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Launch vouchers for space science research
Launch vouchers for space science research
Molly K. Macauley A little-noticed provision of recent US national space policy requires consideration of space transportation vouchers as a new means of promoting key aspects of space activity, including space science research and space transportation. 1 The provision for vouchers is motivated partly by a longstanding backlog of unlaunched space research missions and the worsening of that backlog with the delays caused by the accident of the Space Shuttle Challenger. The voucher proposal also seeks to accelerate the pace of space science research and the development of additional and more diverse space transportation. Vouchers are thus The author is a Fellow and Director of the Space Economics Research Program at possible solutions to concerns that a shortage and inadequate variety of Resources for the Future, 1616 P Street, space transportation are primary roadblocks to space research, as NW, Washington, DC 20036, USA. articulated most recently by the National Research Council and the Several individuals contributed significant- American Institute of Aeronautics and Astronautics. 2 ly to this research, including excellent reIt is not clear whether vouchers would be limited to US transportation search assistance by Sarah Bales and comments and review by John Ahearne, firms and space researchers. There are both foreign launch vehicle Jim Bennett, Riccardo Giacconi, Dave suppliers which could directly accommodate vouchers (several of these Moore, Scott Pace and Tom Rogers. Resuppliers have made explicit provisions for flying small science sponsibility for opinions and errors remains with the author. This research was funded payloads), and numerous Shuttle-delayed payloads involving US and in part by the National Aeronautics and international scientific collaboration. Furthermore, US funding of other Space Administration and corporate supareas of science activity, such as grants made by the National Science port provided to the Space Economics Research Program at Resources for the Foundation or other government entities, frequently encourages interFuture. national collaboration. Accordingly, allowing vouchers to be used by international teams would be consistent with this practice. Even if ~Specifically, the policy states: 'Vouchers vouchers were limited to US entities, however, an effective voucher for Research Payloads: The National Aeronautics and Space Administration programme could have a widespread effect. It could spur space science (NASA) and the Department of Trans- throughout the international community, and in particular broaden portation will explore providing to research understanding of research directions for the international space station. payload owners manifested on the Shuttle a one-time launch voucher that can be For these reasons, and as an example of one type of policy response to used to purchase an alternative US comgovernment and private sector interaction in funding space science, mercial launch service.' See 'The Presivouchers have international import.
Recent US space policy proposes the use of space transportation 'vouchers' for space science payloads. Vouchers could affect the pace of space science and developments in space tranaportation both in the USA and internationally. This article focuses on the economic costs and benefits of vouchers, and strategies for effecUve programme design.
dent's space policy and commercial space initiative to begin the next century', White House Fact Sheet, Office of the Press Secretary, 11 February 1988, p 4. 2See National Research Council, Space Applications Board, Industrial Applications of the Microgravity Environment, National Academy Press, Washington, DC, 1988; and American Institute of Aeronautics and Astronautics, Space Processing: A National Crisis, AIAA, Washington, DC, 1988.
How vouchers might operate Space transportation vouchers would presumably operate much like vouchers presently used in US federal housing programmes. Vouchers would be certificates issued and financially backed by the government, and given to researchers for redemption on any mode of space transportation (the Shuttle as well as unmanned launchers). Researchers in
0265-9646/89/040311-10 $03.00 (~ 1989 Butterworth & Co (Publishers) Ltd
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Launch vouchers for space science research
private industry, government and universities could be eligible, and voucher-supported research topics could run the gamut from materials, life and earth sciences to engineering research, plasma physics and other fields. Vouchers thus support the tradition that space research should be publicly funded at least in part, but bring the possible advantages of a market-like mechanism to the process of allocating public research funds. These advantages arc best illustrated by comparison with past practices. In the past, science payloads have generally been flown only on the Shuttle and in an order determined by centralized administrative decisions. Recent events have demonstrated the problems inherent in these practices; exclusive reliance on the Shuttle was shaken by the Challenger accident, and the perpetual rescheduling of missions such as Galileo and the Hubble Space Telescope has greatly increased costs m those programmcs. In addition, because smaller payloads (so-called 'secondary" payloads, including 'Hitchhikers' and ~Get-Away-Special Canisters', or ~GAS cans') are scheduled jointly with large payloads, Shuttle delays have rippled throughout the space science community. Finally, and more generally speaking, space researchers for both large and small projects have lacked opportunities to choose key transportation parameters that affect research design, such as whether to automate payloads or require human involvement, whether to require payload retrieval and return, and specifying duration on orbit. By comparison with these past practices, vouchers could provide more flight opportunities than are available solely by using the Shuttle, thus diversifying the risk inherent in space transportation and reducing mission delay. Moreover, by permitting broader and more flexible choice among manned and unmanned modes of space transportation~ vouchers could allow wider choice in payload design. Vouchers couM also allow the decoupling of large and small missions. Vouchers are not without disadvantages, however. Although vouchers could alleviate the current backlog of space research experiments, it is less clear whether a one-time w~ucher programme, as called for in the space policy, could stimulate the long-term supply of space research and the diversity of space transportation. Major concerns also include the costs to the government of a voucher programme, how quickly the space transportation industry can augment capacity to attain the policy's aim of accelerating near-term access to space, and issues involving the design and administration of vouchers.
Costs and benefits of vouchers During the present era in which funding is scarce for all national space programmes, in the USA and elsewhere, one of the first questions to ask about vouchers is how much they might cost. Cost estimates begin with two sets of information: an inventory of missions that might be voucher candidates, and a review of projected space transportation capacity and its cost in the near term. From these estimates comes information to respond to another question pertaining to vouchers whether there is an adequate supply of unmanned launch capacity to accommodate a voucher programme in the next few years. Table 1 summarizes much of this information. Columns (a)-(f) include NASA's inventory of large ('primary') and small ('secondary' and 'GAS can') payloads aggregated by size and desired launch date for
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SPACE POLICY November 1989
Launch vouchers for space science research Table 1. Unmanned launch vehicle (ULV) capscity and space science payload demand, 1990 and beyond ('000 Ib).
1990 1991 1992 1993 1994 1995 >1995
Projected aggregate space research demand Secondary Total Primary Payload RV" (a) (b) (c) (d)
GAS cans Payload (e)
RV" (f)
287 171 109 107 39 29 41
57 ? ? ? ? ? ?
40 ? ? ? ? ? ?
105 125 95 90 30 105 ?
50 27 8 10 5 14 24
35 19 6 7 4 10 17
Projected aggregate ULV capacityb Spare (large) Total and small (g) (h) 480 494-503 505-540 ? ? ? ?
58.60 74-83 85-120 ? ? ? ?
"RV denotes return vehicle. bLaunch is to low Earth orbit at parameters specified in US Congress, Office of Technology Assessment, Launch Options for the Future: Buyer's Guide, OTA-ISC-383, US Government Printing Office, Washington, DC, September 1988, Table 2-1, p 20. Sources: Column (a): Sum of columns (b-f). Columns (b, c, e): Based on National Aeronautics and Space Administration, Office of Space Flight, Payload Flight Assignments:NASA Mixed Fleet, National Aeronautics and Space Administration, Washington, DC, August 1988. Columns (d, f): 70% of secondary payloads and GAS cans are assumed to require RVs; RV weight based on discussions with industry. Column (g): Sum of: (1) estimates for larger-vehicle suppliers and Scout from US Congress, Office of Technology Assessment, op cit, net of Shuttle capacity), and (2) estimates for smaller-vehicle suppliers, from Aviation Week& Space Technology(various issues; detailed citations available from author), US Department of Commerce, Space Commerce:An IndustryAssessment, US Department of Commerce, Washington, DC, May 1988, and discussions with industry. Assumes that current estimates for larger vehicles are representative through 1991 and that estimates for smaller vehicles include growth in production and flight rates projected by industry. Column (h): Sum of: (1) 10% of entries in column 5 in US Congress, Office of Technology Assessment, op cit, and (2) total small-capacity ULV projections as described for column (g) above.
3For example, omitted from the table are communications satellites (such as US and foreign commercial satellites and Tracking and Data Relay Satellites) and payloads specifically intended for Shuttle use, such as Spacehab. Detailed data underlying the estimates in Table 1 are contained in Molly K. Macauley, Launch Vouchers for Space Science Research: A Good Idea?, RFF Discussion Paper ENR89-04, Resources for the Future, Washington, DC, February 1989. In addition, the aggregate demand in Table 1 is intended to represent the pool of vouchers referenced by the 1988 space policy, but this is subject to discussion as the policy uses the phrase 'currently manifested on the Shuttle'. 'Manifested' has various interpretations; in the strictest possible sense it might refer to payloads with firm Shuttle launch dates. The difficulties of that interpretation are that large numbers of space research projects would be excluded from voucher eligibility, and that Shuttle dates and scheduled payloads are constantly moving targets. Nonetheless, the table and estimates of voucher costs presented below are structured to allow voucher programme designers to separate types of payloads and, in turn, evaluate voucher costs. 4Such capacity includes, in addition to launch vehicles, associated facilities such as launch ranges and communications for tracking and data relay. These facilities are not explicitly discussed in the text but are included in the estimates of supply shown in Table 1. wrhe larger-vehicle suppliers include small payloads in some business scenarios but generally do not focus business projections on them. Martin Marietta Commercial continued on page 314
all payloads which could be considered space research missions (and thus voucher candidates). 3 These include government space science and applications payloads as well as industry/government payloads operating under Joint Endeavor Agreements. Of the primary payloads, launch delay extends as far back as 1982; requested launch dates currently range from 1989 to 1995, with the bulk of requests for 1990-93 and 1995. Of 33 voucher candidates, 23 are scheduled for Shuttle flights before the end of 1993 and 10 are not currently scheduled. (The table is based on the assumption that the 1989 flights of Magellan and Galileo take place as planned; thus these flights are not included in the table.) The majority of requested dates for secondary payloads are 1989-91 and 1995. The table does not include two secondary payloads that are scheduled for Shuttle flights in 1989. Estimates of return vehicle requirements are given in columns (d) and (f). These estimates assume that 70% of secondary payloads and GAS cans require return, based on the types of experiments represented by payloads on the NASA roster. The effects of changing this assumption will be discussed further below. Columns (g) and (h) in Table 1 list unmanned launch vehicle capacity estimated to be available from 1990 to 1995. 4 Two caveats apply to these numbers. First, it is difficult to project unmanned launcher capacity because production and flight rates are particularly sensitive to anticipated demand; large inventories of vehicles are generally not maintained. (By demonstrating demand, however, vouchers may accelerate production and flight rates.) The second caveat is that near-term capacity for flying small payloads, either as primary payloads or on a 'space available basis', is uncertain. In the USA, but not in other countries, only the smaller-vehicle manufacturers have appeared to target small payloads as primary customers. 5 Reasons include the costs of investment in hardware for mounting the smaller payloads, payload integration, insurance, return vehicle requirements and the specific sizing capability of unmanned launchers. This sizing capability allows unmanned vehicles to be confi-
SPACE POUCY November 1989
313
Launch vouchers ]br space science research
continued from page 313 Titan, Inc, reports that it 'has for some time tried to market Titan's excess cargo space to Get-Away-Special class payloads to no a v a i l . . . ' but is willing to enter that market if it is 'proven to exist'. See Space Business News, 27 June 1988, p 4. 6By contrast, the deployment of piggybacked small and multiple payloads appears to be a practice that Ariane and Long March, for example, are preparing to supply routinely. See Aviation Week & Space Technology, 5 September 1988, p 121, and 22 August 1988, p 19; and Space Business News, 31 October 1988, pp 3-6. 7Nor is it clear how quickly primary and other payloads configured for Shuttle launch could be refitted for alternative vehicles. The National Research Council's Space Science Board and others have concluded that the majority of the primary payloads could be refitted, although how soon was not addressed. 8Projected Shuttle flight rates (excluding Department of Defense missions) are four in 1989, seven in 1990, seven in 1991, 12 in 1992 and 13 in 1993. See NASA, Office of Space Flight, Payload Flight Assignments, NASA Mixed Fleet, June 1989. 9See Roland T. Mayer, 'A cyclically harvested Earth/orbit production system', AAIA Paper No 84-0450, presented at the 22nd Aerospace Sciences Meeting, AIAA, Reno, Nevada, 8-12 January 1984.
314
gured more closely to payload size than the Shuttle (hence, with less spare room). Further, current Shuttle subsidies and government practices of manifesting space science missions exclusively on the Shuttle appear to deter industry investment in launching small payloads. 6 ]'his seems to be the case even though GAS cans and some secondary payloads already meet Shuttle safety ratings and incorporate standardized interfaces, and therefore might be readily integrated into other launch vehiclcs. Subject to these considerations, Table 1 presents annual total capacity in column (g) and, separately, the sum of the roughly 10% of spare capacity awlilabte on flights of larger vehicles plus the total projected capacity of smaller vehicles in column (h). Although it is difficult to predict how vehicle demand and supply might balance under a voucher plan, the table suggests at least three plausible scenarios. One is that the industry has about 70% more capacity than would be required of total space science demand in 1990, three times as much as would be required in 1991, and five times as much as would be required in 1992. Of course, large segments of transportation demand are not represented in the table, including national security and commercial (US and foreign) payloads. Presumably a voucher scheme would allow space science to compete for transportation with these other components of demand. however. 7 As an alternative scenario focusing on smaller payloads, suppose that only spare capacity for larger vehicles and the capacity of small vehicles were available, as represented in column (h). In this case the industry might not be able to respond immediately to a voucher programme that resulted in the oflloading of all secondary payloads and GAS cans, although the backlog could possibly be handled by the end of 1991. This would be the case if, for example, national security, commercial (US and foreign) and large space science payloads consume all but the spare capacity of the large vehicles and the capacity of the small vehicles. In this case secondary payloads and GAS cans would require three times more capacity than is projected to be available in 1990, but only about 60% of the capacity projected for 1991. The third scenario represents the other extreme. If all primary payloads currently scheduled for the Shuttle are flown as planned and, based on historical averages, the equivalent of three large secondary payloads and four GAS cans are flown per Shuttle flight, then at projected annual Shuttle flight rates (net of Department of Defense missions) payload demand could be fully served by the Shuttle by the end of 1991 except for GAS can demand and new flight requests. (At four GAS cans per Shuttle flight, only 148 GAS cans would be flown by 1993.) s The tentativeness of Shuttle scheduling of secondary and GAS can payloads must be emphasized, however, as illustrated by the historically uneven flight rate (from 0 to 10 per flight) and the cancellation of GAS cans from a scheduled Shuttle flight in February 1989. Perhaps one of the foremost questions concerning near-term transportation is the supply of return vehicles. Return vehicles in a variety of sizes have been used operationally since 1960 and have a successful recovery rate of 99% .9 Although no commercial companies are actively producing return vehicles, system design studies are underway under N A S A sponsorship (a sub-orbital return vehicle is under production in the USA, however, and FR Germany has reported an operational
SPACE POLICY November 1989
Launch vouchers for space science research
balloon-borne recoverable system that provides about 60 seconds of microgravity). The reasons for the lack of substantial commercial activity appear to Cost rangeb be both technical and economic: the high re-entry forces compared with Low High Scenario h Assumes vouchers are granted to all those of the Shuttle, and the low Shuttle price for research payloads. 1° primaryand secondaryspace researchpayloads Vouchers may help alleviate the second problem; as to technical that have requested Shuttle launches,c difficulties, a recent survey sheds some light. Of 53 space-based Primary payloads Large 1210 1540 materials processing experiments housed primarily at NASA's Centers Medium 1080 1080 for the Commercial Development of Space, survey data suggest that Small 132 132 Total primary 2422 2752 eight would require no modification and 13 would require some Secondary payloads modification to fly on a prototype reusable return vehicle compatible Large 255 425 with the Delta II and Titan II vehicles (and similar in concept to the Medium 90 225 Small 16 40 1960s NASA Biosatellite programme and the US Air Force Discoverer Total secondary 361 690 re-entry vehicle). 11
Table 2. P o a t l ~ colt of voucher programme" (millions of 1967 dollars).
GAS cans Large Medium Small Total GAS cans
96 48 32 176
144 80 48 272
Potential costs of a voucher programme
continued on page 316
In light of the information in Table i, what might be the direct financial costs to the government of a voucher programme? The answer depends on how many vouchers are issued, their value, what types of payloads are covered, and the costs of administering the programme. Table 2 presents estimates of the cost of a voucher programme under two scenarios. Scenario I assumes that vouchers are granted to all secondary and GAS can payloads that have requested launch dates and to all primary payloads scheduled on the Shuttle for 1990 and beyond or requesting launch dates but not yet scheduled. Scenario I! assumes that vouchers are granted to a fraction, 10%, of these payloads, and might be the tack taken in a voucher pilot programme or one that grants vouchers on the basis of peer review (both alternatives are further discussed below). The scenarios thus illustrate a wide range of possible programme costs depending on the scale of the programme. Costs in the table represent the product of the number of payloads (by type and size) and the estimated cost of unmanned transportation based on data reported in Table 3. In addition, estimated programme costs assume that 70% of payloads will require return vehicles and recovery. Costs of vehicles and recovery depend on vehicle size and flight and recovery conditions; based on industry discussion, these may total from $300 000 to $500 000 for small payloads and as much as $25 million for large secondary payloads. Based on these assumptions, a full-scale voucher programme that issues vouchers to all payloads could total over $4 billion (by comparison, and as the next section reports, a comparable level of space transportation services provided solely by the Shuttle might cost on the order of $3-6 billion). Alternatively, issuing vouchers to 10% of payloads could be close to $500 million (these figures are not 10% of scenario I; see notes to Table 2). The estimates are too large if actual launch and return vehicle costs are overestimated; this may be the case if (1) launch firms are willing to discount fees for secondary payloads flown on a standby or piggyback basis; (2) return vehicles can be purchased with quantity discounts or reused (as much as about 85% of the components of a large return vehicle and some 40-50% of a smaller vehicle can be reused or refurbished for as many as 100 flights); or (3) payload return is not needed or substituted with sounding rockets or drop towers. Of course, if the standby delay is too long in situation (1),
SPACE POLICY November 1989
315
Return vehiclesd Total, all payloads
663
663
3622
4377
Scenario Ih Assumes vouchers are granted to 10% of primary and secondary space research payloads that have requested Shuttle launches. Total, 10% of payloadse'f
387
467
aNOt including costs of programme administration. ~rhis range is based on the range given in Table 3. CPayloadsare listed in National Aeronautics and Space Administration, Office of Space Flight,
Payload Flight Assignments:NASA Mixed Fleet, NASA, Washington, DC, August 1988; GAS can documentation is provided by NASA and available from the author; payload classification as 'space research' and by size are available from author. aRetum vehicles are assumed to be required for 70% of all secondary and GAS can payloads; see text for further discussion. "Includes costs of return vehicles for 70% of secondary and GAS can payloads; see note b above. fCosts of scenario II are not 10% of costs of scenario I because of differences in assigning return vehicle costs based on payload weight to the subset of 10% of payloads. 1°Progress in mitigating re-entry forces appears significant, and risk and insurance costs are also beginning to be addressed: see Mayer, ibid. For discussion of the policy barriers, see W.H. Ganoe, 'Expendable experiments', Space World, August 1987, p 39. 11See Center for Space and Advanced Technology, Inc, An Assessment of Com-
mercial Microgravity Science User Requirements for the Reusable Reentry Satellite, 1987; for additional discussion of the prototype return vehicle, see M.S. Richardson, Reusable Reentry Satellite (RRS) System, Johnson Space Center, Houston, TX, 30 August 1988; and B.L. Swenson and A.C. Mascy, eds, A Concep-
tual Design Study of the Reusable Reentry Satellite, Ames Research Center, Moffett
Launch vouchers for space science research Table 3. Costs of launch based on NASA Shuttle prices, Shuttle resource cost and unmanned launch vehicle (ULV) prices (millions of 1987 dollars). Large payload NASA RC a
Primary Secondary GAS cans
110 11 0.01
ULV
180-290 14-22 0.015
110-140 15-25 0.6-0.9
Medium payload NASA RC a
ULV
Small payload NASA RC a
ULV
73 7 0.005
60 6-15 0.3-0.5
48 2 0.003
33 2-5 0.2-0.3
59-122 11-17 0.01
38-96 4-6 00045
aRC denotes resource cost. See text for definition and discussion.
Sources: NASA pricing: B.A. Stone, 'Understanding the cost basis of Space Shuttle pricing policies for commercial and foreign customers', Journal of Parametrics, Vol 3, No 1, 1984, pp 1-6; J. Naugle, 'A manufacturer's view of commercial activity in space', in M.K. Macauley, ed, Economics and Technology in US Space Policy, Resources for the Future, Washington, DC, 1987, pp 69-80; and Congressional Budget Office (CBO), Pricing Options for the Space Shuttle, Washington, DC, March 1985. Resource cost: CBO, op cit; General Accounting Office, NASA Must Reconsider Operations Pricing Policy to Compensate for Cost Growth in the Space Transportation System, Washington DC, February 1982; MA. Toman and MK. Macauley, 'No free launch: efficient space transportation pricing', Land Economics, Vo165, No 2, May 1989, pp 91-99, and references cited therein; Space Business News, 29 October 1987, pp 5-6; and discussions with industry. ULV pricing: United States Senate, Subcommittee on Science, Technology, and Space, Hearings on NASA Authorization for Fiscal Year 1986, 99 Cong, 1 sess, US Government Printing Office. Washington, DC, 1985; Toman and Macauley, op cit; and discus'ions with industry.
one of the purposes of vouchers, early opportunity to access space, is undermined. The estimates are too small if the costs of payload integration, insurance or return are underestimated. Integrating large numbers of small payloads could be costly, for instance, and return vehicle costs are sensitive to requirements for size, complexity, attitude control and pointing, power, overflight and landing restrictions, and possible environmental concerns. Return vehicle launch insurance could be significant, although launch insurance may not be a large problem as secondary payloads designed for Shuttle launch generally meet strict Shuttle safety standards. (In fact, one advantage of vouchers may be the extent to which an unmanned launch allows such requirements to be less rigid while satisfying insurance conditions). In addition, the extensive standardization of operating parameters and interfaces required for the smaller payloads in the Hitchhiker and GAS can programmes may also result in lower costs for industry payload integration, once initial hardware is designed.
Comparative costs of a voucher programme
continued from page 315 Field, CA, undated. In addition, NASA has reported significant international interest in using the vehicles: see Space Business News, 23 January 1989, p 8. 121t should be noted that the pre-flight subsidy is not the difference between NASA's reported cost and the actual total cost of a flight; rather, the subsidy is the difference between NASA's reported cost and the long-run marginal cost of a flight. Long-run marginal cost does not recoup all costs. For further discussion of Shuttle resource cost, see Michael A. Toman and Molly K. Macauley, 'No free launch: efficient space transportation pricing', Land Economics, Vol65, No2, May 1989, pp 91-99.
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It is crucial for accurate public policy analysis that the resource cost of the Shuttle, not the cost as reported in N A S A accounting, be the basis for assessing the comparative cost of a voucher programme. Table 4 demonstrates the point. The figures in column (a) reflect the cost of a Shuttle flight based on N A S A accounting, which typically includes only the cost of fuel and other expendable items. Yet depreciation of fixed facilities (such as launch pads and reusable orbiters) and capital costs, in addition to the cost of expendable items, constitute a truer measure of resource cost. This resource cost is the measure of the actual social cost of the Shuttle and is reported in column (b). 12 On this more accurate accounting basis, space transportation services provided solely by the Shuttle are estimated to cost in the order of $ 3 ~ billion, as shown in Table 4, column (b). Comparing columns (b) and (c), then, there is a good chance that vouchers could save up to $2 billion if the costs of the Shuttle programme are at the high end of this estimate. Even if Shuttle costs are in the order of $3 billion, however, vouchers could bring cost savings under several conditions: if as a result of the voucher programme the unmanned vehicle industry is able to SPACE POLICY November 1989
Launch vouchers for space science research Table 4. Cost of launching all space science payloads currently requesting flights at NASA Shuttle prices, st estimated Shuttle resource cost, and under voucher programme (millions of 1987 dollars).
(a) Payload
(b)
(c)
NASA Resource Voucher pricing cost" programme
Primary 2716 Secondary 308 GAS cans 3 Total 3027
3194-5770 435- 677 5 3634-6452
2422-2752 856-1185 344- 440 3622-4377
aResource cost is defined in text. Cost data are from CBO, op cit, Table 3, using methodology in Toman and Macauley, op cit, Table 3.
Sources: Column (a): The sum of payloads priced at NASA fees, based on Tables 1 and 3. Column (b): The sum of payloads priced at Shuttle resource cost, based on Tables 1 and 3. Column (c): From Table 2; includes estimated costs of return vehicles.
exploit scale economies in production or flight rates; if opportunities for joint exploitation of economies between the Shuttle and unmanned launchers are exercised under vouchers; 13 or if some payloads do not need to be returned to Earth. The table also suggests that differences in cost between the voucher programme and the current Shuttle programme measured at resource cost are largest in the case of smaller payloads. GAS cans involve very little additional direct cost on the Shuttle (where they can, in fact, serve as ballast) but larger costs on unmanned launchers (where GAS cans generally consume real capacity and may require return capsules). The point to note here, however, as it is one of the purposes of vouchers, is that the queue for small payloads is quite long, such that costs of delay for some payloads could well offset the subsidized Shuttle launch.14 A desire to fly these payloads sooner to reap their space science benefits would presumably strain Shuttle capacity more than is compensated by the direct cost paid by these payloads (some $3000--10 000, depending on size). Otherwise, they would indeed be flown sooner. Thus the argument comes full circle to one of the rationales underlying vouchers - the provision of near-term transportation opportunities.
Additional benefits of vouchers
13See Toman and Macauley, ibid, for discussion of joint economies in operating the Shuttle and unmanned launchers. 14Concern about the indirect cost of flying smaller payloads underlies this observation made by the Rogers Commission in its investigation of the Challenger accident: 'Any middeck or secondary payload has, by itself, a minimal impact compared with major payloads. But when several changes are made, and made late, they put significant stress on the flight preparation process by diverting resources from higher priority problems.' See Report of
the Presidential Commission on the Space Shuttle Challenger Accident, Washington, DC, 6 June 1986, pp 172-173. lSFor details underlying these estimates, see Macauley, op cit, Ref 3, pp 32-35. ISSee Business Week, 30 May 1988, p 98. 17Declining enrolment in aerospace science has also been observed (see D. Quayle, 'Space science education', Defense Science, September 1988, p 52, for a summary of key statistics) and may reflect in part the lack of ready space transportation access. Correlating the events and drawing inferences for the extent to which vouchers may be a solution is outside the scope of this article, although such a review may better clarify for public debate the actual costs of declining enrolments.
SPACE POLICY November 1989
In addition to possible cost savings, what might be other benefits of vouchers? These additional benefits flow from the immediacy of the flight opportunities that vouchers might make possible. These benefits include (a) the avoided costs of mission delay, including storing and maintaining the flight readiness of payloads, and (b) the realization of the fruits of science research earlier rather than later, which may stem attrition in the intellectual resource base of space researchers or increase information about space science research (information that might guide further public investment in space station design and operation or follow-on planetary missions). Based on studies by the US General Accounting Office, the costs of delay for larger planetary and astronomy missions are about $100 million per year. On the basis of Table 4, a one-year delay in all of these missions could readily justify any cost difference between the voucher programme and the costs of Shuttle launches. In the case of smaller payloads, estimates suggest that accelerating the launch of all secondary and GAS can payloads by one year could save about $200 million. 15 Savings of this amount begin to outweigh the cost difference between the voucher programme and the Shuttle programme measured at resource cost; even if the savings are overestimated by an order of magnitude, the difference disappears at the low end of estimated voucher programme costs. While these delay costs do not take into account refitting payloads other than the costs of return vehicles, they also do not take into account the possibly offsetting indirect costs of delay on the pace of space science research and professional resources. The cost of delay on research opportunities and careers is frequently noted. 'It's a helpless feeling,' according to one industry official commenting on the delay of the space telescope. 'The guys are getting tired and o l d . '16 To be sure, space research generally represents long-term career commitments (the Galileo, Ulysses, Magellan and Mars Observer missions, even without delay, were projected to average eight years); however, the delays can add substantiaUy. 17 317
Launch vouchers for space science research
Promising institutional change Aside from potential savings in cost and avoided delay, vouchers could also bring a crucial change in approach to managing space transportation and space research. The present administrative approach sharply separates these activities; they are managed and budgeted in different NASA offices. Such a division of responsibilities leads to a host of problems: observers note that these include inefficient use of resources, wasteful competition for resources and ambiguous and conflicting goals. 18 For instance, consider the transportation-related questions a space researcher faces in designing a payload: Should it be automated or require human interaction'? What should be the on-orbit duration of the experiment'? When is the best time to launch'? Should the payload be returned to Earth? These transportation concerns represent expensive engineering tradeoffs leading ultimately to choice between use of the Shuttle and unmanned rockets, yet such decisions are now made without full information about the relative costs of these trade-offs. By allowing researchers a choice between transportation modes, vouchers could force a closer coupling of the budgetary and cost impacts of payloads and space transportation. Just how this coupling would take place depends on the design of the voucher.
Towards implementation The cost-effectiveness of vouchers is closely related to their actual contractual specifications. Two particular problems arise. One is the difficulty of assigning face values to vouchers. The need to amass sufficient data to ascribe values to vouchers represents a significant informational burden on government. Unlike housing vouchers, for instance, where the large supply of housing generally permits competitive measures of rents, there are not large numbers of space transportation suppliers in all payload classes to permit competitively determined measures of vehicle costs. Overvalued vouchers could result in windfall profits for the unmanned launch industry. The second design difficulty is how to determine the appropriate size of the programme - essentially a judgement about the appropriate amount of public support for space research. This difficulty reflects the broader problem of allocating public support to research in general and space research in particular. It also reflects the problem of dividing responsibility for research funding between public and private sectors. These difficulties are not unique to a voucher programme, since issues of rationing Shuttle capacity and determining space research budgets must be addressed in current policy for space transportation and science. Moreover, even an overvalued voucher, provided it was less 18See, for example, US Congress, Office expensive than the Shuttle, could reduce the total transportation bill. of Technology Assessment, Reducing Launch Operation Costs: New Technolo- Accordingly, vouchers may perform at least as well as the current policy gies and Practices, OTA-TM-ISC-28, US and may do so at lower cost. Government Printing Office, Washington, With these problems in mind, there are at least three alternative DC, September 1988; and National Aeronautics and Space Administration, Micro- contractual designs for vouchers (the designs are summarized in Table gravity Materials Science Assessment 5). Under one programme vouchers would be issued for a standard face Task Force, Microgravity Materials Scien- value that was less than projected total transportation costs. The ce Assessment, Final Report, NASA Headquarters, Washington, DC, June difference would be made up by co-payments from payload sponsors. Co-payments would insure against incentives for researchers to over1987. 318
SPACE POLICY November 1989
Launch vouchers for space science research Table 5. Comparison of voucher designs. Co-payments
Caehable transportation vouchers
Space research vouchers
A. Incentive faced by: Find low-cost transportation Find low-costtransportation subject to alternative uses subject to alternative uses for partial voucher payment of research budget. for space science.
Researcher
Find low-cost transportation.
Transportation provider
Maximize voucher payment Maximize voucher payment. unless can split alternative use of partial payment with researcher.
Maximize voucher payment unless can split alternative use of partial payment with researcher.
8. Governmentrole: Determine scope of vouchers (ie size of programme funding) and administer programme.
19See Space Business News, 26 December 1988.
state transportation and payload return requirements if there were no penalty for so doing (the penalty is analogous to co-payment in US medical insurance). Co-payments could, for instance, be required for the return vehicle, thus forcing payload owners to better assess experiment design alternatives (such as automating payloads). Some evidence that research budgets might permit a 20% copayment, for example, is suggested by the payments reported for experiments on the Cosima research facility (flown by the FR German company Intospace on the Chinese Long March 2 during August 1988). In that case, government-funded research scientists paid a total of about $1 million for microgravity experiments on the 44-1b Cosima, less than the weight equivalent of a small GAS can. To date it appears that the Cosima project was successful, although there have been reports that some crystals were damaged during re-entry. 19 If US research budgets allocated commensurate amounts, then co-payment could be as large as 70% for the larger GAS cans (co-payment of 70% results in total cost to the researcher of $1 million). For the smaller GAS cans, budgets may easily allocate the full amount (about $700 000-800 000). A second design alternative would be 'cashable' transportation vouchers. Cashable vouchers would be valued at the estimated cost of unmanned transportation, but would include a provision under which recipients could keep the difference between estimated and actual costs if the latter were lower, provided that difference is allocated to space research. The advantages of cashable vouchers are that researchers would be encouraged to search for low-cost transportation, and that the burden on government to guess transportation costs precisely would be reduced. In addition, if the transportation cost savings were divided between the researcher and the transportation supplier, suppliers as well as researchers would have incentives to lower costs. A third alternative would be to issue vouchers for an entire space research project rather than for its transportation component only. Such space research vouchers could be funded from space research budgets augmented to include transportation. They would provide space scientists with the greatest degree of choice in all aspects of the research effort: in searching for low-cost transportation (or substituting with the use of drop towers or sounding rockets), in designing payloads with transportation requirements and costs in mind, and in allocating the budget among transportation, payload design, ancillary ground-based facilities and even professional staffing. Of these alternatives, research vouchers would best reduce the sharp discontinuity now existing between research and transportation. Re-
SPACE POLICY November 1989
319
Launch vouchers for space science research
search vouchers would also align space research (and the management of the project budget) more closely with the process of research in other, non-space fields, where grants are awarded to a project as a whole. Thus space science might be better able to compete for talent with other research fields, and perhaps the long line of space access would shorten. Any of these design alternatives should allocate the burden of space transportation and research risk between the government (as the funder of space transportation) and the commerical supplier of the transportation. The economics of risk-sharing offers some guidance. It suggests that the burden should rest with the supplier, given the greater information the supplier has about actual costs and risk and the difficulty of monitoring them.
A pilot programme
2°See Macauley, op cit, Ref 3, p 48, for additional provisions such as voucher expiration dates, transferability and insurance.
320
As a step towards designing a voucher system a pilot programme could be undertaken to test and evaluate different designs on a small scale. By analogy with the evolution of housing vouchers, the US Congress could direct NASA to establish an 'Experimental Space Transportation Allowance Program'. It could specify voucher payment formulas, target dates for completion and conditions for eligibilityfl° The programme could be undertaken at existing Centers for the Commercial Developm e n t of Space. Like housing vouchers, space vouchers would require a multiyear budgetary commitment. The government might also need to finance part of the costs of any major investment in unmanned launch facilities or return vehicles necessary to accommodate space science demand. Based on the estimated costs of vouchers, however, even this investment would be likely to provide space transportation at lower cost than is presently incurred by the Shuttle programme.
SPACE POLICY November 1989
Molly K. Macauley A little-noticed provision of recent US national space policy requires consideration of space transportation vouchers as a new means of promoting key aspects of space activity, including space science research and space transportation. 1 The provision for vouchers is motivated partly by a longstanding backlog of unlaunched space research missions and the worsening of that backlog with the delays caused by the accident of the Space Shuttle Challenger. The voucher proposal also seeks to accelerate the pace of space science research and the development of additional and more diverse space transportation. Vouchers are thus The author is a Fellow and Director of the Space Economics Research Program at possible solutions to concerns that a shortage and inadequate variety of Resources for the Future, 1616 P Street, space transportation are primary roadblocks to space research, as NW, Washington, DC 20036, USA. articulated most recently by the National Research Council and the Several individuals contributed significant- American Institute of Aeronautics and Astronautics. 2 ly to this research, including excellent reIt is not clear whether vouchers would be limited to US transportation search assistance by Sarah Bales and comments and review by John Ahearne, firms and space researchers. There are both foreign launch vehicle Jim Bennett, Riccardo Giacconi, Dave suppliers which could directly accommodate vouchers (several of these Moore, Scott Pace and Tom Rogers. Resuppliers have made explicit provisions for flying small science sponsibility for opinions and errors remains with the author. This research was funded payloads), and numerous Shuttle-delayed payloads involving US and in part by the National Aeronautics and international scientific collaboration. Furthermore, US funding of other Space Administration and corporate supareas of science activity, such as grants made by the National Science port provided to the Space Economics Research Program at Resources for the Foundation or other government entities, frequently encourages interFuture. national collaboration. Accordingly, allowing vouchers to be used by international teams would be consistent with this practice. Even if ~Specifically, the policy states: 'Vouchers vouchers were limited to US entities, however, an effective voucher for Research Payloads: The National Aeronautics and Space Administration programme could have a widespread effect. It could spur space science (NASA) and the Department of Trans- throughout the international community, and in particular broaden portation will explore providing to research understanding of research directions for the international space station. payload owners manifested on the Shuttle a one-time launch voucher that can be For these reasons, and as an example of one type of policy response to used to purchase an alternative US comgovernment and private sector interaction in funding space science, mercial launch service.' See 'The Presivouchers have international import.
Recent US space policy proposes the use of space transportation 'vouchers' for space science payloads. Vouchers could affect the pace of space science and developments in space tranaportation both in the USA and internationally. This article focuses on the economic costs and benefits of vouchers, and strategies for effecUve programme design.
dent's space policy and commercial space initiative to begin the next century', White House Fact Sheet, Office of the Press Secretary, 11 February 1988, p 4. 2See National Research Council, Space Applications Board, Industrial Applications of the Microgravity Environment, National Academy Press, Washington, DC, 1988; and American Institute of Aeronautics and Astronautics, Space Processing: A National Crisis, AIAA, Washington, DC, 1988.
How vouchers might operate Space transportation vouchers would presumably operate much like vouchers presently used in US federal housing programmes. Vouchers would be certificates issued and financially backed by the government, and given to researchers for redemption on any mode of space transportation (the Shuttle as well as unmanned launchers). Researchers in
0265-9646/89/040311-10 $03.00 (~ 1989 Butterworth & Co (Publishers) Ltd
311
Launch vouchers for space science research
private industry, government and universities could be eligible, and voucher-supported research topics could run the gamut from materials, life and earth sciences to engineering research, plasma physics and other fields. Vouchers thus support the tradition that space research should be publicly funded at least in part, but bring the possible advantages of a market-like mechanism to the process of allocating public research funds. These advantages arc best illustrated by comparison with past practices. In the past, science payloads have generally been flown only on the Shuttle and in an order determined by centralized administrative decisions. Recent events have demonstrated the problems inherent in these practices; exclusive reliance on the Shuttle was shaken by the Challenger accident, and the perpetual rescheduling of missions such as Galileo and the Hubble Space Telescope has greatly increased costs m those programmcs. In addition, because smaller payloads (so-called 'secondary" payloads, including 'Hitchhikers' and ~Get-Away-Special Canisters', or ~GAS cans') are scheduled jointly with large payloads, Shuttle delays have rippled throughout the space science community. Finally, and more generally speaking, space researchers for both large and small projects have lacked opportunities to choose key transportation parameters that affect research design, such as whether to automate payloads or require human involvement, whether to require payload retrieval and return, and specifying duration on orbit. By comparison with these past practices, vouchers could provide more flight opportunities than are available solely by using the Shuttle, thus diversifying the risk inherent in space transportation and reducing mission delay. Moreover, by permitting broader and more flexible choice among manned and unmanned modes of space transportation~ vouchers could allow wider choice in payload design. Vouchers couM also allow the decoupling of large and small missions. Vouchers are not without disadvantages, however. Although vouchers could alleviate the current backlog of space research experiments, it is less clear whether a one-time w~ucher programme, as called for in the space policy, could stimulate the long-term supply of space research and the diversity of space transportation. Major concerns also include the costs to the government of a voucher programme, how quickly the space transportation industry can augment capacity to attain the policy's aim of accelerating near-term access to space, and issues involving the design and administration of vouchers.
Costs and benefits of vouchers During the present era in which funding is scarce for all national space programmes, in the USA and elsewhere, one of the first questions to ask about vouchers is how much they might cost. Cost estimates begin with two sets of information: an inventory of missions that might be voucher candidates, and a review of projected space transportation capacity and its cost in the near term. From these estimates comes information to respond to another question pertaining to vouchers whether there is an adequate supply of unmanned launch capacity to accommodate a voucher programme in the next few years. Table 1 summarizes much of this information. Columns (a)-(f) include NASA's inventory of large ('primary') and small ('secondary' and 'GAS can') payloads aggregated by size and desired launch date for
312
SPACE POLICY November 1989
Launch vouchers for space science research Table 1. Unmanned launch vehicle (ULV) capscity and space science payload demand, 1990 and beyond ('000 Ib).
1990 1991 1992 1993 1994 1995 >1995
Projected aggregate space research demand Secondary Total Primary Payload RV" (a) (b) (c) (d)
GAS cans Payload (e)
RV" (f)
287 171 109 107 39 29 41
57 ? ? ? ? ? ?
40 ? ? ? ? ? ?
105 125 95 90 30 105 ?
50 27 8 10 5 14 24
35 19 6 7 4 10 17
Projected aggregate ULV capacityb Spare (large) Total and small (g) (h) 480 494-503 505-540 ? ? ? ?
58.60 74-83 85-120 ? ? ? ?
"RV denotes return vehicle. bLaunch is to low Earth orbit at parameters specified in US Congress, Office of Technology Assessment, Launch Options for the Future: Buyer's Guide, OTA-ISC-383, US Government Printing Office, Washington, DC, September 1988, Table 2-1, p 20. Sources: Column (a): Sum of columns (b-f). Columns (b, c, e): Based on National Aeronautics and Space Administration, Office of Space Flight, Payload Flight Assignments:NASA Mixed Fleet, National Aeronautics and Space Administration, Washington, DC, August 1988. Columns (d, f): 70% of secondary payloads and GAS cans are assumed to require RVs; RV weight based on discussions with industry. Column (g): Sum of: (1) estimates for larger-vehicle suppliers and Scout from US Congress, Office of Technology Assessment, op cit, net of Shuttle capacity), and (2) estimates for smaller-vehicle suppliers, from Aviation Week& Space Technology(various issues; detailed citations available from author), US Department of Commerce, Space Commerce:An IndustryAssessment, US Department of Commerce, Washington, DC, May 1988, and discussions with industry. Assumes that current estimates for larger vehicles are representative through 1991 and that estimates for smaller vehicles include growth in production and flight rates projected by industry. Column (h): Sum of: (1) 10% of entries in column 5 in US Congress, Office of Technology Assessment, op cit, and (2) total small-capacity ULV projections as described for column (g) above.
3For example, omitted from the table are communications satellites (such as US and foreign commercial satellites and Tracking and Data Relay Satellites) and payloads specifically intended for Shuttle use, such as Spacehab. Detailed data underlying the estimates in Table 1 are contained in Molly K. Macauley, Launch Vouchers for Space Science Research: A Good Idea?, RFF Discussion Paper ENR89-04, Resources for the Future, Washington, DC, February 1989. In addition, the aggregate demand in Table 1 is intended to represent the pool of vouchers referenced by the 1988 space policy, but this is subject to discussion as the policy uses the phrase 'currently manifested on the Shuttle'. 'Manifested' has various interpretations; in the strictest possible sense it might refer to payloads with firm Shuttle launch dates. The difficulties of that interpretation are that large numbers of space research projects would be excluded from voucher eligibility, and that Shuttle dates and scheduled payloads are constantly moving targets. Nonetheless, the table and estimates of voucher costs presented below are structured to allow voucher programme designers to separate types of payloads and, in turn, evaluate voucher costs. 4Such capacity includes, in addition to launch vehicles, associated facilities such as launch ranges and communications for tracking and data relay. These facilities are not explicitly discussed in the text but are included in the estimates of supply shown in Table 1. wrhe larger-vehicle suppliers include small payloads in some business scenarios but generally do not focus business projections on them. Martin Marietta Commercial continued on page 314
all payloads which could be considered space research missions (and thus voucher candidates). 3 These include government space science and applications payloads as well as industry/government payloads operating under Joint Endeavor Agreements. Of the primary payloads, launch delay extends as far back as 1982; requested launch dates currently range from 1989 to 1995, with the bulk of requests for 1990-93 and 1995. Of 33 voucher candidates, 23 are scheduled for Shuttle flights before the end of 1993 and 10 are not currently scheduled. (The table is based on the assumption that the 1989 flights of Magellan and Galileo take place as planned; thus these flights are not included in the table.) The majority of requested dates for secondary payloads are 1989-91 and 1995. The table does not include two secondary payloads that are scheduled for Shuttle flights in 1989. Estimates of return vehicle requirements are given in columns (d) and (f). These estimates assume that 70% of secondary payloads and GAS cans require return, based on the types of experiments represented by payloads on the NASA roster. The effects of changing this assumption will be discussed further below. Columns (g) and (h) in Table 1 list unmanned launch vehicle capacity estimated to be available from 1990 to 1995. 4 Two caveats apply to these numbers. First, it is difficult to project unmanned launcher capacity because production and flight rates are particularly sensitive to anticipated demand; large inventories of vehicles are generally not maintained. (By demonstrating demand, however, vouchers may accelerate production and flight rates.) The second caveat is that near-term capacity for flying small payloads, either as primary payloads or on a 'space available basis', is uncertain. In the USA, but not in other countries, only the smaller-vehicle manufacturers have appeared to target small payloads as primary customers. 5 Reasons include the costs of investment in hardware for mounting the smaller payloads, payload integration, insurance, return vehicle requirements and the specific sizing capability of unmanned launchers. This sizing capability allows unmanned vehicles to be confi-
SPACE POUCY November 1989
313
Launch vouchers ]br space science research
continued from page 313 Titan, Inc, reports that it 'has for some time tried to market Titan's excess cargo space to Get-Away-Special class payloads to no a v a i l . . . ' but is willing to enter that market if it is 'proven to exist'. See Space Business News, 27 June 1988, p 4. 6By contrast, the deployment of piggybacked small and multiple payloads appears to be a practice that Ariane and Long March, for example, are preparing to supply routinely. See Aviation Week & Space Technology, 5 September 1988, p 121, and 22 August 1988, p 19; and Space Business News, 31 October 1988, pp 3-6. 7Nor is it clear how quickly primary and other payloads configured for Shuttle launch could be refitted for alternative vehicles. The National Research Council's Space Science Board and others have concluded that the majority of the primary payloads could be refitted, although how soon was not addressed. 8Projected Shuttle flight rates (excluding Department of Defense missions) are four in 1989, seven in 1990, seven in 1991, 12 in 1992 and 13 in 1993. See NASA, Office of Space Flight, Payload Flight Assignments, NASA Mixed Fleet, June 1989. 9See Roland T. Mayer, 'A cyclically harvested Earth/orbit production system', AAIA Paper No 84-0450, presented at the 22nd Aerospace Sciences Meeting, AIAA, Reno, Nevada, 8-12 January 1984.
314
gured more closely to payload size than the Shuttle (hence, with less spare room). Further, current Shuttle subsidies and government practices of manifesting space science missions exclusively on the Shuttle appear to deter industry investment in launching small payloads. 6 ]'his seems to be the case even though GAS cans and some secondary payloads already meet Shuttle safety ratings and incorporate standardized interfaces, and therefore might be readily integrated into other launch vehiclcs. Subject to these considerations, Table 1 presents annual total capacity in column (g) and, separately, the sum of the roughly 10% of spare capacity awlilabte on flights of larger vehicles plus the total projected capacity of smaller vehicles in column (h). Although it is difficult to predict how vehicle demand and supply might balance under a voucher plan, the table suggests at least three plausible scenarios. One is that the industry has about 70% more capacity than would be required of total space science demand in 1990, three times as much as would be required in 1991, and five times as much as would be required in 1992. Of course, large segments of transportation demand are not represented in the table, including national security and commercial (US and foreign) payloads. Presumably a voucher scheme would allow space science to compete for transportation with these other components of demand. however. 7 As an alternative scenario focusing on smaller payloads, suppose that only spare capacity for larger vehicles and the capacity of small vehicles were available, as represented in column (h). In this case the industry might not be able to respond immediately to a voucher programme that resulted in the oflloading of all secondary payloads and GAS cans, although the backlog could possibly be handled by the end of 1991. This would be the case if, for example, national security, commercial (US and foreign) and large space science payloads consume all but the spare capacity of the large vehicles and the capacity of the small vehicles. In this case secondary payloads and GAS cans would require three times more capacity than is projected to be available in 1990, but only about 60% of the capacity projected for 1991. The third scenario represents the other extreme. If all primary payloads currently scheduled for the Shuttle are flown as planned and, based on historical averages, the equivalent of three large secondary payloads and four GAS cans are flown per Shuttle flight, then at projected annual Shuttle flight rates (net of Department of Defense missions) payload demand could be fully served by the Shuttle by the end of 1991 except for GAS can demand and new flight requests. (At four GAS cans per Shuttle flight, only 148 GAS cans would be flown by 1993.) s The tentativeness of Shuttle scheduling of secondary and GAS can payloads must be emphasized, however, as illustrated by the historically uneven flight rate (from 0 to 10 per flight) and the cancellation of GAS cans from a scheduled Shuttle flight in February 1989. Perhaps one of the foremost questions concerning near-term transportation is the supply of return vehicles. Return vehicles in a variety of sizes have been used operationally since 1960 and have a successful recovery rate of 99% .9 Although no commercial companies are actively producing return vehicles, system design studies are underway under N A S A sponsorship (a sub-orbital return vehicle is under production in the USA, however, and FR Germany has reported an operational
SPACE POLICY November 1989
Launch vouchers for space science research
balloon-borne recoverable system that provides about 60 seconds of microgravity). The reasons for the lack of substantial commercial activity appear to Cost rangeb be both technical and economic: the high re-entry forces compared with Low High Scenario h Assumes vouchers are granted to all those of the Shuttle, and the low Shuttle price for research payloads. 1° primaryand secondaryspace researchpayloads Vouchers may help alleviate the second problem; as to technical that have requested Shuttle launches,c difficulties, a recent survey sheds some light. Of 53 space-based Primary payloads Large 1210 1540 materials processing experiments housed primarily at NASA's Centers Medium 1080 1080 for the Commercial Development of Space, survey data suggest that Small 132 132 Total primary 2422 2752 eight would require no modification and 13 would require some Secondary payloads modification to fly on a prototype reusable return vehicle compatible Large 255 425 with the Delta II and Titan II vehicles (and similar in concept to the Medium 90 225 Small 16 40 1960s NASA Biosatellite programme and the US Air Force Discoverer Total secondary 361 690 re-entry vehicle). 11
Table 2. P o a t l ~ colt of voucher programme" (millions of 1967 dollars).
GAS cans Large Medium Small Total GAS cans
96 48 32 176
144 80 48 272
Potential costs of a voucher programme
continued on page 316
In light of the information in Table i, what might be the direct financial costs to the government of a voucher programme? The answer depends on how many vouchers are issued, their value, what types of payloads are covered, and the costs of administering the programme. Table 2 presents estimates of the cost of a voucher programme under two scenarios. Scenario I assumes that vouchers are granted to all secondary and GAS can payloads that have requested launch dates and to all primary payloads scheduled on the Shuttle for 1990 and beyond or requesting launch dates but not yet scheduled. Scenario I! assumes that vouchers are granted to a fraction, 10%, of these payloads, and might be the tack taken in a voucher pilot programme or one that grants vouchers on the basis of peer review (both alternatives are further discussed below). The scenarios thus illustrate a wide range of possible programme costs depending on the scale of the programme. Costs in the table represent the product of the number of payloads (by type and size) and the estimated cost of unmanned transportation based on data reported in Table 3. In addition, estimated programme costs assume that 70% of payloads will require return vehicles and recovery. Costs of vehicles and recovery depend on vehicle size and flight and recovery conditions; based on industry discussion, these may total from $300 000 to $500 000 for small payloads and as much as $25 million for large secondary payloads. Based on these assumptions, a full-scale voucher programme that issues vouchers to all payloads could total over $4 billion (by comparison, and as the next section reports, a comparable level of space transportation services provided solely by the Shuttle might cost on the order of $3-6 billion). Alternatively, issuing vouchers to 10% of payloads could be close to $500 million (these figures are not 10% of scenario I; see notes to Table 2). The estimates are too large if actual launch and return vehicle costs are overestimated; this may be the case if (1) launch firms are willing to discount fees for secondary payloads flown on a standby or piggyback basis; (2) return vehicles can be purchased with quantity discounts or reused (as much as about 85% of the components of a large return vehicle and some 40-50% of a smaller vehicle can be reused or refurbished for as many as 100 flights); or (3) payload return is not needed or substituted with sounding rockets or drop towers. Of course, if the standby delay is too long in situation (1),
SPACE POLICY November 1989
315
Return vehiclesd Total, all payloads
663
663
3622
4377
Scenario Ih Assumes vouchers are granted to 10% of primary and secondary space research payloads that have requested Shuttle launches. Total, 10% of payloadse'f
387
467
aNOt including costs of programme administration. ~rhis range is based on the range given in Table 3. CPayloadsare listed in National Aeronautics and Space Administration, Office of Space Flight,
Payload Flight Assignments:NASA Mixed Fleet, NASA, Washington, DC, August 1988; GAS can documentation is provided by NASA and available from the author; payload classification as 'space research' and by size are available from author. aRetum vehicles are assumed to be required for 70% of all secondary and GAS can payloads; see text for further discussion. "Includes costs of return vehicles for 70% of secondary and GAS can payloads; see note b above. fCosts of scenario II are not 10% of costs of scenario I because of differences in assigning return vehicle costs based on payload weight to the subset of 10% of payloads. 1°Progress in mitigating re-entry forces appears significant, and risk and insurance costs are also beginning to be addressed: see Mayer, ibid. For discussion of the policy barriers, see W.H. Ganoe, 'Expendable experiments', Space World, August 1987, p 39. 11See Center for Space and Advanced Technology, Inc, An Assessment of Com-
mercial Microgravity Science User Requirements for the Reusable Reentry Satellite, 1987; for additional discussion of the prototype return vehicle, see M.S. Richardson, Reusable Reentry Satellite (RRS) System, Johnson Space Center, Houston, TX, 30 August 1988; and B.L. Swenson and A.C. Mascy, eds, A Concep-
tual Design Study of the Reusable Reentry Satellite, Ames Research Center, Moffett
Launch vouchers for space science research Table 3. Costs of launch based on NASA Shuttle prices, Shuttle resource cost and unmanned launch vehicle (ULV) prices (millions of 1987 dollars). Large payload NASA RC a
Primary Secondary GAS cans
110 11 0.01
ULV
180-290 14-22 0.015
110-140 15-25 0.6-0.9
Medium payload NASA RC a
ULV
Small payload NASA RC a
ULV
73 7 0.005
60 6-15 0.3-0.5
48 2 0.003
33 2-5 0.2-0.3
59-122 11-17 0.01
38-96 4-6 00045
aRC denotes resource cost. See text for definition and discussion.
Sources: NASA pricing: B.A. Stone, 'Understanding the cost basis of Space Shuttle pricing policies for commercial and foreign customers', Journal of Parametrics, Vol 3, No 1, 1984, pp 1-6; J. Naugle, 'A manufacturer's view of commercial activity in space', in M.K. Macauley, ed, Economics and Technology in US Space Policy, Resources for the Future, Washington, DC, 1987, pp 69-80; and Congressional Budget Office (CBO), Pricing Options for the Space Shuttle, Washington, DC, March 1985. Resource cost: CBO, op cit; General Accounting Office, NASA Must Reconsider Operations Pricing Policy to Compensate for Cost Growth in the Space Transportation System, Washington DC, February 1982; MA. Toman and MK. Macauley, 'No free launch: efficient space transportation pricing', Land Economics, Vo165, No 2, May 1989, pp 91-99, and references cited therein; Space Business News, 29 October 1987, pp 5-6; and discussions with industry. ULV pricing: United States Senate, Subcommittee on Science, Technology, and Space, Hearings on NASA Authorization for Fiscal Year 1986, 99 Cong, 1 sess, US Government Printing Office. Washington, DC, 1985; Toman and Macauley, op cit; and discus'ions with industry.
one of the purposes of vouchers, early opportunity to access space, is undermined. The estimates are too small if the costs of payload integration, insurance or return are underestimated. Integrating large numbers of small payloads could be costly, for instance, and return vehicle costs are sensitive to requirements for size, complexity, attitude control and pointing, power, overflight and landing restrictions, and possible environmental concerns. Return vehicle launch insurance could be significant, although launch insurance may not be a large problem as secondary payloads designed for Shuttle launch generally meet strict Shuttle safety standards. (In fact, one advantage of vouchers may be the extent to which an unmanned launch allows such requirements to be less rigid while satisfying insurance conditions). In addition, the extensive standardization of operating parameters and interfaces required for the smaller payloads in the Hitchhiker and GAS can programmes may also result in lower costs for industry payload integration, once initial hardware is designed.
Comparative costs of a voucher programme
continued from page 315 Field, CA, undated. In addition, NASA has reported significant international interest in using the vehicles: see Space Business News, 23 January 1989, p 8. 121t should be noted that the pre-flight subsidy is not the difference between NASA's reported cost and the actual total cost of a flight; rather, the subsidy is the difference between NASA's reported cost and the long-run marginal cost of a flight. Long-run marginal cost does not recoup all costs. For further discussion of Shuttle resource cost, see Michael A. Toman and Molly K. Macauley, 'No free launch: efficient space transportation pricing', Land Economics, Vol65, No2, May 1989, pp 91-99.
316
It is crucial for accurate public policy analysis that the resource cost of the Shuttle, not the cost as reported in N A S A accounting, be the basis for assessing the comparative cost of a voucher programme. Table 4 demonstrates the point. The figures in column (a) reflect the cost of a Shuttle flight based on N A S A accounting, which typically includes only the cost of fuel and other expendable items. Yet depreciation of fixed facilities (such as launch pads and reusable orbiters) and capital costs, in addition to the cost of expendable items, constitute a truer measure of resource cost. This resource cost is the measure of the actual social cost of the Shuttle and is reported in column (b). 12 On this more accurate accounting basis, space transportation services provided solely by the Shuttle are estimated to cost in the order of $ 3 ~ billion, as shown in Table 4, column (b). Comparing columns (b) and (c), then, there is a good chance that vouchers could save up to $2 billion if the costs of the Shuttle programme are at the high end of this estimate. Even if Shuttle costs are in the order of $3 billion, however, vouchers could bring cost savings under several conditions: if as a result of the voucher programme the unmanned vehicle industry is able to SPACE POLICY November 1989
Launch vouchers for space science research Table 4. Cost of launching all space science payloads currently requesting flights at NASA Shuttle prices, st estimated Shuttle resource cost, and under voucher programme (millions of 1987 dollars).
(a) Payload
(b)
(c)
NASA Resource Voucher pricing cost" programme
Primary 2716 Secondary 308 GAS cans 3 Total 3027
3194-5770 435- 677 5 3634-6452
2422-2752 856-1185 344- 440 3622-4377
aResource cost is defined in text. Cost data are from CBO, op cit, Table 3, using methodology in Toman and Macauley, op cit, Table 3.
Sources: Column (a): The sum of payloads priced at NASA fees, based on Tables 1 and 3. Column (b): The sum of payloads priced at Shuttle resource cost, based on Tables 1 and 3. Column (c): From Table 2; includes estimated costs of return vehicles.
exploit scale economies in production or flight rates; if opportunities for joint exploitation of economies between the Shuttle and unmanned launchers are exercised under vouchers; 13 or if some payloads do not need to be returned to Earth. The table also suggests that differences in cost between the voucher programme and the current Shuttle programme measured at resource cost are largest in the case of smaller payloads. GAS cans involve very little additional direct cost on the Shuttle (where they can, in fact, serve as ballast) but larger costs on unmanned launchers (where GAS cans generally consume real capacity and may require return capsules). The point to note here, however, as it is one of the purposes of vouchers, is that the queue for small payloads is quite long, such that costs of delay for some payloads could well offset the subsidized Shuttle launch.14 A desire to fly these payloads sooner to reap their space science benefits would presumably strain Shuttle capacity more than is compensated by the direct cost paid by these payloads (some $3000--10 000, depending on size). Otherwise, they would indeed be flown sooner. Thus the argument comes full circle to one of the rationales underlying vouchers - the provision of near-term transportation opportunities.
Additional benefits of vouchers
13See Toman and Macauley, ibid, for discussion of joint economies in operating the Shuttle and unmanned launchers. 14Concern about the indirect cost of flying smaller payloads underlies this observation made by the Rogers Commission in its investigation of the Challenger accident: 'Any middeck or secondary payload has, by itself, a minimal impact compared with major payloads. But when several changes are made, and made late, they put significant stress on the flight preparation process by diverting resources from higher priority problems.' See Report of
the Presidential Commission on the Space Shuttle Challenger Accident, Washington, DC, 6 June 1986, pp 172-173. lSFor details underlying these estimates, see Macauley, op cit, Ref 3, pp 32-35. ISSee Business Week, 30 May 1988, p 98. 17Declining enrolment in aerospace science has also been observed (see D. Quayle, 'Space science education', Defense Science, September 1988, p 52, for a summary of key statistics) and may reflect in part the lack of ready space transportation access. Correlating the events and drawing inferences for the extent to which vouchers may be a solution is outside the scope of this article, although such a review may better clarify for public debate the actual costs of declining enrolments.
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In addition to possible cost savings, what might be other benefits of vouchers? These additional benefits flow from the immediacy of the flight opportunities that vouchers might make possible. These benefits include (a) the avoided costs of mission delay, including storing and maintaining the flight readiness of payloads, and (b) the realization of the fruits of science research earlier rather than later, which may stem attrition in the intellectual resource base of space researchers or increase information about space science research (information that might guide further public investment in space station design and operation or follow-on planetary missions). Based on studies by the US General Accounting Office, the costs of delay for larger planetary and astronomy missions are about $100 million per year. On the basis of Table 4, a one-year delay in all of these missions could readily justify any cost difference between the voucher programme and the costs of Shuttle launches. In the case of smaller payloads, estimates suggest that accelerating the launch of all secondary and GAS can payloads by one year could save about $200 million. 15 Savings of this amount begin to outweigh the cost difference between the voucher programme and the Shuttle programme measured at resource cost; even if the savings are overestimated by an order of magnitude, the difference disappears at the low end of estimated voucher programme costs. While these delay costs do not take into account refitting payloads other than the costs of return vehicles, they also do not take into account the possibly offsetting indirect costs of delay on the pace of space science research and professional resources. The cost of delay on research opportunities and careers is frequently noted. 'It's a helpless feeling,' according to one industry official commenting on the delay of the space telescope. 'The guys are getting tired and o l d . '16 To be sure, space research generally represents long-term career commitments (the Galileo, Ulysses, Magellan and Mars Observer missions, even without delay, were projected to average eight years); however, the delays can add substantiaUy. 17 317
Launch vouchers for space science research
Promising institutional change Aside from potential savings in cost and avoided delay, vouchers could also bring a crucial change in approach to managing space transportation and space research. The present administrative approach sharply separates these activities; they are managed and budgeted in different NASA offices. Such a division of responsibilities leads to a host of problems: observers note that these include inefficient use of resources, wasteful competition for resources and ambiguous and conflicting goals. 18 For instance, consider the transportation-related questions a space researcher faces in designing a payload: Should it be automated or require human interaction'? What should be the on-orbit duration of the experiment'? When is the best time to launch'? Should the payload be returned to Earth? These transportation concerns represent expensive engineering tradeoffs leading ultimately to choice between use of the Shuttle and unmanned rockets, yet such decisions are now made without full information about the relative costs of these trade-offs. By allowing researchers a choice between transportation modes, vouchers could force a closer coupling of the budgetary and cost impacts of payloads and space transportation. Just how this coupling would take place depends on the design of the voucher.
Towards implementation The cost-effectiveness of vouchers is closely related to their actual contractual specifications. Two particular problems arise. One is the difficulty of assigning face values to vouchers. The need to amass sufficient data to ascribe values to vouchers represents a significant informational burden on government. Unlike housing vouchers, for instance, where the large supply of housing generally permits competitive measures of rents, there are not large numbers of space transportation suppliers in all payload classes to permit competitively determined measures of vehicle costs. Overvalued vouchers could result in windfall profits for the unmanned launch industry. The second design difficulty is how to determine the appropriate size of the programme - essentially a judgement about the appropriate amount of public support for space research. This difficulty reflects the broader problem of allocating public support to research in general and space research in particular. It also reflects the problem of dividing responsibility for research funding between public and private sectors. These difficulties are not unique to a voucher programme, since issues of rationing Shuttle capacity and determining space research budgets must be addressed in current policy for space transportation and science. Moreover, even an overvalued voucher, provided it was less 18See, for example, US Congress, Office expensive than the Shuttle, could reduce the total transportation bill. of Technology Assessment, Reducing Launch Operation Costs: New Technolo- Accordingly, vouchers may perform at least as well as the current policy gies and Practices, OTA-TM-ISC-28, US and may do so at lower cost. Government Printing Office, Washington, With these problems in mind, there are at least three alternative DC, September 1988; and National Aeronautics and Space Administration, Micro- contractual designs for vouchers (the designs are summarized in Table gravity Materials Science Assessment 5). Under one programme vouchers would be issued for a standard face Task Force, Microgravity Materials Scien- value that was less than projected total transportation costs. The ce Assessment, Final Report, NASA Headquarters, Washington, DC, June difference would be made up by co-payments from payload sponsors. Co-payments would insure against incentives for researchers to over1987. 318
SPACE POLICY November 1989
Launch vouchers for space science research Table 5. Comparison of voucher designs. Co-payments
Caehable transportation vouchers
Space research vouchers
A. Incentive faced by: Find low-cost transportation Find low-costtransportation subject to alternative uses subject to alternative uses for partial voucher payment of research budget. for space science.
Researcher
Find low-cost transportation.
Transportation provider
Maximize voucher payment Maximize voucher payment. unless can split alternative use of partial payment with researcher.
Maximize voucher payment unless can split alternative use of partial payment with researcher.
8. Governmentrole: Determine scope of vouchers (ie size of programme funding) and administer programme.
19See Space Business News, 26 December 1988.
state transportation and payload return requirements if there were no penalty for so doing (the penalty is analogous to co-payment in US medical insurance). Co-payments could, for instance, be required for the return vehicle, thus forcing payload owners to better assess experiment design alternatives (such as automating payloads). Some evidence that research budgets might permit a 20% copayment, for example, is suggested by the payments reported for experiments on the Cosima research facility (flown by the FR German company Intospace on the Chinese Long March 2 during August 1988). In that case, government-funded research scientists paid a total of about $1 million for microgravity experiments on the 44-1b Cosima, less than the weight equivalent of a small GAS can. To date it appears that the Cosima project was successful, although there have been reports that some crystals were damaged during re-entry. 19 If US research budgets allocated commensurate amounts, then co-payment could be as large as 70% for the larger GAS cans (co-payment of 70% results in total cost to the researcher of $1 million). For the smaller GAS cans, budgets may easily allocate the full amount (about $700 000-800 000). A second design alternative would be 'cashable' transportation vouchers. Cashable vouchers would be valued at the estimated cost of unmanned transportation, but would include a provision under which recipients could keep the difference between estimated and actual costs if the latter were lower, provided that difference is allocated to space research. The advantages of cashable vouchers are that researchers would be encouraged to search for low-cost transportation, and that the burden on government to guess transportation costs precisely would be reduced. In addition, if the transportation cost savings were divided between the researcher and the transportation supplier, suppliers as well as researchers would have incentives to lower costs. A third alternative would be to issue vouchers for an entire space research project rather than for its transportation component only. Such space research vouchers could be funded from space research budgets augmented to include transportation. They would provide space scientists with the greatest degree of choice in all aspects of the research effort: in searching for low-cost transportation (or substituting with the use of drop towers or sounding rockets), in designing payloads with transportation requirements and costs in mind, and in allocating the budget among transportation, payload design, ancillary ground-based facilities and even professional staffing. Of these alternatives, research vouchers would best reduce the sharp discontinuity now existing between research and transportation. Re-
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Launch vouchers for space science research
search vouchers would also align space research (and the management of the project budget) more closely with the process of research in other, non-space fields, where grants are awarded to a project as a whole. Thus space science might be better able to compete for talent with other research fields, and perhaps the long line of space access would shorten. Any of these design alternatives should allocate the burden of space transportation and research risk between the government (as the funder of space transportation) and the commerical supplier of the transportation. The economics of risk-sharing offers some guidance. It suggests that the burden should rest with the supplier, given the greater information the supplier has about actual costs and risk and the difficulty of monitoring them.
A pilot programme
2°See Macauley, op cit, Ref 3, p 48, for additional provisions such as voucher expiration dates, transferability and insurance.
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As a step towards designing a voucher system a pilot programme could be undertaken to test and evaluate different designs on a small scale. By analogy with the evolution of housing vouchers, the US Congress could direct NASA to establish an 'Experimental Space Transportation Allowance Program'. It could specify voucher payment formulas, target dates for completion and conditions for eligibilityfl° The programme could be undertaken at existing Centers for the Commercial Developm e n t of Space. Like housing vouchers, space vouchers would require a multiyear budgetary commitment. The government might also need to finance part of the costs of any major investment in unmanned launch facilities or return vehicles necessary to accommodate space science demand. Based on the estimated costs of vouchers, however, even this investment would be likely to provide space transportation at lower cost than is presently incurred by the Shuttle programme.
SPACE POLICY November 1989