3 comments

  • LocalFluff

    About the billion dollar weather satellite. It is said to be using pioneering technology. It is not sure that private competition is as helpful with that as it is with rationalizing production and taking advantages of economies of scale and scope.

    I’d like to see a cost breakdown of the JWST, the $8 billion space telescope. Materials can’t cost more than a tiny fraction of that, and there’s no stuff like plutonium that requires very winded handling, nor procedures like crash tests that consumes expensive prototypes. In the end almost all of this money must have ended up as salaries to engineers and scientists. 2,000 of the most qualified engineers with $400,000 salary during 10 years? Or can the companies involved make huge profit margins?

  • Insomnious

    JWST?!
    Just two more years! I’m keeping my fingers crossed.

  • Edward

    LocalFluff,
    You wrote: “It is not sure that private competition is as helpful with that as it is with rationalizing production and taking advantages of economies of scale and scope.

    NOAA is just beginning to “hire” commercial satellite data. It is kind of an experiment, at this stage, on the way to commercializing satellite weather data so that NOAA no longer designs or generates the requirements for new weather satellites. Commercial companies are testing the “waters” to see if this government/private partnership will work out.

    If this new method works out with basic weather data, then I would expect that the companies that provide this data will eventually compete in pioneering new technology in order to provide more advanced information that NOAA would be eager to buy. They may innovate new detection methods on their own, in hopes that the new data will be valuable enough to more than repay the development costs.

    Commercializing space, fixed price contracts, and public-private partnerships (government/commercial partnerships) are not guaranteed to work.

    In the 1970s and 1980s, the Air Force tried fixed price commercialization for new aircraft. The F-20 Tigershark is the result. Northrop put about $150 million of its own money into the development, hoping that the Air Force would purchase it, but the Air Force wanted a more complex aircraft and didn’t buy it. Without the US Air Force as a primary customer, the rest of the world chose not to buy it, either, and only three prototypes were ever made. This experiment failed, and no other company tried to spend its own money on developing new military aircraft. Design-on-speculation did not pay off.

    Another, similar, problem in the 1980s was a fixed price project that went over the fixed price (I wish I could remember the project or the company). The company spent some of its own money, charging to an overhead charge number. The government auditors did not understand the unique fixed price contract, and thought that there was mischarging going on. They brought criminal charges, but the judge, after comparing the charges to the contract, threw out the case. However, seeing that fixed price contracts were only going to lead to legal problems, other companies chose to avoid any further fixed price contracts. Thus, cost-plus continued to be the standard system.

    It has taken a while for American aerospace to try these methods again. It also looks like the modern pioneers were mostly new companies that did not already have government auditors pouring over the books, eager to find potential criminal cases.

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