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NASA To Pay More For Less Cargo Delivery To the Space Station (arstechnica.com)
A new report from NASA's inspector general, Paul Martin, finds that NASA will pay significantly more for commercial cargo delivery to the ISS in the 2020s rather than enjoying cost savings from maturing systems. "NASA will likely pay $400 million more for its second round of delivery contracts from 2020 to 2024 even though the agency will be moving six fewer tons of cargo," reports Ars Technica. "On a cost per kilogram basis, this represents a 14-percent increase." From the report: One of the main reasons for this increase, the report says, is a 50-percent increase in prices from SpaceX, which has thus far flown the bulk of missions for NASA's commercial cargo program with its Dragon spacecraft and Falcon 9 rocket. This is somewhat surprising because, during the first round of supply missions, which began in 2012, SpaceX had substantially lower costs than NASA's other partner, Orbital ATK. SpaceX and Orbital ATK are expected to fly 31 supply missions between 2012 and 2020, the first phase of the supply contract. Of those, the new report states, SpaceX is scheduled to complete 20 flights at an average cost of $152.1 million per mission. Orbital ATK is scheduled to complete 11 missions at an average cost of $262.6 million per mission.
But that cost differential will largely evaporate in the second round of cargo supply contracts. For flights from 2020 to 2024, SpaceX will increase its price while Orbital ATK cuts its own by 15 percent. The new report provides unprecedented public detail about the second phase of commercial resupply contracts, known as CRS-2, which NASA awarded in a competitively bid process in 2016. SpaceX and Orbital ATK again won contracts (for a minimum of six flights), along with a new provider, Sierra Nevada Corp. and its Dream Chaser vehicle. Bids by Boeing and Lockheed Martin were not accepted.
But that cost differential will largely evaporate in the second round of cargo supply contracts. For flights from 2020 to 2024, SpaceX will increase its price while Orbital ATK cuts its own by 15 percent. The new report provides unprecedented public detail about the second phase of commercial resupply contracts, known as CRS-2, which NASA awarded in a competitively bid process in 2016. SpaceX and Orbital ATK again won contracts (for a minimum of six flights), along with a new provider, Sierra Nevada Corp. and its Dream Chaser vehicle. Bids by Boeing and Lockheed Martin were not accepted.
Time to put a nail in the "the private sector can do it cheaper" argument.
It only happens when there is competition, and in order for there to be competition there needs to be at least 6 arms-lengh-unrelated choices. In any competative market where the choices have been reduced below six, prices go up, substantially.
Gas stations. At one point in time every city had several brands of gas station. Now all gas comes from one of two sources, and prices just go up. Internet service, the only place with competitive service in the US is in the San Francisco bay area. Mergers of Fox with Disney, Comcast with NBC and Universal, and so forth, have done nothing but destroy competition.
We are absolutely fooling ourselves if we believe these will lower costs. All they do is enrich the board members, maybe some of the largest shareholders, but none of the employees.