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Air Force budget reveals how much SpaceX undercuts launch prices
- 11thEarlOfMar 9y agoMy 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."?
- bigdubs 9y agoI think it's complicated by the retainer like fee the AF pays to ULA. Still, staggeringly cheaper.
- TrainedMonkey 9y ago"But based upon discussions with various space policy experts, this is the maximum amount the Air Force believes it will need to pay, per launch, if United Launch Alliance is selected for all of its launch needs in 2020." While helpful (and shockingly high), it is also misleading due to 2 factors: 1. ULA price spread is quite significant, fully loaded Delta Heavy is super expensive. 2. As per quote above, the number is for all launches done on ULA* . AFAIK here is the formula used to arrive at 422: (fixed_cost + number_of_launches * cost_per_launch) / number_of_launches = 422 fixed_cost = $1b/year subsidy Without knowing number/weight/orbits of things UAF wants to launch it is hard to estimate how much each vehicle costs. Moreover, as per quote above, this price is for all launches done with ULA. If part of the launches are done with other providers amortized price will be higher due to the $1b subsidy. * Without Falcon Heavy flying some launches must be done with ULA.
- Eridrus 9y agoI got the impression the formula was: (fixed_cost + number_of_launches * cost_per_launch) / number_of_launches = 422
- TrainedMonkey 9y agoYou are right, my formula just computed the total price, I've updated my comment.
- JshWright 9y ago> * Without Falcon Heavy flying some launches must be done with ULA. Even with Falcon Heavy, there are missions that will require the Delta IV Heavy.
- robin_reala 9y agoWhy’s that? Falcon Heavy is projected to be able to take up considerably more payload.
- TrainedMonkey 9y agoDo you have a specific example? AFAIK Falcon Heavy can beat Delta Heavy on everything but some deep space and missions requiring super long coast. I am not sure how many of those UAF has.
- andrewwharton 9y agoAre you sure about that? The marketing materials [1] for the Falcon Heavy say: "Falcon Heavy can lift more than twice the payload of the next closest operational vehicle, the Delta IV Heavy - at one-third the cost." [1] http://www.spacex.com/falcon-heavy http://www.spacex.com/falcon-heavy
- JshWright 9y agoThat depends on the orbital destination. Delta IV Heavy has a _very_ eficient upper stage, which makes it better for high energy destinations. Additionally, the Falcon upper stage has very limited on-orbit capabilities. It can't coast for a long time in order to insert a payload directly into a high orbit. (Though SpaceX is working on this, and did some tests in that direction on the recent NROL-76 launch)
- nickik 9y agoThis is false. There are some mission that they can not fly yet but the additional capabilities for the upper stage are already in development and have been partly tested. I would expect that by the time the FH flys the upgrades to the upper stage should be rolled out, so they can fly direct insertions. There is still the additional problem of vertical integration. SpaceX will start doing that on pad 39A.
- rgbrenner 9y agoIt'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-idUSKCN0XP2T2 http://www.reuters.com/article/us-space-spacex-launch-ula-id... * 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 9y agoThere's no dishonesty. The author makes it very clear that the GAO report prices in the billion dollar a year fixed subsidy ULA receives.
- deleted 9y ago[deleted]
- rgbrenner 9y agoThe 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 9y agoNo, 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.
- kobeya 9y agoAs someone who worked for one of the partner companies in ULA... the price quoted by ULA is just the base cost for the rocket hardware. They then nickel and dime the government for all the various launch services as well (fueling, launch prep, payload installation, integration tests, mission control, etc.). It's a bit like the basic cost of an appendectomy being $1,500, but then the bill from the hospital includes a bed fee, a surgery prep fee, $15 per gauze used, etc. SpaceX's <$100m price print is all inclusive -- it is the full price you pay. No extra or hidden fees. The author is a little deceptive in that they quote the upper estimate rather than the average. They should have quoted the average cost. But to be clear I don't think that's nearly as deceptive as saying ULA's comparable cost is $140m.
- ncallaway 9y agoI don't think it's quite a fair direct comparison. The $96.5M is for a single launch. The $422 million is for each individual launch, plus assured access in a 24-hour window. That is, the US Government is paying SpaceX for a launch. They're paying ULC for a launch, and a guarantee that if the US Government asks to launch a rocket tomorrow ULC will say "yes". If the US Government asked SpaceX for a launch tomorrow, they would probably get a response of "No can do. We don't have a rocket fueled, on stand-by, and ready to go."* It costs a lot to maintain a spare rocket, launch pad, and other infrastructure necessary to launch a rocket within 24-hours around the year. I still think SpaceX is a lot cheaper as a launch provider, but I don't think it's quite as extreme as the article makes it seem. I would imagine if SpaceX had to maintain 24-hour launch capacity their "unit cost" would be significantly higher than their individual launch cost. * That's actually not quite true. By coincidence, SpaceX has a launch scheduled for June 17. If there were a national emergency the US Government could probably pay SpaceX to commandeer that launch. However, this is just a coincidence. If I were writing this comment on June 18 it would not be true.
- brickmack 9y agoThats not what assured access means. ULA absolutely cannot conduct a launch on 24 hours notice, nor can any launch provider. It takes months for them to prepare a launch. Payload integration alone (assuming, by some miracle, they actually had a rocket fully built, in the configuration needed, and all the development work needed to certify the combination of the rocket with a particular payload was done, and that the pad is available, exactly none of which will actually be true) takes multiple days. ULA does have, as a commercial service, RapidLaunch which is the fastest launch service in the world from order placement to liftoff, and that still takes 3 months minimum. Assured access, as defined by the EELV program, just means there are at least 2 launch vehicles in service (in this case, Atlas V, Delta IV, and partially Falcon 9) which are capable and certified to carry the full range of national security payloads, which means problems with a single rocket design will never ground all national security payloads
- rst 9y agoULA does not and cannot offer guaranteed launch at any point in time -- their launches, including launches of government payloads, can be and are delayed for days by anything from technical glitches to unfavorable wind conditions to planes wandering into the launch corridor. (Google "Atlas V launch delay" for numerous examples.) And they don't have boosters "on standby, ready to go"; like everyone else, they refer to launch preparations as "campaigns", and they extend for weeks after the rocket and payload are both at the pad. (There are other capabilities ULA offers that SpaceX still can't match, but those are all about babying the payloads -- mounting them vertically on the rocket, rather than tilting as is SpaceX's current practice; providing clean-room access to payloads already on the rocket, and so forth.)
- mabbo 9y ago$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.
- tehlike 9y agoprobably not much. that money is likely to be spent on elsewhere in military.
- linkregister 9y agoI'm pretty sure the military funds schools (University research funding, DARPA) and bridges (maybe in Afghanistan and Iraq). Cancer research is probably not a high priority, but traumatic brain injury treatment research and hearing loss mitigation are. So in between various clumsy bombings with 75% noncombatant casualties, the military occasionally spends money on things universally good for society & humanity.
- orik 9y agoThe U.S. Military is universally good for society & humanity. (Unless you're ISIS)
- pstuart 9y agoIndeed! They've brought peace and stability to Iraq and Afghanistan, for example. /s
- linkregister 9y agoTo be fair, the responsibility overwhelmingly lies with the civilian leaders of the military.
- jessaustin 9y agoIf the tool never works how its users expect, it might be appropriate to blame the tool.
- stevep98 9y agoThe 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?
- adventured 9y agoSeems to be working extraordinarily well given the technology lead that SpaceX and Blue Origin are working on or already have versus Russia and China. That lead should widen significantly in the next three or four years.
- marze 9y agoThey 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 9y agoBut 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.
- rgbrenner 9y agowhy 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-idUSKCN0XP2T2 http://www.reuters.com/article/us-space-spacex-launch-ula-id... 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 9y agoFalcon 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).
- deleted 9y ago[deleted]
- dasmoth 9y agoDelta 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.
- nickik 9y agoSpaceX has already been testing the upgrades to the Upper Stage. They will soon be able to fly all missions. Vertical integration is something they are still missing.
- 43224gg252 9y agoAnd this is why capitalism is necessary.
- manicdee 9y agoNothing to do with capitalism or competition. All that is required is the desire to provide a useful service for the least consumption of resources or energy, rather than operating entirely on the making of profit. SpaceX is a launch company that happens to make money. ULA is a money making enterprise that happens to launch rockets.
- zbobet2012 9y ago> All that is required is the desire to provide a useful service for the least consumption of resources or energy Yeah, that's what we call free market capitalism.
- Naritai 9y agoNot quite, as ULA was also operating under capitalism, yet clearly cared not a whit for minimizing the government's resources. Non-monopolistic capitalism is a closer description.
- Scramblejams 9y agoTo be fair, their customer was always going to be price insensitive. When you're lofting a $2 billion recon satellite, there's no room for error and they don't care if the launch costs $100 million or $300 million -- they just want absolute assurance that it's going to work. So the incentives to minimize resource use weren't there for a very rational reason.
- Naritai 9y agoYeah but, not unlike in the car industry, reliability is a 'good enough' metric for many purchasers. That is to say, beyond some minimum assurance of execution, further improvments in that metric do not further improve the probability that the customer will choose that product over its competitors. So they're only price insensitive up to a point.
- spectrum1234 9y agoWhy 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?
- ouid 9y agoI'm speculating wildly, but it's not like demand is totally inelastic for launches. If you can make launches a lot cheaper, then it's not totally inconceivable that they might make it up in additional volume. Also, if Musk's goal is Mars, then the best thing for that is the healthiest possible space program, which requires the most economic launches.
- oli5679 9y agoYou have an implicit assumption that the competitor was previously charging close to cost. They have an incentive to cut prices too after Space-X enters. The old monopoly price is different to the price where Space-X wins the contract.
- ejolto 9y agoFalcon 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.
- austinl 9y agoI'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
- purpleidea 9y agoWhat 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 9y agoShe 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 9y agoThanks!