Why Bigelow passed on NASA bid for new ISS module
Capitalism in space: In an interview this week, Robert Bigelow provided his reasons for not bidding on the NASA agreement to build additional modules for ISS, won by passed on NASA bid for new ISS module, won by Axiom this week.
In a Jan. 28 interview, Robert Bigelow said his company decided not to bid on a NASA competition for access to an ISS docking port for a commercial module because the funding NASA offered for doing so was too low. NASA announced Jan. 27 it selected Axiom Space to use the port through its Next Space Technologies for Exploration Partnerships (NextSTEP) program.
When NASA issued the request for proposal in June for the docking port, NASA said it projected making $561 million available for both the docking port solicitation and a separate one to support development of a free-flying commercial facility. “That was asking just too much” of the company, Bigelow said. “So we told NASA we had to bow out.”
NASA now appears willing to separate the free flyer from the program, meaning that it wishes to make more money available to both, something Bigelow says is necessary because at the moment he believes there are not enough customers outside NASA for any orbital space business to make a profit.
On this last point I think Bigelow might be wrong. I also think it will be a mistake for NASA to provide these companies too much money. Keep them on a tight lease, force them to work efficiently so that they lower costs. This will make it easier for them to charge less to outside customers, thus widening their customer base more quickly.
If NASA gives them a blank check, it will remain the only customer, as the companies will then end up spending too much building their facilities, making it impossible for any other private customer to afford using it.
On Christmas Eve 1968 three Americans became the first humans to visit another world. What they did to celebrate was unexpected and profound, and will be remembered throughout all human history. Genesis: the Story of Apollo 8, Robert Zimmerman's classic history of humanity's first journey to another world, tells that story, and it is now available as both an ebook and an audiobook, both with a foreword by Valerie Anders and a new introduction by Robert Zimmerman.
The ebook is available everywhere for $5.99 (before discount) at amazon, or direct from my ebook publisher, ebookit. If you buy it from ebookit you don't support the big tech companies and the author gets a bigger cut much sooner.
The audiobook is also available at all these vendors, and is also free with a 30-day trial membership to Audible.
"Not simply about one mission, [Genesis] is also the history of America's quest for the moon... Zimmerman has done a masterful job of tying disparate events together into a solid account of one of America's greatest human triumphs."--San Antonio Express-News
Capitalism in space: In an interview this week, Robert Bigelow provided his reasons for not bidding on the NASA agreement to build additional modules for ISS, won by passed on NASA bid for new ISS module, won by Axiom this week.
In a Jan. 28 interview, Robert Bigelow said his company decided not to bid on a NASA competition for access to an ISS docking port for a commercial module because the funding NASA offered for doing so was too low. NASA announced Jan. 27 it selected Axiom Space to use the port through its Next Space Technologies for Exploration Partnerships (NextSTEP) program.
When NASA issued the request for proposal in June for the docking port, NASA said it projected making $561 million available for both the docking port solicitation and a separate one to support development of a free-flying commercial facility. “That was asking just too much” of the company, Bigelow said. “So we told NASA we had to bow out.”
NASA now appears willing to separate the free flyer from the program, meaning that it wishes to make more money available to both, something Bigelow says is necessary because at the moment he believes there are not enough customers outside NASA for any orbital space business to make a profit.
On this last point I think Bigelow might be wrong. I also think it will be a mistake for NASA to provide these companies too much money. Keep them on a tight lease, force them to work efficiently so that they lower costs. This will make it easier for them to charge less to outside customers, thus widening their customer base more quickly.
If NASA gives them a blank check, it will remain the only customer, as the companies will then end up spending too much building their facilities, making it impossible for any other private customer to afford using it.
On Christmas Eve 1968 three Americans became the first humans to visit another world. What they did to celebrate was unexpected and profound, and will be remembered throughout all human history. Genesis: the Story of Apollo 8, Robert Zimmerman's classic history of humanity's first journey to another world, tells that story, and it is now available as both an ebook and an audiobook, both with a foreword by Valerie Anders and a new introduction by Robert Zimmerman.
The ebook is available everywhere for $5.99 (before discount) at amazon, or direct from my ebook publisher, ebookit. If you buy it from ebookit you don't support the big tech companies and the author gets a bigger cut much sooner.
The audiobook is also available at all these vendors, and is also free with a 30-day trial membership to Audible.
"Not simply about one mission, [Genesis] is also the history of America's quest for the moon... Zimmerman has done a masterful job of tying disparate events together into a solid account of one of America's greatest human triumphs."--San Antonio Express-News
> he believes there are not enough customers outside NASA for any orbital space business to make a profit.
> On this last point I think Bigelow might be wrong.
I think that he might be right. In congressional testimony, Andrew Rush stated that it would be very difficult for him to turn a profit if he had to pay even commercial prices for transport to LEO. And Made in Space is the poster child for in-orbit manufacturing.
Bigelow has (I believe correctly) identified sovereign clients as the most likely customers for his inflatable modules in LEO. Those clients won’t be sending their national astronauts to LEO in order to make money but as part of their national pride — e.g. to make hero astronauts to encourage their young people to pursue STEM. Here Bigelow seems to be assessing that market (something that he has probably formally done) and found it wanting.
Rather, I think that the future for commercial space in not in LEO where there’s practically no material resources and instead, on the Moon where polar resources can greatly reduce the amount of payload that needs to be launched from Earth to support a permanent base leading to settlement. The business case for HSF is most likely retirement and the customer demand to experience the freedom of partial gravity and the status that being part of that community provides.
Cost has much to do with scale.
We can send up people pretty cheap now. But who is in line to do this? Governments at no profit.
The next to go up would be university researchers. Either in conjunction with private business or public/private funding.
This can all be done while connected to the ISS.
After this the next option would be private corporations if something can be found to be manufactured more profitably in space than on Earth.
After that is tourists. And rich tourists want a rich experience. Not all are just excited to just be in space. They will want that zero G sex experience. High quality food cooked by celebrity chefs. And of course the ever favorite space walk.
I can not see that happening in anything small like the ISS.
100 people minimum. Think of it like building a casino and hotel except in orbit. Several billion in investment. And it will have to have at least a small section at some significant portion of gravity. You can not cook in zero G.
It’s getting hard to imagine much use for human residence in near earth orbit. Okay, medical studies and observation of zero-gee phenomena, but almost by definition those are not the repetitive high speed activities associated with modern commerce and manufacturing. True, space offers vacuum, necessary for some processes. Space (or rather orbital mechanics) also offers micro-gravity, which may influence the workings of some manufacturing processes, but I suspect the emerging technology of “3D-printing” will lead to ground-based processes which are equally effective and likely cheaper overall.
Ultimately, of course, we should expect manufacturing and other commercial activities in locations where resources — including human supervision — and suitable infrastructure are available and transport of products to markets is a practical matter. In Upper Michigan, for example. Or Mare Imbrium on the Moon, or Valles Marineris on Mars, or yet uncharted locations on bodies deep in the Kuiper Belt. In the latter case, I foresee that we will eventually need to conglomerate materials from distant sources (AU’s) over extended periods of time (years, or even decades) in manufacturing processes which will produce goods for distribution to equally distant markets. One would like to think that economic analyses are potentially as solid and rigorous as say Newtonian mechanics, but I suspect the differences of time and distance in the space environment will lead to governmental and business decisions which differ considerably from those on Earth.
I also think it will be a mistake for NASA to provide these companies too much money. Keep them on a tight lease, force them to work efficiently so that they lower costs. This will make it easier for them to charge less to outside customers, thus widening their customer base more quickly.
If NASA provides no money at all, that would force them to work very efficiently and really lower costs, which would make very easy to charge less to outside customers and very quickly widen their customer base.
Right?
Jim Davis: You are joking, right? My point is that as a customer, NASA should behave like a private customer who needs a product but does not have unlimited funds obtained by coercion. As a government agency, NASA in the past has not done this, but instead provided blank checks to its contractors (cost-plus contracts). The result has been bloated, over-prices products that take forever to be delivered.
A private customer can’t tolerate such behavior. They demand low prices, efficient operation, and results. All I am urging NASA to do its to follow this approach, not its past behavior.
This isn’t that hard to understand. It is however difficult for government agencies to execute. They need as much prodding, encouragement, and even criticism to push them in this direction.
My point is that as a customer, NASA should behave like a private customer who needs a product but does not have unlimited funds obtained by coercion.
My point is that NASA is the only customer who has ever purchased space station modules. What possible criteria could they use to determine if they are being “coerced” into paying more than they should? There is no market for space station modules so there is little prior knowledge on which to base a judgement.
But you’re a private customer. Suppose you were buying space station modules out of your own pocket. How would you determine whether you were paying a fair price or were being shaken down by an unscrupulous contractor? You don’t want NASA to provide these companies too much money. Fair enough. How much is too much?
Jim Davis: Your question is a fair one. We really don’t know. I think however that if some of the makers of modules are not squealing, then we are paying them too much. Bigelow’s actions here suggest NASA’s price offer was getting close to the right range.
Jim Davis asked: “Suppose you were buying space station modules out of your own pocket. How would you determine whether you were paying a fair price or were being shaken down by an unscrupulous contractor? You don’t want NASA to provide these companies too much money. Fair enough. How much is too much?”
It is like any other business plan. What does NASA charge now for an experiment, and what does it offer its current customers? This is a limit on what you can charge or your opportunity to provide better service for your own potential customers.
Next, you need to determine what it costs for your operations. What does a space-hab cost to build and to launch, how long does one last, what does a seat cost to get there and back, and what does it cost to operate it all? How many experiments can you get to sign up for your service? This gives you an idea of what you need to charge per experiment or experimenter/astronaut that a customer wants to send up.
Unfortunately, there does not seem to be a lot of potential customers beating on Bigelow’s door. This is disappointing news. Perhaps the cost of transportation is scaring off many customers.
I don’t know what it costs to build a space-hab, but the launch of a B330 is limited to ULA, as Falcon’s fairing is too small, so launch is probably $100 million to $200 million. Four Dragon seats are estimated to cost $55 million each, so seven would be around $35 million each. Starliner seems to be about 2/3 again more expensive, around $55 million each. However, B330 supports only six people, so the costs become around $40 million and $60 million per seat, respectively.
So does Starship change all this?
Starship may be able to take six (or a hundred) people for $7 million or so, which would reduce the cost per passenger to around $1.3 million. If a B330 fits inside a cargo Starliner, then launch costs drop dramatically, too.
Bigelow sees the space hotel business as being lucrative, and if he can combine four or five B330s into one space-hab, then each hab would hold around 24 to 30 people, perhaps 20 to 25 tourists and the rest as staff. On Starship, this would cost around $280,000 to $350,000 per tourist for transport.
Such dramatic improvement in transportation costs is coming due to commercialization of the space industry. If transport can improve in efficiency that dramatically, can the rest of commercial space, including space habitats, improve as dramatically? Probably so, because it cost around $100 billion to put together the ISS and it seems to be costing another $50 billion to operate it for a quarter century. I’d bet that commercial space-habs won’t cost that much. And I’d bet that over the next couple of decades there will be more efficiencies found for their construction and operation.
But Bigelow said that the pump needs to be primed in order for all this to start.
Jim Davis asked: “How would you determine whether you were paying a fair price or were being shaken down by an unscrupulous contractor?”
That is an interesting part to this question. What constitutes being shaken down?
SpaceX charges less for its launches than any other launch provider with similar capabilities, yet the company was able to develop a self-landing reusable first stage, a Dragon cargo capsule, a Falcon Heavy rocket (estimated alone to cost $500 million), and made four major modifications to Falcon 9 on the revenues of launching only about 50 payloads. Did SpaceX overcharge for those launches or was it acceptable for them to make ten million dollars or more profit per launch (about 20-ish percent)?
As I like to say, profit is the reward for improving efficiency.
Competition is also a good way to ensure that you don’t get shaken down by an unscrupulous contractor. Competition between Bigelow and Axiom should help keep each company honest. When Ixion and Sierra Nevada start making space-habs, too, then we should start to see much more efficiency in that industry.