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> SpaceX can achieve much higher profit margins by reusing rockets What I've always heard is the legacy defense contractors are used to cost-plus contracts whe

> SpaceX can achieve much higher profit margins by reusing rockets What I've always heard is the legacy defense contractors are used to cost-plus contracts where you don't make bigger profits by reducing costs. They sometimes don't adapt well to firm-fixed-price contracts because changing the organizational culture takes ages. And also the reality is that they can keep raking in money anyway -- Boeing is in fact collecting more cash than SpaceX, so it's not even clear the incentives have changed that much.

philwelch 6y ago
That might be the case, but it doesn't take a genius to realize that you can turn a bigger profit by making your rockets reusable. Boeing isn't even just a "legacy defense contractor"--a massive part of their business is commercial airliners. That hasn't gone well for them either lately. I think the more reasonable explanation for Boeing is that they already have access to ULA's proven launch vehicles, so designing a new one just for Starliner wasn't necessary. I think Boeing just chose a more conservative strategy while SpaceX managed to out-innovate them.
- zxcmx 6y ago
  Yes, and that NASA expected this from them, that is, they were expected to be a credible, reliable-but-expensive (and not particularly innovative) option.
- jdm2212 6y ago
  > Boeing just chose a more conservative strategy That's the legacy defense contractor strategy -- deliver something that checks off the boxes on the government requirement list at an exorbitant price. It's a very conservative strategy; lots of money, no risk. The problem is that at some point SpaceX started landing rockets and the formerly safe strategy became extremely risky because Boeing/ULA not only has a competitor, the competitor is cheaper. But getting a fat, lazy organization to innovate and compete is hard even when facing an existential threat, and Boeing/ULA have not (yet?) managed that transformation. They've known it's necessary for years [1] but haven't been able to change course. [1] https://arstechnica.com/science/2016/03/ula-executive-admits-company-cannot-compete-with-spacex-on-launch-costs/ https://arstechnica.com/science/2016/03/ula-executive-admits...

philwelch 6y ago

That might be the case, but it doesn't take a genius to realize that you can turn a bigger profit by making your rockets reusable. Boeing isn't even just a "legacy defense contractor"--a massive part of their business is commercial airliners. That hasn't gone well for them either lately. I think the more reasonable explanation for Boeing is that they already have access to ULA's proven launch vehicles, so designing a new one just for Starliner wasn't necessary. I think Boeing just chose a more conservative strategy while SpaceX managed to out-innovate them.

zxcmx 6y ago
Yes, and that NASA expected this from them, that is, they were expected to be a credible, reliable-but-expensive (and not particularly innovative) option.
jdm2212 6y ago
> Boeing just chose a more conservative strategy That's the legacy defense contractor strategy -- deliver something that checks off the boxes on the government requirement list at an exorbitant price. It's a very conservative strategy; lots of money, no risk. The problem is that at some point SpaceX started landing rockets and the formerly safe strategy became extremely risky because Boeing/ULA not only has a competitor, the competitor is cheaper. But getting a fat, lazy organization to innovate and compete is hard even when facing an existential threat, and Boeing/ULA have not (yet?) managed that transformation. They've known it's necessary for years [1] but haven't been able to change course. [1] https://arstechnica.com/science/2016/03/ula-executive-admits-company-cannot-compete-with-spacex-on-launch-costs/ https://arstechnica.com/science/2016/03/ula-executive-admits...