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SpaceX Rocket Failure Cost NASA $110 Million
An anonymous reader writes: On June 28th, a SpaceX Falcon 9 rocket exploded just over two minutes into its attempt to reach the International Space Station. It was a contracted mission from NASA to resupply the astronauts living there. Today, NASA associate administrator William Gerstenmaier said the price tag to taxpayers for that failed launch is $110 million. SpaceX is leading the investigation into the cause of the failure, and NASA officials faced tough questions about whether private companies should be allowed to direct investigations into their own failed launches. A similar inquiry is underway at Orbital ATK. NASA inspector general Paul Martin said his office is looking into the matter. Gerstenmaier added that NASA is thinking about making these companies take out insurance policies that would cover the cost to taxpayers in the event of another failure.
"Privatize the profits, socialize the risks."
That's how big business works in the USA.
Painful, but we'll live. There hasn't been a rocket yet that has a perfect operational record.
SpaceX policy seems to be to collect rich telemetry from each launch, so that fault investigation can proceed from the data, rather than the old approach of fishing for wreckage and piecing it together to determine the cause. Does NASA do things this way too now, or is it still using the old style of forensics?
If I ship something, it is up to me to pay insurance if I wish to do so. Otherwise, I take my chances on something happening to the cargo or it getting completely lost.
Why should the rocket manufacturer pay the insurance. That should be NASA's/the taxpayer's responsibility just like any other package delivery system. Let the insurance companies figure out a premium based on the success/failure rate of each rocket launching company and price accordingly.
You act like NASA has a choice and isn't caught between corporate funded Libertarian/TeaParty/NeoCon PACS paying off congresscritters and senators to strong arm them into these deals by holding their budget hostage.
Better than multiple billions and astronaut lives lost for a cargo run. Hell, a shuttle launch that succeeded cost over a billion per launch.
I think this is a good idea, but not for the reason Gerstenmaier says. What it will do is get another private entity to look at the risks of these launches and price them accurately. This will make it clearer in the budget how costly these launches actually are.
However, the cost for insurance will simply be added on top of the contract, so the tax payer pays for it either way. In fact, with insurance, the tax payer will pay more on average than without insurance.
The Orbital failure took out the pad, which was owned by the Commonwealth of Virginia, which had neither insurance nor reserve cash to pay for a new one. That caused a scramble to find the bucks to repair the pad.
Practically every commercial satellite launch is insured. Typically runs $20-30 million for a $250-350 million satellite.
The government is always self-insured. I believe that the private launch companies have to have some basic insurance to get a launch license. Commercial satellites are routinely insured, but that is a business move, not a requirement.
Well, maybe more expensive Russian rockets cost what they do for a reason?
Well, that reason is certainly not reliability-- Russian rockets have been pretty failure prone lately.
http://spacenews.com/proton-fa...
http://spacenews.com/progress-...
http://spacenews.com/russian-s...
Atlas-V and Delta-IV been doing pretty good, though: so far both have had a 100% record for reaching orbit, although each one has had one launch with an underperforming upper stage that put it into lower-than-planned orbits.
http://www.geoffreylandis.com
No they are not.
I can only imagine that Lockheed and United Launch Alliance's teams are all over this launch trying to discredit SpaceX. They cannot compete on price since SpaceX's ground-up engineering is so much cheaper than the Russian rockets they mark up. Last year they decided "We're going to cut our costs by half" - should have done that a long time ago. Seems like they're still struggilng to sort it out: https://en.wikipedia.org/wiki/...
Honestly, it blows my mind that NASA didn't buy insurance in the first place. I agree with the other poster that pointed out, if "I ship something I buy the insurance if I need it." However, just like other types of delivery companies, those costs eventually get passed on to the consumer. It's probably cheaper for if NASA just pays for coverage as they need it, rather than having SpaceX insure every launch for X millions of dollars.
I'm not sure how he came up with $110 million in losses the taxpayer has to cover. The launch, part of SpaceX's CRS contract, is their cost. The contract says they have to deliver X number of supply runs. They lose a rocket, they still have to make X number of DELIVERIES. That means SpaceX has to eat the cost of a failed launch - part of the incentive to get it right. What the government (and tax payers) are on the hook for is the lost contents of the flight. I'm just surprised there was $110 million worth of food, fuel, oxygen and experiments. Seems a bit high.
All insurance schemes are designed to amortize the risk... in this case, amortize the cost of a failure over the previous, and subsequent successes... and the middleman skims a little off the top. So I look at this and think buying insurance is actually just a waste of money.
To anyone who would disagree: If the only insurance you've ever bought is for your car... you probably don't know shit about insurance.
Which has more power: the hammer, or the anvil?
It spreads the risk. That's all. My house probably is not going to burn down this year. But SOMEBODY's house DEFINITELY will. Insurance spreads the risk among policy holders.
How many rocket launch policy holders are there to spread the risk among?
I suppose an insurance underwriter could spread the rocket launch risk (and cost) among their auto and home policy holders. That will make them uncompetitive in the auto and home insurance market. So they'll have to keep the risk amongst similar policy holders for rocket launches.
Ultimately, just like houses burning down, some rocket launches WILL fail.
If NASA is forced (maybe by ignorant Congress who must "do something!") to buy insurance, then the cost of failure is still passed to the policy holders (eg, mostly taxpayers). Plus now you've got another industry (insurance) getting their fingers in the pie and making a profit. If Congress or NASA forces SpaceX to get insurance, then SpaceX will pass the cost of insurance on to NASA and ultimately taxpayers in the form of higher launch prices.
No matter how you slice it, the customers of rocket launches WILL bear the costs of inevitable failure. There's not that many customers to spread the costs amongst like there are for homeowners.
I'll see your senator, and I'll raise you two judges.
They may be self-insuring (getting lower launch costs by not requiring insurance - maybe the launch is $150M insured).
This was my thought. Rocket launches are risky, so any insurance is going to be expensive.
So let's say they require commercial insurance to be bought, and the insurance company correctly predicts a 5% failure rate. But they have expenses to cover, the insurance is 'unusual' and highly variable, it's a small market, etc....
Just to break even, they would have to charge 1/20th the cost per launch, but that's not the end of it. They have expenses and profit to worry about. For something like rocket launches? 20% overhead wouldn't be out of line, I think.
So rather than the 'insurance' cost per launch being 5%, it's now 6%. For a $100M launch, that means self covering costs, on average, $5M. Commercial insurance would increase that to $6M.
I don't read AC A human right
Correct me if I'm wrong, but you seem to think that somehow insurance will lower the cost of the accidents. But it's perfectly obvious that, in the long term, that can't possibly be true. The insurance company has to make a profit - PLUS its own overhead costs. - plus of course covering the payouts.
The reason an individual (unless very wealthy) doesn't self-insure is because the things he is insuring against are very low-runner risks, but if/when they do occur, he would be instantly bankrupt. That's not the case for the US government. $110 million is pin money. Petty cash. Pocket change. Rounding error. They can save money by self insuring.
Now, if they didn't build in a cushion to the program to cover such boo-boos, that is entirely a different thing. Then they would be stupid. That doesn't change the equation that in the long run it is always cheaper to self insure.
You're missing the point. I'm commenting on the expectations of significantly lower price for the same service promised by SpaceX, not on the reliability. A failure rate is factored in the price of Russian rockets.
And we had our hearts set on getting that F-35 jet fighter!
Well, 3/4 of one anyway...
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Prisencolinensinainciusol. Ol Rait!
So the risk instead would be spread out into a higher launch fee (taxpayers) and higher insurance fees for everyone (taxpayers).
The insurance would make the cost of the launch a lot higher, and NASA (taxpayers) would have to pay that.
Money doesn't grow in insurance companies either - they are re-insured and the cost is spread out to everyone.
But I guess it would look better for NASA?
(That said, I thought insurance was involved already. At least for individual projects blowing up?)