidy.

  • Edward

    Futile.

    You say that you have no problem with profits on COTS and CCDev2 , but when they actually make said profit, you adamantly, unwaveringly, and tenaciously declare it a subsidy.

    According to you: when the government buys COTS and CCDev for use, they are subsidies; however, Fords for use are not subsidies, but Fords for non-use are. Perhaps putting your philosophy in one sentence will demonstrate your inconsistency.

    Or putting it in tabular form:

    Intention: | Use | Non-Use
    ——————————————-
    NewSpace: | Subsidy | N/A
    ——————————————-
    Ford Auto: | Profit | Subsidy

    Futile.

  • Kelly Starks

    Arg

    Profit = fee for service or good.

    Subsudy

  • Kelly Starks

    Arg

    Profit = fee for service or good.

    Subsidy = payment for no service or good.

    IE buying food to destroy it but subsidize farmers. Or paying $850m to SpaceX for COTS related R&D, when SpaceX did little if any R&D for COTS. Nor had SpaceX ever spent $850M for all R&D, for all contracts, for all markets, in the companies history.

    I.E. payment for no service or good. In that case to keep SpaceX afloat. I.E. subsidy, not profit.

  • Edward

    > IE buying food to destroy it but subsidize farmers. Or paying $850m to SpaceX for COTS related R&D, when SpaceX did little if any R&D for COTS. Nor had SpaceX ever spent $850M for all R&D, for all contracts, for all markets, in the companies history.

    Little, if any, of SpaceX’s R&D expenditures did not contribute to its COTS work. They didn’t start the Grasshopper research until long after the COTS contract was signed. They developed their own Merlin engine, which is used on COTS. They researched how to build and launch rockets, skills that are mandatory for use on COTS. Your statement makes no sense at all. What R&D that they did before the 2006 award was *not* used on COTS? This is exactly what I mean when I say that they deserve to get return on their investment.

    For the antepenultimate time, despite your previous protestations, we are back to you denying that SpaceX spent its own investors’ money to develop rockets, engines, or facilities for use; that it needed to develop them and have launch experience in order to get their contracts in the first place (e.g. several companies that did not have that much experience did not get CCDev contracts and probably didn’t get COTS contracts either), which sounds like R&D to me (or do you have a different definition of R&D as well as of subsidy?); and that it is right for the investors to receive return on their investment. Where are you proposing that the $850M went?

    You also seem to be denying that a development program can include creation of items that are for test purposes, like rockets that launch no payload, but are not end items. I’ve built a whole lot of non-flight items that the customer paid for in order to learn how to make the end flight item work right or to prove the concept. That is the “research” part of R&D.

    Most companies have near-bankruptcy moments and some get life-saving contracts and grow into large corporations. Rotary Rocket company and Kistler Aerospace come to mind as two that didn’t, and Hewlett-Packard comes to mind as one that did. If Disney hadn’t bought several of their model 200B audio oscillators in order to make their movie “Fantasia,” then Hewlett and Packard probably would have had to close shop and go back to being employees. What do you want to bet that the price that HP charged Disney covered the development costs of both models (would you say that Disney subsidized HP)? Just because you see the same thing happen at SpaceX does not mean that the government only chose them to subsidize them. Indeed, if they were into such subsidies, then why didn’t they choose SpaceX for the first CCDev competition, too?

    http://en.wikipedia.org/wiki/CCDev#Proposals_not_selected

    You still haven’t clarified how cars-for-use are profit, but rockets-for-use are not.

  • Kelly Starks

    >> IE buying food to destroy it but subsidize farmers. Or paying $850m to SpaceX for COTS related R&D,
    >> when SpaceX did little if any R&D for COTS. Nor had SpaceX ever spent $850M for all R&D, for
    >> all contracts, for all markets, in the companies history.

    > Little, if any, of SpaceX’s R&D expenditures did not contribute to its COTS work. …..
    > What R&D that they did before the 2006 award was *not* used on COTS? This is exactly
    > what I mean when I say that they deserve to get return on their investment. .

    The contract was for all research you did before that in some way contributed to your COTS/CRS bid. It was for R&D you did specifically for the COTS/CRS, after you were selected.

    It would be if the Air Force gave a grant to Lockheed/Martin for R&D for the F-35 that covered all R&D since the companies funding, and you justified it as leading to the F-35.

    Return on investment does not mean charity. It does not mean some one likes you and pays off all your bills. It means your profit for the services provided cover your expences. Here NASA paid for the bulk of everything the company ever did, for no services at all. Then the conversation started about bids for launch services. Which since NASA has just whipped away all their debt for nothing, and agreed to pick up most future launch costs for free, they were suddenly in a excellent position to offer low bids for.

    That is not how contracts in gov or private are issued. You would expect SpaceX to bid a cost for services that would pay their bills. Not take a upfrount kickback to cover them. I.E SpaceX (which as I remember was near bankrupt them and about to go under) was effectively carried over the finish line, then asked to compete in the race.

    > You also seem to be denying that a development program can include creation of items that are for test purposes,..

    What development was done for COTS/CRS? Not what do they do in general to get in the business (much actually they didn’t need to do), but what specifically was done just for that NASA COTS/CRS contract?

    >…Hewlett-Packard comes to mind as one that did. If Disney hadn’t bought several of their model 200B audio
    > oscillators in order to make their movie “Fantasia,” then Hewlett and Packard probably would have had to
    > close shop and go back to being employees. What do you want to bet that the price that HP charged Disney
    > covered the development costs of both models ..

    Yes they charged a fee for their product (though likely didn’t cover all their costs with those sales). HP did not come up to Disney and say If you’ll pay off all my bills now, I’ll offer to sell you equipment you might want (or not) and since I’d then be completely in the black, I can then undercut all other suppliers prices (that would actually pay their bills out of the profit margin in the price).

    > You still haven’t clarified how cars-for-use are profit, but rockets-for-use are not.

    Given I’ve been saying the opposite all along, I don’t need to.

  • Edward

    You really dislike the free market.

    > It would be if the Air Force gave a grant to Lockheed/Martin for R&D for the F-35 that covered all R&D since the companies funding, and you justified it as leading to the F-35.

    A bogus argument, and you know it. No grant was given to SpaceX or LM, LM did not have to learn how to build or fly airplanes in order to build the F-35, previously paid-for R&D is not re-paid for, otherwise younger companies would get all the contracts as the older companies’ bids would vastly outweigh the younger companies’ since decades or a century of R&D would add enormous amounts to the bids. ROI is *not* charity, and neither were the COTS or CCDev contracts. You know that, too.

    Nor am I suggesting that SpaceX’s CCDev contract repays for R&D performed for/leading to COTS.

    > It means your profit for the services provided cover your expences.

    Except that you consider the compensation for expenses to be subsidies. SpaceX did not develop its engines, rockets, and facilities for free, and you know that, too.

    You *still* insist that the expenditures resulting from the initial investment not be compensated.

    > Here NASA paid for the bulk of everything the company ever did, for no services at all.

    And now you deny that COTS and CCDev are services.

    > Then the conversation started about bids for launch services. Which since NASA has just whipped away all their debt for nothing, and agreed to pick up most future launch costs for free, they were suddenly in a excellent position to offer low bids for.

    As though LM and Boeing still had debt left over from developing Atlas and Delta. The government compensated them for those expenditures long ago. Their bids are high because they are mired in bureaucracies that developed over decades of management trying desperately to conform to their customers’ requirements (the government customer being especially picky and historically burdened its vendors with satisfying especially expensive special treatment/services/changed requirements). SpaceX will one day have similar bureaucracies (but hopefully will avoid the especially expensive special treatment/services/changed requirements that government has previously required), but today they are still a well run, well managed company. *That* is why they and Orbital (which you don’t complain about) were able to underbid the “big boys.” You should know that, too.

    > Not take a upfrount kickback to cover them.

    There’s another definition we may have to study, or is this another word for “subsidy?”

    > specifically was done just for that NASA COTS/CRS contract?

    Starting the company was a necessary first step. Now you are denying companies the ability to charge customers for any patents that they may have developed in advance of a government contract. That, too, is considered R&D. Or should companies omit all R&D until they have a government contract to fund it? How competitive do you suppose American companies would be under such a system?

    You really *really* dislike the free market. Companies must make a return on their patents, as well as the R&D that does not lead to anything useful. Government-owned companies, like the Energia company under the Soviet Union, can absorb these losses – and can spend R&D on a whole lot of useless products – by burdening their subjects with extra taxes, but free market companies *must* be able to recover these costs by charging customers for them. If they spend too much on unpopular products, they can’t compete with the other free market companies and disappear (Rotary Rocket and Kistler keep coming to mind).

    > HP did not come up to Disney and say If you’ll pay off all my bills now, I’ll offer to sell you equipment you might want (or not) and since I’d then be completely in the black, I can then undercut all other suppliers prices (that would actually pay their bills out of the profit margin in the price).

    Now you are just being silly. You know that isn’t how SpaceX talked to NASA. There was a bidding process (or did you forget about that), and SpaceX and Orbital won their bids. Had they bid excessive amounts for COTS, or seemed unable to perform the contractual tasks, then they would not have won. And if HP asked for too much, they wouldn’t have gotten their company-saving Disney contract, either.

    *That* is how the American system works.

    Indeed, in the first round of the COTS program, Kistler was unable to come up with sufficient private funding, and NASA cancelled their agreement. Kistler was not “granted” a “subsidy” in order to stay in business, and they eventually went out of business, but not for lack of a good rocket. Kistler was considered by NASA to be a company that was capable of performing, unlike some other companies that did not get first round contracts, but it turned out to be incapable of satisfying the conditions of the contract, and many of those other companies also would have failed.

    >> You still haven’t clarified how cars-for-use are profit, but rockets-for-use are not.

    > Given I’ve been saying the opposite all along, I don’t need to.

    Here is how you phrased that “opposite:”

    “For the last time.
    “If the gov buys Fords, computers, corn, etc, because it wants/needs them – that’s a sale.”

    Cars for use “– that’s a sale.” But when SpaceX provides rockets for use, you insist adamantly, emphatically, and tenaciously that it is a subsidy – indeed, if you didn’t, we wouldn’t be having this argument.

    Therefore, you still haven’t clarified how cars-for-use are profit, but rockets-for-use are a subsidy.

    Getting to space is difficult, dangerous, and expensive. Indeed, expensive is the whole reason for COTS and CCDev in the first place: to encourage companies to create ways to get into space more efficiently and affordably. Those that do, survive; those that don’t, go the way of the buggy-whip makers and Kistler. Several companies that have taken the risk have gone out of business, so the risks should be clear to you.

    For the penultimate time: you refuse to let those who take the risks be rewarded for those risks when they succeed. Your entire narrative, on this entirely too-long thread, emphasizes this with every entry; despite your denials, you continually make my point about your attitude toward these companies. Otherwise, you would let the successful, well-run, innovative companies, such as SpaceX, be rewarded without declaring that their well-deserved profits are subsidies.

  • Kelly Starks

    > > It would be if the Air Force gave a grant to Lockheed/Martin for R&D for the
    >> F-35 that covered all R&D since the companies funding, and you justified it as leading to the F-35.
    > A bogus argument, ..
    > Nor am I suggesting that SpaceX’s CCDev contract repays for R&D performed for/leading to COTS.

    Which is the central point. The COTS/CRS contract award for COTS/CRS R&D, covers all R&D ever done by SpaceX since its founding, even though they needed to do no R&D for COTS/CRS R&D.

    Rather then compensate them for their expenses specifically for COTS/CRS (fee for services), It paid 2/3rds of all SpacX cost for everything they’ve ever done since their founding. It was a fee for services – with no services intended..

    > You *still* insist that the expenditures resulting from the initial investment not be compensated.

    Not out of a grant, that you call fee for services. They should pay their bills out of profit for services rendered, not out of subsidizes speciously labled as fees for services.

    >> Here NASA paid for the bulk of everything the company ever did, for no services at all.
    > And now you deny that COTS and CCDev are services.

    The payment wasn’t for COTS services – or for anything related to CCDev. They paid OTHER fees for COTS?CRS and CCDev services.

    >> Then the conversation started about bids for launch services. Which since NASA has just whipped
    >> away all their debt for nothing, and agreed to pick up most future launch costs for free, they were suddenly in a excellent position to offer low bids for.

    > As though LM and Boeing still had debt left over from developing Atlas and
    > Delta. The government compensated them for those expenditures long ago.

    Don’t follow this? They didn’t have debts left over because profits from sales of services with them paid them off. SpaceX couldn’t do that.

    > Their bids are high because they are mired in bureaucracies that developed
    > over decades of management trying desperately to conform to their customers’
    > requirements (the government customer being especially picky and historically
    > burdened its vendors with satisfying especially expensive special treatment/services/changed requirements)

    And yet they can beat SpaceX in costs bids without gov subsidizes.

    >> specifically was done just for that NASA COTS/CRS contract?

    > — Now you are denying companies the ability to charge customers for any
    > patents that they may have developed in advance of a government contract.

    Given that’s never been customary for any launch provider, and SpaceX wasn’t doing it either… yeah.

    > You really *really* dislike the free market. ..

    You REALLY don’t know what it is. Its not crony capitalism where company’s get all their bills paid off in grants for non services to keep them in business, then providing contracts tailors only for them.

    >> HP did not come up to Disney and say If you’ll pay off all my bills now, I’ll
    >> offer to sell you equipment you might want (or not) and since I’d then be
    >> completely in the black, I can then undercut all other suppliers prices
    >> (that would actually pay their bills out of the profit margin in the price).

    > Now you are just being silly. You know that isn’t how SpaceX talked to NASA.

    I don’t know if its what SpaceX said, but its what NASA did. Hence my anger and disgust.

    > There was a bidding process (or did you forget about that), and SpaceX and
    > Orbital won their bids…

    Actually not, you might want to look up the details.

    >… Kistler was not “granted” a “subsidy” in order to stay in business,..

    No, NASA judges their investors weer improper for a federal contract. (Canadian teachers union)

    >..but not for lack of a good rocket. Kistler was considered by NASA to be
    > a company that was capable of performing, ..

    Actually Kistler didn’t have arocket. They had a rough design, but they had nothing completed much less built and flown.

    Actually in their case had NASA awarded them a big R&D fee windlall it would be more justified since Kistler would have to have done a lot of R&D to develop their rock pretty much from scratch.

    Also as a nit, the “COTS” contract was a weirdly run since it explicitly excluded any commercial on the shelf launcher.
    ;/

    >>> You still haven’t clarified how cars-for-use are profit, but rockets-for-use are not.
    >> Given I’ve been saying the opposite all along, I don’t need to.
    > Here is how you phrased that “opposite:”

    > Cars for use “– that’s a sale.” But when SpaceX provides rockets for use, you
    > insist adamantly, emphatically, and tenaciously that it is a subsidy ..

    No because we’re not talking about fees for rockets to be used. Or fees to develop custom rockets for use. Ot fees for any R&D in any way triggered by the COTS/CRS contract services.

    >..Getting to space is difficult, dangerous, and expensive.

    Not really from any engineering or economic sense. Its just a market with no economies of scale.

    > Indeed, expensive is the whole reason for COTS and CCDev in the first
    > place: to encourage companies to create ways to get into space more
    > efficiently and affordably. …

    Actually that wasn’t the reason, nor has it made any progress toward that. But that’s a whole other argument.
    >.. For the penultimate time: you refuse to let those who take the
    > risks be rewarded for those risks when they succeed. ..

    Utterly false.

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