the financial feasibility and a reliability based acquisition
TRANSCRIPT
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© The Aerospace Corporation 2010 SENSITIVE INFORMATION / APPROVED FOR RELEASE TO US GOV’T ONLY
The Financial Feasibility and aReliability Based Acquisition Approachfor Commercial Crew
Presentation to Administrator Bolden
John SkrattThe Aerospace Corporation
Monday, April 4, 2011
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Sensitive But Unclassified / Pre-decisional / Draft
Financial Feasibility Assessment• Objective:
– Research business feasibility of Commercial Crew• Started as internal Aerospace research, picked up by IPCE
– Determine preliminary estimates for Business Case variables• Construct a generalized, high level business case model
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Monday, April 4, 2011
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Sensitive But Unclassified / Pre-decisional / Draft
Summary of Findings• Given the model we developed and the assumptions we made:
– Price Pre Seat for four government passengers per launch and no failures is in excess of $100M in order to make the business case close for most cases studied
– Sensitivities moving away from aggressively low cost forecasts
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Sensitive But Unclassified / Pre-decisional / Draft
Business Case Model Assumptions
• 5 year development and 10 years of operations• NASA requirement of 2 launches per year• NASA invests from $1B to $5B in development per provider• The commercial entity invests 10% of the government’s
investment in development• Range of “unit” variable costs (Launch System, Launch Abort
System and Capsule) in terms of theoretical first unit costs (TFUC) from $175M to $491M, taken from internal assessments
• Aggressively low ground system (fixed) costs, starting out at $400M/Yr and modeled as a step function based on the number of
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Sensitive But Unclassified / Pre-decisional / Draft
Price Per Seat to NASA for Commercial Crew
For the values shown Price per Seat varies Between $90M and $175M
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Sensitive But Unclassified / Pre-decisional / Draft
Total Cost to NASA for Commercial Crew
For the values shown total cost to NASA varies between $8 and $19B with operations costing between $7B and $13B
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Sensitive But Unclassified / Pre-decisional / Draft
NASA Total Cost and Price Per Seat Sensitivities
Total cost is substantially higherfor two providers each supplying
one flight annually compared to oneprovider supplying two flights annually
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Sensitive But Unclassified / Pre-decisional / Draft
Modeling Demand Elasticity for PrivatePassengers
NotionalDemand Elasticity
Relationship
No one knows what this relationship looks like but we do have evidence of~$25M for a few flyers who did and $0.25M for many fliers who said they would
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Sensitive But Unclassified / Pre-decisional / Draft
Implications of Modeling Demand Elasticity for Private Passengers
To make a business case close for a notional demand elasticity the PPS for private passengers would have to be anywhere from 22% to 6% of the PPS for Gov’t passengers
4 Seats Per Launch
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Sensitive But Unclassified / Pre-decisional / Draft
Details Of A Case That “Closes” With Soyuz
$1.4B NASA Investment10% Goes to NASA StaffPrivate Investment = 10% of Total NASA Investment
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Means that the Gov’t would fly 14 passengers a year to ISS
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Sensitive But Unclassified / Pre-decisional / Draft
Summary of Financial Feasibility• Given current assumptions
– Development + 10 years of operations may cost NASA $10B to $20B for one viable commercial crew provider
– Domestic commercial crew launch capability may result in prices per seat 2 to 3 times that of foreign based alternative access options
– Due to the fixed and variable nature of space launch operations 2 viable CC
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Sensitive But Unclassified / Pre-decisional / Draft
Questions Raised By The Business Case Analysis
• Reasonableness of low cost / high reliability space transportation systems
• What are the options for Human Rating?• What is the nature of the required test program?• What level of reliability is required relative to Shuttle?
• Are there ways to forecast eventual system reliability other than relying on design criteria or waiting for demonstrated reliability?
• What is the impact of failures on demonstrated reliability?• Given reliability “desirements” what parts of a total Commercial
Crew transportation system might be assigned to different levels of Human Rating?
• Does history give us insight into what’s reasonable?
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Sensitive But Unclassified / Pre-decisional / Draft
Notional Human Rating (HR) Approaches
• HR4 (Reference Approach): Full compliance with NASA HR specification, Gov't mission assurance / IV&V along with full ability to direct contractor activities, 3 successful flight tests
• HR3 (Contemporary NASA Approach): Minor exemptions from HR4 approach justified through equivalence arguments, Gov't mission assurance / IV&V along with moderate ability to direct contractor activities, 3 successful flight tests
• HR2 (Hybrid Commercial Approach): Major exemptions from HR4 approach justified through equivalence arguments, Gov’t insight only with some mission assurance / IV&V and minimal ability to direct contractor activities, highly reliant on number of successful flight tests
• HR1 (Purely Commercial Approach): Minimal Gov’t insight with no mission assurance / IV&V and no ability to direct contractor activities, Gov’t completely trusts contractor approach, system reliability solely determined by flight testing
Ares I/Orion
STS
Saturn V / CM
Planned and Existing Commercial Systems
Mor
e Q
ual T
estin
g an
d G
ov’t
Insi
ght /
Hig
her I
nitia
l Cos
t
Spectrum of Options with Implications on Crew Safety, Time to Domestic Capability and Cost
Higher R
eliance on Flight Testing / Lower Initial C
ost
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Sensitive But Unclassified / Pre-decisional / Draft14
Example of Reliability Evolution for HR4 Approach• Design and Development Phase
– Design reliability established during this phase– Expected reliability very low because very little
qualification/verification has occurred• High uncertainty in expected reliability
– No demonstrated reliability• Qualification and Verification Phase
– Expected reliability grows throughout this phase as qualification and verification steps are completed
– Uncertainty is reduced throughout this phase– No demonstrated reliability
Design/ Development
Qualification/ Verification
Operations
Flight Test
Time
Rel
iabi
lity
Design ReliabilityExpected ReliabilityDemonstrated Reliability
• Flight Test Phase– Expected reliability approaches design reliability– Flight history for demonstrated reliability begins
• Operations Phase– Expected reliability approximately equal to design
reliability– Demonstrated reliability approaches Expected
reliability over time
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Impact on Demonstrated Reliability Growth of
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Sensitive But Unclassified / Pre-decisional / Draft16
Demonstrated Reliability of Existing Mature Launch Vehicles(at 90% Confidence Level)
RLV = 0.990 results in Crew Safety = 0.995 if RCM = 0.996 and RLAS = 0.900
1/132 2/147 2/1060/6321/ 896 2/51 2/43 1/23 1/15
RLV = 0.950 results in Crew Safety = 0.991 if RCM = 0.996 and RLAS = 0.900
RLV = 0.850 results in Crew Safety = 0.981 if RCM = 0.996 and RLAS = 0.900
CS Requirement and Allowable LV Reliability• Multiple LVs have demonstrated reliability that could meet a slightly lower Crew
Safety requirement if used with an HR3/HR4 Crew Module and LAS
May be Possible to Achieve CS requirement of 0.990 at 90% CL
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Sensitive But Unclassified / Pre-decisional / Draft17
Summary of a Reliability Based Acquisition Analysis
• Completely commercial service is difficult to envision in the near-term given expected CS requirement
• LV offers most flexibility for choosing a commercial-like development approach within CC Program
• Parallel government / commercial efforts may allow near-term assured domestic capability, as well as “maturation ramp” for longer-term, commercially-provided crew launch services
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