Bill Nelson, Biden’s NASA administrator and a former Democratic Party senator from Florida, made it clear during his testimony before a subcommittee of the Senate Appropriations committee today that he condemns cost-plus contracts and no longer wants to use them for any NASA project, even though he demanded NASA use such contracts when he was a senator.
Nelson was asked what, in his opinion, was the biggest threat to NASA’s goal of landing humans on the Moon by 2025. Nelson responded that the agency needed competition in its program to develop a Human Landing System. In other words, he wanted Congress to support NASA’s request for funding to develop a second lander alongside SpaceX’s Starship vehicle.
But Nelson didn’t stop there. He said Congress needs to fund this lander contract with a fixed-price award, which only pays companies when they reach milestones. This contracting mechanism is relatively new for the space agency, which traditionally has used “cost-plus” contracts for large development programs. Such awards pay contractors their expenses, plus a fee. “I believe that that is the plan that can bring us all the value of competition,” Nelson said of fixed-price contracts. “You get it done with that competitive spirit. You get it done cheaper, and that allows us to move away from what has been a plague on us in the past, which is a cost-plus contract, and move to an existing contractual price.”
The significance of Nelson’s remarks is that it bluntly signals that the Biden administration has now wholly bought into the ideas I put forth in Capitalism in Space. Nelson wants NASA to be a customer that buys what it needs from the private sector, and to do it as inexpensively as possible. He also wants to encourage competition by allowing that private sector to own and control what it builds.
In the past, a new administration would have abandoned the policies of the past administration. Instead, the Biden administration is accelerating the Trump administration’s policy of encouraging private enterprise and eliminating cost-plus contracts.
The future of the American space industry appears bright indeed.
This statement by Nelson also indicates that the future of SLS is now very precarious, especially because it is being built almost entirely on cost-plus contracts. Any serious failure could kill it. And even if its next launch succeeds, further launches hang now by a very thin political thread. And the more success private space has, the thinner that thread will become.
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