It isn’t certain that Kistler was not up to the task. This was in a time when it was difficult for investors to believe that the government was really going to go with fixed price contracts, which had been tried before with at least one Air Force contract.* Kistler did not have the funding to successfully get a rocket to orbit, which may have improved investor confidence.

What may have saved SpaceX was its success in getting a Falcon 1 into orbit and that the Falcon 9 was almost ready for a first flight. That may have led investors to believe that SpaceX could conceivably execute the contract without losing too much money. Musk convinced enough investors to put up enough money to reach the first milestone of the contract, so they received the first milestone payment. Commercial satellite operators were also confident in Falcon 9, and started booking flights.

These days, thanks to the advancement of commercial space due to NASA’s fixed price contracts, it is far easier to find investors in non-communication space companies. The government monopoly on space access has been broken, and government is no longer a gatekeeper to space. The government monopsony as the virtual sole customer for space launches is broken, and commercial companies are beginning to make their fortunes operating in space (e.g. Axiom, Made In Space, and Nanoracks).
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* The contractor went over the quoted price, paid out of its own pocket, then got sued by the auditors for mischarging on a contract, using their own funds rather than invoicing the Air Force, making it look like they performed to budget. When it got to court, the judge recognized what the auditor could not understand — fixed price meant that excess expenses came out of the contractor’s pocket. The judge threw the case out of court. The whole experience was so bad that it took a quarter century before anyone was foolish enough to try fixed price again, in 2008.

(Nota Bene: Actually, VSECOTSPE (who prefers his real name not be publicized) was at OMB, not NASA – he just oversaw appropriations and policy over NASA at that posting.)

I do not think he is arguing that “firm fixed price” is a bad idea, or even that it failed under COTS and CRS – because it certainly didn’t. It also was not, he adds, an easy road, either, and it worked because certain premises were in place: capabilities that employed some pretty well characterized technologies, and multiple vendor providers to keep everyone honest. These premises might not always be present in every future endeavor that NASA undertakes, though…

But more immediately, I keep coming back to what he said: “If a contractor has the government over a barrel as the monopoly provider, the government is usually screwed regardless of what type of contract is being used.” That hasn’t happened yet with Commercial Crew despite SpaceX’s de facto monopoly, but how much of that is because NASA has SpaceX under contract already, and maybe also because Elon Musk does not want to kill the golden calf. Elon won’t live forever, though…

I have a lot of unease about the Deorbit Vehicle program and how NASA management is approaching it, but it does remain true that you can’t really do this with multiple vendors. Eventually, a single vendor will have to be selected to do this job, and there won’t be anyone else to keep ’em honest. And honestly, if I were that vendor, I would want the requirements absolutely locked in so that NASA could not keep kibitzing it like they have Gateway.

Richard M: What your NASA manager fails to realize is that the fixed-price contract wasn’t a failure in those cases where the companies have had problems. It was instead like an engineering test where the rocket explodes after completing all of the test’s initial goals. Fixed-price revealed companies that were not up to the task.

For example, the problems at Boeing with Starliner finally made NASA managers look honestly at the company, and when it bid on the manned lunar lander, NASA rejected it immediately, recognizing in it the same kind of errors committed in the Starliner bid.

In other cases, such as Northrop Grumman, the problems give the company a chance to recognize issues in the company itself, and insitute reforms. Whether Northrop Grumman does so will in time become obvious, and will give NASA better information should it bid again for future projects.

VSECOTSPE, the fellow who initiated and oversaw COTS at Bush’s OMB back in the day, had a worthwhile observation on this whole question a few weeks back over at the NSF forums:

….[F]ixed price is not a panacea. In my own fixed-price ISS cargo transport development program (COTS), we had a contractor (RocketPlane-Kistler) fall out because they couldn’t raise funds. In the fixed-price crew transport follow-on program (CCDev), Boeing is still struggling with technical issues in Starliner that have delayed its entry by years. Again, suggest you read up on these programs — link below to the COTS history doc — instead of repeatedly hitting the c-o-s-t-p-l-u-s-b-a-d keys on your laptop.

Where the vast majority of NASA managers fail is not learning that these toggles and tools even exist in the first place, what their implications are, where they best fit different program types and goals, and obtaining good procurement and legal advice and support (one of NASA’s many soft underbellies) to choose the right tools and execute well with them.

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* I prescind from the whole question of whether the Gateway is even a good idea in the first place. But that ship has already sailed.

SpaceX will probably bid then push it to a parking orbit for Elon musk‘s personal vacation home…. just think of its potential as a future museum/tourist attraction!
That only if the Russians don’t have another accident and deorbit the space station for free!

(I am just looking for a nice million bucks in my pocket at the end of all of it but keep this a secret Big Joe).