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"It's two contracts to the same requirements" (press conference), but Boeing needs $4.2 billion and SpaceX makes due with $2.6 billion. What am I missing?

by sho_hn 12y ago

Joeri 12y ago
If they're cost-plus contracts, then it just means SpaceX can build capsules at nearly half the cost of Boeing.
- ChillyWater 12y ago
  If they both succeed and NASA wants a third, SpaceX would seem to be sitting pretty. If they both do not succeed and we assume that SpaceX reached too far, then NASA still looks like the good guy because they gave them a shot.
- sho_hn 12y ago
  I'm basically curious what incentivizes NASA to put that much money into the Boeing option. Is SpaceX' design too radical and unproven, making a backup option a good idea even if the backup is more expensive? Are there political implications in play, like keeping Boeing's workforce employed? What's the big picture?
  - Afforess 12y ago
    The big picture is that NASA has created competition in the commercial space market. If either of the parties fail to live up to their obligations, NASA has a backup. If both succeed, all the better for NASA. Competition is good.
    - sho_hn 12y ago
      That's true; looking at it terms of supporting industry-wide infrastructure it does seem more sensible than throwing everything behind one vendor. Edit: Comment 8326972 by terravion also suggests picking a single winner wasn't an option, which I wasn't aware of, aside from the issue of the relative award magnitudes.
  - deleted 12y ago
    [deleted]
  - XorNot 12y ago
    Its not the money you spend today, its the money you spend tomorrow: we need manned transport to LEO today. But depending who wins, it will determine what it costs tomorrow.
- gedmark 12y ago
  "Unlike previous phases of NASA’s commercial crew program, which used funded Space Act Agreements that provided greater flexibility, the CCtCap awards are fixed-price contracts." http://www.spacenews.com/article/civil-space/41891nasa-selects-boeing-and-spacex-for-commercial-crew-contracts http://www.spacenews.com/article/civil-space/41891nasa-selec...
- dasmoth 12y ago
  It's hard to find prices for Atlas, even more so for the so-far-unflown dual engine Centaur version which CST-100 uses, but it's clear that it's a lot more expensive than a Falcon 9.
- maaku 12y ago
  It's not a cost-plus contract.
terravion 12y ago
I would have to imagine that all four bidders presented plans with varying risk and cost which meet the requirements. Since NASA had a mandate to pick multiple winners there were probably two winning strategies, be low cost or be low risk. I's speculate that Boeing presented the low risk route--nobody doubts they can meet the requirement if they get paid enough. I'd imagine that SpaceX presented the lost cost bid, probably viewing their bid as more of a subsidy for work and risks they are undertaking regardless.
cjslep 12y ago
SpaceX could have massively underbid Boeing in their proposal. I'm no rocket scientist so I honestly don't know how reasonable that conjecture is until either company says more. EDIT: Listening to the follow up questions on NASA HQ UStream Feed the following questions and answers were asked (both questions and answers are paraphrased by me, I can't type as quickly as they can speak): Q: Why did Boeing receive more than SpaceX? A: Both companies proposed costs for their proposals to acquire capabilities to fulfill the RFP, and the government accepted both. Q: Why two rewards instead of one? A: It was in the government's best interest.
gedmark 12y ago
It's pretty straight forward. SpaceX can do the same work with less money for a variety of reasons. And SpaceX has a capsule that has already flown in space and successfully docked with the ISS several times to deliver cargo. They are 'just' upgrading it to carry people. Boeing has not flow their capsule yet, they're playing catchup.
- seanflyon 12y ago
  Indeed, the Dragon seems pretty close to ready to transport people: "Technically, if somebody were to stow aboard the cargo version of Dragon, they'd actually be fine. I mean, hopefully." -Elon Musk
lotharbot 12y ago
It's possible the two contracts don't meet the requirements in the same way or at the same level. There may be optional requirements which one company has promised to meet and the other hasn't, or requirements that require "at least X" where one company is promising 10% over X and the other is promising 30% over X.
dragonwriter 12y ago
> What am I missing? Boeing's advantage in years of experience extracting the most possible money from the government?
jonknee 12y ago
Boeing is an old and slow shop that outsources a lot of its work (even the engines, they're from Russia). SpaceX is essentially a startup and does almost everything in house (even the engines, they're from California). SpaceX also charges much less than Boeing for satellite launches.
damoncali 12y ago
There are more politics and shenanigans in these contracts than you can shake a stick at. I would read almost literally nothing into those numbers.
demallien 12y ago
I rather suspect that it's simply because SpaceX needs less money to finalise their space flight capability. That's typically how government contracts work - suppliers make bids and the government chooses the winner based on price and other criteria. Presumably SpaceX's bid was lower than Boeing's. Off topic: it's "making do", not "making due". Non American English speakers pronounce the two quite differently, so this is a really startling error for us...

"It's two contracts to the same requirements" (press conference), but Boeing needs $4.2 billion and SpaceX makes due with $2.6 billion. What am I missing?

by sho_hn 12y ago

"It's two contracts to the same requirements" (press conference), but Boeing needs $4.2 billion and SpaceX makes due with $2.6 billion. What am I missing?

Joeri 12y ago

If they're cost-plus contracts, then it just means SpaceX can build capsules at nearly half the cost of Boeing.

ChillyWater 12y ago
If they both succeed and NASA wants a third, SpaceX would seem to be sitting pretty. If they both do not succeed and we assume that SpaceX reached too far, then NASA still looks like the good guy because they gave them a shot.
sho_hn 12y ago
I'm basically curious what incentivizes NASA to put that much money into the Boeing option. Is SpaceX' design too radical and unproven, making a backup option a good idea even if the backup is more expensive? Are there political implications in play, like keeping Boeing's workforce employed? What's the big picture?
- Afforess 12y ago
  The big picture is that NASA has created competition in the commercial space market. If either of the parties fail to live up to their obligations, NASA has a backup. If both succeed, all the better for NASA. Competition is good.
  - sho_hn 12y ago
    That's true; looking at it terms of supporting industry-wide infrastructure it does seem more sensible than throwing everything behind one vendor. Edit: Comment 8326972 by terravion also suggests picking a single winner wasn't an option, which I wasn't aware of, aside from the issue of the relative award magnitudes.
- deleted 12y ago
  [deleted]
- XorNot 12y ago
  Its not the money you spend today, its the money you spend tomorrow: we need manned transport to LEO today. But depending who wins, it will determine what it costs tomorrow.
gedmark 12y ago
"Unlike previous phases of NASA’s commercial crew program, which used funded Space Act Agreements that provided greater flexibility, the CCtCap awards are fixed-price contracts." http://www.spacenews.com/article/civil-space/41891nasa-selects-boeing-and-spacex-for-commercial-crew-contracts http://www.spacenews.com/article/civil-space/41891nasa-selec...
dasmoth 12y ago
It's hard to find prices for Atlas, even more so for the so-far-unflown dual engine Centaur version which CST-100 uses, but it's clear that it's a lot more expensive than a Falcon 9.
maaku 12y ago
It's not a cost-plus contract.

terravion 12y ago

I would have to imagine that all four bidders presented plans with varying risk and cost which meet the requirements. Since NASA had a mandate to pick multiple winners there were probably two winning strategies, be low cost or be low risk. I's speculate that Boeing presented the low risk route--nobody doubts they can meet the requirement if they get paid enough. I'd imagine that SpaceX presented the lost cost bid, probably viewing their bid as more of a subsidy for work and risks they are undertaking regardless.

cjslep 12y ago

SpaceX could have massively underbid Boeing in their proposal. I'm no rocket scientist so I honestly don't know how reasonable that conjecture is until either company says more. EDIT: Listening to the follow up questions on NASA HQ UStream Feed the following questions and answers were asked (both questions and answers are paraphrased by me, I can't type as quickly as they can speak): Q: Why did Boeing receive more than SpaceX? A: Both companies proposed costs for their proposals to acquire capabilities to fulfill the RFP, and the government accepted both. Q: Why two rewards instead of one? A: It was in the government's best interest.

gedmark 12y ago

It's pretty straight forward. SpaceX can do the same work with less money for a variety of reasons. And SpaceX has a capsule that has already flown in space and successfully docked with the ISS several times to deliver cargo. They are 'just' upgrading it to carry people. Boeing has not flow their capsule yet, they're playing catchup.

seanflyon 12y ago
Indeed, the Dragon seems pretty close to ready to transport people: "Technically, if somebody were to stow aboard the cargo version of Dragon, they'd actually be fine. I mean, hopefully." -Elon Musk

lotharbot 12y ago

It's possible the two contracts don't meet the requirements in the same way or at the same level. There may be optional requirements which one company has promised to meet and the other hasn't, or requirements that require "at least X" where one company is promising 10% over X and the other is promising 30% over X.

dragonwriter 12y ago

> What am I missing? Boeing's advantage in years of experience extracting the most possible money from the government?

jonknee 12y ago

Boeing is an old and slow shop that outsources a lot of its work (even the engines, they're from Russia). SpaceX is essentially a startup and does almost everything in house (even the engines, they're from California). SpaceX also charges much less than Boeing for satellite launches.

damoncali 12y ago

There are more politics and shenanigans in these contracts than you can shake a stick at. I would read almost literally nothing into those numbers.

demallien 12y ago

I rather suspect that it's simply because SpaceX needs less money to finalise their space flight capability. That's typically how government contracts work - suppliers make bids and the government chooses the winner based on price and other criteria. Presumably SpaceX's bid was lower than Boeing's. Off topic: it's "making do", not "making due". Non American English speakers pronounce the two quite differently, so this is a really startling error for us...