
Air Force budget reveals how much SpaceX undercuts launch prices - Analemma_
https://arstechnica.com/science/2017/06/air-force-budget-reveals-how-much-spacex-undercuts-launch-prices/
======
stevep98
The US lost a significant part of their launch capability and ULA was the only
provider left. They were free to charge whatever they wanted, and it was in
the national interest for them to stay in business, hence the subsidy.

Now spacex is starting to compete, costs will come down. Is something not
going as expected?

~~~
marze
They were the only one left because the two remaining competitors merged to
form ... ULA.

ULA used all of their political connections to keep SpaceX out of the
government launch as long as they could, to maintain their monopoly pricing.

~~~
sjburt
But it was Congress that forced the creation of ULA. Both Boeing and Lockheed
were planning to leave the launch business and leave the US with nothing
(except the Shuttle). Launch is an ugly business, you have big fixed costs but
very lumpy revenues since you get paid when the rocket leaves the ground
(which can be delayed for years due to late payloads, political roadblocks
etc), and Delta and Atlas weren't competitive in the commercial market so they
couldn't smooth things out.

So Congress told them to form ULA and they would give them a readiness
contract to make it worth it to them even if they weren't launching often.
Basically, it was that or lose the heavy launch capability which would have
been a huge national security problem.

Obviously, that changes with SpaceX around, but what hasn't changed is that if
Congress pulls that contract, they'll just kill ULA and the Delta and Atlas
will be gone. Lockheed and Boeing still don't really want to be in this
business and there is nothing they can do to make Atlas price competitive with
Falcon, since their customer won't let them change anything.

~~~
gozur88
>Launch is an ugly business, you have big fixed costs but very lumpy revenues
since you get paid when the rocket leaves the ground (which can be delayed for
years due to late payloads, political roadblocks etc), and Delta and Atlas
weren't competitive in the commercial market so they couldn't smooth things
out.

Add to that the real money is in the satellites themselves. If you were a big
company like Lockheed it made far more sense to stick to building sats and
buying launch services from someone else.

>Obviously, that changes with SpaceX around, but what hasn't changed is that
if Congress pulls that contract, they'll just kill ULA and the Delta and Atlas
will be gone.

Congress will probably allow Delta to die, but they're not going to be 100%
dependent on Falcon. All it takes is a failed launch and nothing goes up for
six months while investigators figure out what happened.

~~~
elif
I am not a rocket scientist... but it seems like a 6 month investigation delay
would be comparable to the time it would take to procure and integrate the
payload into a completely different rocket?

Also if the launch savings exceed the total payload costs, in a pinch couldn't
they just roll the dice given falcon's success %?

(The last falcon investigation delay was only ~4 months)

~~~
gozur88
The problem is a six month delay pushes everybody's launch back six months. So
if you had an interplanetary probe scheduled for the next Mars launch window
in April of 2018, a six month delay starting today would mean your probe
doesn't get launched until the _next_ window in July of 2020 unless you have
enough clout to bump other launches.

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11thEarlOfMar
My read [which, knowing full well we're talking about the US government I'm
still having a hard time believing] is that the SpaceX cost is 23% of the ULA
cost. Meaning 77% less.

Do I misunderstand: "SpaceX won a contract to launch another GPS 3 satellite
for $96.5 million. These represent "all-in, fully burdened costs" to the
government, and so they seem to be roughly comparable to the $422 million
"unit cost" in the Air Force budget for 2020."?

~~~
rgbrenner
It's wrong.. but not because you misunderstood.. thats what the writer wants
you to believe... because the writer is attempting to pump the numbers to make
it sound more exciting.*

but the article that they linked to for the $83m figure says spacex undercut
ULA by 40%.. which means ULA was going to charge under $140m for that same
launch.

ULA didn't bid on the 96m launch.. so it's impossible to say what it would
have charged... but it likely would have been around the same $140m, since
it's for the same gps 3 sat.

[http://www.reuters.com/article/us-space-spacex-launch-ula-
id...](http://www.reuters.com/article/us-space-spacex-launch-ula-
idUSKCN0XP2T2)

* Yes, I think the writer is being dishonest. They have a link to an article that clearly says 40%.. then the writer discards that number, and finds other data that isn't directly comparable to write an article about it, and waives away the differences with "seems to be comparable to"

~~~
rory096
There's no dishonesty. The author makes it very clear that the GAO report
prices in the billion dollar a year fixed subsidy ULA receives.

~~~
rgbrenner
The article says the $422m is "maximum amount the Air Force believes it will
need to pay, per launch".

Are you saying that the air force ALWAYS pays the maximum for every launch --
no matter the payload?

If not, then clearly the number includes much more than just a subsidy.

~~~
btilly
No, it means that this is the maximum that total_paid/launches could be. And
includes fees that are paid independently of whether a launch happens.

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rgbrenner
why did the article compare spacex's costs for one flight, to the maximum ULA
may receive for a flight... these are not equivalent things. Is the spacex
rocket used for that GPS sat equivalent to a delta heavy ($350m) or an atlas v
($100m)?

Edit: this is a better article than the one linked:
[http://www.reuters.com/article/us-space-spacex-launch-ula-
id...](http://www.reuters.com/article/us-space-spacex-launch-ula-
idUSKCN0XP2T2)

it's the article for the gps sat, which clearly says Spacex undercut ULA by
40% on that contract -- so 83m vs 140m for ULA

That is a big difference, but much less than the 83m vs 422m in the article

~~~
JshWright
Falcon 9 (the rocket used for the GPS launch) is comparable to the ~$100m
Atlas.

The Falcon 9 (in 'expendable' mode) is roughly equivalent to an Atlas V in the
551 configuration (it's not an apples to apples comparison because the upper
stage Atlas uses (Centaur) is _really_ capable).

In reusable mode, it's closer to a 511.

Delta IV Heavy is comparable to the (upcoming) Falcon Heavy (though again, due
to the capabilities of Centaur, DIVH will be able to fly missions that FH
cannot). It will be interesting to see just how big the price difference is
there (I expect it to be pretty significant).

~~~
dasmoth
_Delta IV Heavy is comparable to the (upcoming) Falcon Heavy (though again,
due to the capabilities of Centaur, DIVH will be able to fly missions that FH
cannot)._

The Delta Cryogenic Second Stage is not a Centaur. Yes, it uses the same
propellants and a related (though not identical) RL-10 engine. The tanks are
very different, though, and those are arguably the most unique thing about
Centaur: pressure-stabilised ("ballon") tanks made of stainless steel, plus a
common bulkhead between fuel and oxidiser tanks make for a very good
propellant mass fraction.

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austinl
I'd recommend watching the video of Elon Musk debate Michael Gass (of ULA) at
a US Senate hearing. It's over an hour long, and really gets into the
differences between the two programs.

Link to the part where Elon starts talking:
[https://youtu.be/IWVZYKGTenE?t=1102](https://youtu.be/IWVZYKGTenE?t=1102)

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spectrum1234
Why is Elon/SpaceX charging so much less for rockets?

Couldn't they make more profit, to reinvest in Mars plans, by charging
something like 90% of competitors for near perpetuity?

~~~
ejolto
Falcon 9 is a new rocket without a lot of statistics about mission success
rate. They had a few failed launches in 2015 and 2016. This makes launching
your payload on a Falcon 9 more risky and you have to pay a higher insurance
premium, than if you were to launch on a Soyuz rocket (all large payloads are
insured). If they can get more successful launches under their belt, it will
lower their risk and make insurance premiums go down. Then they can up their
prices.

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purpleidea
What is a "non-mercerdi breach"(sp?)

Heard here:
[https://youtu.be/IWVZYKGTenE?t=2876](https://youtu.be/IWVZYKGTenE?t=2876)
(and earlier too)

Not sure of the spelling or the definition.

~~~
ddoran
She said "Nunn-McCurdy breach"

cf [1]: <The Nunn–McCurdy Amendment> "requires notification to the United
States Congress if the cost per unit goes more than 25% beyond what was
originally estimated, and calls for the termination of programs with total
cost growth greater than 50%, unless the Secretary of Defense submits a
detailed explanation"

[1]
[https://en.wikipedia.org/wiki/Nunn–McCurdy_Amendment](https://en.wikipedia.org/wiki/Nunn–McCurdy_Amendment)

~~~
purpleidea
Thanks!

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mabbo
$422m per launch vs under $100m per launch.

Just imagine how many schools, bridges, cancer treatments, or who knows what
else that money could be better spent on.

~~~
jacquesm
Just imagine what you could do if you didn't do those launches at all.

~~~
thomasmeeks
We could not have GPS, and still be trying to fly planes over other countries.
I'm a fan of cost reduction, but it is more nuanced than this.

~~~
jacquesm
Sure, there is plenty of dual purpose stuff. Think of the Hubble as a Keyhole
pointing the other way. But in general money spent on defense is spent in ways
that make me wonder if we could not do something more useful with it. And a
world with GPS could be more annoying than a world with say better education.
And then you might end up launching those GPS satellites anyway, but from a
different bucket and a little later.

Piggy-backing stuff onto the military budget that is dual use is a nice fig
leaf but it does not reduce the component spent on the remainder: weapons of
all sorts, kinds and shapes.

~~~
badosu
> _Think of the Hubble as a Keyhole pointing the other way._

I still remember one discussion on NRO where an user mentioned that it donated
a space telescope to NASA [0], built around the same time as Hubble, that had
better specs. And that's the spare one!

[0] -
[https://en.wikipedia.org/wiki/2012_National_Reconnaissance_O...](https://en.wikipedia.org/wiki/2012_National_Reconnaissance_Office_space_telescope_donation_to_NASA)

~~~
jwhitlark
That was fascinating! Thank you for sharing the link.

