[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]


 
                         NASA'S COMMERCIAL CREW 
                          DEVELOPMENT PROGRAM: 
                     ACCOMPLISHMENTS AND CHALLENGES 

=======================================================================

                                HEARING

                               BEFORE THE

              COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                      WEDNESDAY, OCTOBER 26, 2011

                               __________

                           Serial No. 112-46

                               __________

 Printed for the use of the Committee on Science, Space, and Technology


       Available via the World Wide Web: http://science.house.gov


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              COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY

                    HON. RALPH M. HALL, Texas, Chair
F. JAMES SENSENBRENNER, JR.,         EDDIE BERNICE JOHNSON, Texas
    Wisconsin                        JERRY F. COSTELLO, Illinois
LAMAR S. SMITH, Texas                LYNN C. WOOLSEY, California
DANA ROHRABACHER, California         ZOE LOFGREN, California
ROSCOE G. BARTLETT, Maryland         BRAD MILLER, North Carolina
FRANK D. LUCAS, Oklahoma             DANIEL LIPINSKI, Illinois
JUDY BIGGERT, Illinois               GABRIELLE GIFFORDS, Arizona
W. TODD AKIN, Missouri               DONNA F. EDWARDS, Maryland
RANDY NEUGEBAUER, Texas              MARCIA L. FUDGE, Ohio
MICHAEL T. McCAUL, Texas             BEN R. LUJAN, New Mexico
PAUL C. BROUN, Georgia               PAUL D. TONKO, New York
SANDY ADAMS, Florida                 JERRY McNERNEY, California
BENJAMIN QUAYLE, Arizona             JOHN P. SARBANES, Maryland
CHARLES J. ``CHUCK'' FLEISCHMANN,    TERRI A. SEWELL, Alabama
    Tennessee                        FREDERICA S. WILSON, Florida
E. SCOTT RIGELL, Virginia            HANSEN CLARKE, Michigan
STEVEN M. PALAZZO, Mississippi       VACANCY
MO BROOKS, Alabama
ANDY HARRIS, Maryland
RANDY HULTGREN, Illinois
CHIP CRAVAACK, Minnesota
LARRY BUCSHON, Indiana
DAN BENISHEK, Michigan
VACANCY



                            C O N T E N T S

                      Wednesday, October 26, 2011

                                                                   Page
Witness List.....................................................     2

Hearing Charter..................................................     3

                           Opening Statements

Statement by Representative Ralph M. Hall, Chairman, Committee on 
  Science, Space, and Technology, U.S. House of Representatives..    17
    Written Statement............................................    19

Statement by Representative Eddie Bernice Johnson, Ranking 
  Minority Member, Committee on Science, Space, and Technology, 
  U.S. House of Representatives..................................    20
    Written Statement............................................    22

                               Witnesses:

                                Panel I

Mr. John Elbon, Vice President and General Manager for Space 
  Exploration, The Boeing Company, Houston, TX
    Oral Statement...............................................    26
    Written Statement............................................    28

Mr. Steve Lindsey, Director of Space Exploration, Sierra Nevada 
  Space Systems, Louisville, CO
    Oral Statement...............................................    33
    Written Statement............................................    35

Mr. Elon Musk, CEO and Chief Technology Officer, Space 
  Exploration Technologies Corp., Hawthorne, CA
    Oral Statement...............................................    40
    Written Statement............................................    42

Mr. Charlie Precourt, Vice President, ATK Launch Systems Group, 
  Brigham City, UT
    Oral Statement...............................................    50
    Written Statement............................................    52

Dr. George Sowers, Vice President, United Launch Alliance, 
  Englewood, CO
    Oral Statement...............................................    61
    Written Statement............................................    63

                                Panel II

The Hon. Paul Martin, Inspector General, National Aeronautics and 
  Space Administration
    Oral Statement...............................................    89
    Written Statement............................................    90

Mr. William H. Gerstenmaier, Associate Administrator, Human 
  Exploration and Operations Mission Directorate, National 
  Aeronautics and Space Administration
    Oral Statement...............................................    94
    Written Statement............................................    95

             Appendix I: Answers to Post-Hearing Questions

Mr. John Elbon, Vice President and General Manager for Space 
  Exploration, The Boeing Company, Houston, TX...................   114

Mr. Steve Lindsey, Director of Space Exploration, Sierra Nevada 
  Space Systems, Louisville, CO..................................   119

Mr. Elon Musk, CEO and Chief Technology Officer, Space 
  Exploration Technologies Corp., Hawthorne, CA..................   123

Mr. Charlie Precourt, Vice President, ATK Launch Systems Group, 
  Brigham City, UT...............................................   131

Dr. George Sowers, Vice President, United Launch Alliance, 
  Englewood, CO..................................................   135

The Hon. Paul Martin, Inspector General, National Aeronautics and 
  Space Administration...........................................   139

Mr. William H. Gerstenmaier, Associate Administrator, Human 
  Exploration and Operations Mission Directorate, National 
  Aeronautics and Space Administration...........................   142

            Appendix II: Additional Material for the Record

Statement submitted by Representative Jerry Costello, Committee 
  on Science, Space, and Technology, U.S. House of 
  Representatives................................................   152

Letter submitted by Representative Dana Rohrabacher, Committee on 
  Science, Space, and Technology, U.S. House of Representatives..   153


                         NASA'S COMMERCIAL CREW
                          DEVELOPMENT PROGRAM:
                     ACCOMPLISHMENTS AND CHALLENGES

                              ----------                              


                      WEDNESDAY, OCTOBER 26, 2011

                  House of Representatives,
               Committee on Science, Space, and Technology,
                                                    Washington, DC.

    The Committee met, pursuant to call, at 10:04 a.m., in Room 
2318 of the Rayburn House Office Building, Hon. Ralph Hall 
[Chairman of the Committee] presiding.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Chairman Hall. The Committee on Science, Space, and 
Technology will come to order, and I say good morning to 
everyone.
    Mrs. Johnson, before we get started with the meeting, I 
will go ahead and ask the witnesses to indulge us just for a 
few minutes to take care of some Committee business here. It is 
my understanding Ms. Johnson as the Ranking Member of the Full 
Committee has some housekeeping she would like the Committee to 
undertake regarding the Democrat Caucus Subcommittee Ranking 
Member assignments and rosters. The proposed modified roster is 
in front of each of you here. I am not sure if some of their 
members want to switch parties, or what this is about, but we 
will yield to you as much time as you would like to have.
    Ms. Johnson. Thank you very much, Mr. Chairman. We just 
want to announce that we are taking applications for party 
switches to this side.
    But we do have a couple of Subcommittee vacancies to fill 
on the Democratic side, and so pursuant to the direction of the 
Democratic Caucus of the Committee, I move that the following 
Subcommittee assignments be made: Ms. Edwards of Maryland to 
serve as Ranking Member of the Subcommittee on Technology and 
Innovation; that Mr. Tonko of New York replace Ms. Edwards as 
Ranking Member of the Subcommittee on Investigations and 
Oversight; and that Mr. Clarke of Michigan be assigned to serve 
on the Subcommittee on Space and Aeronautics. And that ends our 
report and request. Thank you.
    Chairman Hall. All right. Without objection, it is so 
ordered.
    I now ask unanimous consent that the Committee adopt the 
revised roster in front of them reflecting these appointments 
as outlined by Ranking Member Johnson. Hearing no objection, 
the revised roster is adopted.
    Moving on, I would like to welcome everyone to today's 
hearing, ``NASA's Commercial Crew Development Program: 
Accomplishments and Challenges.'' That covers a long area there 
looking back and looking forward, and in front of you are 
packets containing the written testimony, biographies and Truth 
in Testimony disclosures for today's witnesses, and today's 
hearing will include two panels, and I recognize myself for 
five minutes for an opening statement.
    I say to all, good morning, and thank you. I know it takes 
valuable time to travel here and to travel back and to prepare 
yourselves for this, and we write legislation based on things 
we hear from people like you because you know more about what 
you are doing than we know about what you are doing, and we 
want to be sure that we represent the greatest good for the 
greatest number as we legislate. So I say good morning to all 
of you, to NASA's commercial crew group, and I would like to 
thank our witnesses for taking time from their very busy 
schedules to be with us, and we will try to keep everybody to 
the five minutes that we have allocated. I realize considerable 
effort goes into the drafting and writing of your statements, 
and I want you to know that your testimony, wisdom and 
experience is going to be invaluable to help us through the 
months ahead on issues that are related to NASA and its 
Commercial Crew Program.
    I would like to note for the Members of the Committee that 
one company, Blue Origin, has received $14.9 million in federal 
funds under this program but declined to testify today. I don't 
really know why they did. Fourteen point nine million, I would 
think I would want to come here and brag about it a little or 
explain something. But they are not here and they will have to 
explain that to the rest of the Committee when they want to.
    Today's hearing is going to provide aerospace companies and 
NASA an opportunity to testify about progress being made toward 
the goal of establishing a purely commercial capability to fly 
humans to and from low Earth orbit, with an initial emphasis on 
ferrying NASA astronauts to the International Space Station.
    Some have described the Commercial Crew Program as a 
variation on the way NASA has traditionally managed our human 
spaceflight program, implying that not much will change in the 
relationship between the agency and aerospace companies in the 
acquisition and operation of space vehicles. I find this 
characterization to be a gross oversimplification that doesn't 
fairly represent the degree of changes between the space launch 
industry and NASA, nor does it do anything to highlight the 
uncertainties of the business model going forward.
    I am not opposed to the new approach, but in the time 
remaining I want to focus my remarks on the business case, as 
that is an area that I would like to see discussed at greater 
length.
    If indeed industry can perform safely and profitably, and 
at substantially less cost, then I will be the first to 
congratulate them and NASA. My hesitance, though, is based on 
the very thin evidence provided to date by NASA that this new 
business model is well understood and that it can succeed. I 
have yet to be convinced that there is a sufficient commercial 
market that will sustain multiple private, for-profit 
commercial crew companies through the duration of America's 
commitment to the International Space Station. I hope so. NASA 
seemingly takes the position of ``build it and they will 
come,'' and by starting these companies first, business will 
soon follow. From my perspective, the business case is not very 
compelling, at least for those companies intending on using 
NASA as an anchor customer. Assuming two commercial companies 
will be certified by the end of 2016, at two flights a year for 
four years based on NASA's projections, government may need 
only eight flights. That is four flights per company, probably 
at a rate of one a year. The number may grow if the 
International Space Station is extended, but there is no 
guarantee. Four flights to recover some significant portion of 
sunk investment, coupled with the goal to price the service at 
a rate that doesn't dwarf the cost now charged by Russia, 
suggests to me a perilous business proposition.
    I think that NASA owes Congress and the laudable companies 
that are before us today a much more thorough assessment of the 
situation ahead. These companies have invested millions of 
dollars and Congress has committed millions more. It is time 
for NASA to deliver credible plans and analysis so that we can 
move forward with more confidence.
    What I do not want to see happen is putting government in 
the position of stepping in to salvage one or more failing 
companies in order to preserve a national capability. Many of 
us are well aware of the debacle that confronted the Air Force 
with its EELV program, and this Committee is not prepared to 
let NASA repeat that mistake. To paraphrase my friend and 
former Chairman of this Committee, Bart Gordon, I don't want to 
find ourselves at some future time throwing additional sums in 
this program because the commercial launch companies are ``too 
important to fail.''
    For all my seeming skepticism, I am willing to be convinced 
that I am wrong, and I hope I am wrong. I want the private 
markets to relieve NASA of the cost and burden of building a 
new launch system for low Earth orbit. But as I said a minute 
ago, NASA must do more to address these important questions, 
and it is our role as the Committee of jurisdiction to ensure 
that whatever path we ultimately take, government's investment 
will be well understood and well spent.
    In a time of constrained budgets, we have to first protect 
our presence in space and keep the faith with the American 
people and our foreign partners. Logically, we cannot expend 
vast sums of money today going to Mars when our people can't go 
to the grocery store. But we have to keep the dream alive by 
moving forward as we are able. That is why it is vitally 
important that we spend our limited NASA dollars wisely.
    I want to offer thanks again to our witnesses. I greatly 
admire the achievements of you and your companies. It is 
undeniable that aerospace has directly contributed to this 
country's greatness and our preeminence in space, and all of us 
must work to ensure you have the missions and resources to 
continue that good work in the years ahead.
    [The prepared statement of Mr. Hall follows:]
               Prepared Statement of Chairman Ralph Hall
    Good morning and welcome to today's hearing entitled ``NASA's 
Commercial Crew Development Program: Accomplishments and Challenges.'' 
I'd like to thank our many witnesses for taking time from their busy 
schedules to appear before our Committee. I realize considerable effort 
goes into the drafting and writing of statements, and I want you to 
know that your testimony, wisdom, and experience will be of invaluable 
help to our Committee and Congress as we deliberate in the months ahead 
on issues related to NASA and its Commercial Crew Program. I would like 
to note for the Members of the Committee that one company, Blue Origin, 
has received $14.9 million in Federal funds under this program but 
declined to testify today-and, I have declined to subpoena them.
    Today's hearing will provide aerospace companies and NASA an 
opportunity to testify about progress being made toward the goal of 
establishing a purely commercial capability to fly humans to and from 
low Earth orbit, with an initial emphasis on ferrying NASA astronauts 
to the International Space Station.
    Some have described the Commercial Crew Program as a variation on 
the way NASA has traditionally managed our human space flight program, 
implying that not much will change in the relationship between the 
agency and aerospace companies in the acquisition and operation of 
space vehicles. I find this characterization to be a gross over-
simplification that doesn't fairly represent the degree of changes 
between the space launch industry and NASA, nor does it do anything to 
highlight the uncertainties of the business model going forward.
    I am not opposed to this new approach, but in the time remaining I 
want to focus my remarks on the business case, as that is an area that 
I would like to see discussed at greater length. If indeed industry can 
perform safely and profitably, and at substantially less cost, then I 
will be the first to congratulate them and NASA. My hesitance though, 
is based on the very thin evidence provided to date by NASA that this 
new business model is well understood and that it can succeed. I have 
yet to be convinced that there is a sufficient commercial market that 
will sustain multiple private, for-profit commercial crew companies 
through the duration of America's commitment to the International Space 
Station. NASA seemingly takes the position of `build it and they will 
come'; that by starting these companies first, business will soon 
follow.
    Some say the business case is not very compelling, at least for 
those companies intending on using NASA as an anchor customer. Assuming 
two commercial companies will be certified by the end of 2016, at two 
flights a year for four years based on NASA's projections, government 
may need only eight flights. That's four flights per company, probably 
at a rate of one a year. The number may grow if ISS is extended, but 
there's no guarantee. Four flights to recover some significant portion 
of sunk investment, coupled with the goal to price the service at a 
rate that doesn't dwarf the cost now charged by Russia, suggests to me 
a perilous business proposition. I think that NASA owes Congress and 
the laudable companies that are before us today a much more thorough 
assessment of the situation ahead. These companies have invested 
millions of dollars and Congress has committed millions more--it is 
time for NASA to deliver credible plans and analysis so that we can 
move forward with more confidence.
    What I do not want to see happen is putting government in the 
position of stepping in to salvage one or several failing companies in 
order to preserve a national capability. Many of us are well aware of 
the debacle that confronted the Air Force with its EELV program, and 
this committee is not prepared to let NASA repeat that mistake. To 
paraphrase my friend and former Chairman of this Committee, Bart 
Gordon, I don't want to find ourselves at some future time throwing 
additional sums in this program because the commercial launch companies 
are `too important to fail.'
    For all my seeming skepticism, I am willing to be convinced that 
I'm wrong, and I hope I'm wrong. I want the private markets to relieve 
NASA of the cost and burden of building a new launch system for low 
Earth orbit. But as I said a minute ago, NASA must do more to address 
these important questions, and it's our role as the Committee of 
jurisdiction to ensure that whatever path we ultimately take, 
government's investment will be well understood and well spent.
    In a time of constrained budgets, we must first protect our 
presence in space and keep the faith with the American people and our 
foreign partners. Logically, we cannot expend vast sums of money today 
going to Mars when our people can't even go to the grocery store. But, 
we must keep the dream alive by moving forward as we are able. That is 
why it is vitally important that we spend our limited NASA dollars 
wisely.
    I want to offer thanks again to our witnesses. I greatly admire the 
achievements of you and your companies. It is undeniable that aerospace 
has directly contributed to this country's greatness and our 
preeminence in space, and all of us must work to ensure you have the 
missions and resources to continue that good work in the years ahead.

    Chairman Hall. The Chair now recognizes Ranking Member Mrs. 
Johnson for her five minutes, which could be 10. You have the 
time that you choose to use, Ms. Johnson.
    Ms. Johnson. Thank you very much, Mr. Hall, and good 
morning. I would like to join Chairman Hall in welcoming all of 
our witnesses this morning. The companies appearing before us 
are doing exciting work, and they are a great example of 
American industry's capacity for innovation. Today's hearing is 
a unique opportunity to hear from each of them, or each of you, 
about their accomplishments and aspirations and the challenges 
they face, and I look forward to the testimony.
    However, I want to be clear from the outset. I cannot let 
my enthusiasm for entrepreneurial innovation override my 
responsibility as a Member of Congress to take a clearheaded 
look at the issues associated with NASA's commercial crew 
proposal. And it is clear that there are many issues that need 
to be addressed and questions that NASA still has not answered 
more than a year and a half after the initiative was first 
announced. In my opening remarks, I will focus on two of the 
issues that need our attention: priorities and risk.
    Let me first say a few words about the issue of priorities. 
Given the cuts that are being made and contemplated to NASA's 
and our other federal agencies' important missions as well as 
to essential services for the most vulnerable in our society, I 
have got to be convinced that the benefits of NASA's commercial 
crew proposal outweigh the costs before I can be comfortable in 
supporting it.
    What are the benefits? As NASA and others have described 
them, they are several-fold. First, Commercial Crew would 
reduce, but not eliminate, dependence on Russia for 
International Space Station-related goods and services. NASA 
estimates that the cost to the U.S. government to purchase 
Russian crew transportation and rescue services would be about 
$450 million a year from 2016 to 2020, or a total of about $1.8 
billion for those four years.
    Second, NASA and others have argued that the commercial 
crew initiative will help create a new commercial crew space 
transportation industry with a wide range of public and private 
customers, thus lowering costs and allowing NASA to focus on 
deep space exploration.
    What are the costs of the initiative? Last week, NASA's 
Deputy Administrator was quoted as saying that ``we have an 
analysis that says we believe we would require $6 billion over 
five years'' to develop the commercial crew systems. I have to 
take the Deputy Administrator at her word, as NASA still has 
not provided Congress with the basis for its commercial crew 
budget requests since the initiative was first announced almost 
two years ago, though I find it unsettling that the $6 billion 
estimate is almost $2 billion more than the amount actually 
book-kept for Commercial Crew in the NASA five-year budget plan 
that was submitted to Congress in February of this year.
    Now, that $6 billion is just to develop the systems. 
Perhaps we will hear otherwise today, but all of the 
information provided by NASA to date indicates that it believes 
that the U.S. commercial crew systems will be competitive with 
the Russian Soyuz in price per seat but not significantly 
cheaper. So, at this point it looks like NASA will still be 
paying roughly the same amount to commercial crew providers 
through 2020 that it would be to the Russians.
    So as a result, I and other Members will have to decide 
whether it is worth paying a $6 billion premium in taxpayer 
dollars in order to make a domestic ISS commercial crew 
capability available to replace the Russian system for a four-
year period, assuming the U.S. commercial crew systems are 
certified operational by 2016. Now I would rather not pay money 
to the Russians either, but I will find it very hard to justify 
to my constituents spending an extra $6 billion to transport 
our astronauts to the ISS for a limited amount of time unless I 
can also credibly argue that doing so will open up a broad new 
competitive market in commercial crew transportation for 
American industry. Unfortunately, based on the information 
provided by NASA and others to date, I can't make that 
argument.
    The only potential non-NASA markets of any significance 
identified by NASA for the foreseeable future are a small 
number of super-wealthy individuals seeking adventure trips, 
provided the price is right, and a small number of non-U.S. 
astronauts, provided their countries are willing to pay for 
their trips. I will be frank: I don't think that the prospect 
of spending $6 billion in taxpayer dollars to enable either 
super-rich tourists or non-U.S. astronauts to fly into orbit is 
going to be seen as a worthwhile priority by very many of my 
constituents in the current fiscal environment, and I have a 
feeling that many of my fellow Members will also find that to 
be the case.
    Let me close by saying a few words about risk. I am not 
talking about risk to our astronauts, because I have to believe 
that NASA will not put any of our astronauts on a commercial 
system until it is convinced that NASA's safety standards have 
been met. Instead, what I am talking about is the risk to the 
U.S. government and the American taxpayer. That risk takes 
several forms. For example, there is the risk that the cost and 
schedule assumptions behind NASA's plans will not prove valid. 
As it is, even if the President's commercial crew budget 
request is approved in total, NASA's latest acquisition roadmap 
projections indicate that any contract for commercial crew 
transportation services to the ISS won't start until 2017, 
which is almost two years later than originally estimated. NASA 
cautions that even that date could slip further depending on 
funding and the rate of progress made by the companies. Thus 
the likelihood that the commercial systems will be able to meet 
a significant portion of ISS crew transportation needs prior to 
2020 is shrinking, and that is a risk to the viability of 
NASA's proposal that I find worrisome.
    That risk is also one reason we mandated in the NASA 
Authorization Act of 2010 that NASA needs to put a credible 
government backup capacity--capability in place as soon as 
possible to support the ISS operations if needed.
    And finally, if a public-private partnership is to protect 
both the interests of the taxpayers and the companies, cost 
risks need to be shared. However, NASA officials indicate that, 
on average, 9 out of every 10 dollars spent to develop the 
commercial crew systems will be taxpayer money. In addition, 
unless we hear otherwise today, the would-be commercial 
providers have indicated that they expect the government to 
indemnify them in the event of an accident. That may or may not 
be good public policy, but unless there is sufficient private 
insurance coverage available to them to cover at least part of 
their potential accident liability, the reality is that the 
government may well be on the hook for the entire amount, at 
risk--or risk losing the company that it is relying on, we are 
relying on to get NASA's crews to and from the ISS.
    In conclusion, Mr. Chairman, none of the issues I have 
raised here should take away from the good work that the 
companies represented at this hearing are doing. I applaud 
their efforts and wish them well. I certainly plan to keep an 
open mind regarding NASA's commercial crew initiative, and I 
hope that NASA will provide all of the information and analyses 
Congress will need to properly evaluate this initiative.
    However, as Members of Congress, we must be vigilant 
stewards of the taxpayers' dollars, and we cannot let either 
enthusiasm nor hope blind us to that responsibility as we 
assess NASA's proposals.
    I thank you, and I yield back.
    [The prepared statement of Ms. Johnson follows:]
       Prepared Statement of Ranking Member Eddie Bernice Johnson
    Good morning. I would like to join Chairman Hall in welcoming all 
of our witnesses to this morning's hearing. The companies appearing 
before us are doing exciting work, and they are a great example of 
American industry's capacity for innovation. Today's hearing is a 
unique opportunity to hear from each of them about their 
accomplishments, their aspirations, and the challenges they face. I 
look forward to their testimony.
    However, I want to be clear from the outset. I cannot let my 
enthusiasm for entrepreneurial innovation override my responsibility as 
a Member of Congress to take a clearheaded look at the issues 
associated with NASA's commercial crew proposal.
    And it's clear that there are many issues that need to be addressed 
and questions that NASA still has not answered more than a year and a 
half after the initiative was first announced. In my opening remarks, I 
will focus on two of the issues that need our attention: priorities and 
risk.
    Let me first say a few words about the issue of priorities. Given 
the cuts that are being made and contemplated to NASA's and our other 
federal agencies' important missions--as well as to essential services 
for the most vulnerable in our society--I've got to be convinced that 
the benefits of NASA's commercial crew proposal outweigh the costs 
before I can be comfortable supporting it.
    What are the benefits? As NASA and others have described them, they 
are severalfold.
    First, commercial crew would reduce--but not eliminate--dependence 
on Russia for International Space Station-related goods and services. 
NASA estimates that the cost to the U.S. government to purchase Russian 
crew transportation and rescue services would be about $450 million a 
year from 2016 to 2020, or a total of about $1.8 billion for those four 
years.
    Second, NASA and others have argued that the commercial crew 
initiative will help create a new commercial crew space transportation 
industry with a wide range of private and public customers, thus 
lowering costs and allowing NASA to focus on deep space exploration.
    What are the costs of the initiative? Last week, NASA's Deputy 
Administrator was quoted as saying that ``we have an analysis that says 
we believe we would require $6 billion over five years'' to develop the 
commercial crew systems.
    I have to take the Deputy Administrator at her word, as NASA still 
has not provided Congress with the basis for its commercial crew budget 
requests since the initiative was first announced almost two years 
ago--though I find it unsettling that the $6 billion estimate is almost 
$2 billion more than the amount actually bookkept for commercial crew 
in the NASA five-year budget plan that was submitted to Congress in 
February of this year.
    Now that $6 billion is just to develop the systems. Perhaps we will 
hear otherwise today, but all of the information provided by NASA to 
date indicates that it believes that the U.S. commercial crew systems 
will be ``competitive'' with the Russian Soyuz in price per seat but 
not significantly cheaper. So, at this point it looks like NASA will 
still be paying roughly the same amount to commercial crew providers 
through 2020 that it would be to the Russians.
    As a result, I and other Members will have to decide whether it is 
worth paying a $6 billion premium in taxpayer dollars in order to have 
a domestic ISS commercial crew capability available to replace the 
Russian system for a four-year period--assuming the U.S. commercial 
crew systems are certified operational by 2016. Now I would rather not 
pay money to the Russians either, but I will find it very hard to 
justify to my constituents spending an extra $6 billion to transport 
our astronauts to the ISS for a limited amount of time unless I can 
also credibly argue that doing so will open up a broad new competitive 
market in commercial crew transportation for American industry.
    Unfortunately, based on the information provided by NASA and others 
to date, I can't make that argument.
    The only potential non-NASA markets of any significance identified 
by NASA for the foreseeable future are a small number of super-wealthy 
individuals seeking adventure trips--provided the price is right, and a 
small number of non-U.S. astronauts--provided their countries are 
willing to pay for their trips.
    I will be frank--I don't think that the prospect of spending six 
billion taxpayer dollars to enable either super-rich tourists or non-
U.S. astronauts to fly into orbit is going to be seen as a worthwhile 
priority by very many of my constituents in the current fiscal 
environment, and I have a feeling that many of my fellow Members will 
also find that to be the case.
    Let me close by saying a few words about risk. I'm not talking 
about risk to our astronauts, because I have to believe that NASA will 
not put any of our astronauts on a commercial system until it is 
convinced that NASA's safety standards have been met.
    Instead, what I am talking about is the risk to the U.S. government 
and the American taxpayer. That risk takes several forms. For example, 
there is the risk that the cost and schedule assumptions behind NASA's 
plans will not prove valid. As it is, even if the President's 
commercial crew budget request is approved in total, NASA's latest 
acquisition roadmap projections indicate that any contract for 
commercial crew transportation services to the ISS won't start until 
2017, which is almost two years later than originally estimated.
    NASA cautions that even that date could slip further depending on 
funding and the rate of progress made by the companies. Thus the 
likelihood that the commercial systems will be able to meet a 
significant portion of ISS crew transportation needs prior to 2020 is 
shrinking, and that's a risk to the viability of NASA's proposal that I 
find worrisome.
    That risk is also one reason we mandated in the NASA Authorization 
Act of 2010 that NASA needs to put a credible government backup 
capability in place as soon as possible to support ISS operations if 
needed.
    Finally, if a public-private partnership is to protect both the 
interests of the taxpayers and the companies, cost risk needs to be 
shared. However, NASA officials indicate that, on average, nine out of 
every ten dollars spent to develop the commercial crew systems will be 
taxpayer dollars. In addition, unless we hear otherwise today, the 
would-be commercial providers have indicated that they expect the 
government to indemnify them in the event of an accident.
    That may or may not be good public policy, but unless there is 
sufficient private insurance coverage available to them to cover at 
least part of their potential accident liability, the reality is that 
the government may well be on the hook for the entire amount--or risk 
losing the company that it is relying on to get NASA's crews to and 
from the ISS.
    In conclusion, Mr. Chairman, none of the issues I have raised here 
should take away from the good work that the companies represented at 
this hearing are doing. I applaud their efforts and wish them well. I 
certainly plan to keep an open mind regarding NASA's commercial crew 
initiative, and I hope that NASA will provide all of the information 
and analyses Congress will need to properly evaluate that 
initiative.However, as Members of Congress, we must be vigilant 
stewards of the taxpayers' dollars, and we cannot let either enthusiasm 
or hope blind us to that responsibility as we assess NASA's 
proposals.Thank you, and I yield back the balance of my time.

    Chairman Hall. I thank the gentlelady for yielding back, 
and I thank you for a statement well done and I thank you as my 
neighbor in Texas.
    If there are Members who want to submit additional separate 
opening statements, your statements will be added to the record 
at this point.
    Chairman Hall. And I say to the witnesses and those who are 
important to this transaction, don't be dismayed by the empty 
chairs because we are at a critical time in this Congress and 
the world knows it and we all know it, and you as business 
leaders know it. Most of these men and women who are not here 
have other committee assignments and they are attending those, 
but all of this is of record. They will have it. It will be 
read and it will be here for people 200 years from now to read 
what this Committee said and what questions this group asked. 
So I will ask you to indulge with it.
    At this time I would like to introduce, first, our panel of 
witnesses. Our first witness is Mr. John Elbon, Vice President 
and General Manager for Space Exploration at the Boeing 
Company. Previously, Mr. Elbon led Boeing's effort as a Prime 
Integration Contractor for the International Space Station. He 
has been the Boeing Program Manager for several NASA programs 
including Constellation and the checkout assembling and payload 
processing services contract at Kennedy Space Center, and we 
thank you, sir, for coming.
    Our second witness is Steve Lindsey, the Director of Space 
Exploration at Sierra Nevada Space Systems. Mr. Lindsey came to 
Sierra Nevada this year after a distinguished 24-year career in 
the United States Air Force. As a NASA astronaut, he has flown 
five shuttle missions, his last two flights as commander 
including STS-133 that flew earlier this year, and we certainly 
welcome you.
    Our third witness is Mr. Elon Musk, Chief Executive Officer 
and Chief Technology Officer of Space Exploration Technologies, 
also known as SpaceX. Mr. Musk has many accomplishments. He is 
also the CEO and Product Architect of the electric car company 
Tesla Motors and the Nonexecutive Chairman of Solar City. 
Previously, Mr. Musk cofounded PayPal. We are very delighted to 
have you here. And because your Congressman has been very proud 
of your accomplishments, I am going to leave my last 2 minutes 
for him to say a few kind words about you. He has paid me good 
money to let him do this.
    Mr. Rohrabacher. Well, there is a lot of good words to be 
said about each and every one of our panelists today. All of 
you are people that I admire. You are in keeping with the 
American tradition of enterprise and technology, perhaps going 
all the way back to the clipper ships when people wanted to do 
business and designed ships and sailed off to distant shores, 
and we had the best ships of any country in the world, but 
today you all reflect those type of values.
    Elon Musk, who I am going to say a few good words about 
now, Elon is a native South African who is now a proud 
American, and as you can see, as the Chairman just noted, he is 
involved in the development of electric cars as well as been 
involved in PayPal, which has enabled all of us to go into debt 
over the Internet.
    Chairman Hall. Your time is almost up.
    Mr. Rohrabacher. So, let me just note that we are watching 
all of your accomplishments and especially you, Mr. Musk. Thank 
you for the 1,500 employees that you represent and everyone on 
this panel represents people who are employed and people who 
are getting something done by furthering America's tradition of 
enterprise and technology. Thank you very much.
    Chairman Hall. Thank you, and Mr. Flores is at another 
committee hearing at this time. He wanted to be here to help 
with the introduction.
    Our fourth witness on this first panel is Mr. Charlie 
Precourt, Vice President of Launch Systems Group of Alliant 
TechSystems, also known as ATK. Prior to joining ATK, Mr. 
Precourt also had a very distinguished 23-year career with the 
United States Air Force as an F-15 pilot and was a commander as 
a NASA astronaut, having flown on four shuttle missions 
including two as mission commander, and we are really delighted 
to have you here.
    Our final witness on the first panel is Dr. George Sowers, 
Vice President in Business Development and Advanced Programs 
for United Launch Alliance. Dr. Sowers has a 30-year history 
working with America's most successful launch vehicles 
beginning with the Titan program and now with the Atlas V and 
Delta IV rockets. Welcome, Dr. Sowers.
    As our witnesses need to know, spoken testimony is limited 
to five minutes, and after all the witness have spoken, Members 
of the Committee will have five minutes each to ask questions. 
We will try to stay with that five minutes if we can, but for 
the sacrifices you have made and for the input that you surely 
have and for the importance you are to this Committee, to this 
Congress and to this Nation, if you go over five minutes, 
nothing is going to happen. We don't have a hook or anything, 
but we do want you to fully explain your presence here and your 
hopes and desires and your history and your future.
    I recognize our first witness on the first panel, Mr. John 
Elbon of Boeing, to present his testimony.

        STATEMENT OF MR. JOHN ELBON, VICE PRESIDENT AND

  GENERAL MANAGER FOR SPACE EXPLORATION, THE BOEING COMPANY, 
                         HOUSTON, TEXAS

    Mr. Elbon. Good morning, Chairman Hall, Ranking Member 
Johnson, Members of the Committee. On behalf of the Boeing 
Company, I wish to convey my deepest gratitude for your 
continued support of human spaceflight. Your efforts have 
enabled a safe fly-out of the space shuttle, completion of the 
International Space Station, and established a path forward for 
human exploration of space. Without your Committee's support, 
none of these achievements would have been possible. It is an 
honor to be a participant with this distinguished panel to 
elaborate on Boeing's development status to support reducing 
the gap in U.S. crewed access to the International Space 
Station.
    Mr. Chairman, if it is okay, I have got a video I would 
like to show to begin with.
    Chairman Hall. Without objection. We want to see it.
    [Video playback.]
    Mr. Elbon. There are three cornerstones of NASA's path 
forward for human spaceflight: utilization of the International 
Space Station, commercial crew for transportation to low Earth 
orbit and development of a capability for human exploration 
beyond low Earth orbit. By providing affordable crew 
transportation to the International Space Station, commercial 
crew will increase utilization of this on-orbit laboratory and 
free up funding and resources for NASA to focus on exploration 
beyond low Earth orbit. Because of this relationship, 
commercial crew should not be viewed as a competitor with deep 
space exploration programs but instead as a complementary 
program that contributes to achieving NASA's overall 
objectives.
    In selecting a design for commercial crew, Boeing adopted 
three overarching principles. We would focus on transporting 
crew to low Earth orbiting platforms only so the vehicle 
capabilities could be kept as simple as possible. We would use 
as much off-the-shelf proven technology as possible in order to 
reduce the development risk and improve cost and schedule 
certainty, and our design would be as uncomplicated as 
practical to improve reliability and safety and to enable low 
operations cost. To date in our program, we have completed 
several significant design milestones and development tests.
    Looking forward, prior to the completion of the second 
phase of commercial crew development in June of next year, we 
will mature the design of the complete integrated system, which 
includes the spacecraft, launch vehicle and ground systems 
through a preliminary design review, perform a parachute drop 
test from a helicopter ending with a touchdown on deployed 
airbags, integrate the emergency monitoring system of the Atlas 
V with the avionics of the Crew Space Transportation system, 
CST-100, to demonstrate the required data communication in the 
event of a launch abort, and test-fire a new, lighter-weight 
version of the abort engine.
    Assuming we are selected by NASA for the next procurement 
phases and that adequate funding is available and we complete 
our critical design review, the 90 percent point in the design 
process by the spring of 2013 and perform an ascent test later 
that year. We also are planning on flying three flight tests, 
which will culminate with the launch of two Boeing test pilots 
in 2015, leading to the capability to fly to the International 
Space Station by late 2015.
    Human spaceflight is challenging and any program to develop 
a capability to transport humans in space must address these 
challenges. We have been transporting humans into earth orbit 
in capsules for nearly 50 years using design and technologies 
that are proven. We have reduced the technical challenges of 
the program to manageable levels.
    There are two significant challenges that remain from 
Boeing's perspective, and they are programmatic in nature. The 
first is stable funding. If we are to achieve an operational 
capability by 2015, adequate funding levels must be provided 
over the next four years.
    The second is addressing liability risk associated with the 
potential for accidents that result in damage to property or in 
death or injury to crew members or passengers. Although the 
likelihood of these occurrences is extremely low, the losses 
would be tragic and the potential monetary consequences could 
be high. With limited performance history, it will be difficult 
for industry to insure against these monetary losses at 
reasonable rates. As such, in order to close the business case, 
it will be necessary for NASA, the FAA and Congress to work 
together to provide indemnification and liability limitations.
    With regards to the size of the potential market, it is 
clear that there is a commercial market for transportation to 
low Earth orbit. The depth of these markets is uncertain, 
though, and a responsible business case cannot be closed on the 
commercial business alone. Our business case assumes only NASA-
purchased transportation to the International Space Station and 
treats revenue from private spaceflight participants and 
commercial transportation to Bigelow Space Complex is upside.
    The commercial crew market would not be as attractive as it 
is if NASA were the only potential customer, but at the same 
time to ensure a successful venture, we must be certain we can 
have a viable business based on NASA flights alone. This is 
important from the government's perspective as well. It 
shouldn't be necessary for the government to gamble on the 
development of a commercial market in order to ensure a viable 
business will be in place to meet its needs for transportation 
to the International Space Station.
    In closing, commercial-provided transportation to low Earth 
orbit is the right solution for enabling a complete and robust 
portfolio of NASA programs in science and human spaceflight. 
The risks in flying spacecraft to low Earth orbit are well 
understood. We have been completing successful low Earth orbit 
missions since John Glenn's historic flight in 1962. It is time 
to leverage the efficiencies of a different model for the 
relationship between NASA and contractors for the part of space 
exploration where the risk levels warrant it. Commercial 
transportation to low Earth orbit supports lower cost 
utilization of the International Space Station and makes 
additional funding available for human exploration beyond low 
Earth orbit.
    Thank you.
    [The prepared statement of Mr. Elbon follows:]
   Prepared Statement of Mr. John Elbon, Vice President and General 
     Manager for Space Exploration, The Boeing Company, Houston, TX

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Chairman Hall. I thank you. And once again, I will stress 
the importance of your offerings here and your service here. 
Heretofore back in September, we had Neil Armstrong, Gene 
Cernan and General Tom Stafford here all day. We kept them from 
early one morning until late at night, and anyone that says 
Neil Armstrong is not generous with his time or won't sign 
things for people, he did all day that day for us. That was 
very important, and Buzz Aldrin would be here today but he had 
a schedule problem, but he has been before this Committee a lot 
of times. So we value you. You all are very, very important to 
the future of NASA and help us work out the problem that we are 
faced with.
    I now recognize Steve Lindsey to present his testimony, and 
thank you, John.

                STATEMENT OF MR. STEVEN LINDSEY,

          DIRECTOR OF SPACE EXPLORATION, SIERRA NEVADA

              SPACE SYSTEMS, LOUISVILLE, COLORADO

    Colonel Lindsey. Thank you, Chairman Hall, Ranking Member 
Johnson and Members of the Committee for this opportunity to 
present Sierra Nevada's perspective on the Commercial Crew 
Program. Mr. Chairman, I have submitted a complete written 
statement that I would ask to be made part of the record.
    I have only recently joined Sierra Nevada after serving for 
24 years in the United States Air Force and 16 years in NASA, 
where I had the opportunity to fly on five space shuttle 
missions including commanding the final flight of Discovery 
this past February. What I would like to address this morning 
is who Sierra Nevada is and what we are doing as part of NASA's 
Commercial Crew Development Program. Sierra Nevada Corporation 
is a proven systems integrator, electronic systems and space 
systems provider with a reputation for rapid, innovative and 
agile technology solutions. We employ a highly talented staff 
of over 2,200 people, mostly engineers, scientists or technical 
personnel serving in six business areas across 20 states. Our 
strong financial track record and stable leadership structure 
are key elements in the successful yearly execution of hundreds 
of government aerospace contracts.
    We are currently in our sixth year of the development of a 
human-rated lifting body spaceflight, and you can see the model 
here in front of me, called the Dream Chaser. The Heritage 
Dream Chaser design evolved from the NASA Langley Research 
Center's HL-20 spaceflight, which was originally designed as a 
lifeboat for the International Space Station. Langley performed 
more than 1,200 wind tunnel tests and performed thousands of 
piloted simulations in its decade-long investment refining 
their design. Sierra Nevada started with Langley's ten years of 
research and has invested an additional six years of capital, 
engineering, time and effort to develop a very sophisticated, 
reusable space plane that can satisfy NASA's low Earth orbit 
needs.
    Sierra Nevada has assembled a world-class team of 
spaceflight-experienced partners to execute the Dream Chaser 
program including Boeing, United Launch Alliance, Aerojet and 
nine other U.S. companies. In addition, we have formed a unique 
industry-to-government partnership where we are funding seven 
NASA centers to provide expert assistance in designing and 
developing our spaceflight. This superb team of experienced 
space companies and NASA centers employing aerospace workers 
across 13 states and growing allows us to rapidly develop our 
space system to provide a cost-effective and safe way to 
transport people to and from low Earth orbit.
    Sierra Nevada's Dream Chaser program has been a part of 
NASA's Commercial Crew Program for the past four years. During 
CCDev1, we completed all technical and performance milestones 
on time and under budget, going well beyond the original 
contract and completing several additional unfunded milestones. 
We have completed the first four milestones of CCDev2 on time 
and on budget with the fifth to be completed tomorrow.
    While every human-rated spaceflight in our Nation's history 
has in fact been built by a commercial company, there are some 
subtle differences between today's program and previous ones. 
Under the current program, the contractual mechanisms are the 
Space Act agreement, a fixed-price, pay-for-performance, 
milestone-based program. If we don't stay on schedule or meet 
our milestones, then we aren't paid. Companies are expected to 
contribute financially to the program and in fact Sierra Nevada 
has invested heavily in the Dream Chaser. This contracting 
mechanism is a cost-effective way for the government to retire 
technology development risk in mature and integrated design. In 
the next phase of the program, Sierra Nevada understands the 
government's need for greater oversight and looks forward to 
working with NASA under a tailored FAR-based contract.
    The interaction between NASA and Sierra Nevada has evolved 
into a very unique partnership. NASA provides us spacecraft 
requirements which we have to meet or NASA simply won't 
contract for our services. To accomplish both the oversight and 
insight function, NASA has embedded a partner integration team 
of spaceflight experts directly into our company to provide a 
true inside view of our day-to-day operations. They participate 
in every aspect of our program, providing complete government 
insight into our design, development and testing. This approach 
is very effective, requiring less oversight due to the 
extraordinary level of insight.
    Mr. Chairman, to conclude my remarks, I would like to talk 
a little bit about safety. While at NASA, I had the privilege 
to serve as Chief of the Astronaut Office for over three years 
overseeing the final servicing mission of the Hubble and the 
completion of the International Space Station. As Chief, my 
number one responsibility was the safety of my crews, and under 
my watch, we successfully executed 14 space shuttle missions 
and 10 space station missions, each time bringing our crews 
home safely. I made the difficult decision just a few months 
ago to leave 30-plus years of government service to come to 
Sierra Nevada. Why? Because I believe that access to space is 
vital to our national interests and I want to do everything in 
my power to get our Nation back into low Earth orbit as soon as 
possible. Let me assure all of you that under my watch, we will 
never, ever sacrifice safety for any reason. With our industry 
partners and NASA's guidance, we will do the job right. The 
space station is waiting and the clock is ticking. I strongly 
encourage this Committee and the Congress to fully support and 
fund NASA's Commercial Crew Program.
    Thank you, Mr. Chairman, for the opportunity to share my 
views this morning.
    [The prepared statement of Colonel Lindsey follows:]
Prepared Statement of Mr. Steve Lindsey, Director of Space Exploration, 
              Sierra Nevada Space Systems, Louisville, CO
    Thank you, Chairman Hall, Ranking Member Johnson and Members of the 
Committee for this opportunity to present Sierra Nevada's perspective 
on the Commercial Crew Program.

Sierra Nevada Corporation (SNC)

    Before addressing the questions you asked in your invitation letter 
directly, I'd like to provide you with a brief description of Sierra 
Nevada Corporation to indirectly answer how the depth and breadth of 
our company provide us with the capabilities necessary to develop a 
human-rated spacecraft for our Nation. Sierra Nevada Corporation (SNC) 
is a proven systems integrator, electronic systems and space systems 
provider with a reputation for rapid, innovative, and agile technology 
solutions. As a 100% U.S., privately held, woman-owned and operated 
business, SNC has been under the current ownership since 1993. It 
employs a highly talented staff of over 2,200 people, mostly engineers, 
scientists, or technical personnel. Our seven business areas have 
operations in 20 states. SNC has a very solid financial foundation and 
an uninterrupted profitable growth history with no long-term debt. 
SNC's strong financial track record and stable leadership structure are 
a key element in the successful yearly execution of hundreds of 
government contracts. SNC holds one of the highest possible Dunn & 
Bradstreet rating scores.
    Sierra Nevada Corporation is currently in our sixth year of 
development of a human-rated spacecraft called the Dream Chaser Space 
System. The SNC team has invested a substantial amount of capital, 
engineering, time and effort to develop the technologies that support 
our Dream Chaser spacecraft. These technologies and expertise include 
hybrid propulsion systems, complex composite structures, airframe 
design, spacecraft components, adapter rings, navigation and control, 
life support, and integrated system design and testing capabilities. 
This previous work and our continuing NASA partnership will 
significantly lower development time and risk, and will help to ensure 
program success.
    SNC has also assembled a world-class team of spaceflight 
experienced partners to execute the Dream Chaser Space System program. 
Boeing Experimental Systems Group has great expertise in lifting body 
spacecraft including analysis, avionics, Guidance, Navigation, and 
Control software, and flight control. Their recent X-37 spacecraft 
experience fits perfectly with our Dream Chaser development and risk 
reduction activities. United Launch Alliance (ULA) has been on our team 
for more than five years. jointly collaborating on an integrated launch 
vehicle that rapidly brings a safe, reliable, and cost-effective 
commercial Crew Transportation System to the Low Earth Orbit market. 
ULA is assisting SNC with integrated aerodynamics and risk retirement. 
Aerojet, a propulsion leader, is developing the main Reaction Control 
System. Draper Lab, with unparalleled GN&C experience, is leading 
orbital Guidance Navigation &Control development. NASA's Langley 
Research Center adds expertise in HL-20 analysis and modeling, while 
NASA's Dryden Flight Research Center adds flight test expertise for our 
extensive flight test program. In fact, we are using the expertise from 
seven NASA Centers to ensure we are building the best spacecraft 
possible. AdamWorks is assisting SNC in structural fabrication using 
our combined composite manufacturing capabilities. The University of 
Colorado is applying young minds to conduct displays and controls 
layout and evaluations and refine the integrated system Human Rating 
Plan, with assistance from Special Aerospace Services. United Space 
Alliance is using their extensive Space Shuttle experience to provide 
operations and software development support. SNC and Virgin Galactic 
are working together to plan for global marketing, sales, and 
commercial operation of the orbital Dream Chaser. In addition to 
coordinating and managing the team, SNC manages all internal systems, 
propulsion, structure, Launch Vehicle integration, and systems 
engineering. This superb team of experienced space companies allows us 
to use heritage hardware and software to rapidly develop our space 
system and provide a cost effective and safe way to transport people to 
and from low Earth orbit.

Dream Chaser Space System

    Our primary Dream Chaser Space System goals are to safely, 
reliably, and cost effectively transport crew to the International 
Space Station and return to a hard surface runway. The heritage Dream 
Chaser design evolved from the NASA Langley Research Center's HL-20, 
which was originally derived from the Russian BOR-4 orbital test 
vehicle that flew 4 orbital flights. Langley performed more than 1,200 
wind tunnel tests, wrote 60 journal papers and NASA contractor reports, 
and performed thousands of piloted simulations in its decade-long 
investment refining HL-20 aerodynamics, performance, and controls. To 
take advantage of the orbital flight and wind tunnel heritage, SNC 
retained the HL-20 design center of gravity limits and outer mold line, 
but made significant upgrades in composite structures so as to take 
advantage of modern construction techniques and materials and we 
incorporated a new safer, more operable, flexible propulsion 
capability. Bottomline, SNC consolidated the fragmented HL-20 
aerodynamic data, filled in the database gaps with significant 
additional analysis, and have designed a very sophisticated reusable 
space plane that can satisfy NASA's low Earth orbit needs.
    The Dream Chaser vehicle features a reusable, piloted lifting body 
design capable of transporting two to seven persons and pressurized 
cargo. Dream Chaser orbital missions are launched on an extremely 
reliable Atlas V 402 booster rocket and return to land on a 
conventional runway. The baseline launch site is Kennedy Space Center 
and the baseline landing site is the Shuttle Landing Facility. But, The 
Dream Chaser is designed to be able to reach and land on any 10,000 
foot hard surface runway for any nominal or abort landing. The DC is 
almost entirely reusable, with exception of some propulsion system 
components and the chemical batteries. Post-flight Dream Chaser 
spacecraft refurbishment and launch processing will occur at the 
Kennedy Space Center prior to re-flight certification.
    The Dream Chaser spacecraft has the capability for launch pad abort 
and intact ascent aborts from any point on its trajectory to hard 
surface runways. The Dream Chaser spacecraft's > 1,100 nautical mile 
cross-range capability is significantly better than the typical capsule 
cross range. Every-orbit deorbit to runway landing capability exists 
for emergencies and there is sufficient cross range to accommodate 
multiple daily Continental U.S. runway landing opportunities. Low 1.5 g 
entry loads are considerably less than those experienced by capsules 
during reentry which allows Dream Chaser to have large down-mass 
capability for g-sensitive science experiments and touchdown shock is 
far lower than capsule loads which can be as high as 15 g's for water 
landing (e.g., Apollo 12 and 15). These reduced loads lessen the 
possibility that a vehicle will require post-mission repair for re-
flight. Runway landings avoid expensive ship-based recovery and salt 
water exposure.
    We selected the reliable Atlas V launch vehicle specifically for 
its heritage, demonstrated reliability, ability to human rate, and 
compatibility with the DC spacecraft. This Nation has launched multi-
billion dollar national assets on the Atlas due to its reliability. The 
Atlas has demonstrated 98 consecutive successes since 1993, including a 
100% mission success record for all Atlas II, III, and V flights, with 
all spacecraft reaching proper orbit.
    After nominal orbital insertion, Dream Chaser is reconfigured for 
orbital operations to support crew Flight Day 2 rendezvous and docking. 
Orbit adjust is performed using the SNC-developed on-board hybrid 
rocket motors and reaction control system. The hybrid motors are 
improved versions of the successful SNC developed SpaceShipOne rocket 
motors. This technology is also being used on the SpaceShipTwo program 
resulting in extensive flight heritage and experience before our first 
orbital flight. The DC is designed for 3.5 days of on-orbit loiter 
without ISS docking. The DC is designed to dock to the NASA Docking 
System (NDS) located at appropriate ISS docking locations.
    The DC provides assured crew return capability while docked to the 
ISS. DC can remain docked to ISS for extended periods (up to 210 days, 
assuming the DC shares ISS cabin atmosphere while docked and receives 
ISS power transfer to support battery trickle charge).

Dream Chaser Space System Accomplishments to Date

    The following milestones were completed from December 2009 to 
September 2010 during the Commercial Crew Development Program, Phase 1 
contract (CCDev1):

      Milestone 1: Program Implementation Plan Delivered. This included 
management planning for design, development, testing, and evaluation 
supplier engagement, risks and anticipated mitigations.

      Milestone 2: Space Vehicle Manufacturing Review of Aeroshell 
Tooling. This included manufacturing the aeroshell tooling, a review of 
the aeroshell design, manufacturing plans, and readiness to begin 
fabrication of the Dream Chaser's aeroshell.

      Milestone 3: Space Vehicle Prime Motor Manufacture and Multiple 
Restart Firings. This milestone include manufacture of and ground based 
motor firings of a single hybrid motor with 3 restartable firings for a 
minimum duration of 5 seconds for each firing, including one firing in 
a vacuum condition.

      Milestone 4: Space Vehicle Primary Structure Testing. In this 
milestone the Dream Chaser's primary structure was designed, 
fabricated, assembled, and tested to support landing gear and hybrid 
motor thrust loads.

All milestones were completed on time and under budget.

    In addition to these milestones, The Dream Chaser spacecraft went 
through extensive aerodynamic, thermal protection system, guidance, 
navigation, and control system analysis. We completed development of 
our desktop simulator, completed extensive systems engineering, 
developed a risk management plan, a human rating plan, and significant 
program documentation to support further Dream Chaser development.
    Since we finished our four milestones under budget during CCDev1 
and because of our commitment to the success of this program, we added 
multiple unfunded milestones. We designed, developed, and successfully 
flight tested a scale model of the Dream Chaser spacecraft, dropped 
from over 14,000 feet at the NASA Dryden Flight Research Center. This 
flight test signaled the beginning of the atmospheric test program for 
the Dream Chaser vehicle. We also developed our first simulator to 
begin engineering development simulations, and built several mockups to 
use for engineering development.
    We are currently six months into the CCDev Phase 2 contract 
(CCDev2). The following milestones have been completed (or are about to 
be) in the CCDev2 program:

      Milestone 1: System Requirements Review. Presented a briefing and 
plan of the overall system requirements for the Dream Chaser Space 
System.

      Milestone 2: Canted Airfoil Fin Selection. Complete wind tunnel 
tests and Computational Fluid Dynamics analysis on candidate airfoil 
fin outer mold line and select final fin shape to ensure proper 
aerodynamic performance of fins.

      Milestone 3: Cockpit Based Flight Simulator. Complete fabrication 
and assembly of cockpit structure, install simulator designs and 
controls, and conduct a Simulator Readiness Review to verify readiness 
for engineering and pilot evaluations.

      Milestone 4: Vehicle Avionics Integration Laboratory (VAIL). 
Design, manufacture, and integrate the VAIL to support testing, 
verification, and validation of Dream Chaser avionics and software.

    Once again, all completed milestones were finished on schedule and 
under budget, with remaining funds being re-invested to accomplish 
additional work to accelerate our program.

Remaining Milestones in CCDev2 and road to Critical Design Review

      Milestone 5: System Definition Review. Conduct Dream Chaser 
System Definition Review, which completes the first design cycle of the 
Dream Chaser Space System architecture and design. This milestone will 
be completed on Oct 27, 2011--on schedule.

      Milestone 6: Flight Control Integration Laboratory. Design, 
manufacture, and integrate the flight control integration laboratory to 
begin developmental engineering tests of flight control actuators and 
surfaces. Complete test hardware such that it is ready to support 
Engineering Test Article flight control tests. This milestone will be 
completed on Nov 17, 2011--on schedule.

      Milestone 7: Engineering Test Article (ETA) Structure Delivery. 
Complete assembly and deliver the ETA primary structure for start of 
systems integration and installation of secondary structures. Scheduled 
for completion in Dec. 2011.

      Milestone 8: Separation System Test. Complete design and 
construction of the prototype Dream Chaser separation system and 
demonstrate activation to validate concept and verify performance of 
the separation system. Scheduled for completion in Feb. 2012.

      Milestone 9: Preliminary Design Review. Conduct Preliminary 
Design Review of the Dream Chaser Space System. This review will 
complete the second design cycle of Dream Chaser Space System. 
Scheduled for completion in May 2012.

      Milestone 10: Captive Carry Interface and ETA Landing Gear Drop 
Tests. Complete fabrication of the ETA captive carry prototype 
mechanism and perform release test to verify performance of system to 
ensure readiness for captive carry. Perform drop test of ETA landing 
gear to evaluate landing gear dynamic limit loads and landing load 
attenuation capability to ensure adequate performance of landing gear. 
Scheduled for completion in Jan. 2012.

      Milestone 11: ETA Captive Carry Flight Test Readiness Review. 
Complete Captive Carry Flight Test Readiness Review to verify ETA 
readiness for captive carry testing. Scheduled for completion in March 
2012.

      Milestone 12: ETA Captive Carry Flight Test. Conduct ETA captive 
carry flight test on carrier aircraft to characterize integrated 
vehicle performance. Schedule for completion in April 2012

      Milestone 13: ETA Free Flight Test. Conduct unpiloted ETA Free 
Flight Test from carrier aircraft to characterize handling qualities 
and approach and landing. Scheduled for completion in July 2012.

    At the completion of the Preliminary Design Review in May of 2012, 
the Dream Chaser team will begin Design Cycle 3, which will culminate 
in our CDR (Critical Design review) in the mid to late 2013 timeframe. 
During this design cycle, all systems will be matured through design, 
analysis, building of flight-like hardware and extensive testing--
culminating in subsystem CDRs to support the overall system CDR. We 
will build a Structural Test Article for further loads testing, and 
continue test flights, both unpiloted and piloted in the Engineering 
Test Article. Additionally, we will build our Suborbital Vehicle and 
complete powered flight tests to validate and verify Guidance, 
Navigation, and Control in the low supersonic region. The Suborbital 
Vehicle flight test program will conclude with a Pad Abort test to 
runway landing.

NASA's Commercial Crew Program: Procurement Strategy Challenges

    A common question often asked about NASA's commercial crew program 
is ``How can commercial companies build and provide spacecraft for crew 
transportation in and out of low earth orbit?'' The answer to this 
question is that commercial companies have been doing this for the past 
50 years. Every single United States human-rated spacecraft has been 
built by a commercial company. Companies such as McDonnell Aircraft 
Company, prime contractor of the Mercury capsule, to Rockwell 
International, builder of the Space Shuttle orbiter, to current 
companies like Sierra Nevada which are today developing new crewed 
spacecraft. Other spacecraft developed in the future for beyond earth 
orbit missions will also be built by commercial companies.
    So what's different about what we are doing when compared to 
previous human-rated spacecraft programs? There are two primary 
differences--the procurement mechanism, and how NASA and our companies 
interact. Under the current Commercial Crew Development program, the 
contractual mechanism is the Space Act Agreement--a fixed price, pay 
for performance, milestone based program. Space Act Agreements are easy 
to implement, easy to change, and easy to terminate. If companies don't 
stay on schedule or milestones aren't met, then companies aren't paid. 
Companies are also expected to contribute financially to the program. 
Losses to the government for a non-performing company can by minimized 
through the use of milestone-based payments, and cost overruns are 
simply not possible. The next phase of the Commercial Crew Program is 
planned to be a FAR based contract that will retain many of the good 
things about SAAs, including fixed-price and milestone-based payments. 
These types of contracting mechanisms are a cost effective way for the 
government to retire technology development risk and mature an 
integrated design.
    Interaction between NASA and Sierra Nevada on our Space Act 
Agreements has evolved into a very unique partnership. Typical 
government interaction with commercial companies building spacecraft 
involves providing guidance, receiving insight into our design, and 
having oversight over our requirements. Guidance has been provided to 
us by NASA in the form of spacecraft system requirements and 
specifications, just as in traditional contracting approaches. We are 
required, in the end, to meet those requirements and specifications or 
NASA simply won't contract for our services. To accomplish the insight 
function, NASA has embedded a `Partner Integration Team' of human 
spaceflight experts directly into our company to provide a true inside 
view of our day-to-day operations. They share offices with us and 
attend all of our meetings, allowing complete government insight into 
the development work we are doing. This has the dual advantage of 
removing many of the burdensome day-to-day reporting requirements, 
while at the same time providing our team with valuable government 
advisors and consultants as we work together to build a new spacecraft.

Insight versus Oversight

    In the next phase of the Commercial Crew Development Program, the 
proposed contracting mechanism is a firm fixed price Federal 
Acquisition Regulations-based contract. While the complexities of this 
type of contract will be much greater than the current Space Act 
Agreement milestone-based contract, the insight and oversight model 
shouldn't change significantly for Sierra Nevada. During the current 
CCDev2 contract, we have allowed complete NASA insight into our day to 
day operations. NASA technical experts are embedded within all of our 
design, development, and test teams--providing both expert advice to us 
as well as critical insight to NASA's Commercial Crew Program. This 
approach has proved to be very effective--requiring less oversight due 
to the extraordinary level of insight.
    The challenge with this next phase of the program will be to 
balance oversight versus insight. For example, NASA should provide 
oversight and direction in all cases where they see a need to improve 
the safety of a spacecraft being developed for their use. However, that 
does not mean that every technical change suggested by the government 
should be accepted. If a change makes the design `better' but doesn't 
impact safety, then the commercial company must have the leeway to 
accept or reject the change, based on technical, cost, and/or schedule 
considerations. This is where the partnership between NASA and a 
commercial company that is truly responsible for the technical design 
of a crewed spacecraft can make a huge difference--keeping costs and 
schedule under control while at the same time developing the safest 
spacecraft possible for the defined mission.

The future Low Earth Orbit commercial market

    The SNC business case is strong. We have performed multiple 
internal and external market research studies during our six-year Dream 
Chaser program. We are developing multiple potential markets for our 
Crew Transportation System, many of which are best serviced by a 
lifting body such as ours. These markets are human transportation, 
critical cargo transportation, orbital servicing, and orbital sensor 
and testbed operations. Five primary client groups include: NASA and 
other civil agencies, commercial space corporations, military agencies, 
international markets, and tourism. NASA and crew transportation to ISS 
will be the anchor tenant for Dream Chaser, but after an early start-up 
period will not be the major revenue provider. SNC, through its 
expanding operations expects to place hundreds of satellites in orbit 
during the next few years and will become its own servicing client. All 
of our markets are expected to grow substantially and are not limited 
in time. SNC will develop a number of Dream Chaser vehicles from the 
same platform, similar to an airplane platform like the 747 or C-130, 
with each variant optimized for the specific mission. Virgin Galactic 
recognizes the market for the DC and they have joined our team to begin 
marketing and sales of orbital human transportation services.
    A key advantage of the Dream Chaser is the ability to land on a 
runway, allowing for many viable orbital and suborbital missions to be 
accomplished. The spacecraft has substantial pressurized cargo down-
mass capability with low g reentry and runway landing at many landing 
sites. It can be adapted from a full seven-person crew to two crew 
members with increased cargo capacity to fully autonomous operations. 
It is also scarred for potential future servicing Extra Vehicular 
Activity capability and robotic manipulator use. Our low stress runway 
landings will allow us to carry the greatest range of passengers, and 
provide researchers with the best possible path for maintaining the 
integrity of their experiments through a low-g return and quick access 
to science samples. Our non-toxic propellants and runway landing 
capability allow us to land at domestic and international locations 
without special services. We are currently refining our business model 
to capture variables such as market share, seat price, and launch 
vehicle price while considering parameters such as turnaround time and 
fleet size. This will allow evaluating the sensitivity to market and 
technical factors.
    We have a dedicated business development team who sell SNC space 
services and products around the world. This team has relationships 
with future customers who we periodically brief on our Dream Chaser 
progress, receiving in return information on their needs and future 
missions. Our relationship with Virgin Galactic will allow utilization 
of its existing marketing infrastructure for the SpaceShipTwo program 
to rapidly develop critical non-NASA global markets for the Dream 
Chaser Space System.

    Chairman Hall. And we thank you. And five words, on time 
and under budget, are things we listen for. Thank you very 
much.
    I recognize Mr. Elon Musk for his statement.

                  STATEMENT OF MR. ELON MUSK,

               CEO AND CHIEF TECHNOLOGY OFFICER,

          SPACE EXPLORATION TECHNOLOGIES CORPORATION,

                     HAWTHORNE, CALIFORNIA

    Mr. Musk. Chairman Hall, Ranking Member Johnson and Members 
of the Committee, thank you for the opportunity to be here 
today.
    The American endeavor in space is uniquely inspirational, 
and human spaceflight is one of the great achievements of 
humankind. Although NASA only sent a handful of people to the 
moon, in a sense we all went there vicariously. We shared in 
the invention and profound achievement. Those are the things 
that make life worth living.
    The goal of SpaceX and our more than 1,500 employees is to 
advance the course of space so that many more may experience 
the great adventure of space exploration. I have to say, it is 
actually not, as some may assume, to maximize profit. That is 
why I have retained a majority ownership of the company to 
ensure that the idealistic goals of SpaceX remain true.
    We are very proud of our partnership with NASA, with whom 
we share the success that we have achieved to date. SpaceX 
would not have been able to get started without the work of 
NASA nor would we have been able to achieve the point we have 
achieved today without the great help of NASA. They are a 
partner in the truest sense.
    Soon we will see Dragon become the first commercial 
spacecraft in history to deliver cargo to the space station, 
and that may come as soon as January of next year.
    Mr. Chairman, if I may show a small video?
    Chairman Hall. Without objection.
    [Video playback.]
    Mr. Musk. This is not a simulation. That is the view that 
an astronaut would have on our spacecraft.
    I would like to focus on three areas: safety, affordability 
and of course our partnership with NASA as it relates to 
commercial crew. Safety is paramount. Safety is always first. 
There is no more important responsibility than transporting the 
heroes of America's astronaut corps into space. For many years, 
Mr. Chairman, you have rightfully championed the development of 
launch abort capabilities for astronauts in the event of a 
launch failure. This is of critical importance. In fact, to 
that end, our efforts on CCDev2 today have focused very heavily 
on launch abort capabilities. In fact, later this year we 
intend to demonstrate a launch abort engine, which I think will 
be quite exciting.
    Our focus on safety is reflected throughout the vehicle in 
both the Falcon 9 launch vehicle and Dragon's basic designs. 
Because our goal from day one has been to carry astronauts, 
every design choice is made with crew in mind. In fact, Dragon 
is fully equipped to handle crew habitation today since 
astronauts will board Dragon while it is berthed with the space 
station for our cargo resupply missions.
    Our upcoming cargo missions will provide significant flight 
experience on the Falcon 9 and Dragon systems so the first time 
that astronauts fly will not be the first time that the 
vehicles fly. In fact, they will have flown perhaps as many as 
a dozen times before astronauts first step foot on our 
spacecraft. We expect the launch vehicle to fly even more often 
as we have over 35 missions under contract for our Falcon 9 
launch vehicle.
    With respect to the CCDev2 program itself, we are 
leveraging our partnership with NASA to accelerate development 
of our integrated launch abort system that flies with Dragon 
throughout its mission and will for the first time provide 
launch abort capability all the way to orbit. This has not been 
the case with prior systems. NASA in fact recently approved our 
preliminary design review of our launch abort system 
components, so we have made some good progress in this 
direction.
    We believe we are on track to carry astronauts to the space 
station in approximately three years. Of course, that does 
depend to some degree on the funding that is allocated to 
commercial crew, but we remain committed to the public 
statement that I have been making for a while, which is that 
within three years we will be able to carry astronauts to the 
space station and do so safely.
    It is good that NASA's effort for the third phase of 
commercial crew development will be firm fixed price and 
milestone-based. It is much better for the government to define 
the standards and the ultimate goal than to actually do the 
design itself. If you ask engineers to figure out a good 
solution, tell them the goal rather than the method, and I 
think that is a very good direction in that respect. I hope the 
final RP4 commercial crew will indeed reflect the best aspects 
of the public-private approach that has been employed under 
COTS and CRS to date.
    Second to safety and reliability as a competitive 
commercial company, affordability is obviously extremely 
important. This has been raised by Ranking Member Johnson as 
well as Chairman Hall and many others. Because we have produced 
by doing both cargo and crew with a vehicle that is 
substantially similar, we are able to leverage the costs and 
divide the costs over a larger number of missions. Instead of 
it perhaps being over two missions per year, it is actually 
going to be over six or even eight missions per year. This 
allows for a dramatic reduction in costs while maintaining high 
reliability. And of course, because our launch vehicle is being 
used to fly many commercial satellites as well, there is an 
even greater allocation of cost. Of the roughly $3 billion that 
SpaceX has been awarded to date in contracts, only about half 
is from NASA, so there is significant support from the private 
sector. In fact, to this point it is over 50 percent in terms 
of revenue. So this I think proves that space exploration can 
be achieved affordably.
    We look forward to continuing our partnership with NASA to 
quickly end our reliance on Russia for human spaceflight and 
fully realize the scientific potential of the space station. 
Harnessing the power of American free enterprise, which I think 
is one of the most powerful forces on earth, is the way to 
achieve these goals on budget and on time. Thank you.
    [The prepared statement of Mr. Musk follows:]
Prepared Statement of Mr. Elon Musk, CEO and Chief Technology Officer, 
          Space Exploration Technologies Corp., Hawthorne, CA
Chairman Hall, Ranking Member Johnson and Members of the Committee,

    On behalf of Space Exploration Technologies (SpaceX) and our more 
than 1,500 employees across the United States, thank you for the 
opportunity to participate in today's hearing.
    I also want to thank you and the members of the Committee for your 
continued support of NASA and America's space exploration programs. The 
goals of this agency, unlike nearly any other, are focused on advancing 
the state of human knowledge and human achievement. Even as we face 
tough fiscal challenges as a Nation, NASA and the cause of space 
exploration deserve support, particularly through efficient investments 
and public-private partnerships that provide best value for the 
taxpayer.
    America's endeavors in space are truly inspirational. I deeply 
believe that human spaceflight is one of the great achievements of 
humankind. Although NASA only sent a handful of people to the moon, it 
felt like we all went. We vicariously shared in the adventure and 
achievement. My goal, and the goal of SpaceX, is to help create the 
technology so that more can share in that great adventure.
    With your support and NASA's invaluable partnership through the 
Commercial Orbital Transportation Services (COTS) program, SpaceX made 
history last year as the first commercial company to successfully 
recover a spacecraft from Earth orbit. The inaugural flight of the 
SpaceX Dragon confirmed what we have always believed--the 
responsiveness and ingenuity of the private sector, combined with the 
U.S. government's investment and technical support, can deliver an 
American spaceflight program that is safe, achievable, sustainable and 
affordable.
    SpaceX is honored to continue our partnership with NASA as we work 
together to develop commercial crew capabilities. Our goal is to 
develop the safest, most reliable and affordable crew transportation 
system to low Earth orbit and, ultimately, beyond. Indeed, carrying 
humans into space has been a cornerstone of SpaceX's vehicle designs 
from the day the company was founded. There is no more critical and 
precious responsibility than having the opportunity and privilege to 
transport the true heroes of America's astronaut corps into space and, 
in the event of a mishap or failure, providing them with an effective, 
life-saving abort capability. This awesome responsibility informs and 
shapes SpaceX's every design, decision and operation.
    Mr. Chairman, the United States needs safe and affordable domestic 
systems for transporting American astronauts into space. Most pressing 
is the need to restore our ability to carry crew to the International 
Space Station (ISS) for which the country has spent so much effort, 
sweat and national treasure. The ISS's research and scientific 
potential is constrained by the current inability to achieve a full 
complement of astronauts on board. Sole reliance on the Russian Soyuz 
is not a remedy.
    With our NASA colleagues, SpaceX is working hard to deliver a 
solution. I am pleased to provide the Committee with an update on 
SpaceX's human spaceflight advances to date and challenges ahead as we 
progress toward the capability to transport human beings into space 
aboard the Falcon launch vehicles and Dragon spacecraft.

I. Commercial Cargo Efforts Leading to Crew Carriage

    In 2006, SpaceX partnered with NASA under the Commercial Orbital 
Transportation Services (COTS) program. The COTS program was the first 
of its kind for NASA: a ``pay for performance'' partnership between the 
government and private business to rapidly design and prototype 
critical technologies. NASA structured the COTS program as a 
collaborative venture with commercial space companies--sharing the 
risks, costs and rewards of developing new space transportation 
capabilities. That ``experiment'' resulted in the first U.S. launch 
vehicle developed since Saturn with engine out reliability. As 
demonstration of its reliability, this launcher flew successfully for 
its first two missions. This reliable launcher is also the only U.S. 
launch vehicle that is competitive in the international marketplace and 
will help bring launch dominance back to the U.S. This experiment also 
resulted in a reusable spacecraft that will service our critical 
national asset--the ISS.
    One of the central tenets of the COTS program is that public-
private partnerships leverage private capital to supplement government 
dollars, yielding products and services more cost-effectively and more 
rapidly. In pursuing its mission to create ``new commercial space 
transportation systems and demonstrate capabilities to provide cost-
effective transportation services to orbit,'' NASA's COTS office 
granted its partners ``latitude to freely innovate and optimize their 
launch vehicle and spacecraft designs and operations.'' \1\
---------------------------------------------------------------------------
    \1\ NASA COTS video, www.nasa.gov
---------------------------------------------------------------------------
    That latitude fostered SpaceX's ability to focus on safe, simple, 
proven designs that are cost-effective. As a result, SpaceX developed 
the Falcon 9 rocket for a fraction of the cost NASA would have paid 
under a traditional acquisition model. NASA's internal studies using 
the NASA-Air Force Cost Model (NAFCOM) concluded that it would have 
cost NASA $1.7B to $4B to develop the Falcon 9 rocket. By contrast, in 
partnership with NASA's COTS program, SpaceX developed the Falcon 9 for 
approximately $300M. \2\ It bears noting that the Falcon 9's 
development included designing, building and testing SpaceX's Merlin 
engine, the first new all-American hydrocarbon engine for an orbital 
booster in forty years.
---------------------------------------------------------------------------
    \2\ NASA independently verified SpaceX's total development costs of 
both the Falcon 1 and Falcon 9 at approximately $390 million in the 
aggregate ($300 million for Falcon 9; $90 million for Falcon 1). NASA, 
Falcon 9 Launch Vehicle NAFCOM Cost Estimates, August 2011.
---------------------------------------------------------------------------
    Likewise, SpaceX developed the Dragon spacecraft--a free-flying, 
reusable spacecraft--from a clean sheet of paper to the first 
demonstration flight in just over four years for about $300 million.

    a.  SpaceX's COTS Flight Success and Upcoming Launch

    In June of last year, SpaceX performed a successful demonstration 
launch of the Falcon 9 on its maiden voyage. Then, on December 8, 2010, 
SpaceX successfully launched the Falcon 9 with the Dragon spacecraft, 
becoming the first commercial company in history to launch, reenter and 
successfully recover a spacecraft from Earth orbit. SpaceX's COTS 
demonstration mission blasted off from Launch Complex 40 at Cape 
Canaveral. The Falcon 9 lofted the Dragon to orbit where it twice 
circled the Earth and then reentered the Earth's atmosphere, splashing 
down safely in the Pacific Ocean. Until late last year, launching, 
orbiting, reentering and recovering a spacecraft was a feat previously 
performed by only six nations or government agencies: the United 
States, Russia, China, Japan, India and the European Space Agency. 
NASA's expert advice and mentorship throughout the development process 
helped SpaceX build upon 50 years of U.S. space achievements to reach 
this goal.
    In preparation for the next COTS demonstration mission, which is 
set to occur in the next few months, the Dragon spacecraft design has 
been upgraded to meet all requirements for ferrying cargo to and from 
the ISS, including the proximity operations sensors to guide the 
vehicle safely near the ISS. This mission will be an extended mission 
to the ISS, lasting more than three weeks. Consequently, two solar 
array wings have been added to the Dragon trunk to enable positive 
power generation throughout the flight. Additionally, a redundant 
active thermal control system loop has been installed in the Dragon 
trunk to reject excess heat into space; protect the spacecraft from 
excessively hot or cold temperatures; and provide an environment inside 
the spacecraft that is acceptable for cargo and for the ISS crew when 
berthed to station.
    In accordance with our COTS milestones, a series of tests have been 
conducted on the fully integrated Dragon spacecraft, including a 12-day 
thermal vacuum test during which, the entire avionics system was 
exercised while flowing telemetry 24/7. (No notable issues were 
uncovered and the thermal data matched model predictions closely.)
    Dragon's proximity sensors are critical for the ISS approach and 
have been put through extensive performance testing in open loop and 
closed loop simulation using flight hardware and software. Significant 
testing emphasis has also been placed on the new Dragon mechanisms, 
which have all completed qualification testing. These mechanisms 
include the forward hatch, solar arrays, guidance, navigation and 
controls (GNC) bay door that exposes the Flight Releasable Grapple 
Fixture (FRGF) and a claw that provides electrical and data connections 
between the capsule and trunk.
    Several joint SpaceX-NASA tests have been completed, including the 
Passive Common Berthing Mechanism (PCBM) testing and cabin acoustic 
noise verification. Most recently, the vehicle completed radiation 
testing of all avionics components and an Electromagnetic Interference 
(EMI) test in keeping with NASA requirements.
    We are rapidly progressing toward the next COTS demonstration 
flight and are still engaged with NASA to finalize vehicle 
verifications and the mission plan. This next COTS mission represents a 
huge milestone not only for SpaceX, but also for NASA, the U.S. space 
program and American free enterprise. When the astronauts stationed on 
the ISS open the hatch and enter the Dragon spacecraft for the first 
time, it will mark the beginning of a new era in space travel.


    b.  Commonality between Cargo Falcon 9/Dragon and Crew Falcon 9/
Dragon
    SpaceX conceived the Falcon 9 and Dragon with crew carriage in mind 
and undertook designs from inception to meet human certification 
requirements, including increased structural factors of safety, triple-
redundant avionics, trajectories with acceleration limits within human 
safety limits, and many others. Because SpaceX planned for the current 
cargo Dragon to evolve into a crew version, many of the Dragon's 
systems are identical in the cargo and crew versions. In fact, Dragon 
was designed to meet NASA's human engineering safety requirements in 
SSP 50808 because the cargo Dragon will fly in close proximity to the 
ISS, berth with the ISS and support on-orbit crew habitation during 
cargo transfer operations.
    Designed to be as safe as possible from a clean sheet in 2005, the 
Dragon crew transportation system takes advantage of 21st century 
technology advances and lessons learned throughout the history of human 
spaceflight. The Dragon spacecraft is comprised of three main elements: 
the Nosecone, which protects the vessel and the docking adaptor during 
ascent; the Spacecraft, which houses the crew and/or pressurized cargo 
as well as the service section containing avionics, the Reaction 
Control System (RCS), parachutes and other support infrastructure; and 
the Trunk, which provides for the stowage of unpressurized cargo and 
will support Dragon's solar arrays and thermal radiators.
    As a result of the commonality between the cargo and crew versions 
of Dragon, many of the critical components of the Dragon crew 
transportation system are already operational and flight-proven. Other 
systems for crew accommodation require some development, but the only 
major development is for the launch abort system. This commonality 
enables SpaceX to plan for crew demonstration flights in 2014, with a 
rapid transition to operational capability.

    c.  Lessons Learned from the COTS Program Model
    The NASA-SpaceX COTS partnership has successfully enabled and 
promoted genuine innovation while maintaining safety and reliability 
standards. The COTS program helped guide the development of Dragon and 
Falcon 9 to pass a set of specific requirements and verifications 
required for any ISS visiting vehicle, but left the design and aspects 
of analysis and testing largely to the contractor. This allowed for 
rapid prototyping and design iterations in which components could be 
designed, tested, modified and retested, often times in a matter of 
hours. And NASA could be confident in the final design because all 
design and test data were available for review. Also critical for 
innovation was the fact that decisions about ``how to meet the 
requirements'' were generally left to the contractor. Rather the 
critical metric was that the requirement was clearly met. I note here 
that specificity as to how to meet requirements is inherently 
prescriptive and often results in less innovation.
    Safety and reliability standards have been maintained through 
insight into the entire system design and insight and oversight into 
safety critical systems. Systems that interface with the ISS are 
thoroughly reviewed by independent contractors, NASA employees 
providing regular and ongoing support, formal NASA panels and other 
subject matter experts. These safety-critical systems are also subject 
to strict requirements and verifications that ensure they will function 
as intended.
    Overall, this teaming approach with NASA has proven invaluable. 
NASA has a wide array of resources and deep technical expertise that 
was generally made available in a partnership approach. Testing 
facilities, analyses, subject matter experts and a host of other 
contributions helped solve difficult technical problems, improve the 
safety and robustness of vehicle and help advance innovative 
approaches.

II. Commercial Crew Development Efforts: CCDev2 and Flight by 2014

    The goal of SpaceX's crew transportation system is to safely and 
reliably transport up to seven crew members from our launch pad on Cape 
Canaveral to the ISS, dwell on the ISS for up to 210 days and return 
the same number of crew safely to Earth. A two-stage, liquid oxygen and 
kerosene launch vehicle, the Falcon 9 possesses robust reliability 
features. The nine SpaceX Merlin engines that power Falcon 9's first 
stage provide engine-out reliability from liftoff--a feature not 
offered by the Russian Soyuz--and the engine's turbopumps run at lower 
pressure, making them more resistant to failure from foreign object 
debris (FOD) ingestion. The Dragon offers improved avionics redundancy 
and failure tolerance compared to Soyuz's single gyroscope and 
accelerometer.
    SpaceX selected the Dragon design so that it would be naturally 
stable entering the earth's atmosphere, thereby maximizing the chances 
of a safe return to Earth even in the event of the vehicle's control 
systems' total failure. Other features vital to the cargo Dragon's 
ability to safely reenter Earth's atmosphere, such as the PICA-X heat 
shield, are already integrated into the Dragon capsule and will gain 
significant flight heritage during the Commercial Resupply Services 
(CRS) missions.
    In the coming years, SpaceX will collect significant data and 
experience on the Falcon 9 and Dragon system from upcoming COTS and 
future CRS missions. Specifically, the Dragon spacecraft and Falcon 9 
launch vehicle are currently scheduled to fly together at least eight 
more times before a crew demonstration in 2014. The Falcon 9 itself is 
scheduled to launch a total of 14 missions prior to the first Dragon 
crew mission. The commonality between the cargo and crew versions of 
Dragon allows for significant end-to-end flight heritage and 
operational experience to be gained on critical functions--including 
launch, navigation and control, thermal protection, thermal control, 
power generation and distribution, avionics, software, entry guidance 
and recovery--well before the first crew flight. The avionics hardware 
is highly scalable, allowing SpaceX to significantly leverage the 
architecture tested and proven on cargo missions for use on crew 
missions.
    Crew transport launch operations are similar to our cargo 
transportation launch operations inasmuch as they will take advantage 
of the safety, reliability and availability benefits of the ``aircraft-
like'' operations of the Falcon 9. For example, full-stage static fire 
tests, similar to an aircraft ground run-up, are performed prior to 
each launch. During terminal countdown, the Falcon 9 throttles up to 
full power before being released for liftoff, allowing anomalies during 
engine startup to be safely mitigated. The Falcon 9 can support 
multiple full-thrust static fires and engine aborts without need for 
refurbishment, allowing for true ``test-like-you-fly'' operations. 
Additionally, Falcon 9 avionics support hardware-in-the-loop testing to 
prove out flight software in the actual flight hardware configuration.

    a.  CCDev 2: the Criticality of Launch Abort Systems

    Under NASA's Commercial Crew Development II (CCDev 2) program, 
SpaceX has opted to focus on accelerating the development of an 
efficient, life-saving launch abort system (LAS). SpaceX's crew Dragon 
includes an integrated LAS, which we believe will yield numerous safety 
and performance benefits. The Dragon's LAS is carried through orbit and 
reentry, with the abort systems available for use throughout the time 
the Dragon is boosted into space. Carrying the abort system all the way 
into orbit also eliminates the jettison of the abort system as a 
required event for the safe completion of a nominal mission.
    SpaceX is further addressing launch vehicle malfunction detection 
and initiation of automated aborts as well as developing the necessary 
LAS engine hardware to implement such a design. This development will 
culminate in a series of engine tests to demonstrate safety, 
reliability, maximum thrust, minimum thrust, throttling capability, 
throttling rate and specific impulse.
    The Dragon LAS is a vehicle-integrated, side-mounted engine system 
selected for its safety, reliability and performance after a system-
level analysis conducted by SpaceX. Eight abort engines (known as 
SuperDracos because they are modified versions of Dragon's existing 
Draco thrusters) are located around the periphery of the Dragon service 
section and fed by hypergolic propellant stored in the spacecraft 
propellant tanks. SuperDracos will carry the spacecraft away from the 
booster and are capable of separating the Dragon crew spacecraft from a 
failing booster while on the pad all the way through nominal on-orbit 
separation of Dragon from the second stage.
    The LAS will be enabled after crew ingress and securing on the pad 
and will be disabled on orbit after Dragon separation from the second 
stage. The launch vehicle malfunction detection system for automatic 
abort will monitor the Falcon 9 and Dragon for engine failures, flight 
control failure, failure of the booster propellant tank and failure of 
the booster's primary structure, among other signatures.
    Abort responses will be determined by failure(s) detected and the 
phase of flight, in order to maximize survivability. For example, a 
significantly off-nominal change in tank pressure while the vehicle is 
on the pad may result in an instantaneous high-acceleration abort, 
while a performance-related failure of the second-stage engine during 
ascent may result in a delayed abort until ideal entry conditions are 
met, a pre-abort shutdown of the second-stage engine and a low-
acceleration abort profile.
    Ultimately, this technology, research, design and intellectual 
effort are about one thing: protecting human life. No one has summed it 
up better than Garrett Reisman, former astronaut and one of the heads 
of development for the Dragon LAS at SpaceX, who said, ``We are not 
going to design a vehicle that I wouldn't strap myself or my friends 
into.''

    b.  CCDev 2: Successes To Date and Approach Going Forward

    To date, SpaceX has successfully completed four of the ten 
milestones in our CCDev2 Space Act Agreement (SAA) for a total of $40M 
of the $75M under SpaceX's CCDev2 agreement. The first three milestones 
included a detailed program plan roll out, LAS propulsion Conceptual 
Design Review, Design Status Review and LAS Components Preliminary 
Design Review (PDR). In successfully meeting those milestones on 
schedule and on budget, SpaceX provided NASA with comprehensive Falcon 
9/Dragon crew systems concept design insight including cabin layout, 
seat design, space suit design, life support system design, abort 
scenarios, concepts for the launch abort system, ground systems, abort 
trajectories, aerodynamics of ascent and entry and mass margins. The 
Design Status Review provided an opportunity for SpaceX to work with 
both NASA and industry teammates as partners and make desired crew 
systems design concept changes after peer review and feedback on the 
system-level designs and concepts.
    With regards to the LAS components PDR, our most recently completed 
milestone, SpaceX engineers demonstrated to NASA's satisfaction that 
the maturity of the LAS propulsion components design is appropriate to 
support proceeding with detailed design, fabrication, assembly, 
integration and test of LAS propulsion components test articles. We 
also provided evidence that the LAS propulsion design meets all system 
requirements with acceptable risk and can be developed within schedule.
    Going forward, milestones will include abort engine fabrication and 
testing and further maturation of the vehicle system design and concept 
of operations. In addition, design and construction of a test facility 
for the launch abort engine is underway at the SpaceX rocket test 
facility in McGregor, Texas. The remaining hardware milestones will 
culminate in all key launch abort system propulsion components 
undergoing initial fluid and environmental development testing. Here, 
the SuperDracos will be hot-fire tested for a full duration. We will 
also demonstrate throttle capability, which is essential for abort 
maneuvers.
    With respect to the crew systems design efforts, SpaceX will 
incorporate feedback from NASA and industry partners, present safety 
and mission assurance studies and provide a draft of the Vehicle 
Certification Plan (the path forward for getting crew flights certified 
by NASA). SpaceX is also investing in two self-funded milestones for 
crew cabin development with engineering prototypes of the cabin layout 
including seats where NASA astronaut trials will provide feedback on 
cockpit design.

    c.  CCDev 2: Designing Crew Accommodations for the Dragon
    In parallel with the design and development work on the launch 
abort system engine and components, SpaceX is working on the design of 
other systems necessary to carry astronauts in the Dragon spacecraft. 
These systems include seats, spacesuits, an environmental control and 
life support system, displays and controls and ground systems.
    SpaceX is designing the Dragon to carry seven crewmembers seated in 
two rows. The seats will be conformal and a mechanical force 
accommodation system will cushion any off-nominal landing impacts to 
assure crew safety. The crew will wear spacesuits to protect them from 
any rapid cabin depressurization emergency event. The suits will be 
rated for operation at vacuum and provide communication and cooling 
systems.
    The Dragon environmental control and life support systems will 
provide the crew with fresh air ventilation, remove carbon dioxide and 
control humidity and cabin pressure. Fire detection and suppression 
systems will protect the crew in the event of an emergency. 
Accommodations will be provided for food preparation and waste 
disposal.
    During the span of the CCDev2 SAA, SpaceX is completing preliminary 
designs on modifications to our launch pad and mission control center 
to be ready to fly astronauts. The launch pad will have a new tower and 
access arm to allow crew to enter the Dragon and egress quickly in the 
event of a launch pad emergency. Mission control will have a new 
console position for a flight surgeon for human missions.
    In addition to these crew vehicle systems, the operation of the 
vehicle for nominal, contingency and emergency situations is being 
outlined for all phases of flight. A crew cabin mock-up is being 
constructed to allow NASA astronauts to evaluate crew accommodations 
and other human factors considerations. We are conducting preliminary 
designs for crew display and manual control hardware. The detailed 
operation of the launch abort system is also being characterized by 
defining abort modes, triggering events and abort trajectories. 
Finally, the safety and mission assurance analyses are being evaluated 
with the goal of ensuring that the Dragon and Falcon 9 vehicle will 
achieve a level of safety better than any human spacecraft ever flown.
    This work on crew accommodations, along with the design and 
development of the launch abort system, as part of NASA's CCDev2 
program will result in a preliminary design of all the upgrades 
necessary to convert the cargo Dragon spacecraft and Falcon 9 into a 
certified crew transportation system.

    d.  Critical Design Review-level Development

    Each flight of the Falcon 9 and cargo Dragon to the ISS brings us 
one step closer to flying astronauts to the ISS. Each of these flights 
will demonstrate many of the common elements between the cargo vehicle 
and the crew vehicle. Ultimately, the Falcon 9 will be one hundred 
percent common as between the cargo and crew vehicles. Therefore, 
though there is much work ahead, SpaceX already is beyond a Critical 
Design Review (CDR) equivalent level of maturity--and even into the 
production phase--with respect to many aspects of the vehicle system. 
This includes the main propulsion systems, structures, thermal 
protection systems (including the Dragon heat shield), power generation 
systems, altitude control, on-orbit propulsion systems, thermal control 
systems and GNC systems.
    Crew-related modifications that have yet to reach a CDR-equivalent 
level of maturity include the remaining work on the launch abort 
system. The most significant remaining milestones will be full-scale 
pad abort and max-drag abort flight tests. In addition, crew displays 
and controls, a voice communication system, cabin layout and seats, 
space suits, environmental control and life support systems, launch pad 
and control center modifications, final approach guidance and control 
and the docking system will need to be matured to a CDR-equivalent 
level. The most significant remaining technical milestones for these 
systems will be human-in-the-loop testing of the environmental control 
and life support systems and spacesuits as well as static and dynamic 
testing of the seats and other mechanisms.
    Beyond the launch abort system and crew accommodations, SpaceX's 
efforts to transport crews aboard Dragon also require additional ground 
facilities and crew training equipment. These would support flight crew 
training for nominal, off-nominal and emergency conditions. Full-scale 
spacecraft mock-ups may be required for training. Launch Control and 
Mission Control teams will be certified as planned for other Falcon 9 
and Dragon missions, including joint operations training with NASA 
Mission Control Center--Houston (MCC-H). The launch pad will also be 
modified to include gantry access for nominal ingress/egress and 
emergency egress of crew and pad support team.

    e.  SpaceX Falcon 9 / Dragon vs. Russian Soyuz

    The Russian Soyuz is an unquestionably capable vehicle with 
significant flight heritage. Indeed, SpaceX has benefited from lessons 
learned from Soyuz operations and predecessor spacecraft. That said, we 
do not intend to duplicate the capabilities of Soyuz, but to improve 
upon them. Critically, the Dragon will have the capability to transport 
up to seven crew members to the ISS--four more astronauts than Soyuz. 
Further, the Dragon has the capability to carry additional 
unpressurized cargo to the ISS as well as the capability to return 
cargo from the ISS--areas in which the Soyuz is highly limited.
    Additionally, the Dragon and Falcon 9 offer several safety 
improvements relative to the Soyuz, including:

      modern electronic control systems and computers;
      improved redundancy in the automatic control system;
      simpler and safer egress from the vehicle during an 
emergency on the launch pad;
      improved data displays for ascent and entry;
      capability for the crew to initiate an abort during the 
launch phase of the mission;
      capability for the crew to initiate the deploy of the 
landing parachutes;
      first stage engine out capability; and
      NASA insight into design, testing and production (NASA 
has limited insight to the Soyuz rocket design as well as limited 
access to the production facilities for the spacecraft and the rocket).

    One of the largest safety distinctions between the Falcon 9 and 
Dragon system over the Soyuz transport system is the reduction in 
separation events--failure of separation events is one of the most 
common events leading to mission failures of space systems. The Soyuz 
launcher and spacecraft must release four side-mounted booster modules, 
the second stage, the third stage, the launch escape tower, fairing, 
propulsion module and habitation module prior to the point where the 
crew can enter safely in the Soyuz descent module. For the Dragon and 
Falcon 9, there are only four separation events which must occur prior 
to the Dragon's entry: separation of the first stage, second stage, 
external cargo module or trunk and for a nominal mission separation of 
the nose fairing.

III. Commercial Crew Integrated Design Contract Proposal

    NASA's recently issued draft request for proposals (DRFP) for the 
Commercial Crew Integrated Design Contract (CCIDC) has incorporated key 
features critical to facilitate successful commercial partnerships. 
SpaceX appreciates the fact that the contract will be firm fixed-price 
and milestone-based; includes cost sharing with fixed government 
investment; and waives cost and pricing data requirements inherent in 
certain Federal Acquisition Regulation (FAR) based contract 
formulations. SpaceX has offered NASA several suggestions to improve 
the DRFP and the subsequent contract implementation. Those suggestions 
focus on resolving certain key technical issues prior to contract 
award; focusing NASA approval authority with respect to design, 
development and test activities; placing a greater emphasis on 
development and test activities; and defining an insight plan that 
creates a teaming relationship between NASA and the contractor.
    The DRFP indicates that several documents, including any proposed 
alternative technical standards, the integrated system baseline review 
(ISBR) and integrated critical design review (ICDR) plans, and the 
project management plan, are to be provided as drafts or initial 
documents at the time the proposal is submitted. All of these documents 
will have significant cost and schedule impacts and the technical 
standards will also drive the design of the vehicle. However, the final 
versions of these documents will not be approved until after the 
contract is signed. This timing makes it difficult to know exactly what 
commitments a contractor is making in its bid response. This concern 
can be easily addressed by having these key documents agreed to prior 
to signing the CCIDC contract.
    SpaceX has found that the COTS and CRS public-private partnership 
approach with NASA combines and capitalizes on the strengths of both 
partners. The requirements in this DRFP have the potential to mitigate 
the proven benefits of this approach by exponentially increasing NASA's 
involvement in design, development and testing.
    SpaceX has also suggested that insight personnel be teammates. 
According to the DRFP, the NASA insight team is to be given full access 
to the contractor's activities while being specifically precluded from 
providing any NASA resources (services, technical expertise, or access 
to Government property) to the contractor. As a result, the insight 
team is tasked to ``audit and report'' and thus becomes a second 
oversight team. Instead of an ``audit and report'' model, given 
successes witnessed under the interactions to date on the COTS and CRS 
programs, we propose that we work together as partners to a larger 
degree.

IV. The Commercial Space Market

    At present, SpaceX has over forty flights on manifest, representing 
approximately $3.5 billion in revenues from the U.S. government, 
commercial and international business customers. NASA missions 
represent approximately 40 percent of those flights. Our ability to 
compete successfully in the domestic and international commercial 
market demonstrates the long-term viability of our business model and 
allows us to keep our costs to the U.S. taxpayer low.
    SpaceX currently has the lowest launch prices in the world and, as 
noted by a Chinese government official earlier this year, even the 
Chinese do not believe they can beat them. Although our prices shatter 
the historical cost models of government-led developments, they are not 
arbitrary or premised on capturing a dominant share of the market, nor 
are they ``teaser'' rates meant to lure in an eager market only to be 
increased later. SpaceX's prices are based on known costs and a 
demonstrated track record and exemplify the potential of America's 
commercial space industry.
    Critically, as the provider of an end-to-end solution for crewed 
missions, with our own manufacturing of the launcher and the 
spacecraft, and with the provision of all launch and recovery 
operations, SpaceX is uniquely positioned relative to competitors with 
respect to the impact of sales of commercial crew missions on the 
overall business. Each NASA purchase of our crewed capabilities 
complements our booster sales and production because the Falcon 9 will 
be the same for satellite carriage, cargo carriage, and ultimately crew 
carriage. Moreover, the commonality of features between our cargo 
Dragon and crewed Dragon likewise speaks to the economies of scale that 
we can achieve with spacecraft production and operations, maximizing 
efficiencies and driving down costs for the consumer. This is a key 
differentiator as between SpaceX and others when considering the 
commercial human spaceflight market.
    However, as to the commercial human spaceflight market alone 
(taking into account the concept above that this market ties directly 
to the other well-known markets), NASA is the primary market driver for 
launching human beings into space. NASA is currently purchasing those 
services on the commercial market from Russia, the only currently 
available supplier. As a Nation, we are paying too a high price for 
those services--currently $56M per seat--due to the lack of competition 
and supply.
    There is ample evidence of a demand for spaceflight beyond NASA, 
though it has yet to emerge as a substantial operational secondary 
market. In the past decade, seven individuals bought eight very 
expensive tickets to fly to the ISS on a Russian Soyuz. That may not 
seem like much, but even as prices dramatically increased since Dennis 
Tito first flew back in 2001, every seat available for sale has been 
sold. No tickets have been sold for the past two years because Russia 
is providing one hundred percent of their Soyuz capacity to serve the 
ISS partnerships. This evidence ratifies our view that offering seats 
for half or a third of the Soyuz price will expand the human 
spaceflight market. Moreover, alternative low-earth destinations such 
as the Bigelow space modules provide another strong market opportunity.
    Non-spacefaring nations are also interested in space access. 
Between 1978 and 2010, ninety-six astronauts from thirty-one nations 
without indigenous spaceflight capabilities traveled into orbit. \3\ 
According to NASA's Commercial Market Assessment, there is a desire 
among other countries ``to send astronauts into space to perform 
scientific research, acquire technical knowledge, and increase national 
prestige.'' \4\
---------------------------------------------------------------------------
    \3\ NASA. Commercial Market Assessment for Crew and Cargo Systems 
Pursuant to Section 403 of the NASA Authorization Act of 2010 (P.L. 
111-267), p.12, April 27, 2011.
    \4\ Ibid.
---------------------------------------------------------------------------
    Further market potential also exists in the United States. The ISS 
is America's national laboratory in space and like all laboratories its 
productivity depends on how many scientists can visit the lab, conduct 
their experiments and return to their public or private enterprises. 
NASA currently bases astronauts at the ISS for six months. That 
limitation is based on how many Soyuz capsules are produced each year, 
how long the Soyuz is rated to last on orbit and the high price of 
Soyuz seats.
    The ISS can actually support seven crew members once we have a 
better crew rescue capability. Commercial crew will deliver that 
capability. Should the U.S. space industry lower the cost to between 
$20 and $30 million per seat, it will be possible for research 
scientists to visit the ISS for shorter periods of time, conduct 
dedicated research and return to Earth. Less costly, more regular 
access to ISS will enable more scientists to do more research in the 
same amount of time, with the same amount of dollars.
    Overall, SpaceX's business model is based on a diverse customer 
base that spans multiple markets. We have increased the U.S. share of 
the commercial space launch market since we started competing for and 
winning launches in 2008. For the first time in more than three 
decades, America last year began taking back international market-share 
in commercial satellite launch. Whereas in 1980, one-hundred percent of 
commercial launches took place from within the United States; last 
year, it was less than twelve percent. NASA's and SpaceX's efforts and 
investments are bringing critical launch revenue back to the U.S. and 
will bring thousands of jobs with it.
    This remarkable turn-around was sparked by the investment NASA made 
in SpaceX in 2006 as part of COTS. By leveraging private funding with 
federal investment, controlling our costs and developing a diverse 
customer base, we are able to offer competitive pricing to our 
commercial and government customers. Safe, reliable and affordable 
transportation of cargo and astronauts to low Earth orbit by an 
American company will keep jobs in the United States; eliminate 
reliance on Russia to support the ISS; and providing significant 
taxpayer savings that instead can be invested in what NASA does best: 
pursuing the next frontier.
    Mr. Chairman, I am honored by your invitation to provide testimony 
today. Through continued public-private partnerships like the one that 
helped develop the Falcon 9 and Dragon system, commercial companies 
will transform the way we access space. Together, government and the 
private sector can simultaneously increase the reliability, safety and 
frequency of space travel, while greatly reducing the costs.
    NASA's Commercial Crew Development Program has the potential to be 
the most fiscally responsible means to rapidly advance American human 
spaceflight. To date, it has protected taxpayer dollars with fixed-
price, pay-for-performance contracts. It has forced companies to 
compete on safety, reliability, capability and cost. And it leverages 
private investment--making taxpayer dollars go further.

    Chairman Hall. Sir, I thank you.
    I now recognize our fourth witness on the panel, Mr. 
Charlie Precourt of ATK.

 STATEMENT OF MR. CHARLES PRECOURT, VICE PRESIDENT, ATK LAUNCH 
               SYSTEMS GROUP, BRIGHAM CITY, UTAH

    Colonel Precourt. Chairman Hall, Ranking Member Johnson and 
Members of the Committee, thank you so much for allowing me to 
present our plans at ATK for commercial crew and our Liberty 
launch vehicle.
    Liberty is a launch vehicle capable of lifting any of the 
crewed spacecraft that are currently under consideration with 
margin to the ISS orbit. We believe that Liberty is an 
innovative way to support the ISS because it leverages 
significant prior investments in NASA shuttle and Constellation 
programs as well as the European space agency's RN-5 launcher.
    To give you an easier reference as to what makes up 
Liberty, I have a short video that lays out the system. Mr. 
Chairman, if you would allow me, I would share that video.
    As you mentioned, Mr. Chairman, the recoupment of upfront 
investments is a significant factor for us, so we have chosen 
to use and leverage significant elements from both the space 
shuttle, as you see here, the booster forms the first stage of 
Liberty and the work that went into Constellation to provide 
the five-segment booster is going to be leveraged here as well. 
From Ariane, we chose the core element of that vehicle, which 
is a liquid hydrogen/liquid oxygen stage which matches very 
nicely in terms of performance and suitability to create the 
Liberty vehicle concept. The design, as I mentioned, can carry 
any of the spaceflight currently under consideration with 
margin. The vehicle has 44,500 pounds of performance to the 
space station's orbit.
    The first-stage propulsion system benefits from many, many 
years of flight on the space shuttle, where we realized 221 
successful flight operations, and the Constellation program was 
further evolved with improvements in materials, processing and 
increased safety. In the current configuration that you see 
here, this was the development motor test of the five-segment 
motor. It produces 3.7 million pounds of thrust. The upper 
stage is derived from the Ariane 5 vehicle, which is used by 
the European space agency to launch the cargo module, the ATV, 
to the ISS for the Europeans' contribution. Here is that stage 
being assembled in its vertical assembly building. It uses the 
Vulcain-2 engine, 46 consecutive successful flights. The 
Ariane-5 enjoys the lowest premiums for insurance of any 
launcher on the planet for commercial satellite operations.
    Launch operations likewise will leverage activities at the 
Kennedy Space Center facilities that are already in place, 
again, minimizing the upfront investment for major elements. As 
a matter of fact, from a business case standpoint, the ongoing 
remaining investment has to do with the integration of the two 
elements so that they can fly together. We have made 
significant progress on the Liberty program over the past year 
and a half and are continuing under an unfunded Space Act 
agreement with NASA. Liberty was first proposed at a firm fixed 
price for NASA under their CCDev2 solicitation, and although 
NASA ultimately chose in that competition to fund only the 
spacecraft providers, we are very pleased and honored that NASA 
rated Liberty very high in both business and technical merits. 
Only two of the 18 proposals submitted were rated better.
    The Liberty focuses foremost on achieving the maximum 
possible levels of safety for our astronauts. We believe 
Liberty is the safest, most cost-effective launch vehicle 
design available and is fully compliant with the 
recommendations of the Columbia Accident Investigation Board. 
One such recommendation was to lower the complexity of the 
launch vehicle and reduce the number of failure points. Liberty 
draws its safety rating from a simple design with an absolute 
minimum number of moving parts. A Valador study earlier this 
year showed that Liberty was more than 10 times safer than 
shuttle and even safer than the Ares I design because it uses 
established stages. The integrated vehicle today has passed its 
systems design review and is approaching preliminary design 
review. We are approximately one year to critical design review 
given adequate funding.
    Challenges going forward include adequate funding as an 
adequate funding profile is required. In the case of Liberty, 
because it leverages flight-proven elements, much of the 
development is complete and the amount of necessary government 
funding is in fact quite modest. The infusion of outside 
capital is available to Liberty but awaits customer endorsement 
of the value proposition that Liberty presents. As a result, 
working on an unfunded Space Act agreement has slowed our 
milestone plans towards Liberty's first flight test.
    Additionally, I offer a thought about strategy from an 
acquisition standpoint in the government-private industry 
partnerships. When NASA chose to fund only spaceflight in 
CCDev2, it placed a higher burden on the launch vehicle 
providers, and from a human rating standpoint, launcher 
development is more challenging than the spaceflight 
development because the preponderance of risk to the crew 
during launch, which must be mitigated, emanates from the 
launch vehicle. Therefore, we believe and suggest that in 
NASA's acquisition strategy, it would benefit significantly 
from a greater investment on the launcher side of the equation 
than has been made to date. The August failure of the Russian 
Soyuz launcher attempting to deliver progress cargo to the ISS 
serves to underscore this point.
    Mr. Chairman, I would like to thank you and commend the 
Committee for your attention to safety in fielding the next-
generation system. In the NASA Authorization Act, you asked 
that the certification requirements be at least equivalent to 
the requirements of crew transportation currently in use as 
well as adherent to any relevant recommendations of the 
Columbia Accident Investigation Board. As a former astronaut 
and Chief of the Astronaut Office who personally selected the 
crew of Columbia, I believe we are capable today of an order of 
magnitude improvement in spaceflight safety, and I am also 
confident that striving continuously to achieve the maximum 
possible levels of crew safety in our human spaceflight systems 
will pay the biggest dividends in the long run.
    I truly appreciate the opportunity to introduce our Liberty 
system to you today. The system is available in the near term 
with a test flight possible within three years. Liberty offers 
a great opportunity to foster the next level of cooperation 
between Europe and the United States while reinstating and 
sustaining our access to the ISS. I believe that Liberty is a 
cost-effective solution posed to ensure America's commercial 
crew program is safe, robust and enduring. Thank you so much.
    [The prepared statement of Colonel Precourt follows:]
Prepared Statement of Mr. Charlie Precourt, Vice President, ATK Launch 
                    Systems Group, Brigham City, UT

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Chairman Hall. And we thank you.
    I now recognize our, it says here final witness. I don't 
like the word ``final'' at my age. I will just say we will 
recognize the fifth witness of the first panel, Dr. George 
Sowers, to present his testimony.

 STATEMENT OF DR. GEORGE SOWERS, VICE PRESIDENT, UNITED LAUNCH 
                 ALLIANCE, ENGLEWOOD, COLORADO

    Dr. Sowers. Mr. Chairman and Members of the Committee, 
thank you for the opportunity to appear today to discuss NASA'S 
Commercial Crew Program. My name is George Sowers and I am the 
Vice President of United Launch Alliance. I don't have a video 
but I have spent my career designing, developing, building and 
launching rockets and was the Chief System Engineer for the 
Atlas V development.
    The formation of the United Launch Alliance in 2006 brought 
together the launch industry's two most experienced and 
successful launch vehicle teams and two of its most dependable 
launch vehicles families, the Atlas and the Delta. Our history 
spans over 1,300 successful space launches including the launch 
of John Glenn, the first American to orbit the earth.
    Since formation, we have conducted 54 launches, almost one 
a month, with 100 percent mission success. We are entrusted 
with delivering the Nation's most critical payloads to support 
the war fighter, the intelligence community and national 
decision makers. Within the last year, we successfully 
completed the most ambitious launch campaign in the history of 
the National Reconnaissance Office, putting up five nearly 
priceless satellites in seven months. We are currently in the 
midst of an unprecedented launch campaign of five NASA science 
missions in six months. So far we have successfully launched 
the Aquarius spacecraft, the Juno spacecraft to Jupiter, and 
the Grail spacecraft to the moon. Within the next week, we will 
launch the NPOESS Preparatory Project and we will finish up the 
year with the launch of NASA's Mars Science Lab, an SUV-sized 
rover powered by a nuclear battery that may discover the first 
signs of life on that planet.
    United Launch Alliance strongly supports Congress's and 
NASA's efforts to develop a commercial crew capability. In my 
mind, there are three main reasons for the Nation to invest in 
commercial crew and together they form a compelling argument.
    First, the Nation needs this capability. Now that the 
shuttle is retired, our Nation is wholly dependent on the 
Russians to transport our own crews to and from the ISS. 
Currently, the government of Russia is NASA's sixth largest 
contractor receiving over $350 million per year. The recent 
Soyuz failure reminds us that the very existence of the ISS is 
now in jeopardy and that we are reliant on a single, fragile 
lifeline that we have little insight into or control over.
    Second, the private sector has the expertise to provide 
safe and affordable crew transportation. The private sector can 
bring efficiencies and development and operations spurred by 
competition unobtainable in a government-owned and -operated 
system. In ULA's case, NASA can take advantage of the 
investments we have already made, the rockets that are already 
flying in synergy with other users of our rockets like the DOD 
and NASA science.
    The third reason is to stimulate and to promote commercial 
human spaceflight. As an example, my good friend, Bob Bigelow, 
is a visionary with a dream of a fleet of private space 
stations, but Bob needs a safe and affordable transportation 
system. NASA is in a unique position to create a transportation 
system that can address the Nation's needs while also providing 
opportunities for American entrepreneurs like Bob. NASA 
shouldn't count on this new market but will benefit 
substantially if it does develop.
    Through NASA's investments in the Commercial Crew 
Development Program, the private sector is making great 
progress in developing a crew delivery capability. United 
Launch Alliance is proud to have been chosen by three of the 
four CCDev contractors, Sierra Nevada, Blue Origin and Boeing, 
to provide launch services using the Atlas V launch system. The 
Atlas program as a whole has a record of 98 consecutive 
successes, the best in the world. The Atlas V has launched 27 
times with 100 percent mission success. It is the only rocket 
in its class certified by NASA to launch category 3 missions 
such as Juno and the Mars Science Lab, and it is the only 
rocket in the world certified to launch nuclear payloads.
    The next step for Atlas is to launch humans. If NASA's 
Commercial Crew Program is to be successful, every effort must 
be undertaken to ensure the highest possible level of safety 
and reliability. Under an unfunded Space Act agreement with 
NASA, we are conducting a comprehensive assessment of the Atlas 
design against NASA's stringent human certification 
requirements. This entails a part-by-part, system-by-system 
review of the design, analysis and test pedigree of the Atlas.
    We are also making excellent progress on the relatively few 
modifications required to accommodate human launch. These 
include the development of the emergency detection system that 
will provide a signal to the spacecraft to abort if a launch 
vehicle failure is imminent.
    Looking to the future, we believe NASA's recently announced 
plans for the Commercial Crew Integrated Development Contract 
strikes the right balance between a commercial approach to 
delivering innovation and affordability and the appropriate 
level of certification and oversight necessary to ensure 
safety. The importance of insight and rigorous certification 
has been highlighted by the recent Soyuz failure. For new, 
unproven vehicles, this rigor is mandatory in addition to 
establishing a track record of demonstrated and repeatable 
success. With adequate funding, Atlas could be ready to support 
test flights in 2014 and operational flights in 2015.
    In conclusion, we strongly believe NASA's commercial crew 
program is vital to extend our Nation's leadership in human 
spaceflight. American industry represented by the companies 
here today has the expertise and experience to create safe and 
affordable crew access to the ISS and potentially stimulate an 
entire new economic sector.
    Thank you again for inviting me to testify, and I look 
forward to your questions.
    [The prepared statement of Mr. Sowers follows:]
Prepared Statement of Dr. George Sowers, Vice President, United Launch 
                        Alliance, Englewood, CO
    Mr. Chairman and Members of the Committee, thank you for the 
opportunity to appear today to discuss NASA's Commercial Crew Program. 
My name is George Sowers and I am the Vice President of Business 
Development and Advanced Programs for United Launch Alliance. I was 
educated as a physicist but have spent my career designing, developing, 
building and launching rockets. I was the chief systems engineer for 
the development of the Atlas V rocket.

Introduction

    My company, the United Launch Alliance, LLC was formed in 2006. 
ULA's heritage reaches back 50 years to the beginnings of the space age 
and human spaceflight. The formation of ULA brought together the launch 
industry's two most experienced and successful launch vehicle teams and 
two of its most dependable launch vehicle families, the Atlas and the 
Delta. Our history spans over 1300 successful space launches including 
historic achievements as a part of the nation's first two human 
spaceflight programs, Mercury and Gemini. At the height of the space 
race, it was an Atlas rocket that launched John Glenn into orbit and 
America into a proud space future. Since then, we've delivered payloads 
with unprecedented reliability and unparalleled performance--helping 
America become the world's leading space-faring nation.
    Our current customers are the Department of Defense, the National 
Reconnaissance Office, NASA, and commercial satellite system providers. 
ULA was formed to provide the highest reliability launch services to 
these customers while lowering cost through the consolidation of 
infrastructure.
    Since its formation nearly five years ago, ULA has conducted 54 
launches, almost one a month, with 100% mission success. ULA is 
entrusted with safely delivering the nation's most critical missions to 
support the warfighter, the intelligence community and national 
decision makers. Within the last year, we successfully completed the 
most ambitious launch campaign in the history of the National 
Reconnaissance Office, putting up five nearly priceless, irreplaceable 
satellites in seven months. ULA has proven it can reliably deliver 
critical missions safely and on schedule. Schedule reliability is also 
critical for many missions and each of the dozen missions performed by 
ULA in the last year has occurred within a day or two of its planned 
launch date.
    The evidence of ULA's success is literally on orbit. Every GPS 
satellite, every missile warning satellite, nearly every intelligence 
collection satellite, weather satellite, and military communications 
satellite and nearly every major NASA science mission has been 
launched-successfully-on a ULA or ULA heritage product. As a result, 
America has been able to push the frontiers of innovation and 
discovery; has the most capable spy satellites in the world; has the 
best satellite navigation system ever imagined; and has more rovers on, 
and more spacecraft orbiting distant planets than anyone else.
    We are currently in the midst of an unprecedented launch campaign 
for NASA's science program. So far, ULA has successfully completed 
three of five planned missions, including the launch of the Juno 
spacecraft to the planet Jupiter in August and the launch of the Grail 
spacecraft to the moon in September. Our next launch in the campaign 
occurs within the next week with the launch of the NPOESS Preparatory 
Project (NPP), a precursor to the next generation weather satellite. 
We'll finish up the year with the launch of NASA's Mars Science 
Laboratory, an SUV sized rover powered by a nuclear battery that may 
discover the first signs of life on another planet.
    ULA's rockets are the most reliable in the world and we're 
routinely tasked with launching the most challenging missions 
imaginable. Five years ago, the fastest object ever created by man, the 
Pluto New Horizons spacecraft, was launched on an Atlas. Two years ago, 
we worked with NASA to guide a Centaur upperstage into the moon, 
proving that there was indeed water hidden in its deep craters. The 
missions performed by the Delta IV heavy, the nation's most capable 
launch vehicle, are incredibly complex, but classified. We are 
currently working with NASA to potentially use the Delta IV heavy to 
launch the Orion spacecraft on its first uncrewed test flight.

Why Commercial Crew?

    I'd like to start by commending this committee for having the 
foresight and vision in its 2008 NASA Authorization Act to help spur a 
commercial crew capability for the International Space Station, and its 
subsequent support in the 2010 NASA Authorization bill. Nearly 50 years 
after Glenn's first flight, these efforts are helping unleash a new 
space race-this time it's an all-American space race to help us further 
unlock the boundless possibilities of the space frontier.
    ULA strongly supports both Congress' and NASA's efforts to develop 
a commercial capability to meet U.S. obligations to deliver crew to and 
from the International Space Station. In my mind, there are three main 
reasons for the nation to invest in commercial crew and together they 
form a compelling argument.
    First, the nation needs this vital capability. Now that the shuttle 
is retired, our nation is wholly dependent on the Russians to transport 
our own crews to and from the ISS. Currently, the Government of Russia 
is NASA's sixth largest contractor, receiving over $350M per year. Not 
only does this represent thousands of high tech jobs sent overseas, but 
it's ceding our leadership as a space-faring nation. Furthermore, the 
Russian Soyuz vehicle now represents the only means to send crew to the 
station. The recent failure of that normally reliable craft reminds us 
that the very existence of the ISS is now in jeopardy, and that we are 
reliant on a single fragile lifeline that we have little insight into 
or control over.
    We should have an urgency to get a commercial service up and 
operating as quickly as possible to close the Human Spaceflight 
``Gap.'' I have no doubt that the U.S. aerospace industry (represented 
by the companies here today) is up to the task. We have the ingenuity 
and the inventiveness necessary to meet this national imperative.
    The second reason the U.S. Government should invest in commercial 
crew is that the private sector has the expertise to provide crew 
transportation safely and can provide the best value to the taxpayer. 
The companies competing for the commercial crew service include those 
with decades of experience in NASA's human spaceflight program, such as 
Boeing. Newer companies bring fresh ideas and the entrepreneurial 
spirit like Sierra Nevada, Blue Origin and SpaceX. The private sector 
already possesses the world's most reliable rocket with the Atlas V.
    Affordability is maximized by several factors. Specifically, the 
private sector can bring efficiencies in development and operations, 
spurred by competition, unobtainable in a government owned and operated 
system. In ULA's case, the government can take advantage of the 
billions we and the Air Force have already invested and the synergy and 
cost sharing with other users of those rockets like the DOD, NRO, NASA 
science and commercial companies.
    The third reason the U.S. Government should invest in commercial 
crew is to stimulate and promote commercial human spaceflight-a policy 
consistently supported by numerous Congresses and Administrations, 
including in the NASA Authorization Act of 2010 and the most recent 
National Space Policy. We believe this is the right policy and that 
free and competitive markets create the most efficient conditions for 
promoting economic development.
    As an example, my good friend Bob Bigelow is a visionary with a 
dream of a fleet of private space stations. His customer base will be 
countries that want a space program but cannot buy or beg time on the 
ISS. But Bob needs a safe and affordable transportation system to 
orbit. NASA is in a unique position to create a transportation system 
that can address the nation's needs for access to ISS, while also 
providing an opportunity to unleash the power of the U.S. entrepreneur 
in Low Earth Orbit.
    We don't know if ideas like Bob Bigelow's are viable. There is 
extremely high uncertainty in this market and NASA shouldn't build its 
program assuming it materializes. But if a market does emerge, everyone 
will benefit: new jobs will be created and the Government's prices will 
go even lower, across both the civil and military sectors.

ULA support to Commercial Crew

    Through NASA's investments in the Commercial Crew Development 
(CCDev) program, the private industry is making great progress in 
developing a crew delivery capability. ULA is proud to have been chosen 
by three of the four CCDev contractors (Sierra-Nevada, Blue Origin and 
Boeing) to provide launch services using the Atlas V launch system. We 
and our customers believe the Atlas V is the right launch vehicle to 
help establish commercial human spaceflight. From its roots as the 
launch vehicle for the manned Mercury program in the 1960s, each new 
generation of the Atlas system has demonstrated advancements in 
reliability and performance. The Atlas program has a record of 98 
consecutive successes, best in the world. Today's Atlas V is the 
culmination of decades of improvements and lessons learned. The Atlas V 
has launched 27 times with 100% success. A list of those launches is 
included in Table 1. It is the only rocket certified by NASA to launch 
Category 3 missions, a category reserved for NASA's most important 
science missions, like Juno and the upcoming Mars Science Laboratory. 
It is the only rocket in the world certified to launch nuclear payloads 
to orbit, and it's entrusted to launch many of our nation's most 
critical national security missions.
    The next step for Atlas is to launch humans. If NASA's commercial 
crew program is to be successful, every effort must be undertaken to 
ensure the highest possible level of safety and reliability. A key 
element of this is the rigorous process of human system certification. 
Under a Space Act Agreement with NASA, we are conducting a 
comprehensive assessment of the Atlas design against NASA's stringent 
human certification requirements. This entails a part-by-part, system-
by-system review of the design, analysis and test pedigree of the 
Atlas. We are also performing a detailed analysis of the hazards faced 
by the crew and their mitigation as well as a Probabilistic Risk 
Assessment for the launch of crew. My expectation is that the Atlas 
will fare very well. This is because of the rigor and attention to 
detail we applied during the original design and development process as 
well as the flight demonstrated performance of the system through 27 
successful missions.
    We are also making excellent progress on the relatively few 
modifications to the Atlas required to accommodate human launch. These 
include the development of the emergency detection system (EDS), a 
health monitoring system that will provide a signal to the spacecraft 
to abort if a launch vehicle failure is imminent. A prototype of this 
system was demonstrated last year in our high fidelity systems 
integration lab, correctly detecting a wide range of potential failures 
and sending the abort signal in time to ensure a safe abort. We are 
progressing on the design of the modifications required at the launch 
pad to accommodate getting crew into and out of the spacecraft. And 
we're working with several spacecraft providers on the details to 
integrate their systems to the Atlas.
    Looking to the future, we believe NASA's recently announced plans 
for the Commercial Crew Integrated Development Contract (CCIDC) strikes 
the right balance between a commercial approach delivering innovation 
and affordability and the appropriate level of certification and 
oversight necessary to ensure safety. The importance of insight and 
rigorous certification criteria has been highlighted by the recent 
Soyuz failure. For new, unproven vehicles, you need the rigor even 
more, in addition to establishing a track record of demonstrated and 
repeatable success.
    With adequate funding, Atlas could be ready to support test flights 
in 2014 and operational flights in 2015.

Conclusion

    In conclusion, we strongly believe NASA's commercial crew program 
is vital to maintain our nation's leadership in human spaceflight. The 
U.S. private sector has the expertise and experience to create safe and 
affordable crew access to the ISS and potentially stimulate an entire 
new economic sector with thousands of high tech jobs. Affordability is 
greatly enhanced by the use of Atlas which leverages synergy with the 
DOD, NRO, NASA Science and other users. With adequate funding, we can 
be ready to launch crew within three to four years.
    Thank you again for inviting me to testify. I look forward to your 
questions.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Chairman Hall. And I thank you, and I thank all of you for 
your testimony. Reminding Members that Committee rules limit 
questions to five minutes. We will try to stay as close to that 
five minutes as we can, and the Chair at this point will open 
the round of questions. The Chair recognizes himself for five 
minutes.
    As I mentioned in my opening statement, some of us remain 
very concerned that the promise of commercial markets could put 
the government in the position of supporting or bailing out 
companies in order to preserve a national capability, and I 
hope we are wrong in this fear, and I hope we will hear more 
from NASA on the next panel. But my questions to all the 
companies on this panel are, and these are to each of you and 
probably I will start with Mr. Elbon of Boeing, what are the 
non-NASA commercial crew markets that you intend to serve and 
what is your company's business case if there are no customers 
other than NASA?
    Mr. Elbon. Thank you, Mr. Chairman. As I mentioned in my 
testimony, we are basing our business case, structuring our 
business case so that it can close if all we do is transport 
NASA crew to the space station.
    Chairman Hall. And in your statement, does your company 
have the financial backing to see this development program to a 
conclusion? That is very important. I would like for you to 
give us all the explanation you can on that.
    Mr. Elbon. Okay, sir.
    Chairman Hall. Quickly.
    Mr. Elbon. Okay. So Boeing has a history of executing 
several X Prize programs for the government. Often it takes 
company investment to complete those but we have a track record 
of moving into fixed price kinds of contracting and then 
completing those contracts. That will be no different for 
commercial crew. We of course are laying in a very good program 
plan, one that we believe can be executed for the funding that 
we propose and that will be available. But our track record of 
executing on those I think speaks for itself.
    Chairman Hall. All right. Mr. Lindsey?
    Colonel Lindsey. Yes. For our business case in terms of 
closing, we too think we can close, even if NASA is our only 
business. I think that the challenge will be getting there in a 
timely fashion based on the funding that we have, but that is 
what we are proposing.
    But let me expand a little bit on the market beyond NASA 
because that is the question you asked, sir, and the areas that 
we think that we have another markets is in cargo 
transportation, potentially orbital servicing with our vehicle 
because of its unique capabilities and additional ability to 
maneuver in orbit, potentially orbit sensor and test bid 
operations, and we talk about other businesses, other business 
areas besides NASA. We think there may be other civil agencies 
involved. There is some tourism involved, potentially military 
agencies, DOD.
    One thing I wanted to expand on was international markets. 
The Russians in their flying participants or tourists on the 
Soyuz actually flew a crew member from both South Korea and 
Malaysia, so we think there is potential that other nations 
would want to fly into space. Right now, the International 
Space Station partnership is limited to the founding partners 
and the crew slots on the space station are based on your 
contribution to the development and the building of the space 
station. But in the future we think there is a possibility that 
you could open up the International Space Station to additional 
international partners with additional capabilities.
    Chairman Hall. All right. Mr. Musk.
    Mr. Musk. So I will address that in a couple of ways. With 
respect to the launch vehicle, as I mentioned earlier, we have 
other 35 launches under contract. In fact, for the last few 
years SpaceX has won more launch contracts than any other 
company in the world, in fact, any other country in the world. 
So I believe that the costs associated with the launch vehicle, 
the rocket part, is well taken care of.
    Then with respect to the spacecraft, we are slated already 
to provide more cargo servicing missions to the space station 
than any other organization. And since our cargo and crew 
vehicle are essentially the same, it means that the cost of 
crew is divided over all of those missions and so it results in 
a great deal of efficiency and a great deal of reliability.
    And then thirdly, I will put it in the Congressional 
Record, I will personally guarantee this.
    Chairman Hall. Mr. Precourt.
    Colonel Precourt. Mr. Chairman, as a launch vehicle 
provider, we don't have a lot of the same challenges that the 
crewed spacecraft do from a business case standpoint. We are 
addressing a number of opportunities that customers could 
leverage Liberty. We are gearing it toward commercial crew 
because that is the most difficult design part of a launch 
vehicle. Once it has that capability, it can serve other 
customers. I would like to point out NASA's NLS, NASA Launch 
Services, system that has been in place very successfully for 
many years, launches deep space probes, payloads, science 
platforms. Those are missions of interest that Liberty could 
certainly service as well as other missions for other 
government agencies in the satellite and payload interest 
areas, leveraging the capabilities and performance of a vehicle 
designed for crew. Crew and cargo, other science missions and 
other government agency payloads really give you the leverage 
you need there, and we would be designing a common interface 
that could handle multiple users of the launch vehicle.
    Chairman Hall. And I thank you.
    Dr. Sowers.
    Dr. Sowers. Yes. We are a little bit different than some of 
the other companies up here. Our investment is already 
substantially made. Our rockets are flying today. The Atlas V 
that has been chosen by Boeing, Sierra Nevada and Blue Origin 
has already had 27 successful flights. We have an ongoing 
business of roughly six to eight missions per year consisting 
of DOD, National Reconnaissance Office, NASA science and 
commercial customers, and commercial crew would be merely 
adding one to two missions a year into that already robust 
manifest and so our business case does not count on other 
customers. We have been working with Bob Bigelow for a number 
of years and so we are optimistic about a new market but also 
my company lived through the EELV experience where we made 
assumptions about a commercial market that didn't materialize 
and so that scar tissue is very fresh and tender in our 
memories.
    Chairman Hall. And we thank you, and my time has expired by 
almost a minute.
    At this time I recognize Mrs. Johnson.
    Ms. Johnson. Thank you very much. I have listened very 
attentively and I am very excited about this possibility. What 
I would like each of you to comment on is whether or not you 
think Congress is justified in making this initiative at this 
time, and what realistically do you expect of the U.S. 
government? And thirdly, where are your potential markets for 
now? I want to make sure I make efficent use of my time, if you 
will start, Mr. Elbon.
    Mr. Elbon. I think it is very important that commercial 
crew exists as part of an enabling system to provide low-cost 
transportation to ISS, affordable transportation, in such a 
manner that there is funding left over in NASA's budget so that 
we can invest in capabilities for exploration beyond low Earth 
orbit. So I think that investment is prudent at this time.
    You asked about other markets, I believe. We believe there 
are--as others have said, there are certainly--it has been 
demonstrated that there are individuals that would pay to fly 
to station but there is also, through the opportunities that 
Mr. Bigelow is putting in place, other countries in the world 
that would like to have their own space program, can't afford 
the infrastructure associated with that and so that business 
model I think has a really good opportunity of maturing and 
becoming an additionally commerce in low Earth orbit that can 
be served by commercial crew transportation.
    Chairman Hall. Go ahead, Ms. Johnson.
    Ms. Johnson. I was waiting for Mr. Lindsey.
    Colonel Lindsey. Yes, Congresswoman. The reason I think we 
need to be back in the business of commercial crew, I think--as 
I mentioned in my remarks, low Earth orbit access to me is a 
vital interest to this country. When we retired the shuttle, we 
are in a gap period where we don't have that access and we are 
relying on the Russians and spending, as you mentioned earlier, 
$450 million a year paying the Russians to provide that 
service. I think it is very important that we get back into 
that business and establish our preeminence in space. So that 
is probably my primary reason. That is why I am doing what I am 
doing and why I think it is really important.
    In terms of the markets that you asked us about, as John 
mentioned, there are some commercial individuals that could 
afford to do that. I think our bigger market, though, is 
potentially with other governments, going to the International 
Space Station. We know for a fact that there is interest in 
doing that for other nations, not just International Space 
Station partners, and there is, we think, there is interest in 
doing other sorts of mission with our vehicle like satellite 
servicing and things like that like we have done in the past 
with space shuttle.
    Mr. Musk. As I mentioned, with respect to the rockets, 
those costs, those are a given. So then with respect to the 
cargo version of the spacecraft, those costs are also given 
because we are already doing that for NASA, so we have a high 
certainty associated with those so it is really what is 
incremental to carry crew, and we anticipate that that is 
perhaps no more than about a 20 percent increment to carry 
crew, primarily related to the launch escape system and 
improved life support systems. And in fact, again, I am willing 
to go on record and say that at a launch rate of four crewed 
flights per year, we are willing to commit in current-year 
dollars to $140 million per fight with a seven-astronaut 
contingent so that would mean $20 million per astronaut and 
compares very favorably with what we are currently paying the 
Russians, which is $63 million per astronaut. So you have it on 
record.
    Colonel Precourt. Congresswoman, I think the investment, as 
you asked, is necessary and urgent. We are many years behind 
replacing the shuttle capability. I would also add that your 
opening remarks were spot on. There are a number of questions 
that I would vouch for the fact that we in industry are poised 
and ready with a very capable workforce to go execute this job. 
Between the Congress and NASA, the Administration and industry, 
we are poised and capable, more than capable but a lot of 
strategy and acquisition and the methods to get to the goal 
line need to be laid out so that we can perform very well under 
the right conditions, so I think you have asked all the right 
questions.
    Dr. Sowers. Thank you, Congresswoman. I think our 
investment in commercial crew is justified, first of all, to 
protect the investment that we have made in the International 
Space Station. Right now the Soyuz is the only means of 
transportation to the ISS, and we have seen just recently that 
as reliable as the Soyuz has been historically, anyone can have 
a bad day, and if we have a bad day, then there is no access to 
the ISS, much less American-provided access to the ISS.
    Secondly, in terms of markets we do think there is 
potential for additional markets for this capability. If that 
is true, then it will generate a tremendous number of jobs 
right here in the United States servicing these other markets.
    Ms. Johnson. Thank you. My time is expired.
    Chairman Hall. Thank you, Ms. Johnson. You were exactly 
five minutes. That is just perfection.
    I ask the gentleman from California to take his five 
minutes. Mr. Rohrabacher.
    Mr. Rohrabacher. Thank you very much, Mr. Chairman.
    Let me just note before I ask my questions that I have been 
surprised by a number of things in my 24 years here in 
Congress, but one of the things that I have been surprised the 
most about is the hostility that seems to be expressed towards 
depending on and helping promote commercial space alternatives 
to just government approaches to things like transportation, 
and this has been much to my dismay that all of the worst 
elements of decision making, for example, of what I call space 
pork and just focusing on one's own district and what 
government spending can be directed to one's district seems to 
be having a major effect on a decision that is so important to 
America's future as to how we will proceed into space, and I 
consider this to be a historic moment for our country and for 
this anti-commercial space alternative attitude that I see. I 
think it could have very grave consequences. We had, for 
example, the post office early on did have a fleet of 
airplanes, and we decided, it was decided by our country, that 
it would be better to contract out airmail rather than having 
the government run a fleet of airplanes, and I think that 
decision went a long way in helping make sure that America was 
the number one aviation power on this planet, and I would have 
to say that had we had the other approach, perhaps we would 
have had a much more bureaucratic development of our aviation 
capabilities, and certainly we wouldn't have thought that 
having the government run airliners that only the government 
can run, what would that have done to America's competitive 
position in the world on some of the most important 
technological developments of the last century.
    With that said, we have got some problems within the 
government in terms of approaching commercial, and I am not 
sure if it is based on hostility to commercialism or it is just 
a belief that we ought to have more government controls over 
everything, but there is a fight now between these two 
approaches of these contracts that the Federal Government is 
approaching with these private sector companies. Apparently, we 
have in the past--what we have and also with other types of 
situation, we have a Federal Acquisition Regulation which is 
FAR, which is a more traditional way of contracting with 
companies but we have instituted with the development of this 
commercial alternative, at least for the development stage, a 
system based on the Space Act agreements, and I would just ask 
very quickly for a comment from each one of you, and it has to 
be quick because I only have a couple minutes left. Is this 
vitally important that we move forward with an approach that 
was dictated by the Space Act agreement which of course I 
understand brings down the amount of bureaucratic costs to each 
one of your projects? What does that mean to your projects and 
your approach to space, the FAR versus Space Act agreement 
approach? Just a little bit from each one.
    Mr. Elbon. Thank you, Congressman. Two quick comments or 
responses to your question. The first is, I think it is very 
important that we differentiate the kind of model that we are 
using for something like transportation to low Earth orbit that 
we have been doing for 50 years in capsules, it is understood, 
the challenges are understood, versus exploration beyond low 
Earth orbit that is a new thing, very much not understood, more 
complex, more challenging, so the level of NASA involvement in 
those two programs, the dependence on contractors in those two 
programs needs to be very different, in my view.
    The second thing you asked was about a FAR versus SAA. I 
would say that from our perspective, this can be done with 
either of those instruments as long as the right environment is 
being put in place. Boeing will execute this with the same 
processes and procedures for design, for parts traceability, 
for configuration management, for all those kinds of things, 
not because the contract drives us to do that, we do these 
things in government programs and commercial programs like 
commercial airplanes because it is necessary to do those kind 
of things to develop a safe and reliable vehicle that can 
provide good transportation.
    Colonel Lindsey. Yes, Congressman. Up to this point, we 
have been executing under the Space Act agreements in the last 
couple of phases, and it has worked very well for us. We have 
been able to move very, very quickly, co-invest our own money, 
and basically retire a lot of technology risk, and that is how 
it has really helped us out. Eventually as a program develops, 
you have to reach a point where you want to go a firm fixed 
price and you want to have some chance of meeting cost and 
schedule. That is really important to everybody. The advantage 
of the Space Act agreement, it gets you to the point where you 
can go to a FAR-based contract and succeed, and that is kind of 
where we are now and so the question is, when is the right time 
to transition, and right now, NASA is suggesting that the next 
phase is the right time to transition. Either way, our company 
will execute, but again, the Space Act agreements enabled us to 
move quickly and we think we can execute under FAR-based as 
well.
    Mr. Musk. The COTS approach has been, I think, very 
effective. To the degree that it can be extended, that is 
desirable. If it can't, then as we transition to FAR-based 
contracts, it is important that if the prices are fixed, that 
the terms are fixed and that they are based on clear hardware-
based milestones. The challenge that will come with the FAR 
contract is if the prices are fixed but the terms are not, if 
the terms change over time. I think that is just common sense. 
But I am increasingly optimistic that it can be made to work 
under the right sort of FAR-based contract.
    Colonel Precourt. Congressman, I would echo the comments 
from my colleagues here. I think just trying to decide based on 
FAR versus SAA kind of misses the point. We need to have a 
mechanism that enables performance and accountability, and we 
can perform under firm, fixed prices, John mentioned with low 
Earth orbit, and our understanding of it. I think it comes down 
to setting the organizational construct within the agreements 
and we can make that happen. I think NASA is stepping up in 
that way. They have taken the advantage of the FAR's ability to 
be streamlined and enable us to perform in a streamlined 
fashion.
    Dr. Sowers. Congressman, ULA is comfortable operating under 
a wide range of different contracting environments. We are 
comfortable with the SAA. In fact, the entire development of 
the EELV program was done under the OTA, the Other Transaction 
Authority, of the FAR which is like a Space Act. We are also 
very comfortable under the FAR acquisition approach but the one 
caution is that the requirements in the contract need to be 
understood very well up front, and especially in this case, the 
human rating requirements.
    Mr. Rohrabacher. Mr. Chairman, thank you very much, and I 
would like to submit for the record at this point an article in 
Space News by Mike Gold, who works for the Bigelow company, who 
is expressing his view on the regulatory requirements of the 
FAR approach versus the Space Act agreements approach. Thank 
you very much.
    Chairman Hall. Without objection, it will be put in the 
record.
    [The information appears in Appendix II:]
    Chairman Hall. And I think it ought to be stated in the 
record too that NASA has put around $320 million in already, 
and most of the recipients are in this room and they are 
planning $4 to $6 billion that these folks will be competing 
for, and we are trying to make that a level competition. We 
just need to be sure that whoever bids can do more than sign a 
contract, and that the fears that you all are here to allay, 
and I thank you for your comments. I don't totally agree with 
them but I always admire you for making them.
    Next, Mr. Clarke from Michigan.
    Mr. Clarke. Thank you, Mr. Chair.
    This question is for anybody who chooses to address it, but 
in particular for Mr. Musk. Essentially, how can the 
technologies developed for the Commercial Crew Program create 
jobs outside of the space industry, especially jobs in the 
automotive industry? The reason why I ask that primarily is 
because of the region that I represent, which is Detroit and 
includes metro Detroit. Now, the city that I was born and 
raised in, it has been affected by many tough economic forces 
that is creating a lot of blight in the city, so as a result, 
we just have acres and acres of vacant, abandoned land but it 
also has the infrastructure that you need--the roads, the water 
lines, the sewers. Also, on the positive side, we have the best 
manufacturing know-how around and the best trained workforce, 
and the best engineers in the country in metropolitan Detroit. 
Typically, when U.S. auto manufacturers sell more U.S.-made 
automobiles to folks that live in the United States, that 
creates jobs not only for Detroit but for our entire country, 
and in particular, Mr. Musk, you referenced the power of 
innovation resulting from the free enterprise system, you know, 
your career in business, you are a personal example of that 
success and growth. And in particular, I received information 
that your suppliers made around $2 almost $3 million in 
supplier purchases in Michigan.
    So essentially it is this. This technology that you are 
working on, can it be leveraged to create jobs outside of the 
space industry to help revitalize certain areas in this country 
like metropolitan Detroit? I believe the answer is yes, but if 
you could help illustrate that for the record, any of you, that 
would be appreciated.
    Mr. Musk. I actually have quite a bit of knowledge of and 
respect for the automotive industry, and in fact, if you think 
about the amazing things that the automotive industry does, 
they create these man-rated devices called cars which are 
supposed to last for ten years and provide incredible safety 
over that period of time, and yet cost only a few tens of 
thousands of dollars. That is actually amazing, when you think 
about it. So I have really been pushing SpaceX to use more and 
more automotive suppliers because the quality is actually so 
good. And in fact, for our Merlin engine, I will give you one 
example, we use a company called Experimental, which does the 
engine jackets, outer engine jackets on our engines and does an 
amazing job, and we are actually hiring people from the 
automotive industry to bring more of that expertise and cross-
pollinate into the space industry and bring the decades of 
expertise and trillions of dollars that have been spent on 
automotive and apply that effectively to that space industry. I 
very much agree with your point.
    Dr. Sowers. I have got one example from my company. We are 
currently working with a company in Michigan in the Detroit 
area called Rausch to take piston engine technology from the 
automotive industry and apply it to rocket engines. 
Traditionally, rocket engines have been turbo pump-based but we 
are doing some research right now that says that piston pumps 
could be superior to turbo pumps for certain applications and 
the precision machining capability that we found at this 
company is just absolutely amazing and so we are actually 
looking to bring automotive technology back into the aerospace 
industry.
    Mr. Elbon. I will just add, Congressman, that through the 
history of space, investments in space exploration have spun 
off incredible industries in the United States. As an example, 
the telecommunication industry, the computer industry, those 
all were spawned by technologies developed in space. It is 
often difficult to predict what the next technologies will be 
but there is certainly a proven track record of that investment 
returning a dividend.
    Colonel Precourt. Congressman, I would add that one of the 
things we share in common is the manufacturing of high-tech 
equipment, and the automotive industry has a lot of cross-
pollination. We have in our company several who have come from 
the automotive industry to help us with manufacturing lean 
processes that really increase the performance and cost value 
of the product, and likewise it has gone back the other way and 
that continues I think as we cross-pollinate and we share 
technologies that excite and enable improvement in both 
industries.
    Mr. Clarke. Thank you. Just with the brief time I have, 
representing metropolitan Detroit and also now newly appointed 
as a Member of the Science and Aeronautics Subcommittee, which 
I think is an extraordinary tie-in, we can show how investing 
in space technology can mean growth for jobs and a stronger 
U.S. economy over time, so I look forward to that type of 
partnership. Thank you very much.
    Chairman Hall. I thank the gentleman.
    The Chair recognizes Mr. Hultgren of Illinois.
    Mr. Hultgren. Thank you, Mr. Chairman, and thank you all 
for being here. I really appreciate the amazing work that you 
have done and continue to do. I am very excited about the 
future.
    I have a couple of questions. Mr. Musk, I wonder if I could 
start and ask you a question quickly. Vertical integration is 
something certainly that is new to the space industry. I wonder 
if you could speak to how much you currently outsource to other 
U.S. subcontractors and how much you plan in the future to do 
that, and as a percentage of government program dollars, what 
is that percentage and how much trickles back to other smaller 
companies across the United States of the work that you are 
doing at SpaceX?
    Mr. Musk. So at SpaceX, we make all the major components of 
the vehicle in-house so the engine, air frame, avionics and 
launch operation. However, feeding into that are a vast number 
of smaller suppliers. Now, we have to do the major components 
internally in order to achieve a revolutionary improvement in 
the cost of space transportation because to the degree that we 
inherited the legacy components, we would inherit the legacy 
limitations and costs. But we have several hundred suppliers 
throughout the country and I mentioned some in the automotive 
industry. By value, if you look at our expenditures on a weekly 
basis, about half of the money is spent internally and about 
half is spent externally.
    Mr. Hultgren. Thank you.
    I wonder for all of you, if you could address, the name of 
NASA's Commercial Crew Program implies a significant amount of 
private investment and not simply government funding. We have 
talked about that a lot today and really that discussion, of 
how important it is. I wondered if briefly each of you could 
discuss just how much private investment is going into your 
company's commercial crew program beyond the government funding 
from NASA and the Department of Defense, and if you are not 
willing to say an amount due to proprietary concerns, I wonder 
if you could give a range or percentage.
    Mr. Elbon. Congressman, I would characterize that our 
program includes the preponderance of the investment from the 
government. I think this is important for a couple of reasons. 
In order to keep the services prices low, it is important that 
there not be a significant investment that requires a return on 
that. I think it is also important that the government can be 
assured that a product and a service will be delivered and that 
the government won't make an investment that doesn't realize 
that because the company couldn't follow through with the 
investment that it was required to make.
    Colonel Lindsey. And Congressman, for us, we are a private 
company, so one thing that is unique about us is that because 
we are a private company, we invest a significant amount of 
money into R&D each year into various business areas. For this 
program, we are passionate about it, our owners are passionate 
about it, and our percentage right now we are running is 
somewhere around 40 percent is what we are investing.
    Mr. Musk. Well, if you looked at, say, our expenditures 
through the end of last year, our total expenditures of SpaceX 
time including every check we have written, we are about $800 
million, and approximately 300 of that came from the 
government, so 500 private.
    Mr. Hultgren. Okay. Thank you.
    Colonel Precourt. Congressman, in the case of Liberty, our 
concept, as I mentioned, was to leverage developed and flying 
elements so it has required a large amount of the startup cost 
and also the amount of cost you have to recoup through pricing 
and operations. So we have an integration cost to go to make 
these two elements fly together. We are leveraging huge 
investment from both European Space Agency and NASA on previous 
systems, so we have a little bit different problem in terms of 
business case, but we are poised to have greater than 50 
percent of that remaining cost for development come from 
outside investment. And as I mentioned, it also does require a 
head nod from our customers that there is a commitment to the 
design and enabling the investors to climb onboard.
    Dr. Sowers. So from United Launch Alliance perspective, the 
rockets we are planning to use for commercial crew for Boeing, 
Sierra Nevada, and Blue Origin were substantially developed 
under commercial funds; about 80 percent of the cost of the ELB 
development was commercial. Going forward, the investments to 
human rate are quite modest and we are currently funding our 
participation in the Commercial Crew Program with ULA internal 
funds.
    Mr. Hultgren. Thank you. I just have a few seconds left, 
but if I can ask you each quickly just a two-sentence answer of 
just terminology. I wondered if you could each describe your 
definition of what ``commercial'' means.
    Mr. Elbon. In the environment that we are in, I think 
``commercial'' means that we are working towards developing 
markets in addition to NASA. I think that we are doing this as 
a company with reduced government involvement as compared to 
programs that we have done in the past and that we are doing 
this in at least a fixed-price environment where the financial 
risk for performance is on the companies that are 
participating.
    Colonel Lindsey. Sir, for us I would define ``commercial'' 
much as John did in terms of we have other markets we are 
looking at and we are co-investing and participating. Probably 
the most significant difference between what--now and what we 
have done in the past is when we are done with this and when we 
go contract for services to orbit, instead of the government 
actually owning the entire vehicle and operating it, they will 
actually pay for services where we own the vehicle and operate 
it jointly with them.
    Mr. Musk. Yeah, I think you are going to hear much the same 
answer, but essentially, ``commercial'' would mean that the 
commercial companies are deciding on the design but NASA is 
deciding on the objective. These are the standards and the 
objectives that need to be achieved, but then the solution to 
those standards and objectives is arrived at backed by the 
commercial company. And then secondly--that in terms of the 
funding that goes into making it happen--that there is a 
substantial portion of our funding that comes from entities 
other than the government.
    Colonel Precourt. Congressman, I might offer a little 
different perspective based on a number of proposed programs 
that we have for different customers. We have everything from 
the range of a small rocket motor that serves the Pegasus 
launching for Orion all the way up through the space shuttle 
and in between. We have Minuteman missiles and the Trident 
missiles for the government. And in the purest sense, 
``commercial'' means that we as the company would invest in the 
development completely, and then it would be based on a return 
on a number of sales of that product, whether it be a 
government or another buyer would purchase enough that we could 
recoup that investment. We do some of those in proposing and we 
do others that are purely cost-plus where the government takes 
on the risk.
    I think in this particular environment, we are trying to 
get towards the place where the businesses can invest and there 
is enough there, but in the case of what we are doing here 
today, I don't know that there is enough market to draw that. 
So we are moving in a direction where I believe the advantage 
will be getting some of the benefits of outside investment 
while delivering on a valuable product. And I think it is 
laudable to try to get to a place where we are streamlined in 
the interface between the government and the contractors.
    Dr. Sowers. I think in the context of the Commercial Crew 
Program, it means that the government is purchasing a service 
from a private company using a commercial contract. And in that 
sense, all of NASA's science missions are performed that way, 
as well as all of our military space launches and intelligence 
community's space launches are done that way with the 
government purchasing a service from a private company.
    Mr. Hultgren. Again, thank you all.
    Chairman, I have gone over. I yield back. Thank you.
    Chairman Hall. Thank you for yielding back. And it might 
have been more in keeping with our thrust if we had the Virgin 
Galactic people here. Ms. Johnson and I were just talking about 
them. I don't know what Galactic means but I think their space 
port out there that they, for suborbital flights, it might be 
of interest to the gentleman's questions there. And it would be 
of interest to everybody here. We will look into that later.
    Mr. Tonko of New York, you have five minutes.
    Mr. Tonko. Thank you, Mr. Chair.
    Good morning, gentleman, and thank you for your testimony.
    Let me direct this to you--each of you. If a commercial 
launch vehicle experiences a serious anomaly or failure, what 
should NASA require of the companies before they are allowed to 
resume flights carrying NASA astronauts?
    Mr. Elbon. I would assume as we go forward that we will 
follow processes and approaches like we have used for Space 
Shuttle, Space Station, other programs that have carried crew 
into orbit. If there is an incident, it is very important to 
stand down, understand what that incident is, resolve that 
incident, and fix whatever needs to be fixed before we proceed. 
So we will need to do things like that as we move forward.
    Colonel Lindsey. From my perspective, exactly the same 
thing--a full investigation needs to happen. I think the 
entities involved, be it the government or other folks 
involved, need full insight into what happened, what is going 
on, full investigation, study, basically nail the problem--or 
pound the problem down flat is a must as we have done in the 
past when we had anomalies. And we eventually need something 
called a Flight Readiness Review that everybody has to agree, 
including with the same opinions exposed before we are ready to 
go back to flight and follow a very disciplined pass--path much 
like NASA has done in the past.
    Mr. Tonko. Mr. Musk?
    Mr. Musk. I agree with those comments. NASA is 
fundamentally the customer and the customer decides what they 
want to do next so------
    Mr. Tonko. Mr. Precourt?
    Colonel Precourt. Congressman, its root cause and then 
corrective action. And getting to the root cause is somewhat 
technically challenging at times and it requires a degree of 
openness and collaboration across both sides of the interface 
between the customer and getting to really, truly understanding 
what that root cause is such that the corrective action can be 
appropriately designed to it.
    Mr. Tonko. Dr. Sowers?
    Dr. Sowers. NASA already has a working model of what you 
are talking about for the science missions that they purchase 
commercially, and they have a very rigorous certification 
process, that has different levels, depending on the importance 
of the payload. And once you are certified, if there is an 
anomaly, then there is a process of going back through the 
anomaly investigation, corrective action, and then there is a 
recertification that has to occur back to those same standards 
of rigor.
    Mr. Tonko. In the case of those circumstances, who should 
bear the cost?
    Mr. Elbon. That will be something that we will need to 
focus on and work as we go forward and develop the services 
contract. Clearly, if that risk is on the provider, the cost of 
service will need to be a higher amount in order to cover that 
risk. If the government decides to carry that risk, the price 
of the service could be lowered. So I think it is a cost-risk 
trade that will be made as we go forward and work on the 
services contract. Clearly, the provider community needs to 
step up and bear its share of that risk.
    Colonel Lindsey. Yeah, I agree. I think it will be a cost-
risk trade, but ultimately, just like in design, it is our 
responsibility to design it adequately and test it adequately 
before we go flying. It is part of the root cause investigation 
when you have an anomaly. We will have to get at the root cause 
and that will be part of the determination, I think, as what 
caused the problem. And as a result of that, then, will 
probably determine who bears the most cost in this case.
    Mr. Musk. Yeah, I think it is a shared cost situation. I 
think there are parallels here in aviation, automotive, and--
yeah, so it is going to be a shared cost so------
    Colonel Precourt. Congressman, I think the Ranking Minority 
Member stated it very well with the indemnity question. I think 
that, as John mentioned, the services contract would be laid 
out such that it is clear to a certain degree. There are some 
very low probability events with very extremely high costs that 
we as companies probably would not be able to cover, and that 
is where the indemnification comes in is at what level does 
that occur and how would it be handled. When we fly off a 
range, there is a presumption of certification with the Air 
Force, and some of those costs--certainly for government 
missions--are borne beyond a certain liability level that 
protects us all.
    Dr. Sowers. I think I agree with my colleagues up here. 
Everyone up here has every incentive to make sure all of our 
missions are successful. The viability of our companies depends 
on being successful. The question of liability I think is one 
that we need to work on in the future. On commercial space 
missions right now, there is the Commercial Space Launch Act, 
which does provide some indemnification of third parties off of 
government ranges.
    Mr. Tonko. Finally, Mr. Chair, if I might, are there any 
assurances--other assurances that you can offer the Members 
that there would be no additional hidden cost to taxpayers in 
the event of failure or anomaly?
    Mr. Elbon. I would offer that that will be specified in the 
contracts that we have and it will be up to us to honor those 
contracts. There are lots of contracts the Boeing Company has 
with the government, and it is very important for us to execute 
on those and honor those if we are going to continue as a 
responsible company doing business with the government. So we 
will be highly motivated to do that.
    Colonel Lindsey. Part of the philosophy of this whole 
Commercial Crew Program is to be a firm, fixed price pay for 
services, no hidden costs, know exactly what we are getting 
into, so I think as mentioned by my colleagues, we need to nail 
down the indemnification and how we are going to do that before 
we proceed and have that as part of the contract. And then we 
will know so there won't be any surprises. But I think it is 
really important we nail that down before we proceed forward 
with services contracts.
    Mr. Musk. I think it is tempting to think of space as 
somehow fundamentally different from other modes of transport, 
but I think it is not. It is a new mode of transport, or a 
newer mode of transport, but I think there are many parallels 
with other modes of transport. And NASA, for instance, 
purchases air tickets on airlines. And in a sense, that is 
extending that model to space flight. It works very well with 
airliners. So I don't think that this is something that should 
be a very fundamental concern because of parallels to other 
industries.
    Colonel Precourt. I would just echo from John and Steve 
that setting out the right ground rules in the contract for 
services is really the way to address that--I completely agree 
with that--and being as detailed as you can up front so it is 
well understood and managed. We are all here to serve the 
customer and if we don't, then we won't be a producer for them 
for long------
    Dr. Sowers. Yeah, I agree. As we get further down the road 
with it, all those details will be worked out and at that point 
there will be no hidden costs.
    Mr. Tonko. Thank you, Mr. Chair.
    Chairman Hall. The gentleman yields back.
    We all have other questions. In fact, I would like to ask 
about NASA oversight, what they think is necessary for the 
safety of passengers and the crew, but each of us will have the 
right to write to you and give you a reasonable amount of time 
to answer those questions. And we are trying to be as thorough 
as we can and let everybody ask all the questions they can 
while we have you here. That is how important you are to us.
    Mo Brooks, you are recognized for five minutes.
    Mr. Brooks. Thank you, Mr. Chairman.
    NASA is pursuing a commercial approach to crew 
transportation to the International Space Station. While the 
word ``commercial'' has been used, I am not really sure how it 
is used and how this approach actually exists when put against 
the traditional definition of commercial. And I would like to 
get a better understanding of the business approaches that we 
might be using when we use this word ``commercial.'' And I do 
it in this context:
    It does not seem to me that there is really a commercial 
market in the normal sense that you might have with airline 
flights or you might have with food or anything else where you 
have a large base of people out there that want to demand 
consumption of whatever good or service that might be produced. 
In fact, if I were to look at it in terms of private sector, 
non-NASA crew transportation, it would appear to me that the 
market is somewhere between minimal and nonexistent. You might 
read about the random private person who will pay money to go 
up in space using a Russian aircraft--excuse me--spacecraft, 
but that seems to be the extent of it.
    And if that is the case that there is not truly a private 
sector commercial market that space launch companies can 
pursue, then I am very much concerned that we might be running 
into a case of inverse economies of scale. With economies of 
scale, generally speaking, the more you produce of something, 
economies of scale come into place and that product or service, 
whatever it is that you are producing, the price goes down 
again because of economies of scale. And when I say inverse 
economies of scale, I am talking about where we have a limited 
market, if it is limited just to NASA, and we keep creating 
more and more companies competing for that constant slice of 
the pie, then in fact we are going to have increasing cost per 
launch rather than decreasing cost per launch.
    With that concern on the record, please, if each of you 
would, describe for me what actions are you taking to fully 
explore the non-NASA crew transportation market or search for 
customers in the private sectors; and second, what would be the 
impact to your NASA pricing if you fail to capture these 
commercial opportunities in the private sector? And I am 
limiting it to human spaceflight. So with that, if all of you 
could respond and assist as best you can with helping us better 
understand the impact of this plethora of companies pursuing 
what appears to be a rather constant human spaceflight market.
    Mr. Elbon. Thank you, Congressman. I will start by agreeing 
with your assessment of the market. I think that there 
definitely is potential for a commercial market. It is in my 
view, not well defined, the depth of it is difficult to 
estimate, and so developing a business case that depends on it 
is a difficult thing. So we have chosen to develop a system 
that will be affordable if the only transportation that we do 
is government transportation to ISS, that the investment, et 
cetera, will allow us to do that at a reasonable basis.
    In parallel, though, we are also working hard to develop a 
commercial market independent of that. We have teamed with 
Space Adventures, who is the company that brokered the flights 
you mentioned to International Space Station on the Russian 
rockets, and also with Bigelow Aerospace to help provide a 
reliable transportation system so that Bigelow's business model 
serving countries who can't afford their own space program but 
would like to send astronauts to the space station.
    So I think the fundamental thing is to develop a capability 
based on the transportation to space station, but at the same 
time, work really hard to cultivate this adjacent commercial 
market, and then as that matures, the cost for the NASA 
transportation will go down.
    Mr. Brooks. That was a part of my question. Have you or 
anybody else been able to ascertain any private sector market 
for human spaceflight, and if so, can you give us a judgment as 
to how many you anticipate on the private sector you could take 
into space on an annual basis within five or ten years?
    Mr. Elbon. We traveled with Mr. Bigelow to Farnborough 
about a year and a half ago now and met with several of his 
potential clients. As I mentioned, there are sovereign 
entities, countries that would like to have their own space 
program, and we met with six of those, and I can tell you from 
that conversation that if there is a Bigelow Space Complex that 
exists and that is dependent on reliable transportation that 
those countries are willing to sign up now to do that. So I 
think the potential is there for a significant number of 
flights to low Earth orbit, but as I said, we aren't basing our 
business model on that because we don't want to not be able to 
execute the primary business of taking U.S. crew to space 
station and have that be dependent on this commercial market 
maturing.
    Colonel Lindsey. Yes, Congressman, we also are basing our 
business model on the core business, which is taking U.S. 
astronauts back and forth to the International Space Station, 
but we have been doing a lot of work looking at other markets. 
We think there are significant markets out there or we wouldn't 
be doing this investing of our own company's money in it. We 
think that foreign governments, other countries have already 
flown with the Russians and there are a lot of them out there 
that would like to join, I think, the international partnership 
that we have with the space station that is not there.
    One thing I would like to point out is that the current ops 
concepts for how we operate the International Space Station is 
really based on our ability to launch and land and get resupply 
up to space station. And I would suggest to you that if that 
paradigm changes in the future, if we are successful, that ops 
concept will change as well just as aircraft have evolved over 
time and ended up doing missions you never expected them to 
start doing.
    So I think there is a market there. I think the more we fly 
up in space, the cheaper the launch costs get. There is an 
economy of scale there. And so for all these reasons, we think 
there is a market--a significant market well beyond just the 
core of transporting astronauts to the space station.
    Mr. Musk. I think your concern about inverse economies is a 
good one, I think it applies only to a portion of the cost per 
flight. If you look at the cost per flight for transporting 
astronauts to the space station, at least in the case of 
SpaceX, about 40 percent of that is the rocket, about 40 
percent of that is the non-manned elements of the spacecraft, 
and then maybe 20 percent incrementally is the human element. 
For the--for rockets, we already have two-thirds of our 
launches with commercial entities. So NASA has about one-third 
of our missions; two-thirds go to launching commercial and 
communications and broadcast satellites and that kind of thing.
    For the spacecraft, driving the spacecraft, we already will 
be doing roughly four, perhaps going up to six missions per 
year for cargo transport to the space station. And it is the 
same basic spacecraft that is used for human elements. So it is 
really just that remaining 20 percent where there is 
potentially a concern of inverse economies of scale.
    However, I would like to make another prediction which is 
that in ten years there will be more commercial flights--manned 
flights to space than there will be government. I am quite 
confident of that. But we need to have constantly improving 
technology. The cost needs to get lower because there are only 
a few people that can afford to spend $20 or $30 million just 
to go to space.
    Colonel Precourt. Congressman, thanks for your question. I 
agree with your assessment of the market, and as a launch 
vehicle provider, we are looking at broader markets for other 
users besides crew through a common interface with multiple 
payloads, whether it be crew cargo, science, other satellite 
missions, et cetera. And so we need to be able to leverage a 
market that is broad like that to make this work.
    I would like to add to that, though, that what I would hope 
would emerge from this commercial approach for NASA is a better 
outcome in terms of cost affordability for a highly reliable 
product. And what we learned with Constellation and with 
Shuttle and other programs is that it comes down to how you 
organize with your people as to how much it is going to cost in 
the long term, both on the government's side and the 
contractor's side. And we at ATK have streamlined to the degree 
about 50 percent of our overheads in the last two years with 
essentially the same production capabilities, and that is due 
to the way we organize both internally and with the interface 
to the customer. We were able to do that because we have 
customer interfaces of a broad nature, all the way from pure 
commercial where we invested in the product and delivered it 
from our own internal monies and had a market that pulled on it 
to return that investment all the way to the full cost-plus 
that you are familiar with.
    So in doing so, we talk a lot about, okay, so in 
theoretical terms, how do you get to a point which is optimum 
from a customer-contractor interface so that there is not too 
much oversight and not too little? And we began to look at it 
in quantifiable means and measure, and there have been a number 
of reports on this, but you can look a lot of my programs, and 
they range in two ratios that are of interest. One is what we 
call the contractors' workforce in support to touch labor 
ratio. Those ratios range in industry from anywhere from one-
half of a person for every person producing a product to over 
three people that are doing support work for the touch labor 
people.
    Then you look at that total labor ratio of the industry to 
the government, and the programs range from one industry--
sorry, one government person for every four in the industry in 
the contract all the way to 20 industry for each government 
member on the contract. And so we need to use those metrics to 
try to drive ourselves to an optimum position, and I would hope 
that as we strive in this commercial crew process, we can get 
to those. I have seen in a lot of our commercial programs that 
the safety records remain very, very high even though those 
ratios of labor across the interfaces are much lower.
    Dr. Sowers. Congressman, United Launch Alliance is not 
planning to develop new rockets to support commercial crew. We 
are going to use the rockets that are currently flying NASA 
science and military payloads all built in Decatur, Alabama. 
From a market-sized standpoint, I agree with the rest of the 
panel up here that the commercial market is highly uncertain, 
but I think there are promising business plans like Bob 
Bigelow's and the traffic models I have seen from Mr. Bigelow's 
business plan are truly stunning. They could get the industry 
into a launch rate that we have never experienced before, 
doubling or tripling the demand that we currently see out 
there. So the promise is very high; the uncertainty is also 
very high.
    Mr. Brooks. I thank the gentlemen for your insight. And Mr. 
Chairman, thank you for allowing these witnesses to go way 
beyond my allotted time.
    Chairman Hall. Your time really has expired. Thank you. But 
good questions and good answers. Thank you.
    Now, I recognize Mrs. Lofgren, gentlelady from California.
    Ms. Lofgren. Thank you, Mr. Chairman.
    This is I think a very important hearing because really I 
think the gentleman from Alabama's question is a good one. I 
have been enthusiastically supporting this effort, but the 
question is whether we are helping a transition or whether this 
is it. And there is no way to know that at this point except 
that the payoff is so enormous that we have to take some risks 
sometimes. And that is I think what we are doing at this point. 
I think it is a risk worth taking.
    But I--one of the things I would like to know--I mean we 
need to have a safe product. And I am interested if you can 
each tell me what is the most challenging aspect of meeting 
NASA's safety requirements that you are facing today?
    Mr. Elbon. So we are accustomed to NASA's safety 
requirements, having worked on Shuttle and Station most 
recently, but Apollo, Gemini, Mercury before that. It is kind 
of ingrained in what we do, so things like safety reviews, 
design reviews, traceability, configuration management, all of 
those processes are baked into our system.
    And as I mentioned earlier, we have learned over the years 
that it is not a function of whether it is a government program 
or commercial program that you use those processes; we have 
learned that in order to have a safe, reliable transportation 
system, you must follow processes like that.
    Ms. Lofgren. Um-hum.
    Mr. Elbon. And so the same kinds of things that we have 
done in the past on Shuttle, Space Station, and other programs 
will be implemented in our Commercial Crew Program.
    Colonel Lindsey. Yes, Congresswoman, as far as the most 
challenging single safety aspect, we don't really have one 
technical issue that is the most challenging. We also follow a 
process. The process is very disciplined. It is very known. 
Having flown on Shuttle, I really appreciate the safety process 
because it kept me safe, and that is exactly the same kind of 
process we are implementing in our design and our development 
in terms of safety reviews, putting the SNNA processes 
together, tracking all those, identifying all of our hazards, 
identifying our failure tolerance and establishing that.
    The challenging part is doing all of it--the verification 
and validation of that. And our approach to those have been to 
team very, very closely with NASA and have them involved from 
the very beginning looking over from a safety standpoint, 
looking over our designs, identifying early those areas that we 
may not have enough tolerance, for example, in fixing those 
early. So it is process--it is a continual process. The most 
important thing is to stay vigilant and stay on top of that 
process all the way through, and that has been our approach.
    Mr. Musk. Well, the single toughest thing I think having 
gone through this with our Dragon spacecraft approaching the 
space station, where it has to be a human rate system because 
it is a robotic spaceship that is approaching and berthing 
robotically with the space station, which is $100 billion asset 
and it has astronauts from several countries on board. The 
biggest challenge is two-failure tolerance. So in other words, 
you have to be able to fail any two things at any time and 
still be okay. And when you consider all the systems on a 
spacecraft, that is just very difficult to achieve. We have 
been able to achieve it and we are going through--this is the 
final verification now, but that was the single most 
challenging thing.
    Colonel Precourt. Congresswoman, we also have had decades 
of human rating considerations driven into our processes, and 
our partner on Liberty, Astrium Corporation, similarly on the 
Ariane 5, which was designed with human rating in it for the 
Hermes space plane that Europe had planned brings our elements 
already to the table understanding and integrating human 
rating. The distinction that is being made at NASA right now, 
it is one thing to be human-rated; it is yet another to be 
determined that you are certified. So these new systems that we 
are bringing onboard have to go through a certification process 
even if we bring a human-rated full understanding of the 
requirements for human rating into the design. The question 
that we have is what will be the extent of the certification 
process that is not well known to us yet? And how many testing 
and verification activities and the cost of those will we have 
to include in our planning?
    Dr. Sowers. Congresswoman, we are also very accustomed to 
the rigor that is required to have repeatable success, 
especially given the nature of the payload to be launched for 
the national security community. I would say one of the 
interesting challenges that we are faced with is providing the 
abort capability, and this is one thing that all of the systems 
that are being talked about for Commercial Crew that Space 
Shuttle didn't have and that is the ability to sense an 
impending failure of the launch vehicle and to have the 
spacecraft come back safe and sound with the crew intact. And 
working out all those different abort scenarios is a very 
interesting challenge. I think it is also very worthwhile.
    Ms. Lofgren. I would just say, Mr. Chairman, looking at the 
timeline that NASA has provided, it is really not until 2017 
that we are looking to get this mission accomplished. To me, 
coming from Silicon Valley, that seems like an awfully long 
time. Is there any possibility that we could significantly 
reduce that time frame in your judgment with the private sector 
involvement that we have?
    Mr. Elbon. Congresswoman, the baseline plan that we have 
laid in place has us flying by late 2015. That, of course, is a 
function of funding. And I think it is also a function, as NASA 
goes forward with the program, how many providers they decide 
to carry and so how many providers will that funding be divided 
amongst. But certainly with adequate funding we can be ready to 
go by the end of 2015 and so start in earnest missions in 2016.
    Colonel Lindsey. Congresswoman, our internal plan also has 
us starting to fly by the end of 2015, so I have heard the 2017 
number from NASA and I haven't talked to NASA about that 
number. But our internal number is 2015, and again, if we get 
adequate funding and--we will accelerate. If we don't get 
adequate funding, then the schedule is the one thing that has 
to give.
    Mr. Musk. Yeah, I totally agree. Six years seems like 
infinity. So SpaceX has only been around for nine years. During 
that time we developed from scratch two launch vehicles and 
flew them and complex spacecraft and flew that. So I would be 
disappointed if this was not accomplished within 3 years.
    Colonel Precourt. Congresswoman, acceleration is possible. 
It is one of the reasons we chose the Liberty concept because 
the elements are flying today on other vehicles and have that 
experience. So the long lead for us is actually the ordering of 
components in the supply chain and the lead time available to 
get those components ready to do a test flight. The other 
integration engineering happens in parallel, and so 
acceleration is feasible with the right funding profiles.
    Dr. Sowers. So given that we are using existing rockets 
that are flying today, we can be ready as soon as any of these 
other companies can provide a spacecraft to launch.
    Ms. Lofgren. Thank you, Mr. Chairman. I see my time has 
expired.
    Chairman Hall. I thank the gentlelady.
    I now recognize the gentleman from Mississippi, Mr. 
Palazzo.
    Mr. Palazzo. Thank you, Mr. Chairman.
    Good morning, everyone. The great thing about going last I 
guess is I can just eliminate question after question that has 
already been asked and answered. But it is definitely good to 
see you all here today.
    The Chairman mentioned something earlier about how he was 
excited to hear on time and within budget, and I have always 
liked that, too, especially within the private sector--on time, 
within budget, but also to the customer's satisfaction. So 
please don't forget that aspect of it as well.
    I would like to ask each of our witnesses here today to 
share their perspective with this Committee on ground-based 
testing. What do you see the value in the ground-based testing? 
What have you done in regards to ground-based testing? What are 
you planning to do in regards to that? And also how can we also 
make sure that we stay focused with this critical component 
throughout the development and the procurement process? And we 
will start with Mr. Elbon.
    Mr. Elbon. Ground-based testing is an important part of any 
development program, particularly human spaceflight development 
programs. You saw on the video we have test-fired a couple 
engines. We will be doing ascent--or an ascent-abort test that 
will happen without a rocket so it will go from the ground. We 
are integrating our avionics now in Houston. I am traveling in 
about a month to visit Mr. Galloway at Stennis and to look at 
the capabilities there and determine what kind of testing might 
be possible at Stennis. So we will have a comprehensive ground-
based testing that is in line with what we have traditionally 
done on human spaceflight programs.
    Colonel Lindsey. Thank you, Congressman. That is a great 
question for us because actually, our philosophy on the Dream 
Chaser Program is test, test, test. You know, you can do 
thousands of wind tunnel simulations, but the best wind tunnel 
in the world is to actually go drop test and see if your 
vehicle really flies. You take more programmatic risk, but we 
think you can accelerate and go faster doing that. So we are 
all about test. And the first phase of the program, instead of 
just coming up with a Power Point vehicle, we actually built a 
real vehicle, put it in University of Colorado's earthquake lab 
and tested it structurally. We did drop-model tests; we have 
done all kinds of testing. Our rocket motors, which are 
actually the same rocket motors that are used by Virgin 
Galactic for SpaceShipOne and SpaceShipTwo are extensively 
tested on the ground, and we continue to test those.
    Every component, every aspect of what we do will be ground-
tested, so we think it is invaluable to do all of that before 
we go into flight test and we think it enables us to move 
faster and accelerate our program by doing an extensive amount 
of testing.
    Mr. Musk. At SpaceX we do a great deal of ground-testing, 
but I should point out that we also flight-tested our launch 
vehicle and our Dragon spacecraft. So it is not just the 
ground-testing. We do--actually flight-test the vehicles and 
there is going to be a great deal of flight-testing to come. 
One of the big milestones is coming in about 3 months or so 
where we will dock with the space station or berth with the 
space station. And so that should be pretty exciting.
    Colonel Precourt. Congressman, flight-testing is critical, 
and many of the people in your State know that very, very well 
and we have worked for decades in many NASA programs exploiting 
the test capabilities in Mississippi. We actually have a plan 
with Liberty at leveraging a lot of testing that has already 
gone on behind us and then to leverage existing facilities like 
at Stennis and other places in the country that would further 
mitigate the risks of the systems as we take them into flight.
    Testing is all about a build-up approach. An example I can 
give you is we removed 1,500 pounds from the weight of our 
booster. We didn't do that on one fell swoop; we did it 
incrementally over several ground tests. And when you are 
handling 3.5 million pounds of thrust, you have to do that with 
a build-up approach, not jumping to the end state immediately. 
So that testing is ultimately critical to the reliability that 
we get out of the product.
    Dr. Sowers. Congressman, ground-based testing is 
fundamental to our philosophy of mission assurance. For every 
rocket that we fly, every part is tested as a part. They are 
built into subsystems and tested at the subsystem level. They 
are built further up into systems and tested at the system 
level. And then finally, the whole rocket is integrated on the 
launch pad and tested as an entire rocket, and that is before 
every single flight, and that is key to establishing repeatable 
mission success.
    Mr. Palazzo. I appreciate that. When we had an opportunity 
to talk to Commander Cernan I asked him the importance of 
ground-based testing, and he pretty much said everybody that we 
sent up to the moon came home from the moon safely. So it is 
extremely important to our space program that we stayed 
committed to testing and we don't try to take shortcuts, fly 
before we test, save costs, I don't think that is in the best 
interest of the program at all.
    Chairman Hall. Judge Miller has kindly said that he will 
not ask any more questions, but he like others that were here 
have been on other committees during this time and knows that 
we have the full report to read. And Judge, thank you for 
yielding your time.
    Mrs. Adams is here. She has five minutes if she would like.
    Mrs. Adams. Thank you, Mr. Chair.
    Chairman Hall. Thank you for being here with us.
    Mrs. Adams. Thank you. I am sorry I am late. I was in 
another committee.
    I understand that with the recent failure of the Russian 
cargo mission, it highlighted some problems with depending on 
foreign countries to access ISS, so we need to build capacity 
for American astronauts to reach space on U.S. spacecraft and 
U.S.-built spacecraft built quickly but safely and with, I 
would believe, aggressive oversight by Congress based on what 
has happened in the past.
    Mr. Musk, can you talk about the importance of your rocket 
being 100 percent made and what business advantage you gain 
from that?
    Mr. Musk. One hundred percent even American-made? I believe 
it is important to avoid a foreign dependency on American 
launch vehicles. You never know what the future security 
situation of the world will look like. And so in order to have 
good control over our costs and not face potential future 
foreign dependency, we sourced the vehicle 100 percent in the 
United States.
    Mrs. Adams. And what is your biggest concern with the 
management of the Commercial Crew Program?
    Mr. Musk. Well, I should say right now I think NASA is 
doing a pretty good job. Going forward, the most important 
thing is that the terms and the costs be well defined. Where 
things can go wrong is if the price is fixed but then the terms 
change over time and that is obviously not a workable situation 
for any contract.
    Mrs. Adams. In the document given to the Committee dated 
February 19, 2008, SpaceX laid out an ambitious schedule which 
has all demonstration flights for commercial crew ending in 
April of next year. Can you tell the Committee what NASA can do 
to help you meet any schedule you lay out in the future and why 
the demonstrations have been so delayed?
    Mr. Musk. Okay, but that could be a bit of a longer answer.
    So we are getting ready to do our first flight to the space 
station, which I think could occur in the January time frame. 
So I think that is doing pretty well. I think by the standards 
of the space industry, I think we are doing very well on 
schedule. The space industry is not known for being on time, so 
I guess if you are running a little bit late, that is maybe by 
most other standards being on time. I hate to say that but it 
is unfortunately true. And you know, I think I feel highly 
confident that if the funding is there for commercial crew that 
we can get crew safely to the station and back within three 
years.
    Mrs. Adams. Mr. Precourt, could you tell the Committee how 
much money that ATK spent on this application and CCDev-2?
    Colonel Precourt. How much we invested in going through the 
CCDev-2? We have a partner in Astrium from Europe, and together 
in putting together our program, we took the concept to a 
systems requirements review on our own funding, and it is north 
of $10 million.
    Mrs. Adams. And were you told that both launch vehicles and 
spacecraft were eligible for awards under CCDev-2?
    Colonel Precourt. That was NASA solicitation. They 
specifically requested elements of vehicle, of spacecraft 
services such as launch vehicles and spacecraft.
    Mrs. Adams. Thank you. I yield back.
    Chairman Hall. Ms. Adams yields back.
    I think we really want to thank you for your good time. And 
I just want to comment on Ms. Lofgren's question because she 
asked a good one about acceleration of those dates, 2017 and 
2020. They seem a little far off to me but I can remember we 
are in an emergency, and this country is in an emergency right 
now. NASA is in an emergency. Our space program is in an 
emergency. We can do better than those dates I think, and I 
refer to a time back toward the end of World War II when the 
Japanese were headed for Midway and we had broken their code; 
we knew they were coming. We had two aircraft carriers, one of 
them ready for battle, the other being worked on in Pearl 
Harbor to be worked on for eight months Admiral Nimitz went 
aboard it on Monday and said by Thursday we are going to go out 
of here and meet the other. We only had two aircraft carriers 
to fight to five aircraft carriers that were attacking us. They 
did it in those five days. And somebody just needs to say damn 
it, let us go. And I think you all are the ones to do it and 
hope you will.
    And I thank the two astronauts who are there and all five 
of you. I am very grateful to you. We do have Garrett Reisman 
who has--flown three shuttle missions. I recognize him. And Bob 
Walker who chaired this Committee is here. We welcome you, Bob. 
And we are going to close this hearing in just a few minutes 
with thanks to Bart Gordon for the four years he served here.
    The round of questions are completed, and I thank you for 
your testimony. If Members of the Committee have additional 
questions for anyone, we will write to you and ask you to 
respond to those in writing if you will.
    You are excused. You can stay if you like. You are welcome 
to stay; you are wanted to stay. I know how busy you are. You 
are not going to stay, but we once again on behalf of all--
everybody here, we really do appreciate you and the time you 
have given us, each one of you.
    Okay. At this time we will get our very patient second 
panel seated, I want to welcome you, too. Our first witness on 
the panel is the Honorable Paul Martin, the Inspector General 
of NASA, who was confirmed in November 2009. Prior to NASA, Mr. 
Martin served as Deputy Inspector General at the U.S. 
Department of Justice, a great background and good for service 
now. Mr. Martin, we are really delighted to have you here.
    Our second witness on the panel is Bill Gerstenmaier, a 
very knowledgeable Associate Administrator of the Human 
Exploration and Operations Mission Directorate. We don't need 
any of that at NASA. He has been at NASA since 1977, led a 
number of activities with the Space Shuttle and the Shuttle Mir 
and International Space Station before becoming Associate 
Administrator for Space Operations prior to this summer. Mr. 
Gerstenmaier, thank you for your leadership in ensuring safe 
and successful human spaceflight program and for coming before 
us today.
    As our witnesses should know, spoken testimony is limited 
to five minutes after which Members will have five minutes each 
to ask questions. We won't hold you to the five minutes. Stay 
as close as you can but we are honored to have you and we will 
be very lenient. We don't have a hook or anything. If they go a 
little over when they are as important as you two are.
    So at this time, I will recognize Mr. Martin to present his 
testimony.

               STATEMENT OF THE HON. PAUL MARTIN,

            INSPECTOR GENERAL, NATIONAL AERONAUTICS

                    AND SPACE ADMINISTRATION

    Mr. Martin. Thank you, Mr. Chairman, Members of the 
Committee. Thank you for inviting me here today to discuss the 
progress made and the challenges remaining with NASA's efforts 
to encourage a market for privately owned commercially operated 
space transportation.
    To date, NASA has spent $320 million in its commercial crew 
development effort, most recently making awards to four 
companies to help foster a commercial space industry that can 
meet NASA's need to transport its crews to the International 
Space Station. Although NASA has over 50 years of experience 
with contractor-built government-owned space vehicles, it has 
never purchased transportation for its astronauts aboard a 
commercially developed system. Of primary concern in this new 
paradigm is how NASA will work with its commercial partners to 
ensure that their vehicles meet NASA's safety and human rating 
requirements. How NASA addresses this challenge will to a large 
degree determine whether the nascent commercial space 
transportation industry can evolve into a viable commercial 
enterprise.
    To examine NASA's progress as it transitions from its 
traditional role of owning human spaceflight vehicles to 
purchasing these services, the Office of Inspector General 
reported this summer on the Agency's efforts to modify its 
safety and human rating requirements and acquire and certify 
commercial crew transportation services. Our June 30 report 
concluded that NASA has made sustained progress toward its goal 
of obtaining commercial transportation services to low Earth 
orbit. At the same time, we identified a series of significant 
challenges. My written statement summarizes each of these 
challenges, and I will not attempt a summary of that summary 
here. But let me highlight three important issues.
    First, NASA has not finalized the process it will use to 
certify that a commercial partner's vehicle can safely 
transport NASA personnel. Every requirement NASA imposes has a 
cost associated with it in time, money, or potentially 
decreased innovation. Conversely, incurring these costs is 
often necessary to appropriately manage risk, particularly when 
the issue is human crew as opposed to cargo. In the coming 
months, NASA must finalize a set of crew safety requirements 
that help reduce development and operation costs for its 
commercial partners.
    Second, NASA has recently announced acquisition strategy 
that calls for a firm fixed-price contract in its first phase. 
NASA's decision to move away from funded space act agreements 
toward far-based contracts has drawn criticism from some 
quarters over fears that it may create administrative burdens 
and reduce the control companies have over their own system 
designs. NASA counters that its contract eliminates much of the 
time-consuming paperwork of a more traditional far-based 
contract. Going forward, one of the key challenges for NASA is 
to strike a balance that will enable innovation and 
flexibility, yet provide the appropriate amount of direct 
government involvement to ensure the safety of NASA astronauts, 
which leads to my third and final point.
    NASA initially plans to operate in an insight role while 
companies are beginning development of their launch systems. In 
later stages, NASA may assume more oversight role in directing 
or granting approval to partners on the path to certification. 
Selecting the appropriate level and mechanisms of insight and 
oversight will be critical to provide NASA with sufficient 
information to assess partners' technical, schedule, and cost 
risks with the goal of certifying that commercially developed 
vehicles are safe for NASA astronauts, all without unduly 
affecting the commercial partner's ability to operate in a 
cost-effective manner.
    Mr. Chairman, this concludes my prepared statement. I would 
be pleased to answer any questions, preferably easy questions. 
I would leave the hard ones to my colleague. Thank you.
    [The prepared statement of Mr. Martin follows:]
Prepared Statement of The Hon. Paul Martin, Inspector General, National 
                  Aeronautics and Space Administration
Mr. Chairman and Members of the Committee:

    Thank you for inviting me to discuss the progress made--and 
challenges remaining--with NASA's efforts to develop privately owned, 
commercially operated crew launch capabilities.
    With the final Space Shuttle flight in July 2011, the Agency turned 
its attention to the manned space program called for in the NASA 
Authorization Act of 2010 while continuing to encourage development of 
commercially operated U.S. space transportation systems. When these 
commercial capabilities are matured and available to the Government and 
other customers, NASA intends to use them to replace its reliance on 
the Russian Soyuz for transporting astronauts to the International 
Space Station (ISS).
    The emergence of commercial companies seeking to provide access to 
the ISS and low Earth orbit presents NASA with both opportunities and 
challenges. In April 2011, NASA announced a second round of funded 
Space Act Agreements with four companies totaling $269.3 million as 
part of the Agency's Commercial Crew Development (CCDev) effort. NASA 
has since reported that these four companies--Blue Origin, Boeing, 
Sierra Nevada Corporation (Sierra Nevada), and Space Exploration 
Technologies Corporation (SpaceX)--have successfully met all initial 
milestones set for them. Furthermore, NASA has amended its agreements 
with Boeing and Sierra Nevada to include optional milestones for 
specific tests intended to accelerate development efforts. If met, 
these new milestones bring the potential value of the companies' 
agreements to $112.9 million and $105.6 million, respectively.
    Additionally, in July 2011 NASA and United Launch Alliance (ULA) 
entered into an unfunded Space Act Agreement to share personnel, 
infrastructure, and information to accelerate the potential use of 
ULA's Atlas V launch vehicle as part of a commercial crew 
transportation system. Similarly, last month NASA and Alliant 
Techsystems (ATK) entered into an unfunded Space Act Agreement to 
collaborate on the development of ATK's commercial launch system known 
as Liberty. Under the agreement, ATK and NASA will review and discuss 
Liberty system requirements, safety and certification plans, 
computational models of rocket stage performance, and avionics 
architecture designs.
    These Space Act Agreements illustrate the progress NASA has made to 
date with its CCDev initiative. However, significant challenges remain 
as NASA attempts to cultivate privately owned, commercially operated 
crew launch capabilities and foster a commercial space industry that 
could meet the Agency's low Earth orbit crew transportation needs. 
Although the Agency has over 50 years of experience with contractor-
built, Government-owned space vehicles, NASA has never procured 
transportation for its astronauts aboard a commercially developed 
vehicle. Of primary concern in this new paradigm is how NASA will work 
with its commercial partners to ensure that commercially developed 
vehicles meet NASA's safety and human-rating requirements, which seek 
to ensure that spaceflight systems accommodate human needs, control 
hazards, manage safety risks and, to the maximum extent possible, 
provide the capability to recover the crew safely from hazardous 
situations. How NASA responds to this challenge will to a large degree 
determine whether the nascent commercial space transportation industry 
evolves into a viable commercial enterprise that meets NASA's crew 
transportation needs. To examine NASA's progress as it transitions from 
its traditional role of contracting for and owning human spaceflight 
vehicles into the role of purchasing crew transportation services from 
industry, the Office of Inspector General (OIG) earlier this summer 
reported on the Agency's efforts to modify its existing safety and 
human-rating requirements to make them applicable to commercially 
developed vehicles. We also evaluated the overarching challenges 
associated with possible approaches NASA may use to certify and acquire 
commercial crew transportation services.
    Our report, issued on June 30, 2011, concluded that NASA has made 
sustained progress toward its goal of obtaining commercial 
transportation services to low Earth orbit. \1\ At the same time, we 
identified a series of challenges NASA faces as it expands its 
Commercial Crew Transportation program:
---------------------------------------------------------------------------
    \1\ ``NASA's Challenges Certifying and Acquiring Commercial Crew 
Transportation Services,'' NASA Office of Inspector General (June 20, 
2011) accessible at http://oignasa.gov/audits/reports/FY11/IG-11-
022.pdf.

      modifying NASA's existing safety and human-rating 
requirements for commercially developed systems;
      managing its acquisition strategy for commercial crew 
transportation services;
      implementing the appropriate insight/oversight model for 
commercial partner vehicle development;
      relying on an emerging industry and uncertain market 
conditions to achieve cost savings; and
      managing the relationship between commercial partners, 
the Federal Aviation Administration (FAA), and NASA.

I summarize each of these challenges in turn.

    Modifying NASA's Existing Safety and Human-Rating Requirements for 
Commercially Developed Systems. In December 2010 NASA issued a 
consolidated set of health and medical, engineering, and safety and 
mission assurance requirements that commercial partners will have to 
meet to obtain certification to transport astronauts (``Commercial Crew 
Transportation System Certification Requirements for NASA Low Earth 
Orbit Missions ''). These Requirements describe NASA's certification 
philosophy; the content and timing of the certification packages 
commercial companies will be required to deliver to NASA; and NASA's 
expectations for system safety, human control of the vehicle, and crew 
survival. In addition, the Requirements reference a set of 93 other 
documents, each containing additional requirements the companies must 
consider in order to obtain certification. NASA has categorized the 
underlying 93 documents into three types: Type 1-mandatory, must be 
implemented as written; Type 2-alternatives allowed with NASA approval; 
and Type 3-suggested best practices. Each of the 93 documents reference 
other documents that set forth additional requirements. According to 
one estimate, NASA's Certification documents contain more than 4,000 
requirements. However, NASA has not finalized the processes Agency 
officials will use to verify that commercial partners have met these 
requirements and certify that a commercial partner's vehicle can safely 
transport NASA personnel. In May 2011 the Agency released for industry 
comment six draft documents (the 1100-series) that supplement the 
Certification Requirements relating to missions to the ISS. These 
documents provide additional information to commercial partners 
regarding roles and responsibilities, technical management processes 
supporting certification, crew transportation system and ISS services 
requirements, and the application of technical and operations 
standards.
    Since issuance of our report, NASA has received industry's 
feedback, reviewed and updated the 1100-series documents, and is 
working to validate the requirements for development of commercial 
services to deliver crew to the Space Station. Updates to these 
requirements will continue through the formal NASA document change 
process with final approval and release planned for early November 
2011.
    Despite the absence of finalized requirements from NASA, the 
private sector is already developing systems and vehicles to meet 
NASA's crew transportation needs. During the comment phase, companies 
have suggested that NASA (1) modify existing requirements to the 
greatest extent possible and ensure they are achievable so that 
industry fully understands what is expected; (2) coordinate with the 
FAA --which has regulatory oversight of U.S. companies providing 
commercial space transportation services --to ensure NASA requirements 
and FAA regulations are compatible; and (3) allow for flexibility so 
that changes in vehicle or system design are attainable within 
reasonable costs. For its part, NASA said that it has reduced its 
compliance documents to those truly necessary to meet Government 
requirements. Additionally, the Agency has stated that it will allow 
commercial partners to propose alternative standards, where applicable.
    Every requirement NASA imposes on commercial vehicles has a cost 
associated with it in time, money, or decreased innovation. Conversely, 
incurring these costs is often necessary to appropriately manage risk, 
particularly when the issue is human crew as opposed to cargo. 
Consequently, many of the requirements NASA will impose on its 
commercial partners are the same as those the Agency applies to its own 
spaceflight programs. NASA must determine if, when, and how it will 
oversee commercial partners' development efforts in order to ensure 
they meet Agency requirements and maximize safety and reliability 
without burdening commercial partners with unnecessary demands that 
lead to higher development and operations costs.
    Managing the Acquisition Strategy for Commercial Crew 
Transportation Services. When we issued our report in late June, NASA 
was still developing its acquisition strategy and had not settled on 
the specific mechanisms it planned to use for procuring commercial crew 
transportation services. Therefore, our report discussed the financial 
and programmatic challenges of several possible strategies, including 
those that rely on funded Space Act Agreements; competitive 
procurements, in particular fixed-price contracts; or a combination of 
both.
    With respect to funded Space Act Agreements, we reported that their 
use limits Government control compared to traditional procurement 
contracts based on the Federal Acquisition Regulations (FAR). As one 
potential customer of the private sector market, NASA expects CCDev 
Space Act Agreements to result in commercial capabilities that consider 
the Agency's Certification Requirements. However, under such agreements 
the Agency cannot dictate specific system concepts or elements or 
mandate compliance with its requirements. Rather, commercial partners 
are free to determine the system requirements and concepts they believe 
will best serve their target markets. Because crew transportation for 
NASA is the most viable segment of the human spaceflight market in the 
short term, it is in the companies' best interests to ensure compliance 
with NASA requirements if they hope to obtain NASA's business. 
Nevertheless, the lack of mandatory compliance with NASA's requirements 
would have presented some risk that differences between partner designs 
and Agency requirements could occur. In addition, according to Agency 
policy, NASA may only enter into funded Space Act Agreements when its 
objective cannot be accomplished through a contract, grant, or 
cooperative agreement. Moreover, under the law a procurement contract 
is required if NASA is the sole beneficiary of the expected 
deliverables.
    Similarly, we reported that the use of fixed-price contracts for 
crew transportation services also presented challenges. Traditionally, 
cost-reimbursement rather than fixed-price contracts have been used on 
projects in which costs and risks are not clearly defined. While fixed-
price contracts lock in the Government's initial investment, proceeding 
in this manner may not eliminate cost risks. Some of NASA's potential 
commercial crew partners are building spacecraft for the first time and 
design and development are under way without fully defined and 
finalized requirements. In this type of environment, there is a risk 
that during the period of contract performance NASA's requirements may 
change so significantly that contractors could successfully argue that 
the Agency is changing the contract's scope, in which case NASA could 
be required to pay the contractor to make necessary modifications.
    In September 2011, NASA released an outline of its acquisition 
strategy to achieve a certified crew transportation capability from 
private industry no later than the end of fiscal year 2016. The draft 
request for proposal calls for a firm fixed-price Commercial Crew 
Integrated Design Contract in the first phase to be awarded to one or 
more companies that will result in a complete end-to-end design 
compliant with NASA Crew Transportation System requirements, including 
spacecraft, launch vehicle, launch services, ground and mission 
operations, and recovery. The contract value could be up to $1.61 
billion from July 2012 through April 2014. In the second phase, NASA 
will issue a separate, formal solicitation for follow-on contracts for 
development, test, evaluation, and certification activities with 
optional ISS service flights.
    NASA's decision to move away from funded Space Act Agreements and 
toward FAR-based contracts has drawn criticism from some quarters over 
fears that this approach may cause significant delays and limit the 
flexibility of participating companies. In rolling out its new 
strategy, NASA has described it as a non-traditional contract approach 
that eliminates certified cost and pricing and Cost Accounting 
Standards requirements and incorporates tailored requirements, limited 
deliverables, and focused insight and oversight. Nevertheless, industry 
representatives have expressed concerns that NASA's plans for a more 
hands-on FAR-based approach may be prohibitively expensive, create 
undue administrative burdens, and curtail the innovation and control 
they have over their system designs. Conversely, NASA believes the risk 
of commercial partners' inability to meet its human-rating requirements 
could cause costly and time-consuming redesigns, pose safety concerns, 
and require NASA to be more involved in the development of any 
commercial transportation system. Going forward, one of the key 
challenges for NASA will be to strike a balance that will enable 
innovation and flexibility yet provide the appropriate amount of direct 
Government involvement to ensure the safety of NASA's astronauts.
    Establishing the Appropriate Insight/Oversight Model for Commercial 
Partner Vehicle Development. In selecting the timing and 
appropriateness of its procurement mechanisms, NASA must balance its 
role as a supporter of commercial partners with its responsibility to 
ensure that commercially developed vehicles are safe for NASA 
astronauts, meet the Agency's needs, and provide for a viable domestic 
alternative to the Soyuz vehicle. As we reported in June 2011, the 
Commercial Crew Office is in the process of developing the model for 
NASA's insight and oversight of commercial companies. According to NASA 
policy, ``insight'' means acquiring knowledge and an understanding of 
contractors' actions by monitoring selected metrics and milestones. 
Methods of achieving insight include reviewing documents, attending 
meetings and tests, and conducting compliance evaluations. 
``Oversight'' combines technical insight of contractor activities with 
approvals that provide the contractor with formally documented 
authority to proceed or formal acceptance of plans, tests, or other 
criteria.
    With the issuance of the draft request for proposal for the 
Commercial Crew Integrated Design Contract, NASA has confirmed that it 
plans to function in an insight role while commercial partners are 
designing and beginning development of their launch systems. For 
example, the Agency intends to assign a core Partner Integration Team 
comprised of NASA employees to follow each contractor as they design 
and begin to develop their systems, performing insight activities at 
commercial facilities as needed. Additionally, a board headed by a NASA 
Commercial Crew Program Manager and co-chaired by an industry 
representative will approve commercial systems and determine whether 
they meet NASA requirements.
    As each contractor moves forward with development, demonstration, 
and flight test activities, NASA will still need to maintain insight 
into the development of each vehicle but may assume more of an 
oversight role in granting approval or direction to each partner on the 
path to certification. To our knowledge, NASA has not finalized the 
oversight model for this phase that will include defining the key 
milestones commercial partners must successfully meet. Selecting the 
appropriate level and mechanisms of insight and oversight is critical 
to provide NASA with sufficient information to assess partners' 
technical, schedule, and cost risks and certify that commercially 
developed vehicles are safe for NASA astronauts without unduly 
affecting the commercial partners' ability to operate in a cost-
effective manner.
    Relying on an Emerging Industry and Uncertain Market Conditions to 
Achieve Cost Savings. In the NASA Authorization Act of 2010, Congress 
stated that commercial companies offer the potential of providing lower 
cost crew transportation services to support the Space Station. In 
fact, NASA's acquisition strategy for procuring crew transportation 
services is premised on competition and a healthy commercial human 
spaceflight industry that would allow NASA to solicit bids from a 
number of partners and make informed, competitive procurement decisions 
that meet individual mission requirements and provide the best value 
for the taxpayer. However, the commercial human spaceflight industry is 
in its infancy and the market beyond NASA's own crew transportation 
needs is uncertain. Many of the risks associated with achieving 
anticipated cost savings are largely out of NASA's control, 
particularly in the area of creating non-Government demand for 
commercial human spaceflight services. The 2010 Authorization Act 
directs NASA to work with the Federal Aviation Administration's (FAA) 
Office of Commercial Space Transportation and assess the potential non-
Government market for commercially developed crew and cargo 
transportation systems and capabilities. In April 2011, NASA and the 
FAA reported that over time the market for commercial crew and cargo 
services may emerge and provide significantly more customers, more 
flights, and potentially lower prices to the U.S. Government. The 
continuing challenge will be to determine at what point the market can 
sustain a number of commercial partners, allowing NASA to transition to 
the role of consumer and ultimately realize cost-effective commercial 
crew transportation.
    Managing the Relationship Among Commercial Partners, the FAA, and 
NASA. The FAA is responsible for regulatory oversight of companies 
seeking to provide commercial human space transportation. To date, the 
FAA has issued regulations pertaining to launch and reentry activities 
that could affect the public safety. However, in December 2012 the FAA 
is authorized to begin proposing regulations concerning the safety of 
passengers and crew involved in commercial spaceflight. As previously 
discussed, NASA plans to impose its own set of requirements, standards, 
and processes that commercial partners must meet to obtain a 
certification before transporting Agency personnel. Accordingly, NASA 
must coordinate with the FAA to avoid an environment of conflicting 
requirements and multiple sets of standards for commercial companies 
seeking to transport Government and non-Government passengers to low 
Earth orbit. Toward that end, the FAA and NASA have expressed a spirit 
of cooperation, and both groups have agreed that the ultimate goal is 
FAA licensing of commercially developed vehicles used to transport NASA 
personnel. Additionally, the agencies are co-locating personnel at NASA 
Headquarters, FAA field offices, and Johnson and Kennedy Space Centers 
to optimize Government oversight of commercial partners through 
compatible requirements, standards, and processes.
    While we did not make specific recommendations for corrective 
action in our June report, we continue to believe NASA must pay 
particular attention to these challenges as it continues to partner 
with commercial companies seeking to provide safe, reliable, and cost-
effective access to the ISS.
    This concludes my prepared statement. I would be pleased to answer 
any questions.

    Chairman Hall. That makes sense to me.
    I now recognize Mr. Gerstenmaier to present his testimony. 
And he will accord you the same opportunity I am sure.

           STATEMENT OF MR. WILLIAM H. GERSTENMAIER,

           ASSOCIATE ADMINISTRATOR, HUMAN EXPLORATION

 AND OPERATIONS MISSION DIRECTORATE, NATIONAL AERONAUTICS AND 
                      SPACE ADMINISTRATION

    Mr. Gerstenmaier. Thank you, Mr. Chairman.
    The Commercial Crew Program represents a shift in near 
Earth operations to the private sector, freeing NASA and NASA's 
limited resources to pursue other human spaceflight goals 
including the utilization of the International Space Station 
and setting out on missions of exploration.
    Commercial Transportation Systems, together with the 
capabilities to explore deep space provided by the Space Launch 
System and by the Orion Multipurpose Crew Vehicle will enable 
NASA to move forward on a robust, comprehensive U.S. human 
spaceflight program. We had the right mix of government-managed 
programs and new commercial acquisitions. Technical 
considerations drove these acquisition approaches.
    NASA is committed to managing the requirements, standards, 
and processes for Commercial Transportation Systems 
certification to ensure that the commercial missions are held 
to the same safety standards as government missions. NASA will 
be responsible for defining, managing, reviewing, and approving 
certification plans and verifying requirements related to 
commercial crew program missions. However, more direct 
accountability will be shifting to the commercial companies 
providing these services to NASA.
    We have listened to the comments from the IG, the Aerospace 
Safety Advisory Board, and the GAO. We have amended our 
acquisition approach based on their input. We have listened to 
industry's comments from the draft RFP and learned from cargo 
transportation experiences. We have worked corporately with the 
IFA and worked cooperatively with the FAA. We have attempted to 
strike a balance among the many competing objectives. The plan 
that we have will have many challenges and will not be easy to 
execute. We will continue to listen and adapt as we move 
forward. We have put together a solid plan to deliver safe and 
reliable crew transportation for the Nation at low cost.
    NASA's 2012 budget request of $850 million in fiscal year 
2012 for the Commercial Crew Program would provide for the 
development of commercial crew transportation system designs 
with crew transportation services available to the ISS in 2016. 
Reduction in funding from the President's request could 
significantly impact the program's schedule, risk posture, and 
acquisitions strategy. NASA's initial analysis shows that a 
2012 funding level of $500 million consistent with the 2010 
NASA Authorization Act would delay initial capability to the 
ISS to 2017 assuming additional funding is available in the out 
years. During that roughly one-year period of delay, NASA would 
be paying approximately $480 million to Russia for crew 
transportation services. Therefore, NASA seeks funding for the 
Commercial Crew Program and the final conference action on the 
fiscal year 2012 appropriation as close to the NASA fiscal year 
2012 request as possible.
    Providing inadequate funding to this delicately balanced 
acquisition approach represents an unacceptable risk to program 
execution and would force us to relook at our overall approach. 
We need the appropriate funding for this challenging program. 
The commercial program is the Nation's strategy for ending sole 
reliance on the Russians for crew transportation capability to 
the space station. Private enterprise and affordable commercial 
operations in low Earth orbit will enable a truly sustainable 
step in our expansion into space.
    NASA plans to acquire these services in a unique, cost-
effective, and timely manner that will maintain safety for the 
crew. This acquisition will have many challenges. NASA is 
addressing these challenges in a systematic way. We will need 
your continued support and help in supporting this program.
    This program is part of a larger plan for the exploration 
of space that will keep the United States a leader in space 
exploration. I look forward to your questions and thank you.
    [The prepared statement of Mr. Gerstenmaier follows:]
           Prepared Statement of Mr. William H. Gerstenmaier,
       Associate Administrator, Human Exploration and Operations
   Mission Directorate, National Aeronautics and Space Administration
    Mr. Chairman and Members of the Committee, thank you for the 
opportunity to appear before you today to discuss NASA's efforts to 
support the development of commercial crew transportation systems. We 
are pleased with the progress our industry partners have made in this 
new and innovative approach to human spaceflight development. Their 
success is critical to ensuring that we re-establish an American 
capability to transport U.S. astronauts--and their cargo--to the 
International Space Station (ISS), and quickly end the outsourcing of 
this work to foreign governments. And they need robust funding from 
NASA, to achieve timely success in this critical endeavor. Not only 
will the availability of one or more commercial crew transportation 
systems represent the emergence of a brand new domestic capability for 
carrying our astronauts to Low Earth Orbit (LEO) and the ISS, it will 
also enable the Agency to focus on developing its own systems for 
sending astronauts on missions of exploration beyond LEO.

Commercial Crew Development (CCDev)

    NASA's investments have been aimed at stimulating efforts within 
the private sector to develop and demonstrate human spaceflight 
capabilities through the CCDev initiative. Since 2009, NASA has 
conducted two CCDev rounds, soliciting proposals from U.S. industry 
participants to further advance commercial crew space transportation 
system concepts and mature the design and development of elements of 
the system, such as launch vehicles and spacecraft. In the first round 
of CCDev, NASA awarded five funded Space Act Agreements (SAAs) in 
February 2010, which concluded in the first quarter of 2011. Awardees 
and the amounts of the awards were: Blue Origin, $3.7 million; the 
Boeing Company, $18 million; Paragon Space Development Corporation, 
$1.44 million; Sierra Nevada Corporation, $20 million; and United 
Launch Alliance, $6.7 million. Under these SAAs, companies received 
funding contingent upon completion of specified development milestones. 
All milestones were successfully accomplished by the CCDev industry 
partners.
    During the second CCDev competition, known as CCDev2, NASA awarded 
four funded SAAs that are currently being executed with the following 
industry partners:

      Blue Origin's work involves risk-reduction activities 
related to development of a crew transportation system comprised of a 
reusable biconic shaped Space Vehicle launched first on an Atlas V 
launch vehicle and then on Blue Origin's own Reusable Booster System. 
The company is working to mature its Space Vehicle design through 
Systems Requirements Review (SRR), maturing the pusher escape system, 
and accelerating engine development for the Reusable Booster System. As 
of September 30, 2011, Blue Origin had successfully completed five of 
ten milestones and NASA had provided $11.2 million of the $22 million 
planned for this effort.

      The Boeing Company is maturing its commercial crew 
transportation system through Preliminary Design Review (PDR) and 
performing development tests. Boeing's system concept is a capsule-
based spacecraft reusable for up to ten missions that is compatible 
with multiple launch vehicles. Boeing's effort will include launch 
abort engine fabrication and static test fire, landing air bag drop 
demonstration, wind tunnel testing, parachute drop tests, Service 
Module Propellant Tank Development Test, and Launch Vehicle Emergency 
Detection System/Avionics System Integration Facility Interface 
Simulation Test. As of September 30, 2011, Boeing had successfully 
completed five of fifteen milestones and NASA had provided $52.5 
million of the $112.9 million planned for this effort milestones.

      Sierra Nevada Corporation (SNC) is maturing its 
commercial crew transportation system, the Dream Chaser, through PDR 
with some subsystems to Critical Design Review (CDR). The Dream Chaser 
is a reusable, piloted lifting body, derived from NASA's HL-20 concept 
that will be launched on an Atlas V launch vehicle. SNC's effort also 
includes fabrication of an atmospheric flight test vehicle, conducting 
analysis and risk mitigation, and conducting hardware testing. As of 
September 30, 2011, SNC had successfully completed four of thirteen 
milestones and NASA had provided $30 million of the $105.6 million 
planned for this effort.

      SpaceX is maturing its flight-proven Falcon 9/Dragon 
transportation system focusing on developing an integrated, side-
mounted Launch Abort System. The uncrewed version of Dragon is already 
being demonstrated as part of the Commercial Cargo project, and will be 
used operationally as part of the ISS cargo resupply services effort. 
Their crew transportation system is based on the existing Falcon 9 
launch vehicle and Dragon spacecraft. The Launch Abort System, an 
essential safety-critical system, represents the longest-lead portion 
of the Falcon 9/Dragon crew transportation system. As of September 30, 
2011, SpaceX had successfully completed four of ten milestones and NASA 
had provided $40 million of the $75 million planned for this effort.

    In addition to the four funded agreements mentioned above, NASA has 
also signed SAAs without funding with three companies: Alliant 
Techsystems, Inc. (ATK); United Launch Alliance (ULA); and Excalibur 
Almaz, Incorporated (EAI). The ATK agreement is to advance the 
company's Liberty launch vehicle concept. The ULA agreement is to 
accelerate the potential use of the Atlas V as part of a commercial 
crew transportation system. The EAI agreement is to further develop the 
company's concept for LEO crew transportation. As of September 30, 
2011, ATK had successfully completed one of five milestones; ULA 
successfully completed two of five milestones. NASA and EAI are 
initiating activities under the SAA now, and milestones are planned to 
continue through May 2012.

Commercial Crew Program (CCP)

    The CCP is a partnership between NASA and the private sector to 
incentivize companies to build and operate safe, reliable, and cost 
effective commercial human space transportation systems. In the near 
term, NASA plans to be a reliable partner with U.S. industry, providing 
technical and financial assistance during the development phase. In the 
longer term, NASA plans to be a customer for these services, buying 
transportation services for U.S. and U.S.-designated astronauts to the 
ISS. We hope that these activities will stimulate the development of a 
new industry that will be available to all potential customers, 
including the U.S. Government.
    Success of the CCP would also end the outsourcing of space 
transportation to foreign providers. Together with the capabilities to 
explore deep p space provided by the Space Launch System and the Orion 
Multi-Purpose Crew Vehicle, NASA is moving forward on a robust, 
comprehensive U.S. hum man spaceflight program. Reductions from the 
President's FY 2012 requested funding level would affect our ability to 
successfully implement this program's procurement strategy, and could 
leave us depend dent on foreign transportation services for a longer 
period of time at a cost of approximately $480 million per year. The 
success of this program will ensure that U.S. companies will provide 
these services.

Commercial Crew Program Acquisition Roadmap

    The CCP acquisition lifecycle is comprised of an overall hybrid 
structure that originated d with the funded SAAs for subsystem, system 
and element design during the separate CCDev efforts, to be followed by 
a series of competitively awarded contracts for an integrated Crew 
Transportation System (CTS). NASA's review and analysis led to the 
development of a phased acquisition strategy incorporating separate, 
sequential, full and open competitions, tailored to meet the Program 
objectives throughout each phase of design, development, test, 
evaluation, certification, and ISS transportation services. A 
combination of funded agreements and contracts for separate phases was 
determined to be the ideal strategy to capitalize on the strengths of 
each in the appropriate lifecycle phase, while balancing technical, 
schedule and cost risks. Figure 1.0 illustrates the overall hybrid 
approach for the CCP acquisition strategy.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    CCP's acquisition approach focuses on reducing the risk and 
uncertainty of the development cycle and on the incentives provided 
through competition by separating the design and early development 
content (Phase 1) from the longer-term Development, Test, Evaluation, 
and Certification (DTEC) activities (Phase 2). This multi-phased 
approach provides a shorter period of performance for the Phase 1 
contract, thereby limiting the potential financial risk involved in 
utilizing long periods of performance with multiple commercial 
partners. Separating the early design from the longer-term development 
also provides a phased approach to cost assessment and management. The 
separation between Phase 1 and Phase 2 is distinctly defined to 
finalize design requirements in Phase 1, prior to a financial 
commitment to invest in the required capital assets associated with 
development and testing. Additionally, the approach encourages 
competition among multiple companies at each stage, which results in 
lower costs for each lifecycle phase and allows for well-timed 
incorporation of lessons learned.
    On September 19, 2011, NASA released a draft Request for Proposals 
(RFP) for Phase 1, entitled Commercial Crew Integrated Design Contract 
(CCIDC), inviting industry to comment on the process. The final CCIDC 
RFP will incorporate input from industry as appropriate and solicit 
proposals for a complete end-to-end crew transportation system design, 
including spacecraft, launch vehicles, launch services, ground and 
mission operations and recovery. NASA plans to release the final RFP 
for this effort by the end of 2011. The Agency anticipates that one or 
more operational CTS will be available for the transportation of 
astronauts to and from the ISS--as well as the provision of rescue 
services--by the middle of this decade, assuming that the CCP is funded 
at the requested level. Competition among multiple partners is a 
fundamental aspect of the strategy. Competition incentivizes 
performance, supports cost-effectiveness, and eliminates NASA 
dependence on a single provider.

Human Rating/Safety

    The commercial crew program represents a shift in near Earth 
operations to the private sector, freeing NASA (and NASA's limited 
resources) to pursue other human space flight goals, including 
utilizing the Space Station and setting out on missions of exploration.
    Within this new paradigm, NASA will maintain its stringent safety 
requirements and standards. We have always used contractors to build 
our space systems. In these programs, we are planning to use an 
acquisition approach that will allow the contractors more freedom to 
pursue cost-effectiveness, but still allow NASA the appropriate level 
of insight and oversight to ensure that the systems will be safe. 
Developing crew transportation systems to achieve LEO does not require 
any significant technological breakthroughs which is a key factor in 
using a unique insight/oversight approach. We will maintain crew safety 
by way of a crew transportation system certification, and no system 
will receive this certification until NASA has confidence that our 
personnel will be safe.
    NASA is committed to managing the requirements, standards, and 
processes for CTS certification to ensure that commercial missions are 
held to the same safety standards as Government missions. NASA will be 
responsible for defining, managing, reviewing and approving 
certification plans and verification closure of requirements related to 
CCP missions.
    To implement the lessons learned from Apollo, Challenger, and 
Columbia relative to the independent oversight of design, test and 
certification, CCP will map program processes to the Agency's 
programmatic guidelines for all NASA spaceflight programs (NASA 
Procedural Requirements 7120.5, NASA Space Flight Program and Project 
Management Requirements) while working to minimize bureaucratic 
hurdles. These processes will include independent review of the 
commercial providers' performance of key milestones and major technical 
risks to crew safety. NASA CTS certification will evaluate and assure 
that the commercial provider's CTS design and implementation can safely 
conduct the required crew transportation mission. NASA CTS 
certification includes evaluation of design features and capabilities 
that accommodate human interaction with the CTS to enhance overall 
safety and mission success. NASA, through our CTS certification 
process, is fully accountable for the safety of the NASA crew on CCP 
missions.
    The underpinning of the certification process is the CTS 
requirements. To date, NASA's CTS requirements have matured 
considerably. On May 21, 2010, NASA released its first version of 
commercial human rating requirements to industry in a document titled 
Commercial Human Rating Plan (CHRP). Through a Request for Information, 
NASA received extensive and valuable feedback on the CHRP and 
incorporated that feedback, along with refined NASA understanding and 
planning, into the preparation of the next release of the requirements.
    In response to the release of CHRP, industry identified that there 
was a lack of clarity about the Agency's approach to certifying 
commercial transportation systems. As a result, NASA released the 
Commercial Crew Transportation System Requirements for NASA LEO 
Missions to the public on December 10, 2010. This document provides 
requirements, standards and processes that will be applied to any NASA 
or NASA-sponsored commercial crew transportation mission to LEO.
    CCP currently is refining the requirements identified in the 
Commercial Crew Transportation System Requirements for NASA LEO 
Missions into several documents to clearly communicate NASA's 
requirements, standards, and processes for CTS certification. The 
clarification provided by these documents will allow NASA and industry 
to ensure all necessary requirements, standards, and processes are met 
by commercial partners to safely transport NASA and NASA-sponsored 
crewmembers to the ISS. CCP refers to the program-level requirements as 
the ``1100-series'' documents, which are depicted in Figure 2.0. The 
initial public release of a subset of the program-level requirements 
was accomplished on October 25, 2010, along with the announcement for 
CCDev 2.
    The second release of the 1100-series documents to industry 
occurred on April 29, 2011. As a result, all program-level requirements 
and standards were made available to industry for review and comment. 
CCP hosted a requirements workshop with industry on May 24-25, 2011 to 
communicate the intent of the documents, and to continue a dialogue 
with industry with respect to the documents.
    NASA provided a third release of the 1100-series documents in 
conjunction with the draft Request for Proposals (RFP) for the 
Integrated Design Contracts on September 19, 2011, followed by another 
requirements workshop with industry on October 4, 2011. Baseline 
versions of the 1100-series documents are expected to be released to 
industry in December 2011 in conjunction with the final RFP for the 
Integrated Design contracts.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    As an additional ``check and balance'' in the area of safety, all 
CCP activities will be subject to evaluation by organizations 
independent of and funded separately from CCP, including the NASA 
Safety and Mission Assurance independent technical authority, the NASA 
Space Flight Safety Panel which is chaired by a member of the Astronaut 
Office, and the NASA Aerospace Safety Advisory Panel.

Coordination with the Federal Aviation Administration (FAA)

    Both NASA and the FAA envision a state where the FAA licenses 
commercial human spaceflights provided by a robust industry, from which 
NASA and the private sector can purchase transportation services. The 
requirements and processes of these separate agencies must be carefully 
coordinated and aligned to assure that both Agencies' roles are 
accomplished with thoroughness and rigor. At the same time, it will be 
critical to the success of the industry ventures to minimize the burden 
of Government requirements and regulations imposed by multiple 
agencies.
    The nature of the FAA involvement in NASA's commercial crew 
activities will vary through the development and operation of each 
potential flight system. NASA will establish initial certification and 
operations requirements for the services it wishes to acquire from 
commercial providers. NASA will partner with the FAA for the purposes 
of determining common standards and uniform processes to ensure both 
public safety and protection of crews and spaceflight participants for 
the NASA-sponsored missions. NASA and the FAA will work towards 
minimizing the duplication of requirements, developing a streamlined 
process and addressing indemnification issues.
    This will be accomplished by clearly defining roles and 
responsibilities of each Agency, sharing relevant data and jointly 
performing assessments to enable the commercial partner to be 
successful in support of NASA-sponsored missions and non-NASA 
commercial human spaceflight missions. NASA and the FAA are in the 
process of documenting agreements that solidify each Agency's 
commitment to this partnership.

Budget and Recent Accomplishments

    NASA has been told consistently by a broad range of potential 
providers that private sector partners expect to be able to achieve the 
capability to provide commercial spaceflight services to the ISS within 
3-5 years from initial development start. NASA's FY 2012 budget request 
of $850 million for CCP would provide that initial start in FY 2012 for 
the development of commercial crew transportation systems which NASA 
believes would enable services to ISS to be possible in the 2016 
timeframe. A reduction in funding from the President's request could 
significantly impact the program's schedule, risk posture, and 
acquisition strategy. NASA's initial analysis shows that a FY 2012 
funding level of $500 million (consistent with the 2010 NASA 
Authorization Act) would delay initial capability to ISS to 2017, 
assuming additional funding is available in the out-years. During that 
roughly one-year period of delay, NASA would be paying approximately 
$480M to Russia for crew transportation services. NASA remains 
concerned about potential reductions to the CCP budget and the 
anticipated schedule delays and additional costs that they will cause. 
NASA therefore requests sufficient funding for the CCP to avoid 
delaying the development of U.S. crew transport capabilities and 
lengthening the period during which the United States will need to pay 
Russia to transport crew to the Space Station.
    It is worth noting that subsequent to the passage and signing of 
the 2010 NASA Authorization Act in October 2010, several milestones or 
similarly important events have occurred which shed new light on the 
importance, viability, and criticality of NASA's commercial crew 
efforts.
    In April 2011, NASA completed its CCDev agreements with five 
industry partners. These agreements yielded significant progress on 
multiple commercial crew transportation concepts for a relatively 
modest $50 million investment from NASA. Under CCDev, U.S. private 
industry was able to mature long-lead capabilities that accelerated 
commercial crew transportation concepts.
    As part of CCDev, NASA received and reviewed over 20 proposals from 
U.S. companies, ultimately making four awards in April 2011. NASA was 
very impressed with the quality of the proposals which suggested that, 
given the right investment and appropriate schedule, multiple U.S. 
companies could develop safe, reliable, and cost effective commercial 
CTS.
    n December 2010, the SpaceX Falcon 9 rocket successfully launched 
for the second time and the accompanying Dragon spacecraft successfully 
orbited the Earth and safely returned to the Pacific Ocean. This 
achievement helps demonstrate the viability of the Government/private 
sector partnerships like the one envisioned for commercial crew and 
provided further evidence that innovative approaches to spacecraft 
development efforts can be successful, and considerably less expensive 
than traditional NASA procurements. However, significant work still 
remains for delivery of cargo to ISS. The commercial companies are 
continuing to make sound progress in these activities. I expect to see 
cargo demonstrations in the next several months.
    Lastly, on August 24, 2011, Russia's Progress 44 cargo vessel 
crashed in Siberia after the third stage of its Soyuz rocket failed. 
That rocket is similar to the one NASA depends on to transport 
astronauts to the ISS. A Russian commission recently pinpointed the 
Soyuz problem as a quality-control issue, not a major design flaw. NASA 
concurs with that assessment. However, the failure emphasized the need 
to have a robust capability to transport and provide rescue services 
for our ISS astronauts. Currently, we have three systems to carry cargo 
to the ISS, and that number will soon expand to five when Orbital 
Sciences and SpaceX are successful in completing their systems. 
However, we only have one system to rely on, the Russian Soyuz, to 
transport and provide rescue services for our ISS astronauts. If that 
system is unavailable for any reason for a significant length of time, 
there can be serious impacts to the productivity of the ISS.

Challenges

    Currently, the biggest challenge confronting commercial crew 
developers as they attempt to develop and demonstrate their systems is 
financial. This challenge has been consistently cited as the top risk 
to commercial crew development and NASA's financial commitment is 
critical to mitigating this risk. For example, in the fall of 2009, the 
Augustine Report concluded, ``.unless NASA creates significant 
incentives for the development of the [commercial crew] capsule, the 
service is unlikely to be developed on a purely commercial basis.''
    NASA's CCP is designed to reduce the risk for private industry by 
providing significant financial (and technical) assistance for the 
development of these systems. NASA believes that by providing both 
assistance in the system development and demand for the service, the 
``business case'' for commercial human spaceflight providers can close 
for one or more U.S. aerospace companies in a manner that also yields a 
safe and cost-effective capability for meeting NASA's crew 
transportation needs.
    For these reasons and the timing issues discussed earlier, it is 
important that the Congress provide robust funding for NASA's 
commercial crew initiative. This political and financial commitment 
from the Congress will also reduce the risk for private industry. This 
Congressional support will support industry in obtaining investment 
capital above the amount provided by NASA.
    In addition to financial challenges, each of the commercial crew 
developers has unique technical challenges associated with its system. 
Given NASA's current understanding of the state of the commercial crew 
development efforts, the Agency is confident that the commercial crew 
developers can overcome these challenges. However, in order to mitigate 
the risk associated with technical challenges, NASA plans to support 
multiple commercial providers, thereby insulating the Agency in the 
event a commercial provider cannot complete its development effort. In 
addition, NASA plans to be fully supportive of in the commercial 
development activities, providing technical assistance, lessons 
learned, and past experience and knowledge in the area of human 
spaceflight development and operations.
    A final challenge is balancing the need for NASA involvement in 
order to obtain a safe and reliable system and allowing the providers 
the freedom to seek innovative and cost effective solutions. Striking 
the right balance will be key to successful and timely delivery of the 
crew transportation systems.

Conclusion

    The Commercial Crew Program has great promise, but also some 
significant challenges ahead. Human spaceflight is a very difficult 
endeavor, and our industry partners will have the responsibility for 
the full end-to-end system.
    We cannot guarantee their success; however, we can structure an 
approach that provides the highest probability of success. I believe 
the approach outlined by NASA provides a solid path for developing and 
acquiring crew transportation services in a manner that is cost 
effective, and provides for crew safety. We need your support to 
provide the funding required for this effort.
    In July the Space Shuttle Atlantis rolled to ``wheels stop'' 
signifying the end of Space Shuttle operations. But, it also signaled 
the end for now of the ability of the U.S. to transport its astronauts 
into space, leaving the Nation dependent on the Russian Soyuz for crew 
transportation to the ISS. The CCP seeks to ensure that American 
companies will transport our crews to the ISS by mid-decade and that 
aerospace jobs and taxpayer dollars remain here in America.
    The CCP is the Nation's primary strategy for ending sole reliance 
on the Russians for crew transportation capability to the Space 
Station. Private enterprise and affordable commercial operations in LEO 
will enable a truly sustainable step in our expansion into space-a 
robust, vibrant, commercial enterprise with many providers and a wide 
range of private and public users will enable U.S. industry to support 
NASA--and other Government and commercial users--safely, reliably, and 
at a lower cost. This is the ultimate goal--one that I believe unites 
all of us.
    Mr. Chairman, I would be happy to respond to any question you or 
the other Members of the Committee may have.

    Chairman Hall. All right. And I thank you. And Members, the 
two Members that are here know very well, it was three Members. 
I am sorry. Welcome--that we have a five minute limit on our 
questions. Let us try our best to stay with it and I will try 
to set the first record for it myself. I will ask some 
questions.
    My first question is developing any new systems typically 
takes a lot longer than expected. We know that; we have watched 
that happen. I know you all have seen it. My question is does 
NASA plan to negotiate the purchase of additional Soyuz seats 
that might be necessary in 2016 and 2017 and they are talking 
about 2020? We don't know what is going to happen between now 
and then. There has been suggestions that we can accelerate the 
action prior to that time and then a lot of people think when 
we had the three birds we had, we ought to rob from two of them 
and still be flying that one. So there is a lot of arguments 
pro and con, but we have to face the facts and face what funds 
are going to be available, and I think it is a shame. As 
important as NASA is and as important as the space program is 
that we have less than half a percent of the whole dang budget 
of the entire Congress when really we are a national defense. 
We may be defending the next war out of space. It is important, 
I think, that the people that set the budget really realize 
this.
    The question is whether or not NASA plans to negotiate the 
purchase of additional seats, and a related question, what 
would be the impact on the International Space Station if 
Congress fails to extend the Iran, North Korea, Syria Non-
Proliferation Act? And that is a general act that prohibits any 
American government from purchasing from Russia, but we also 
have an exception to it called INKSNA that allows them to do 
it. And you all are familiar with that and you know how to work 
that and work around it. What are you going to do if we fail to 
extend that act and the exception?
    Mr. Gerstenmaier. Okay. First of all, we have purchased all 
the seats from Russia that we can under the existing exemption 
to the act. So in other words, we have purchased all the things 
we can up to the period where we will need an exception to the 
Iran, North Korea, Syria Non-Proliferation Act if we are going 
to do any additional purchases.
    At this time, I think it is too early to say exactly 
whether we are going to make those purchases or not with 
Russia. We need to start into this program, see what funding 
levels we get, see how good of progress these commercial 
companies can make. As you heard in the previous session, they 
think they can do better than the dates that I read to you in 
my opening statement, so we will let them go ahead and progress 
through and see and in the next year or so we will see------
    Chairman Hall. Now, them, who are you talking about?
    Mr. Gerstenmaier. The commercial companies.
    Chairman Hall. All right.
    Mr. Gerstenmaier. The commercial companies look like they 
can provide earlier dates than what I verbally just read to 
you. So we will see what happens in the next year, how much 
progress they make, how well we do on issuing the contracts, 
and then we will make the decision on what the right risk 
posture is, should we purchase additional seats from Russia. In 
the meantime, we are going to have to pursue some relief to the 
Iran, North Korea, Syria Non-Proliferation Act. We are working 
that through the Administration now to see what needs to be 
done there. We think we need an exemption to that even for 
basic sustaining engineering onboard space station, independent 
of transportation. So we are starting to do that planning now 
and I would say we are probably about a year away before we are 
ready to answer the question that you asked, whether we will 
make additional purchases.
    Chairman Hall. And you think the exception would fall right 
in line?
    Mr. Gerstenmaier. We will work to get the exception in 
place to support our needs for crew transportation.
    Chairman Hall. All right. I have a minute and 23 seconds I 
am going to give back to Mr. Miller for his five minutes. You 
can have my minute and 20 seconds.
    Mr. Miller. Six minutes and 23 seconds?
    Chairman Hall. Yes, sir.
    Mr. Miller. That is exceptionally generous, Mr. Chairman.
    Mr. Gerstenmaier, in the past, we have paid all the costs 
of developing human space systems and we have owned them. To 
paraphrase Ronald Reagan on the subject of the Panama Canal, we 
bought it, we paid for it, it was ours, and we kept it. In your 
testimony today you say that the reason to go to commercial 
firms is to free up money to do other things, but I really have 
some questions about how that math works. It does appear that 
we are paying the Soviets--no longer the Soviets--the Russians 
about $62 million per seat per flight. That is right, isn't it?
    Mr. Gerstenmaier. That is correct.
    Mr. Miller. Okay. And we are presumably--you kept using the 
term companies but we are probably going to only have one 
contractor for this, right?
    Mr. Gerstenmaier. Again, we need to go through the 
acquisition process and do the awarding process and we can see 
based on what proposals we get how many contracts we can carry 
through this process. So there may be an option of carrying 
more than one contractor through this process. We will see once 
we start getting responses to our proposals that we have put 
out for them to evaluate.
    Mr. Miller. Okay. The estimates are that they will pay some 
of the costs, whoever we have a contract with, and it is still 
hard to imagine that we are going to have two or three primes. 
I mean we are going to have just one company that we deal with 
in buying seats, right?
    Mr. Gerstenmaier. Again, I think it is a little early to 
speculate on that. We have a two-phase procurement where the 
first portion of the procurement would essentially put the 
vehicle design in place------
    Mr. Miller. Right.
    Mr. Gerstenmaier. --and we would like to make--drop the 
request for proposal in the middle of December of this year for 
that activity. Then, there is a second phase where we do 
demonstration phases and then we finally go to a service phase 
at the end. That service phase could be one. Again, it depends. 
You heard in the earlier------
    Mr. Miller. Okay.
    Mr. Gerstenmaier. --hearing that there may be a market out 
there that is larger. It is up to these companies, the 
commercial companies to see if there is a larger market, and if 
there is, we may be able to choose more than one company. So 
the answer is, I think, it is too early to say definitely we 
are going to be down to only one provider.
    Mr. Miller. All right. In terms of developing the system, 
though, they may pay something but we are going to pay 90--
probably 90 cents on the dollar and that is going to end up 
being around $6 billion. Is that correct?
    Mr. Gerstenmaier. Again, the 90 cents on the dollar 
discussion appeared from the previous hearing to be different. 
And you can go back and look at what each individual company 
said their contributions were, but I think they varied off of 
that.
    Mr. Miller. Okay, but we think our part is going to be 
about $6 billion. Is that correct?
    Mr. Gerstenmaier. We are estimating somewhere between $4 
and $6 billion.
    Mr. Miller. Okay. And we think that we will end up needing 
about 40 seats, eight to ten missions to the space station with 
four astronauts on each, a maximum of about 40 seats, and then 
we will also be charged presumably per seat at the time. This 
is just development costs is four to six billion and then we 
will also have to pay them per seat to go there, isn't that 
right?
    Mr. Gerstenmaier. Yes, there will be some additional cost 
for the actual transportation services we------
    Mr. Miller. Any notion at all what that might be, any clue?
    Mr. Gerstenmaier. Well, we think it will be obviously less 
than what the Soyuz seat price is today.
    Mr. Miller. Okay. More than a bus ticket, less than Soyuz. 
Have you considered whether we will likely be requested or 
actually demanded by the companies we deal with that we 
indemnify them for any liability?
    Mr. Gerstenmaier. I think that is one of the key issues we 
need to work with the companies and go through in this process. 
The amount and specific details of the indemnification needs to 
be worked out with the companies.
    Mr. Miller. Well, there probably will be at least some kind 
of indemnity?
    Mr. Gerstenmaier. There will be some indemnification.
    Mr. Miller. Okay. It certainly appears that we are paying a 
lot more per seat than we are paying the Russians now. Is that 
math wrong?
    Mr. Gerstenmaier. Again, we need to see the actual 
proposals from the companies to make that statement. In our 
estimates, we think we can equal the Soyuz seat price or be 
slightly better than the Soyuz seat price, but we need to see 
the actual proposals and actually see the concepts get fleshed 
out by the companies.
    Mr. Miller. And when it comes time to negotiate the per-
seat flight, you really think there is a possibility of having 
more than one company we would negotiate with so there might 
actually be a market? There might actually be competition? That 
is a little difficult to imagine but------
    Mr. Gerstenmaier. It is difficult for me to speculate on 
that one way or the other. I think I would wait until we get a 
little bit further down the process, see if the market starts 
maturing as some of the commercial companies talked about in 
the previous hearing, and then we can make some definitive 
statement.
    Mr. Miller. Well, with the minute and 33 seconds that 
Chairman Hall yielded to me, Mr. Martin, have you looked at 
those numbers and does this appear to be a good deal or how 
does this compare to the deal we have with the Russians now to 
pay them $62 million per seat?
    Mr. Martin. We have not looked at those numbers yet. There 
are still far too many unknowns with respect to firm fixed 
requirements and time frames and, importantly, external 
funding. So we have not looked at those numbers yet.
    Mr. Miller. Okay. Have any of my questions been 
misdirected? Is there anything in the math that I have laid out 
that has been incorrect? I mean it certainly sounds like this 
is going to be a lot more expensive to build a space system for 
a private contractor who will then own it or pay 90 cents on 
the dollar, whatever it is, and then contract with them and pay 
them to transport astronauts. It sounds like it is a lot more 
expensive than the deal we have now.
    Mr. Martin. I am going to defer to my colleague here, I am 
a lawyer but my understanding is that, yes, one of the 
objectives of course is to get NASA astronauts to the 
International Space Station, but under the Space Act Agreement 
was also want to foster this commercial space market. So there 
is at least two broad objectives in NASA's moving forward here.
    Mr. Miller. Okay. Mr. Chairman, I think I have used my five 
minutes and your minute and 43 seconds.
    Chairman Hall. All right. At this time, I recognize Mr. 
Rohrabacher, the gentleman from California.
    Mr. Rohrabacher. Thank you very much, Mr. Chairman.
    Chairman Hall. Five full minutes.
    Mr. Rohrabacher. Okay. All right. Let us just note that the 
testimony we just heard indicated that there had been major 
investment of money in the private sector and that if we can 
have up to a billion dollars of private sector money invested 
in space technology development, that is a good thing. That is 
a very good thing. And it is bound to have a positive result 
than not having that $1 billion in private money being used for 
space-based technology development. And I will just note 
SpaceX, in answer to the question to my colleague, suggested 
that they had put in $500 million in development of their 
Falcon System and only 300 of that--only $300 million came from 
the government. So SpaceX was actually putting in several 
hundred million dollars more than what the government actually 
put into this. That is a good thing that we have a private 
sector company putting in $500 million in developing a new type 
of space transportation systems.
    So I would suggest that not only in the end by taking this 
approach. Had NASA been only totally in charge of this goal--of 
achieving this goal rather than trying to encourage the private 
sector companies, the major question we have is would that have 
cost the people, taxpayers, more than what in the end it will 
cost them when one of these companies wins the competition. Do 
you have any thoughts on that, either one of you?
    Mr. Gerstenmaier. Again, I think we have been able to use 
the private company investment very effectively to leverage the 
NASA investment to get a substantial amount of technology and 
research and activities done. So I think, so far, it has been a 
very good process for us in terms of getting return on their 
investment.
    Mr. Rohrabacher. Yeah. And in the end we hope we will have 
a product that it will cost less than what Soyuz or at least 
equal to what Soyuz is offering today and much less than if 
this was simply a NASA project that was being done in-house 
with NASA. So at a time when we have $1.5 trillion more in 
federal spending than we have in money coming in, having 
private sector money invested seems to me to be a very laudable 
goal.
    And I would like to ask for the last two minutes that I 
have got here, Mr. Martin, in your June report you describe 
several potential acquisition strategies that NASA could use 
for the Commercial Crew Program moving forward, including the 
use of funded Space Act agreements. Could you confirm the 
finding in your report that while every acquisition strategy 
has its strengths and weaknesses, which we have just heard, 
that the SAA's could theoretically be used by providing 
certification requirements to participating companies in a non-
mandatory fashion?
    Mr. Martin. Yes, sir. I don't believe our report went that 
far and I think whether or not------
    Mr. Rohrabacher. It did not. I am trying to push it a 
little farther.
    Mr. Martin. No, we did not go that far. It really comes 
down to sort of a procurement law and a legal question, and I 
think Bill is in a better position, at this particular stage, 
certainly with the first phase of this next stage in CCDev, 
perhaps you may have been able to use either acquisition 
vehicle.
    Mr. Rohrabacher. Right. Well, you said it is a legal 
requirement from a policy. According to agency policy, NASA may 
only enter into funded Space Act agreements when its objectives 
cannot be accomplished through contract, grant, or other 
agreements. I understand that is the ``policy,'' but legally, 
this is not a ``legal'' requirement, is it? It is just the 
``policy'' requirement?
    Mr. Gerstenmaier. My understanding is it is a legal 
requirement that once we say we need to have a service or we 
have a requirement for a capability, at that point we need to 
go into a FAR-type instrument.
    Mr. Rohrabacher. Okay. Is that your understanding, Mr. 
Martin, a legal requirement versus this is just what the policy 
is?
    Mr. Martin. It is.
    Mr. Rohrabacher. Okay. So you agree with that. Thank you 
very much.
    Thank you, Mr. Chairman.
    Chairman Hall. The Chair now recognizes the temporary 
Ranking Member of the Committee, Ms. Donna Edwards, the 
gentlelady from Maryland.
    Ms. Edwards. Thank you, Mr. Chairman. And thank you, 
gentleman, for your testimony. And I apologize; I had to step 
out just briefly but I did have a chance to read your 
testimony. I want to go back to the earlier panel because one 
of the things that I haven't heard, Mr. Gerstenmaier, is 
whether you all have in your cost estimates factored things--
that at least some of the companies have said that the taxpayer 
is going to have to underwrite--like indemnification. Is that 
factored into your cost considerations?
    Mr. Gerstenmaier. It is a consideration but it is really 
difficult to estimate exactly what that cost could be and how 
that gets accounted in our budgets. So until we get into that 
portion of negotiation with the individual companies, it is 
very difficult to estimate. So we have some assumptions based 
on where we think it is. We think there will be some 
indemnification required but------
    Ms. Edwards. But the companies--excuse me. But the 
companies in their testimony actually said that they can't do 
this without the taxpayer providing the indemnification. So it 
would seem to me that sooner rather than later the taxpayer 
needs to know how much they are going to be on the hook for in 
the cases of failure.
    Let me just go to something else. Also, the companies 
talked about--Boeing in particular talked about the ownership 
of intellectual property rights. This is something that has 
long concerned me that basically taxpayers are underwriting a 
lot of the early development work where an awful lot of 
intellectual property assets are acquired and then the taxpayer 
basically gets no benefit, no real benefit of that bargain. Why 
is that in taxpayers' interest not to receive at least some 
portion of the long-term profitability of intellectual property 
rights?
    Mr. Gerstenmaier. Again, the model is that the companies 
are going to invest some of their own money in this activity, 
and as we have heard, varying amounts depending upon the 
company. And for that investment, the company expects some 
return on that investment, so they would like------
    Ms. Edwards. The taxpayer does, too.
    Mr. Gerstenmaier. I agree. And so the return for the 
taxpayer is we get a service at a lower price. The return for 
the company is that they have a vehicle which they own which 
they can then go market to other users that has really brought 
down the cost of development for the U.S. taxpayer.
    Ms. Edwards. Right, I have to tell you I am just not 
actually clear where or who this other market is that somehow 
is out there. I haven't been convinced at all about this 
market, and it sounds to me that the companies that were in 
front of us are presuming that the biggest consumer here is 
going to be the U.S. taxpayer for our space program. And so 
this sort of ephemeral market and consumer out there I don't 
think has quite materialized enough.
    Let me just go to another question. Your Deputy 
Administrator was recently quoted as saying, ``We have an 
analysis that says we believe we would require $6 billion over 
5 years.'' If you have that analysis, I think it would be 
helpful for this Committee to see that analysis to know upon 
which you base that $6 billion over five years. Do you have an 
analysis?
    Mr. Gerstenmaier. We have the basis for our budget submit 
and the basis of our estimate. It is roughly a range between 4 
and $6 billion.
    Ms. Edwards. Well, what is the analysis that the Deputy 
Administrator was referring to?
    Mr. Gerstenmaier. It is a portion of that same analysis, 
but the way it is going to work is when we actually get the 
proposals from the contractors next year, we can then really 
definitize that and we can show you a much more definitive 
budget. The problem with this acquisition is there is a lot of 
uncertainty of how much the companies will invest in their 
piece that we don't know right now. We have some other issues 
to work out with them in terms of those prices. So we have 
estimates, we have a basis and a model that we have based our 
budgeting on, but we need to get that data from the companies 
to actually get more of a definitized model. So we have------
    Ms. Edwards. For those of us who do numbers, can you show 
us the basis of your analysis?
    Mr. Gerstenmaier. Yeah, we can--it will be a range and you 
can see the range.
    Ms. Edwards. No, I guess I am trying to figure out all of 
your underlying assumptions in making the analysis. I mean if 
your Deputy Administrator is going to say definitively that we 
are going to need $6 billion over five years, I kind of want to 
know where that is coming from.
    Mr. Gerstenmaier. We can show you the basis for that 
estimate.
    Ms. Edwards. And then, Mr. Martin, how well do you have an 
understanding of NASA's budget and the schedule estimates for 
the Commercial Crew Development Program?
    Mr. Martin. We have not--in preparing our June audit report 
on the status commercial crew challenges, we did not have 
access to those. We did not analyze those documents.
    Ms. Edwards. So NASA hasn't given you an analysis that 
provides the basis for the estimates that they are making?
    Mr. Martin. They have not but they wouldn't in normal 
course.
    Ms. Edwards. Would you ask for one?
    Mr. Martin. I will.
    Ms. Edwards. Thank you. And then lastly, I just want to go 
to this point. It seems to me that we are running on a course 
of eventually the taxpayer subsidizing a monopoly, and my worry 
about that is that in subsidizing a monopoly, we will end up 
footing an even bigger bill than we can anticipate in the 
beginning because there will be no other, you know, I don't 
know, horse in the race, you name your analogy. And so how 
does--how do you, Mr. Gerstenmaier, then estimate what the 
overall cost to taxpayers is going to be in terms of 
subsidizing essentially one entrant, maybe you say another, 
into this program?
    Mr. Gerstenmaier. We tried to structure the acquisition 
approach in two phases. The first phase of the acquisition 
approach is essentially where we have the companies work on 
developing the design, and that means we get all the 
requirements in place, we see how well they understand our 
safety requirements, we see how well they can respond to our 
relaxed contracting requirements, we can actually see company 
performance with some milestones and development tests during 
that phase, and then we can enter into the second phase. So we 
can limit our exposure by doing this as a two-phase procurement 
so we can see the first portion of the procurement activities 
and see how well it progresses, see if we are making 
significant progress, see if these estimates that we put 
together for our budget hold up. If they do, then we can 
proceed into the second phase. If we see through this first 
phase something just doesn't look right, it is totally 
different than we have got, we can adapt to that and then move 
forward to the next phase. So therefore we can------
    Ms. Edwards. Just as you close because I know the 
Chairman------
    Mr. Gerstenmaier. --minimize the risk to the taxpayer.
    Ms. Edwards. Thank you. Just one last question and just a 
yes or no answer. Have any of the companies that were here 
before us ever provided safe crew transport?
    Mr. Gerstenmaier. I guess if you--under this model, no, but 
if you look at the space shuttle and------
    Ms. Edwards. Have any of the companies that were here that 
we have invested in at this point ever provided that? NASA has 
but these companies haven't right?
    Mr. Gerstenmaier. Well, Boeing did the work in cooperation 
with NASA to develop the space shuttle which delivered crew to 
space.
    Chairman Hall. Ms. Edwards did a good job, but golly, I 
miss Ms. Johnson.
    Mr. Palazzo, I recognize you for five minutes.
    Mr. Palazzo. Thank you, Mr. Chairman.
    Mr. Gerstenmaier, you were developing an acquisition 
strategy for commercial crew and I think you were using the 
$850 million mark. What would you do differently if you have 
less than that, or more specifically, based on the $500 million 
that the Senate is pushing?
    Mr. Gerstenmaier. Again, based on our models and our 
internal estimates which have some softness in them because 
this is a new approach for procurement for us, if we ended up 
with $500 million in 2012, as long as we have got some 
additional funding in the out years above the levels that we 
put in our budget request, we think that would delay the 
commercial crew service to space station by about 1 year.
    Mr. Palazzo. What is the total estimated cost of taxpayer 
dollars that NASA is committed to spending on each current 
commercial contractor?
    Mr. Gerstenmaier. We have not broken it out by individual 
contractor. We have the total budget estimate that I described 
before of roughly four to six billion.
    Mr. Palazzo. Do you have any legitimate studies that 
provide a realistic picture of the commercial market for human 
space flight activities that will exist in the next five years?
    Mr. Gerstenmaier. We have in our report which we provided 
to Congress there is a wide range of potential activities that 
sit out there or potential market that sits out there in the 
future. There is a lot of uncertainty in that market, and I 
think again you can--as you heard in your previous panel--they 
can better describe what that market is than I can.
    Mr. Palazzo. How many commercial crew providers can NASA 
support if the commercial market fails to materialize?
    Mr. Gerstenmaier. Again, we will see what the cost is for 
those services, and depending upon the cost for those services, 
we could potentially support more than one but we need to see 
what the actual cost of the services is and then we will 
determine what that is--what we can afford in terms of number 
of providers.
    Mr. Palazzo. How many flights per year are you planning to 
support the space station?
    Mr. Gerstenmaier. It would be roughly two flights per year.
    Mr. Palazzo. Two?
    Mr. Gerstenmaier. And we could change that model if the 
research demand changes and someone wants some other 
activities, but right now, that is our basic plan is two.
    Mr. Palazzo. What is your estimated cost per flight once 
the development stage is completed?
    Mr. Gerstenmaier. Again, we would look at it as equal to or 
less than what we would be paying for Soyuz at that time.
    Mr. Palazzo. Some------
    Mr. Gerstenmaier. Roughly $480 million or so.
    Mr. Palazzo. How much would that come down per astronaut 
since that seems to be the common way of looking at it?
    Mr. Gerstenmaier. Roughly $80 million per crew seat.
    Mr. Palazzo. Okay.
    Mr. Gerstenmaier. Six seats per year, $480 million total 
per year.
    Mr. Palazzo. All right. Well, thank you for your testimony, 
and I yield back.
    Chairman Hall. I thank the gentleman, and the round of 
questions are completed. And I really thank both of you. You 
are very important, you are knowledgeable, and thank you for 
sharing that knowledge with us. Time and time again we have had 
you before.
    Members of the Committee have additional questions of 
witnesses, we will ask the witnesses to respond to those in 
writing. They might and we will send them to you. The record 
will remain open for two weeks for additional comments from 
Members, and witnesses are excused.
    And this hearing is adjourned.
    [Whereupon, at 12:59 p.m., the Committee was adjourned.]
                              Appendix I:

                              ----------                              


                   Answers to Post-Hearing Questions




                   Answers to Post-Hearing Questions
Responses by Mr. John Elbon, Vice President and General Manager
for Space Exploration, The Boeing Company, Houston, TX

Questions submitted by Chairman Ralph Hall


Q1.  How confident are you about NASA's and FAA's ability to coordinate 
their requirements for commercial crew launches? Have you seen any 
evidence yet that the two agencies are attempting to define roles and 
responsibilities, and to minimize overlap?

A1. NASA and the FAA both have key roles in establishing requirements 
for commercial crew launches, and have demonstrated willingness to work 
together to define the requirements. The regulatory body controlling 
NASA commercial crew flights to the ISS has not been definitively 
established to our understanding, but NASA and the FAA are working 
closely to finalize those details. Commercial crew flights in support 
of customers other than NASA will need to be regulated by the FAA. It 
is important for Congress to provide the FAA the ability to establish 
regulations to the existing Part 400 in support of this emerging 
market. Earlier regulatory ability will play a key role in stimulating 
the commercial space market in several ways. Regulations will help the 
insurance industry baseline safety for underwriting, resulting in more 
affordable insurance premiums. Regulations will also provide a level 
playing field, ensuring that all potential providers and operators duly 
consider safety concerns. A lack of safety regulations also increases 
business risk for all participants. An accident prior to regulation 
enforcement could produce three negative economic drivers: increased 
insurance costs, a pendulum swing to over-regulate, and lessened demand 
due to simple fear.

Q2.  Launch abort systems are one of the most critical technically 
challenging features to design, integrate and test. What type of launch 
abort system do you intend to build into your crew system, and how 
mature is the design? Do you intend to demonstrate it in a relevant 
launch environment?

A2. Boeing's CST-100 capsule utilizes a ``Pusher type'' launch abort 
system (LAS) with four 40,700-lb thrust launch abort engines which are 
derived from the Atlas II sustainer engines. Our LAS design ensures a 
controllable, stable abort from pad through orbit insertion with no 
``black zones,'' meeting or exceeding all requirements for separation. 
During CCDev-2, we performed three full duration LAE development tests. 
During the future phases of the program, we plan to perform additional 
single engine hot-fire tests prior to full-up Service Module cold flow 
tests and hot fire tests. These tests precede a pad abort test that is 
similar in nature and uses the same test stand as the abort test 
conducted for the Orion spacecraft.

Questions submitted by Ranking Member Eddie Bernice Johnson


Q1.  NASA's plan requires the development and certification of the 
commercial crew systems to occur within a tight timeline, requires the 
commercial systems to capable of safe and reliable flight operations by 
2016, makes use of new and unproven government-industry development and 
safety approaches, and has development and operations costs that are 
still unknown. In that regard, please provide the following questions:

     What is the evidence that you believe provides the 
justification for Congress to invest in this commercial crew 
initiative, and
     What your company realistically would require from the 
U.S. government to make this initiative a success.

A1. The government-industry partnership on Commercial Crew has been 
highly successful as demonstrated by Boeing's ability to complete a 
system preliminary design review in March 2012, less than two years 
from program start, with $120M of government funding. This is 
significantly faster and less expensive than traditional programs. In 
addition, we are designing the system with a firm understanding of 
NASA's safety and certification requirements, based on five decades of 
building and operating HSF systems. Boeing's CST-100 will provide safe, 
reliable, and affordable domestic transportation capability to ensure 
the full utilization of the ISS. This affordable transportation 
capability will also allow additional NASA resources to be applied to 
exploration beyond LEO with the Space Launch System and Orion vehicles. 
The commitment demonstrated by Congress and NASA to support the 
infrastructure development is critical to support the emergence of the 
commercial space market. Boeing, in partnership with NASA, will deliver 
a safe, reliable, and affordable commercial crew system. Boeing has 
invested a significant amount prior to and during the performance of 
CCDEV, and will continue to invest throughout the development phase.

Q2.  What is your understanding of how third-party liability and 
indemnification will be addressed for both launch and reentry and for 
on-orbit operations of any commercial crew transportation system used 
for NASA ISS servicing:

     How important an issue is liability and indemnification to 
any decision your company might make to enter into a Phase 1 or Phase 2 
development contract with NASA for commercial crew systems, or to enter 
into a service contract with NASA to transport astronauts to the ISS?

     Do you plan to purchase insurance for your systems as part 
of your business plan, and how confident are you that adequate 
insurance coverage will be available privately? If it isn't, what do 
you plan to do?

A2. There are two viable paths for liability protection in support of 
commercial crew launches to the ISS. If NASA is the final regulatory 
authority, they could offer indemnity protection for the launch, on-
orbit, and re-entry phases of these launches. However, if the FAA is 
determined to be the regulatory authority for launches to the ISS, the 
launch and re-entry phases would be licensed through the CSLA. In this 
situation, insurance would be procured up to the maximum probable loss 
determination, and additional liability would be covered through the 
congressionally approved indemnity ceiling. Damage to the ISS would not 
be insurable, and adequate cross-waivers would need to be provided by 
NASA through their planned certification approach.

  FAA, COMSTAC and industry have been working together on defining an 
approach for addressing third-party liability for both launch and 
reentry phases. FAA has proposed an extension to the Commercial Space 
Launch Act (CSLA) with informed consent as the path to limit liability. 
Boeing will require adequate cross waivers of liability prior to 
docking with ISS. For areas of risk not addressed by legislative limits 
of liability or indemnification, Boeing has included insurance 
protection in our cost estimates and business plan.

Q3.  During the hearing, you testified that your company could provide 
commercial crew transportation services within the 2015-2016 timeframe. 
Please provide 1) the assumptions behind the date, including a) the 
magnitude and timing of funding from NASA, b) the timeline assumed for 
development, integration, testing, and certification, and c) the number 
of certification flights you are assuming will be required.

A3. The details of the Boeing plan for completing development of our 
Commercial Crew Transportation System--including assumptions, magnitude 
and timing of NASA funding, timeline, and certification approach--
represent our proposal to NASA in response to the Commercial Crew 
Integrated Capability (CCiCAP) announcement for proposals. This is an 
ongoing competitive procurement, with awards expected July/August 2012. 
The CCiCAP AFP projected maximum awards during the 21-month base period 
of $300-$500 million. This funding level is below the funding level 
required to support a 2015 crewed test flight. However, if NASA is able 
to provide additional funding to Boeing during this phase, the launch 
date could move up to as early as 2015. The total funding required for 
the development and certification of the Boeing system is approximately 
$2 billion. This includes extensive qualification testing on the 
service module, structural test article, and qualification test 
articles. In addition, the cost includes a pad abort test, un-crewed 
orbital flight test, and a crewed flight test. Note that Boeing's 
system cost above is for the development of the entire commercial crew 
mission capability, which includes ground operations, mission 
operations, crew training, and the launch vehicles to support the 
flight tests.

Q4.  Would you anticipate any additional capacity on CST-100 flights 
after taking into account NASA's crew requirements on ISS crew 
rotations?

     How will that overcapacity be dealt with?

     Will NASA be required to procure the entire spacecraft, or 
will they be able to just purchase the required number of seats for 
each flight?

     If passengers not paid for by NASA are transported on the 
flight, how will their stay on the ISS be accommodated and for how 
long?

     Are you assuming the ISS partnership will host the non-
NASA spaceflight participants on the ISS?

     If you are planning to fly extra passengers on each 
flight, how do you plan to get them back from the ISS in an emergency 
if the CST-100 capsule is also supposed to serve as an ISS crew rescue 
vehicle?

A4. NASA has identified a transportation requirement for crew and 
limited cargo. The Boeing CST-100 spacecraft can accommodate up to 7 
crew or a combination of crew and cargo. As part of our business plan, 
we anticipate a market for private space flight participants to travel 
to ISS, and if NASA were to approve such participation, the resulting 
revenue could offset the NASA mission cost. NASA could also use the 
additional cargo capacity available on each flight to support science 
payloads or logistics requirements. In the event private spaceflight 
participants were approved for travel to the ISS, it is projected that 
they would return on the Boeing CST-100 spacecraft that was docked to 
the ISS, serving as the prior rescue vehicle.

Q5.  NASA has proposed that the first phase of its commercial crew 
procurement--the Integrated Design Contract--be awarded fixed-price 
contract. From your perspective, is that a manageable approach?

     How would you plan to balance risk mitigation and flight 
test programs, which can be expensive, against the need to keep within 
the contracted-for fixed-price limits?

A5. NASA has changed its acquisition approach from a FAR-based fixed-
price contract to an SAA, which also requires fixed price milestones. 
Boeing believes that a fixed-price contract is acceptable for this 
procurement. The design solution is low-risk, benefiting from the 
incorporation of flight proven hardware previously flown on other 
Boeing programs, including the X-37, Orbital Express, Space Shuttle, 
and other programs. Efficient design and manufacturing approaches 
proven on Boeing commercial and defense programs are being incorporated 
in the CST-100 design to ensure successful program execution. Our 
approach has already included numerous risk mitigation hardware 
development tests to ensure success early in the development phase, 
significantly reducing the risk of costly redesigns later in the design 
phase. At Boeing, our brand and our business are fundamentally 
dependent on the safety of our products. We do not sacrifice safety for 
cost performance, because there is nothing more costly than an unsafe 
product. We have demonstrated repeatedly--across a range of commercial 
and defense aircraft and spacecraft--our ability to develop and 
manufacture safe and reliable products, and to do so in such a manner 
as to run a profitable, well-performing business.

Questions submitted Representative Paul Broun

Q1.  What obligation does your company have under space act agreements 
to report anomalies to NASA?

A1. Under the CCDev, CCDev2, and CCiCap space act agreements, NASA 
embeds a Partner Integration Team with our team for ongoing insight 
into our development process. NASA has visibility into our tests, 
demonstrations, and reviews as we are performing them and is aware of 
the outcomes as they occur.

Q2.  What information do you believe your company is obligated to 
provide NASA about anomalies under a space act agreement?

A2. See response to item 1 above.

Q3.  How long after an anomaly is detected, observed, or identified, do 
you believe your company is obligated to report such an anomaly to NASA 
under a space act agreement?

A3. See response to item 1 above.

Q4.  What obligations does your company have under traditional 
contracting to report anomalies to NASA?

A4. The planned NASA insight approach is the same, regardless of 
contracting mechanism. Whether under SAA or FAR-based contract, NASA 
embeds members of their Partner Integration Team with our team, and 
they have full visibility into our tests, demonstrations, and reviews 
as they occur.

Q5.  What information do you believe your company is obligated to 
provide NASA about anomalies under traditional contracting?

A4. See response to item 4 above.

Q6.  How long after an anomaly is detected, observed, or identified, do 
you believe your company is obligated to report such an anomaly to NASA 
under traditional contracting?

A6. See response to item 4 above.

Q7.  What obligations does your company have under the modified FAR 
acquisition to report anomalies to NASA?

A7. Boeing is unable to answer as NASA did not provide the final terms 
and conditions for their proposed modified FAR acquisition prior to 
switching to a space act agreement approach. However, the NASA insight 
approach, in which the NASA Partner Integration Team has full ongoing 
insight into our development effort, obviates the need for such 
reporting as NASA is aware as events emerge.

Q8.  What information do you believe your company is obligated to 
provide NASA about anomalies under a modified FAR acquisition?

A8. See response to item 7 above.

Q9.  How long after an anomaly is detected, observed, or identified, do 
you believe your company is obligated to report such an anomaly to NASA 
under a modified FAR acquisition?

A9. See response to item 7 above

Questions submitted Representative Jerry Costello:

Q1.  NASA's FY 2012 budget request proposes a total of $4.25 billion 
over five years, or $850 million a year through 2016, to fund the U.S. 
government's share of commercial crew capabilities development for one 
or more systems. What do you believe, in terms of a percentage of total 
development costs, the private sector might realistically contribute?

     What percentage is your company planning to contribute?

A1. Boeing has invested significantly over the past five decades as 
well as directly in the performance of commercial crew development on 
hardware and technologies that support our offering. We will continue 
to offer significant investment throughout the development phase. NASA 
and the Congress have taken a tremendous step to stimulate this 
emerging market by committing to funding the preponderance of the 
development cost. Without this commitment, the market would take 
significantly longer to mature. In addition, the ability to provide a 
safe, reliable, and affordable domestic transportation capability vital 
to the ISS would not be available.

Q2.  Is private sector investment contingent on additional, non-
financial U.S. government support too? If so, what would that support 
involve?

A2. The support provided by NASA and the Congress to fund the 
preponderance of the development cost, along with significant industry 
investment, will ensure the ability of a safe, reliable, and affordable 
domestic transportation capability to the ISS. In addition, this 
commitment will allow the stimulation of the commercial space 
transportation market. The ability of NASA and/or the FAA to regulate 
these launches will be required prior to the services phase.

Q3.  What is your reaction to NASA's proposed approach to human-rating 
future commercial crew transportation systems? Do you believe NASA's 
proposed approach will both ensure astronaut safety and facilitate 
eventual FAA licensing of launches for non-government customers? Are 
there any changes you would like to see made to the approach?

A3. NASA is applying their considerable experience in human space 
flight to baseline a set of human rating requirements to ensure crew 
safety and facilitate FAA licensing for non-government customer 
launches. Boeing incorporated the NASA requirements into our own design 
requirements to ensure that our system can achieve NASA and FAA 
certification. Although Boeing has adopted the NASA human rating 
requirements in our design, there is no contractual requirement to do 
so. We don't have insight into other competitors' plans, but we feel it 
is important that NASA have the ability to contractually levy design 
requirements in the future to ensure design safety, and an equitable 
competitive environment.

Q4.  During the hearing, you testified about the investment your 
company is making in commercial crew activities relative to what the 
government is investing in your program. Do you intend to maintain that 
percentage should you receive an award for the design and development 
contracts from NASA? If not, what level of investment would you 
anticipate contributing for the design and development contract phase?

A4. Boeing will continue to invest at the previous percentage level, 
providing NASA evidence at our commitment to provide a safe, reliable, 
and affordable commercial crew transportation system.
Responses by Mr. Steve Lindsey, Director of Space Exploration,
Sierra Nevada Space Systems, Louisville, CO

Questions submitted by Chairman Ralph Hall

Q1.  How confident are you about NASA's and FAA's ability to coordinate 
their requirements for commercial crew launches? Have you seen any 
evidence yet that the two agencies are attempting to define roles and 
responsibilities, and to minimize overlap?

A1. Sierra Nevada Corporation is working directly with both NASA and 
the FAA to coordinate our flight test program, set to begin in 2012. We 
don't have any direct evidence that the two agencies are defining roles 
and responsibilities to minimize overlap, but we do know that the FAA 
has a person directly assigned to NASA's Commercial Crew Program and 
that they have been working cooperatively on our program. We hope that 
meeting NASA's defined requirements will also lead to a smooth 
licensing process through the FAA. This, of course will depend upon 
close communications, cooperation, and agreement between the FAA and 
NASA.

Q2.  Launch abort systems are one of the most critical and technically 
challenging features to design, integrate and test. What type of launch 
abort system do you intend to build into your crew system, and how 
mature is the design? Do you intend to demonstrate it in a relevant 
launch environment?

A2. SNC plans to utilize the Atlas V rocket which is well known to both 
the DoD and NASA as it is their primary launch vehicle for high value 
payloads. The Atlas V has had 30 flights to date, all successful, and 
its characteristics are well known. SNC has been working with ULA for 
over five years studying and demonstrating through testing that our 
vehicle will not pose any significant challenges. We require no solid 
boosters which contribute to safety. On board the Sierra Nevada Dream 
Chaser we use our internally developed hybrid rocket motors as our 
abort system, which are designed to ensure a runway landing from 
anywhere along the ascent trajectory. We do not require a separate 
launch abort system external to the vehicle. These flight-proven rocket 
motors have already successfully flown into space on Spaceship 1 and 
the technology has already had over 50 tests to date. We just completed 
wind tunnel tests further validating positively our ascent models and 
intend to test our motors during powered flight drop testing. 
Additionally, prior to our first orbital flight we will demonstrate a 
powered abort from a simulated launch pad to a runway landing at 
Edwards Air Force Base as part of an end to end flight test program. We 
also plan to do an uncrewed autonomous orbital flight where the hybrid 
motors will again be tested on-orbit prior to the first crewed mission.

Questions submitted by Ranking Member Eddie Bernice Johnson

Q1.  NASA's plan requires the development and certification of the 
commercial crew systems to occur within a tight timeline, requires the 
commercial systems to be capable of safe and reliable flight operations 
by 2016, makes use of new and unproven government-industry development 
and safety approaches, and has development and operations costs that 
are still unknown. In that regard, please provide the following 
questions:

     What is the evidence that you believe provides the 
justification for Congress to invest in this commercial crew initiative 
, and

     What your company realistically would require from the 
U.S. Government to make this initiative a success.

A1. Sierra Nevada Corporation is the ideal partner for NASA to develop 
a U.S. capability to provide safe, reliable, and cost-effective access 
to Low Earth Orbit (LEO). We are an experienced systems integrator and 
a builder of 100% reliable space hardware that meets the goals and 
objectives of the commercial crew program. Over our 25 years we have 
been engaged on over 400 space missions and have built over 4,000 
systems, subsystems and components all of which have operated 
successfully on orbit. We successfully completed the first two phases 
of the NASA commercial crew program by performing extensive risk 
reduction and building hardware. To date we have completed all our 
milestones, 12 in total, on time and on budget while providing NASA 
complete insight and access to our technical program. We have brought 
together over 12 heritage space companies, three aerospace universities 
and 7 NASA centers to be part of our program with employment happening 
in over 10 states, including expected significant growth in Texas where 
we have opened a new office.

  With all of the necessary partnerships, facilities and investment in 
place, we are ready to take the next step in the development of our 
integrated crew transportation system. The Dream Chaser Space System is 
based upon a NASA program called the HL-20 which had over ten years of 
development, includes the reliable Atlas V launch vehicle which has 
flown over 30 times, and has ground and mission systems that leverage 
the known infrastructure of the Kennedy and Johnson Space Centers, 
including Johnson's Mission Operations Directorate which has 
successfully controlled and flown almost all of NASA's human 
spaceflight missions. The Dream Chaser lifting body spacecraft offers 
significant advantages over capsules including low g reentry, 
substantial cross range and gentle runway landings. Our goal is to 
bring the jobs currently being outsourced to the Russian Space Program 
back to the United States and in doing so continue to drive America 
technology and manufacturing base forward while creating STEM 
opportunities for the next generation. Without this effort we are 
consigned to purchase our space needs from aboard. We realize that 
these are difficult economic times which are why as a Company we have 
substantially co-invested alongside of NASA. What we need most from the 
USG is predictability in the program and support to this mission of 
returning jobs to the U.S. It is difficult to build on a program that 
takes years without a commitment. We support this commitment being 
conditioned on our being able to continue to meet our milestones.

Q2.  What is your understanding of how third-party liability and 
indemnification will be addressed for both launch and reentry and for 
on-orbit operations of any commercial crew transportation system used 
for NASA ISS servicing?

     How important an issue is liability and indemnification to 
any decision your company might make to enter into a Phase 1 or Phase 2 
development contract with NASA for a commercial crew system, or to 
enter into a service contract with NASA to transport astronauts to the 
ISS?

     Do you plan to purchase insurance for your systems as part 
of your business plan, and how confident are you that adequate 
insurance coverage will be available privately? If it isn't, what do 
you plan to do?

A2. Per the Commercial Space Launch Amendments Act (CSLAA), all 
applicants applying for a launch and/or re-entry license from FAA must 
demonstrate financial responsibility through liability insurance or 
other means to cover third-party liability as well as damage or loss to 
Government property. The amount of the liability that has to be covered 
is determined by the FAA as part of the licensing process and is called 
the Maximum Probable Loss. We understand that we are responsible for 
that liability. Currently, there is limited indemnification for license 
applications received no later than December 31, 2012. Liability and 
indemnification is a very important issue for all commercial service 
providers, but we understand that it will take some time to finalize 
all the related issues, so this would not keep us from proceeding with 
development contracts with NASA. It will be a factor in our eventual 
pricing for a service contract since we will have to include the costs 
for liability insurance for all phases of the service. We do plan to 
purchase all the necessary insurance as part of our business plan and 
have had discussions with space insurance brokers and underwriters and 
believe that insurance coverage will be available privately.

Q3.  During the hearing, you testified that your company could provide 
commercial crew transportation services within the 2015-2016 timeframe. 
Please provide 1) the assumptions behind that date, including a) the 
magnitude and timing of funding from NASA, b) the timeline assumed for 
development, integration, testing and certification, and c) the number 
of certification flights you are assuming will be required.

A3. As part of the competitive Commercial Crew Integrated Capabilities 
(CCiCap) proposal due to NASA on March 23, 2012, bidders are required 
to provide all of the information that is asked in this question as 
well as to identify the magnitude and timing of the company investment 
on the program. Since this is a competitive proposal that is still 
under review we respectfully cannot provide detail to this question at 
this time. We can however state that we are able to meet or exceed the 
requirement for flight times and costs as outlined in that RFP and 
would be available to provide information at a future date.

Q4.  Would you anticipate any additional capacity on the Dream Chaser 
after taking into account NASA's crew requirements to ISS crew 
rotations?

     How will that overcapacity be dealt with?

     Will NASA be required to procure the entire spacecraft, or 
will they be able to just purchase the required number of seats for 
each flight?

     If passengers not paid for by NASA are transported on the 
flight, how will their stay on the ISS be accommodated and for how 
long?

     Are you assuming the ISS partnership will host the non-
NASA spaceflight participants on the ISS?

     If you are planning to fly extra passengers on each 
flight, how do you plan to get them back from ISS in an emergency if 
the Dream Chaser is also supposed to serve as an ISS crew rescue 
vehicle?

A4. NASA's stated ISS requirement is to provide transportation to four 
crewmembers for crew rotation. Sierra Nevada's Dream Chase Space System 
has a capability for seven seats. The additional three seats can be 
used in several ways. Those seats can be replaced by equivalent cargo 
to ISS or used to fly additional ISS crewmembers or payload 
specialists. Sierra Nevada plans to provide transportation services by 
the seat, so NASA will not be required to procure the entire 
spacecraft. We also assume that we are responsible for the logistics 
associated with any spaceflight participants that are not NASA 
crewmembers. We will either provide all support for these additional 
participants, or negotiate support with NASA/ISS, or a combination of 
the two. Extra passengers will only be flown if the ISS crew rotation 
model is `direct handover'--which means there will be a second Dream 
Chaser already on-orbit. In this case the non-NASA astronauts would 
only be on the ISS as long as it takes to swap out crews; they would 
all return to earth with the ISS crewmembers rotating home. In our 
traffic model, no non-NASA spaceflight participants would spend more 
than a few days on the ISS.

Q5.  NASA has proposed that the first phase of its commercial crew 
procurement--the Integrated Design Contract--be awarded as a fixed-
price contract. From your perspective, is that a manageable approach?

     How would you plan to balance risk mitigation and flight 
test programs, which can be expensive, against the need to keep within 
the contracted-for fixed-price limits?

A5. SNC believes that our vehicle can be successfully designed, built, 
tested, and certified within the framework of a fixed-price contract. 
We have been in the aerospace business for over 25 years and have 
successfully completed hundreds of fixed price programs. There can be 
no compromise when it comes to astronaut safety. Of the greatest 
advantage to us is that a majority of our systems have significant 
flight heritage. For example the Atlas V, which pricing is known and 
our environmental systems which are NASA heritage. This provides us 
with the visibility to more accurately predict our costs. To back this 
up, SNC has available to it a substantial and existing financial 
capability which provides ample contingency for future program changes.

Questions submitted by Representative Paul Broun


Q1.  What obligation does your company have under space act agreements 
to report anomalies to NASA?

Q2.  What information do you believe your company is obligated to 
provide NASA about anomalies under a space act agreement?

Q3.  How long after an anomaly is detected, observed, or identified, do 
you believe your company is obligated to report such an anomaly to NASA 
under a space act agreement?

Q4.  What obligation does your company have under traditional 
contracting to report anomalies to NASA?

Q5.  What information do you believe your company is obligated to 
provide NASA about anomalies under traditional contracting?

Q6.  How long after an anomaly is detected, observed, or identified, do 
you believe your company is obligated to report such an anomaly to NASA 
under traditional contracting?

Q7.  What obligation does your company have under the modified FAR 
acquisition to report anomalies to NASA?

Q8.  What information do you believe your company is obligated to 
provide NASA about anomalies under a modified FAR acquisition?

Q9.  How long after an anomaly is detected, observed, or identified, do 
you believe your company is obligated to report such an anomaly to NASA 
under modified FAR acquisition?

A1-9. Sierra Nevada's approach to the NASA's Commercial Crew Program is 
to be completely transparent, whether we are on a Space Act Agreement 
or a FAR-based contract. NASA is invited to any and all technical 
meetings we have, and learns of any anomalies in our technical 
development as they are happening. This completely honest and open 
approach enhances the NASA-Sierra Nevada team environment, promotes 
trust, and ultimately results in a much better product for both Sierra 
Nevada and NASA. We would expect no difference in dealing with 
anomalies under any contract type. Our safety program is consistent and 
is based upon doing what is right for the astronauts and the success of 
the program. We cannot answer how NASA may have dealt with such issues 
under a FAR or modified FAR contract as there was not a final RFP that 
was issued and that is a question better asked to NASA.

Questions submitted by Representative Jerry Costello

Q1.  NASA's FY 2012 budget request proposes a total of $4.25 billion 
over five years, or $850 million a year through 2016, to fund the U.S. 
government's share of commercial crew capabilities development for one 
or more systems. What do you believe, in terms of a percentage of total 
development costs, the private sector might realistically contribute?

     What percentage is your company planning to contribute?

     Is private sector investment contingent on additional, 
non-financial U.S. government support too? If so, what would that 
support involve?

A1. As part of the competitive Commercial Crew Integrated Capabilities 
(CCiCap) proposal due to NASA on March 23, 2012, bidders are required 
identify the magnitude and timing for all required NASA funds and all 
planned company investments both for a base contract period of 21 
months, and for full system development through a crewed orbital 
demonstration flight. The percentage of company investment and how it 
relates to required NASA funding will be evident in our proposal. As 
this is in the competitive stage we cannot answer this question, 
however, we can say that our contribution was significant in the first 
two phases of the program and, for us, is not expected to be contingent 
on additional non-financial U.S. government support.

Q2.  What is your reaction to NASA's proposed approach to human-rating 
future commercial crew transportation systems? Do you believe NASA's 
proposed approach will both ensure astronaut safety and facilitate 
eventual FAA licensing of launches for non-government customers? Are 
there any changes you would like to see made to the approach.

A2. SNC believes that NASA's approach to human rating will ensure both 
astronaut safety and eventual FAA licensing. SNC is designing the Dream 
Chaser spacecraft to NASA's 1100 and 50808 series requirements--which 
are the most recent NASA human rating requirements. Meeting these 
requirements will ensure we have the safest spacecraft possible--they 
are derived from ISS, Space Shuttle, and Constellation program 
requirements. FAA licensing should follow if there is tight 
communications, cooperation, and agreement between NASA's requirements 
and the FAA's licensing requirements for commercial spacecraft.

Q3.  During the hearing, you testified that your company is investing 
about 40 percent of the cost of your commercial crew activities 
relative to what the government is investing in your program. Do you 
intend to maintain that percentage should you receive an award for the 
design and development contracts from NASA? If not, what level of 
investment would you anticipate contributing for the design and 
development contract phase?

A3. The percentage of our company investment and how it relates to 
required NASA funding will be disclosed in our proposal. As this is in 
the competitive stage we cannot answer this question at this time.
Responses by Mr. Elon Musk, CEO and Chief Technology Officer,
Space Exploration Technologies Corp., Hawthorne, CA

Question Submitted by Chairman Ralph Hall

Q1.  How confident are you about NASA's and FAA's ability to coordinate 
their requirements for commercial crew launches? Have you seen any 
evidence yet that the two agencies are attempting to define roles and 
responsibilities, and to minimize overlap?

A1. SpaceX is confident that NASA and FAA will effectively coordinate 
their requirements for commercial crew launches. As you know, SpaceX 
previously secured FAA licensing for launch and reentry under the NASA 
Commercial Orbital Transportation Services (COTS) program. For 
Commercial Crew, we understand that NASA and FAA are in ongoing 
discussions to ensure that FAA regulations support NASA requirements 
and that duplication of efforts is minimal. The divisions of labor 
between NASA and FAA are clear: since NASA is both the leading federal 
agency for human spaceflight and the end user of the Commercial Crew 
Program, NASA should set requirements for human spaceflight systems. 
FAA should retain its current regulatory scope of protecting public 
safety during launch and reentry using its authority under the 
Commercial Space Launch Act (CSLA) of 1984, as amended.

  NASA and FAA collaboration for future commercial crew missions is 
already underway. A NASA employee from the Commercial Crew Program 
office is on a rotational assignment at FAA headquarters. Similarly, a 
FAA representative is assigned to the Commercial Crew Program office at 
NASA's Kennedy Space Center. NASA is supporting FAA definition of 
regulations for crew and participant safety and FAA is participating in 
CCP safety certification requirements development. Both Agencies are 
ensuring compatibility between NASA requirements and FAA regulations. 
Furthermore, the FAA participates in the Commercial Crew Program 
milestone reviews.

Q2.  Launch abort systems are one of the most critical and technically 
challenging features to design, integrate and test. What type of launch 
abort system do you intend to build into your crew system, and how 
mature is the design? Do you intend to demonstrate it in a relevant 
launch environment?

A2. SpaceX concurs that launch abort systems (LAS) are critical and 
technically challenging, which is why our LAS development is the 
centerpiece of our commercial crew effort. SpaceX's crew Dragon will 
include an integrated launch abort system (LAS), which will yield 
numerous safety and performance benefits. The Dragon's LAS is carried 
through orbit and reentry, with the abort systems available for use 
throughout the time the Dragon is boosted into space. Carrying the 
abort system all the way into orbit eliminates the jettison-effectively 
a stage separation event-of the abort system as a required event for 
the safe completion of a nominal mission. Separation events are, 
historically, a leading factor of launch failures.

  The Dragon LAS is a vehicle-integrated, side-mounted engine system 
selected for its safety, reliability and performance. Eight abort 
engines, or SuperDracos, are located around the periphery of the Dragon 
service section and are fed by hypergolic propellant stored in the 
spacecraft propellant tanks. In the event of a mishap or launch 
failure, the SuperDracos will push the Dragon spacecraft and crew away 
from the booster. This abort capability is maintained from the pad all 
the way through nominal on-orbit separation of Dragon from the second 
stage.

  To date, SpaceX has successfully completed five of the ten milestones 
in our CCDev2 Space Act Agreement (SAA). The completion of these 
milestones represents $40M of NASA's $75M funding under SpaceX's CCDev2 
agreement. During the execution of these milestones, SpaceX provided 
NASA with comprehensive Falcon 9/Dragon crew systems concept design 
insight, including cabin layout, seat design, space suit design, and 
life support system design. Further, SpaceX provided detail for abort 
scenarios, concepts for the launch abort system, ground systems, abort 
trajectories, and aerodynamics of ascent and entry and mass margins. 
The Design Status Review provided an opportunity for SpaceX to work 
with NASA and industry teammates as partners and make desired crew 
systems design concept changes subsequent to peer review. This feedback 
on the system-level designs and concepts constituted a successful 
collaboration between NASA and SpaceX under the SAA contracting 
structure.

  With regard to the LAS components PDR-our fourth milestone-SpaceX 
engineers demonstrated to NASA's satisfaction that the LAS propulsion 
components design is mature enough to support proceeding with detailed 
design, fabrication, assembly, integration and testing of LAS 
propulsion components test articles. SpaceX also provided sufficient 
evidence to demonstrate that the Dragon LAS propulsion design meets all 
system requirements within acceptable risk and can be developed within 
schedule.

  Future milestones will include abort engine fabrication and testing, 
as well as further maturation of the vehicle system design and concept 
of operations. To achieve these milestones, SpaceX has already begun 
design and construction of a test facility for the launch abort engine 
at our Rocket Development Facility in McGregor, Texas. The remaining 
hardware milestones will culminate in all key launch abort system 
propulsion components undergoing initial fluid and environmental 
development testing. Here, the SuperDracos will be hot-fire tested for 
a full duration. SpaceX will further demonstrate throttle capability, 
which is necessary for abort maneuvers.

Question Submitted by Ranking Member Eddie Bernice Johnson:

Q1.  NASA's plan requires the development and certification of the 
commercial crew systems to occur within a tight timeline, requires the 
commercial systems to be capable of safe and reliable flight operations 
by 2016, makes use of new and unproven government-industry development 
and safety approaches, and has development and operations costs that 
are still unknown: In that regard, please provide the following 
questions:

     What is the evidence that you believe provides the 
justification for Congress to invest in this commercial crew 
initiative, and

     What your company realistically would require from the 
U.S. Government to make this initiative a success.

A1. The NASA Commercial Cargo and Crew Program is a public-private 
partnership with the U.S. commercial space sector that leverages 
financial and technical resources to develop, demonstrate, and provide 
safe, reliable, and low-cost space transportation capabilities to the 
International Space Station (ISS). At SpaceX, government investment is 
leveraged with two additional nongovernment sources of capital: private 
investment and revenue from other markets. In other words, NASA's 
investment in commercial space transportation capabilities is augmented 
both by private investment and by advance sales revenue in the 
commercial and international launch market, such as telecommunication 
satellite launches and others.

  Since the retirement of the Space Shuttle earlier this year, the U.S. 
has no option but to send hundreds of millions of dollars to Russia 
annually to purchase seats on Soyuz spacecraft. While the Russians have 
been a reliable partner in space, they have continually increased their 
prices, from $48 million per seat in 2007 to $63 million in 2011--an 
increase of 31 percent in just five years. With the purchase of six 
seats annually, this equates to a transfer of wealth of over $336 
million per year to the Russian government, with an increase to $378 
million annually in 2014. This cost escalation demonstrates clearly the 
need to expeditiously develop new American human spaceflight 
capabilities to low Earth orbit. The U.S. is outsourcing its space 
missions and jobs to Russia by relying on Russian Soyuz vehicles to 
reach the ISS.

  The U.S. has always been a human spaceflight leader. However, no new 
launch vehicle has been developed since the Space Shuttle, an 
engineering and technical marvel, primarily due to inefficient 
contracting structures that led to extreme cost and schedule overruns, 
leading to program termination. This has been a familiar history in 
recent years. The innovative approach that forms that basis of NASA's 
Commercial Crew Program, in which private contractors have ``skin in 
the game,'' and are required to meet performance milestones to receive 
payment, has already contributed to the successful development of the 
Falcon 9 launch vehicle and a cargo version of the Dragon capsule.

  A robust U.S. Commercial Crew program-built on a firm fixed price, 
milestone-based, pay-for-performance approach-will leverage private 
investment to create thousands of American jobs in Florida, Nevada, 
Colorado, Virginia, Texas, California, Washington, and Alabama 
depending on the companies that remain involved going forward. 
According to an April 2010 Tauri Group study, fully funding and 
implementing the Commercial Crew and Cargo Program would result in an 
average of 11,800 direct jobs per year over the next five years 
nationwide. Further, Commercial Crew provides the only affordable way 
to regain America's human spaceflight capability within the next 
several years. If Congress is committed to the restoration of this 
capability for America, it should ensure robust and consistent funding 
for the program.

  Commercial crew and cargo providers actively seek as many new markets 
as possible for their services, increasing the volume of flights and 
thus reducing the cost of access to space for all, including NASA. 
SpaceX already has a substantial non-government customer base, with 
over 60 percent of our launch manifest consisting of commercial 
launches. This market diversity allows us to disperse our costs widely 
and keep them low for U.S. government customers. More broadly, markets 
for commercial spaceflight include scientific research flights, 
national security missions, commercial launches for satellites, private 
space travel, and others. A strengthened U.S. commercial spaceflight 
industry would bring space launches back to the United States-an 
outcome SpaceX has already contributed to-from foreign governments to 
whom the U.S. has recently surrendered that market.

  Subsequent to the Committee's hearing in October, NASA has announced 
that it will initiate another competition for Space Act Agreements for 
the next round of Commercial Crew development. The details on the next 
round and the guidelines for proposals have not been released, but 
SpaceX is planning to participate and submit a proposal. Once we have 
additional details about the next commercial crew development phase, we 
will be better able to estimate the necessary federal investment.

Q2.  What is your understanding of how third-party liability and 
indemnification will be addressed for both launch and reentry and for 
on-orbit operations of any commercial crew transportation system used 
for NASA ISS servicing?

     How important an issue is liability and indemnification to 
any decision your company might make to enter into a Phase 1 or Phase 2 
development contract with NASA for a commercial crew system, or to 
enter into a service contract with NASA to transport astronauts to the 
ISS?

     Do you plan to purchase insurance for your systems as part 
of your business plan, and how confident are you that adequate 
insurance coverage will be available privately? If it isn't, what do 
you plan to do?

A2. While NASA has not released its final plans for acquiring crew 
services to the ISS, NASA contracts have traditionally contemplated 
third-party liability and indemnification. The cross-waiver, 
indemnification, and insurance requirements in NASA contracts are set 
forth in 14 CFR 1266, NASA FAR Supplement Part 1828, and FAR Part 28. 
We anticipate that any commercial crew transportation system that is 
conducted under a NASA contract will accord with the legal and 
regulatory requirements guiding third-party liability and 
indemnification. Should that system require an FAA license, then 
contractors will be required to obtain that license pursuant to the 
Commercial Space Launch Act, 51 U.S.C. Ch. 509, Sec. Sec.  50901-23 
(2011).

  Liability and indemnification are one of many important factors that 
impact SpaceX's decision to enter into contracts with NASA. Prior to 
entering into a development or services contract to transport 
astronauts to the ISS, it is essential that the applicable liability 
and indemnification regime be clearly defined. It would be very 
difficult to appropriately price the services without clearly 
delineated responsibilities, including any costs associated with the 
relevant insurance requirements.

  SpaceX will purchase appropriate levels of insurance consistent with 
prudent business practices and all relevant legal, regulatory and 
contractual requirements. We have no reason to believe that adequate 
insurance will not be available on the private market as insurance 
products meeting current FAA/NASA requirements are readily available. 
In the unlikely event insurance is not available on the private market, 
a contractor could self-insure or seek indemnification by NASA under 
the Space Act (Pub. L. No. 85-568).

Q3.  During the hearing, you testified that your company could provide 
commercial crew transportation services within the 2015-2016 timeframe. 
Please provide the assumptions behind that date, including:

     the magnitude and timing of funding from NASA,

     the timeline assumed for development, integration, 
testing, and certification, and

     the number of certification flights you are assuming will 
be required.

A3. In the coming years, SpaceX will collect significant data and 
experience on the Falcon 9 and Dragon system from upcoming COTS and CRS 
missions. According to the current schedule , the Dragon spacecraft and 
Falcon 9 launch vehicle will have flown together at least 8 more times 
before a crew demonstration if it were to occur by 2015. The Falcon 9 
itself is scheduled to launch a total of 14 missions prior to the first 
Dragon crew mission. The commonality between the cargo and crew 
versions of Dragon will generate significant end-to-end flight heritage 
and operational experience for our system well in advance of any crew 
flight.

  Ultimately, the Falcon 9 will be one hundred percent common as 
between the cargo and crew vehicles. Therefore, though there is much 
work ahead, SpaceX already is beyond a Critical Design Review (CDR) 
equivalent level of maturity--and even into the production phase--with 
respect to many aspects of the vehicle system. This includes the main 
propulsion systems, structures, thermal protection systems (including 
the Dragon heat shield), power generation systems, altitude control, 
on-orbit propulsion systems, thermal control systems, and GNC systems.

  SpaceX has been steadily progressing through our CCDev2 milestones, 
which are focused on accelerating development of our launch abort 
system. As you know, NASA recently elected to pursue Space Act 
Agreements (SAA) for the next phase of the Commercial Crew Development 
program. NASA determined that an SAA approach will ``offer more 
flexibility and efficiency in adjusting to future appropriations'' and 
enhance ``partner flexibility in technical development through the next 
phase.'' \1\ SpaceX looks forward to receiving more details on NASA's 
plans for this phase, will be better able to predict our future 
schedule for development, integration, testing and, depending on NASA's 
certification process, provide transportation services within the 2015 
timeframe. SpaceX defers to NASA with regard to the number of 
certification flights that will be required and makes no assumptions in 
that regard.
---------------------------------------------------------------------------
    \1\ NASA Commercial Crew Program, Commercial Crew Program Near Term 
Strategy Discussion. December 2011.

Q4.  Would you anticipate any additional capacity on the Dragon capsule 
after taking into account NASA's crew requirements on ISS crew 
---------------------------------------------------------------------------
rotations?

     How will that overcapacity be dealt with?

     Will NASA be required to procure the entire spacecraft, or 
will they be able to just purchase the required number of seats for 
each flight?

     If passengers not paid for by NASA are transported on the 
flight, how will their stay on the ISS be accommodated and for how 
long?

     Are you assuming the ISS partnership will host the non-
NASA spaceflight participants on the ISS?

     If you are planning to fly extra passengers on each 
flight, how do you plan to get them back from ISS in an emergency if 
the Dragon capsule is also supposed to serve as an ISS crew rescue 
vehicle?

A4. The goal of SpaceX's crew transportation system is to safely and 
reliably transport up to seven crew members from our launch pad on Cape 
Canaveral to the International Space Station (ISS), dwell on the ISS 
for up to 210 days and return the same number of crew safely to Earth. 
As America's national laboratory in space, the ISS productivity depends 
on how many scientists can visit the lab, conduct their experiments and 
return to their public or private enterprises. NASA currently bases 
astronauts at the ISS for six months. That limitation is based on how 
many Soyuz capsules are produced each year, how long the Soyuz is rated 
to last on orbit and the high price of Soyuz seats.

  The ISS can actually support seven crew members once we have a better 
crew rescue capability. Commercial crew will deliver that capability. 
Should the U.S. space industry lower the cost to between $20 and $30 
million per seat, it will be possible for research scientists to visit 
the ISS for shorter periods of time, conduct dedicated research and 
return to Earth. Less costly, more regular access to ISS will enable 
more scientists to do more research in the same amount of time, with 
the same amount of dollars.

  Since NASA has not released its final plans for acquiring crew 
services to the ISS, it is too soon to anticipate if the Dragon will 
have additional capacity beyond NASA's crew. SpaceX anticipates that 
NASA will purchase seats on the Dragon in a similar fashion as NASA 
procures seats on the Russian Soyuz. SpaceX's commercial crew proposals 
to date have been premised on developing a safe and affordable crew 
capability that NASA will be able to procure as a commercial service 
rather than bearing the burden of acquiring the entire spacecraft.

  The Commercial Crew Program is still in the development stage. Should 
NASA select SpaceX for future crew development efforts and eventually 
for a crew services contract, SpaceX will work with NASA to resolve 
questions about excess capacity, non-NASA participants, ISS visits and 
ISS emergency evacuations.

Q5.  NASA is providing your company with an additional 42% of the 
original funding provided for developing a commercial cargo 
transportation system to buy down risk and assure that commercial cargo 
resupply services to the ISS are ready when NASA needs them. How can 
Congress have confidence that a commercial crew program, which is more 
challenging than developing systems to deliver cargo, will be any 
different and not require additional funding further down the road?

A5. The Commercial Orbital Transportation Services (COTS) augmentation 
milestones exceeded the tests and demonstrations originally agreed to 
by SpaceX and NASA for COTS when the parties first signed their Space 
Act Agreement. Specifically, certain milestones augmented pre-planned 
ground and flight testing, others accelerated the development of 
enhanced cargo capabilities, and the remaining focused on 
infrastructure improvements. The additional milestones further 
developed the ground infrastructure needed for cargo carriage 
operations and helped improve the launch and recovery operations, test 
site and production facility infrastructure. In short, COTS 
augmentation milestones were meant to further reduce risk and enhance 
the execution of the cargo demonstration and operational missions to be 
performed under the COTS and CRS programs. NASA divided these 
milestones among multiple amendments due to the uncertainty in Fiscal 
Year 2011 funding.

  Since the hearing in October, NASA has announced that it will alter 
its approach to the next stage of commercial crew development and is 
delaying moving forward with the Commercial Crew Integrated Design 
Contract (CCIDC). Instead, NASA is planning to initiate another 
competition for Space Act Agreements. NASA specifically cited the 
Fiscal Year 2012 funding level and "the uncertainty with the FY13 and 
FY14 budget levels" as a key cause for ``adjusting the near-term 
strategy.'' \2\
---------------------------------------------------------------------------
    \2\ NASA Commercial Crew Program, Commercial Crew Program Near Term 
Strategy Discussion. December 2011.

  Further details on the next round and the guidelines for NASA's 
commercial crew development Space Act Agreements have not been 
released. Once those are released, the industry and Congress will have 
a better sense of the funding required to participate in the next 
---------------------------------------------------------------------------
commercial crew development and the timeline for the program.

Q6.  NASA has proposed that the first phase of its commercial crew 
procurement--the Integrated Design Contract--be awarded as a fixed-
price contract. From your perspective, is that a manageable approach?

     How would you plan to balance risk mitigation and flight 
test programs, which can be expensive, against the need to keep within 
the contracted-for fixed-price limits?

A6. NASA has elected to pursue Space Act Agreements (SAA) for the next 
phase of the Commercial Crew Development (CCDev) program rather than 
the previously-proposed Commercial Crew Integrated Development Contract 
(CCIDC). SpaceX strongly supports firm fixed-price contracts, whether 
SAAs or FAR-based, as providing the best value for the taxpayer. To 
date, SpaceX has solely operated under firm fixed-price contracts, and 
believes this approach is manageable, provides contractors with proper 
incentives, and will help keep costs low as compared with cost-plus 
contracts. Firm fixed-price (FFP) contracts have proven that they 
deliver those results. For example, development of the Falcon 9 and 
cargo Dragon under the Commercial Orbital Transportation Services 
(COTS) program was undertaken under a FFP.

  By contrast, cost-plus contracts have resulted in cost overruns and 
schedule delays, and ultimately have resulted in no new domestic launch 
vehicle since the Space Shuttle. Indeed, NASA's internal studies using 
the NASA-Air Force Cost Model (NAFCOM) concluded that it would have 
cost NASA $1.7B to $4B to develop the Falcon 9 rocket. By contrast, in 
partnership with NASA's COTS program, SpaceX developed the Falcon 9 for 
approximately $300M under its firm fixed-price Space Act Agreement.

  Firm fixed-price contracts make the most sense when requirements are 
properly identified and milestones are effectively negotiated. NASA and 
SpaceX will incorporate risk mitigation and flight testing into its FFP 
milestone-based, pay for performance contracts under Space Act 
Agreements as the CCDev program progresses. The clearest example of 
this approach is the Falcon 9/Dragon demonstration mission under the 
COTS program. FFP contracts do not inhibit risk mitigation or rigorous 
testing. In fact, they allow NASA and the contractor to negotiate those 
terms and milestones at a high level of specificity on the front end of 
a contract, prompting payments when milestones are reached.

  The Government Accountability Office (GAO) has recently identified 
NASA's firm fixed-price approach for CCDev as one its ``good 
acquisition practices.'' Further, GAO states: ``We have reported that 
the use of firm-fixed-price contracts-along with well-defined 
requirements and a sufficient level of knowledge about critical 
technologies-presents the least risk to the government. Firm fixed-
price contracts place the onus on the contractor to provide the 
deliverable at the time, place, and price negotiated by the contractor 
and the government. In addition, firm fixed-price contracts place the 
maximum risk on the contractor as well as full responsibility for all 
costs and any resulting profit or loss'' (GAO-12-282 NASA Commercial 
Crew Program).

Question Submitted by Representative Paul Broun

Q1.  What obligation does your company have under space act agreements 
to report anomalies to NASA? What information do you believe your 
company is obligated to provide NASA about anomalies under a space act 
agreement? How long after an anomaly is detected, observed, or 
identified, do you believe your company is obligated to report such an 
anomaly to NASA under a space act agreement?

A1. The obligations to report anomalies under a Space Act Agreement are 
well-defined. Under SpaceX's Space Act Agreement (SAA) for the 
Commercial Orbital Transportation Services (COTS) program, we are 
required to ``[i]dentify any anomalies with preliminary assessment of 
cause'' for each mission. When SpaceX documents an anomaly, we report 
it to NASA with our preliminary analysis of the anomaly's cause and 
then we work to NASA on the resolution.

  SpaceX's COTS SAA provides NASA with significant insight into 
SpaceX's operations and includes a number of obligations and reporting 
requirements that include anomaly reporting assessment and corrective 
actions. SAA's provide NASA with the ability to require anomaly 
reporting and information as well as a process for reviewing and 
resolving any anomalies observed during work taking place under the 
SAA.

Q2.  What obligation does your company have under traditional 
contracting to report anomalies to NASA? What information do you 
believe your company is obligated to provide NASA about anomalies under 
traditional contracting? How long after an anomaly is detected, 
observed, or identified, do you believe your company is obligated to 
report such an anomaly to NASA under traditional contracting?

A2. The obligations to report anomalies under a traditional contracting 
mechanism are determined by the contract. SpaceX's Commercial Resupply 
Services (CRS) contract to provide NASA with ISS cargo services is a 
Federal Acquisition Regulation (FAR) contract. The FAR provides a 
framework for NASA to include mission-specific requirements in its 
contracts, including anomaly reporting. During its procurement process 
and negotiations with its contractors, NASA determines the level of 
insight and oversight it requires.

  For example, the following obligations are part of NASA's insight and 
approval authority under SpaceX's CRS contract:

        The Contractor shall notify NASA of qualification or test 
anomalies involving ISS Commercial Resupply launch and orbital 
vehicles, systems, subassemblies, components, software and similar 
launch and orbital vehicles that the Contractor is aware of.

        In the event of an in-flight anomaly or launch, on-orbit or 
entry failure, the Contractor shall allow NASA to participate fully in 
the Contractor`s Failure Investigation Board including those for non-
NASA missions.

        Our CRS contract provides NASA with significant insight into 
SpaceX's operations and includes a number of obligations and reporting 
requirements that include anomaly reporting assessment, corrective 
actions. Those requirements appear in various parts of the contract.

Q3.  What obligation does your company have under the modified FAR 
acquisition to report anomalies to NASA? What information do you 
believe your company is obligated to provide NASA about anomalies under 
a modified FAR acquisition? How long after an anomaly is detected, 
observed, or identified, do you believe your company is obligated to 
report such an anomaly to NASA under modified FAR acquisition?

A3. Please see the response above. Any differences in anomaly reporting 
obligations between a traditional FAR acquisition, a modified FAR 
acquisition, or a Space Act Agreement would be determined by NASA in 
the contract.

Question Submitted by Representative Jerry Costello

Q1.  NASA's FY 2012 budget request proposes a total of $4.25 billion 
over five years, or $850 million a year through 2016, to fund the U.S. 
government's share of commercial crew capabilities development for one 
or more systems. What do you believe, in terms of a percentage of total 
development costs the private sector might realistically contribute?

     What percentage is you company planning to contribute?

     Is private sector investment contingent on additional, 
non-financial U.S. government support too? If so, what would that 
support involve?

A1. At SpaceX, government investment is leveraged by at least one 
additional nongovernment source of capital, including private 
investment and revenue from other markets. In other words, NASA's 
investment in commercial space transportation capabilities is augmented 
both by private investment and by advance sales revenue in the 
commercial and international launch market, such as telecommunication 
satellite launches and others.

  Commercial crew and cargo providers actively seek as many new markets 
as possible for their services, increasing the volume of flights and 
thus reducing the cost of access to space for all, including NASA. 
Markets for commercial spaceflight include scientific research flights, 
national security missions, commercial launches for satellites, private 
space travel, and others. A strengthened U.S. commercial spaceflight 
industry would bring space launches back to the United States from 
foreign governments who have increasingly taken over the market.

  Since the hearing in October, NASA has announced that it will alter 
its approach to the next stage of commercial crew development to 
initiate another competition for Space Act Agreements. The details on 
the next round and the guidelines for proposals have not been released, 
though SpaceX is planning to participate and submit a proposal. Once we 
have greater details about the next commercial crew development phase, 
we will be better able to estimate the private sector contribution.

  Our continued investment will not be contingent upon that support 
continuing; however, we believe it provides valuable benefits to NASA 
and its industry partners. Under NASA's Space Act Agreements for COTS 
and commercial crew development, industry has received non-financial 
U.S. government support, generally in the form of technical assistance 
by NASA experts and centers. SpaceX's participation in COTS and CCDev2 
has not been contingent upon non-financial U.S. Government support, 
though NASA's technical support has contributed to the success of our 
partnership.

Q2.  What is your reaction to NASA's proposed approach to human-rating 
future commercial crew transportation systems? Do you believe NASA's 
proposed approach will both ensure astronaut safety and facilitate 
eventual FAA licensing of launches for non-government customers? Are 
there any changes you would like to see made to the approach?

A2. NASA has been safely transporting astronauts into space for 50 
years. Building on its decades of experience, earlier this month, NASA 
released the baselined version of the CCT-1100 Series. Those documents 
will provide valuable guidance to industry on NASA's human rating 
requirements as we continue development of future commercial crew 
transportation systems. NASA's oversight coupled with SpaceX's 
innovative vehicle design--which in many cases exceeds the NASA 
requirements--will improve safety by a factor of ten compared to 
previous human-carrying spacecraft. The resulting transportation system 
is also expected to satisfy the FAA licensing requirements.

Q3.  During the hearing, you testified that your company is investing 
about 60 percent of the cost of your commercial crew activities 
relative to what the government is investing in your program. Do you 
intend to maintain that percentage should you receive an award for the 
design and development contracts from NASA? If not, what level of 
investment would you anticipate contributing for the design and 
development contract phase?

A3. Since the hearing in October, NASA has announced that it will alter 
its approach to the next stage of commercial crew development to 
initiate another competition for Space Act Agreements. The details on 
the next round and the guidelines for proposals have not been released, 
though SpaceX is planning to participate and submit a proposal. Once we 
have greater details about the next commercial crew development phase, 
we will be better able to estimate the private sector contribution. 
However, SpaceX is committed to substantial investment as part of this 
program.

Q4.  During the hearing, you testified that you would commit in current 
year dollars to a price of $140 million for commercial crew for a seven 
astronaut flight and at a flight rate of four crewed flights per year.

   a.  Do you anticipate any additional capacity on the four flights, 
after taking into account NASA's requirements for ISS crew rotations? 
If so, how would you plan to fill the remaining seats on those flights 
included in the four flights per year rate?

   b.  Would NASA assume the cost of the entire flight if any seats 
were not filled?

A4. The goal of SpaceX's crew transportation system is to safely and 
reliably transport up to seven crew members from our launch pad on Cape 
Canaveral to the International Space Station (ISS), dwell on the ISS 
for up to 210 days and return the same number of crew safely to Earth. 
SpaceX's commercial crew proposals to date have been premised on 
developing a safe and affordable crew capability that NASA will be able 
to procure as a commercial service.

  Since NASA has not released its final plans for acquiring crew 
services to the ISS, it is too soon to anticipate if the Dragon will 
have additional capacity beyond NASA's crew. SpaceX anticipates that 
NASA will purchase seats on the Dragon in a similar fashion as NASA 
procures seats on the Russian Soyuz. Should NASA select SpaceX for 
future crew development efforts and eventually for a crew services 
contract, SpaceX will work with NASA to resolve questions about excess 
capacity, non-NASA participants, ISS visits and ISS emergency 
evacuations.

Q5.  Following the hearing, it was reported that SpaceX may not bid on 
the commercial crew development contract if NASA does not change the 
terms in the draft version of the contract. Is that correct?

A5. The report was inaccurate and was changed by the reporter. SpaceX 
plans to submit a proposal to participate in the next phase of NASA's 
commercial crew development program. The company was founded to develop 
the safest, most reliable and affordable crew transportation system to 
low Earth orbit and, ultimately, beyond. Indeed, carrying humans into 
space has been a cornerstone of SpaceX's vehicle designs from the day 
the company was founded.

  Since the hearing in October, NASA has announced that it will pursue 
competitively-awarded Space Act Agreements for the next stage of 
commercial crew development. The details on the next round and the 
guidelines for proposals have not been released, though SpaceX is 
planning to participate and submit a proposal.
Responses by Mr. Charlie Precourt, Vice President,
 ATK Launch Systems Group, Brigham City, UT

Question Submitted by Chairman Ralph Hall

Q1.  How confident are you about NASA's and FAA's ability to coordinate 
their requirements for commercial crew launches? Have you seen any 
evidence yet that the two agencies are attempting to define roles and 
responsibilities, and to minimize overlap?

A1. ATK believes that a working relationship is being developed between 
the two agencies for the ISS Commercial Resupply program which can be 
evolved to manage a Commercial Crew Transportation program. The FAA 
also has established a Commercial Space Transportation Advisory Council 
that includes industry membership to engage in issues surrounding roles 
and responsibilities for commercial spaceflight operations. The input 
from the COMSTAC informs the FAA on approaches that can be taken in its 
interface with NASA and other government agencies relative to 
commercial space activities.

Question Submitted by Ranking Member Eddie Bernice Johnson

Q1.  Please provide the evidence that provides the justification for 
Congress to invest in this commercial crew initiative and what would 
your company realistically require from the U.S. Government to make 
this initiative a success.

A1. The question raises appropriate issues relative to the commercial 
crew program's readiness to support ISS schedule requirements as well 
as the expected levels of safety, reliability, and the costs of 
development and operations in fielding a commercial system. One of the 
biggest factors that will influence the outcome of all of these 
questions is the certification process to be used by NASA for the 
commercial vehicles. The amount of testing and certification 
documentation required to be awarded a commercial crew delivery 
contract is not yet known. The certification process ultimately will 
affect schedule, cost, performance, reliability and safety.

  It is hoped the process for certification can become clear during the 
next phase of the development program, so that industry can better 
estimate the costs to be carried in its business approach. To make this 
initiative a success, our company would require a contract for services 
beyond the development program that is specific in terms of numbers of 
flights and prices. This was done for commercial cargo services during 
NASA's COTS program. The Commercial Resupply Services contracts were 
awarded to the COTS contractors while development was still underway. 
This enabled the companies to project realistic returns on investment 
for the program. To date, this has not been addressed by NASA for the 
commercial crew program. The development activities for commercial crew 
could take longer than for cargo services, making the need for early 
services contracts all the more important to ensure reasonable returns 
on investment are achievable.

Q2.  What is your understanding of how third-party liability and 
indemnification will be addressed for both launch and reentry and for 
on-orbit operation of any commercial crew transportation system used 
for NASA ISS servicing?

A2. At this time, ATK understands that NASA will procure commercial 
launch services, and the services will be provided and licensed under 
the FAA authority, which dictates the required insurance coverage, as 
well as the Government indemnification coverage. We also anticipate 
that a Cross Waiver of Liability for Space Station Activities, similar 
to Commercial Resupply, will be incorporated into any resulting 
contract.

Q3.  How important an issue is liability and indemnification to any 
decision your company might make to enter into a Phase 1 or Phase 2 
development contract with NASA for commercial crew system, or to enter 
into a service contract with NASA to transport astronauts to the ISS?

A3. While there are extremely talented people designing rockets and 
conducting a rigorous certification process, there are potential risks 
that could financially destroy a company. Without insurance coverage 
and ultimately indemnification, the risks would be too great to enter 
into the launch services business.

Q4.  Do you plan to purchase insurance for your systems as part of your 
business plan, and how confident are you that adequate insurance 
coverage will be available privately? If it isn't, what do you plan to 
do?

A4. ATK plans to acquire the insurance required by an FAA License and 
has had discussions with the Insurance industry and believes that 
insurance will be available.

Question Submitted by Representative Paul Broun

Q1.  What obligation does you company have under space act agreements 
to report anomalies to NASA?

A1. ATK does not have any space act agreements that spell out a 
requirement for anomaly reporting. However, as a result of ATK's 
ongoing relationship with NASA on several contracts, ATK provides NASA 
insight to events and anomalies as soon as they occur, whether required 
contractually or not. Generally, the aerospace industry openly reports 
anomalies to ensure that they aren't unnecessarily repeated on other 
operating systems, or on other programs, due to lack of insight. This 
is a common lessons learned practice in the industry, and is done in a 
manner that enables learning while protecting proprietary information.

Q2.  What information do you believe your company is obligated to 
provide NASA about anomalies under a space act agreement?

A2. This is dependent on the type of space act agreement, the scope of 
the agreement, and the requirements contained in the agreement. For 
example, if an agreement required hardware performance and anomaly 
reporting, ATK would be obligated to provide information relative to 
the anomaly.

Q3.  How long after an anomaly is detected, observed, or identified, do 
you believe you company is obligated to report such an anomaly to NASA 
under a space act agreement?

A3. This is dependent on the type of a space act agreement, the scope 
of the agreement, and the requirements contained in the agreement. As 
noted in the response to question #1, we generally report anomalies as 
a normal way of doing business.

Q4.  What obligation does your company have under traditional 
contracting to report anomalies to NASA?

A4. ATK is required to report failure and anomalies upon occurrence or 
detection for any and all anomalies.

Q5.  What information do you believe your company is obligated to 
provide NASA about anomalies under traditional contracting?

A5. ATK is required to provide reporting on ten items

    1.  A failure
    2.  An overstress or a result of an overstress of equipment and/or 
material
    3.  An unsatisfactory condition
    4.  An unexplained anomaly
    5.  An alert applicable to flight hardware
    6.  Failure of Critical Items List (CIL) hardware that fail in 
critical failure modes
    7.  Affects accepted delivered hardware
    8.  In-flight anomaly
    9.  Ground Support Equipment (GSE) Nonconformance
    10.  Contractor/Customer request

Q6.  How long after an anomaly is detected, observed, or identified, do 
you believe you company is obligated to report such an anomaly to NASA 
under traditional contracting?

A6. Upon occurrence or detection (as soon as feasible).

Q7.  What obligation does your company have under the modified FAR 
contracting to report anomalies to NASA?

Q8.  What information do you believe your company is obligated to 
provide NASA about anomalies under a modified FAR acquisition?

Q9.  How long after an anomaly is detected, observed, or identified, do 
you believe you company is obligated to report such an anomaly to NASA 
under modified FAR acquisition?

A7-9. As noted in my response to question #1, we feel we are morally 
obligated to provide anomaly reporting as soon as practical regardless 
of contractual requirements. In our history, there have been numerous 
examples where we were assisted by both the contracting agency and 
competitors in anomaly resolution and similarly, we assisted 
competitors and contracting agencies in analyzing and resolving their 
anomalies. Typically the industry works in this fashion to avoid 
unnecessary failures on similar systems on other programs. The process 
is as open as possible while protecting proprietary data. ATK feels 
that providing the launch services NASA is pursuing, be it payloads or 
people, is an extremely valuable and critical requirement for the 
nation. As such, ATK would not alter the approach to anomaly reporting 
currently in practice for the vast majority of our contracts if a 
modified FAR acquisition approach is taken.

Question Submitted by Representative Jerry Costello

Q1.  What do you believe, in terms of a percentage of total development 
costs, the private sector might realistically contribute? What 
percentage is your company planning to contribute? Is private sector 
investment contingent on additional non-financial U.S. government 
support too? If so what would that support involve?

A1. The percentage contribution from the private sector is directly 
proportionate to the return on investment that can be expected from the 
future sales of the product (in this case a launch service). Currently, 
for commercial crew services, there are many assumptions being made to 
create future business models. As a point of reference, one can look to 
the production of commercial aircraft for the airline industry, where 
100% of the upfront investment is borne by industry. This is achievable 
because of the high numbers of aircraft ordered resulting in a positive 
return on investment.

  In the case of commercial crew services however, the number of 
flights (demand levels for the service) is likely to be six per year or 
less. The flight rate expectation will set the price levels required to 
generate a positive return on investment. If industry invested 100% in 
system development while anticipating these flight rates, the cost per 
flight required to recoup the investment would be extremely high. 
Therefore, government must offset the upfront costs so that investments 
from industry can be reasonably amortized. Using assumptions based on 
our best understanding of the NASA plan during the CCDev2 timeframe, 
ATK required 50% or less of the up-front investment from the 
government. However as changes in the NASA plan occur, the amount that 
ultimately is our contribution would change accordingly. For example, 
should NASA test and certification requirements prove to be more costly 
than we have assumed, then the investment percentages would be 
affected.

  Similarly, if NASA's acquisition strategy changes, or the number of 
flight services ordered is lower than currently anticipated, then the 
cost per flight or the upfront government investment, or both would be 
affected. Given these uncertainties in the ultimate flight rates or 
contractual requirements through demonstration, test and initial 
operational capability, it is essentially impossible to define a set 
percentage investment that would be reasonable for industry to make. In 
the absence of this clarity, we make reasonable assumptions as a 
starting point for our investment with the expectation there will be 
changes as NASA's final requirements, and the means to pay for them, 
become better understood. Finally, private sector investment also 
depends on other additional, non-financial U.S. government support. 
This is most notable in the area of launch site infrastructure and 
other government facility and equipment access. Costs to industry for 
access to the government owned assets will ultimately affect the 
viability of the commercial approach. There are various means to 
address these costs, but will be the government's responsibility to 
determine.

Q2.  What is your reaction to NASA's proposed approach to human-rating 
future commercial crew transportation systems? Do you believe NASA's 
proposed approach will both ensure astronaut safety and facilitate 
eventual FAA licensing of launches for non-government customers? Are 
there any changes you would like to see made to the approach?

A2. The most important consideration for human-rating is to ensure that 
standards we know to be technically achievable, and that would result 
in increases in astronaut safety relative to Shuttle, are not 
compromised for budget or other financial reasons. Although NASA has 
released its human rating requirements, it is not yet clear what will 
be required to be certified to those requirements. The means to prove a 
system meets the human rating requirement are still to be defined in a 
certification process. The cost for this process therefore is also an 
unknown. As those costs become better understood, there may be pressure 
to do less than what is achievable in the way of safety and reliability 
for the astronauts in a crew transportation system. NASA should 
maintain the highest achievable standards for both their human rating 
requirements and their certification process to ensure we deliver the 
safest, most reliable system possible.

Q3.  During the hearing, you testified your company plans to have 50% 
of the cost come from outside, non-government investment. Do you intend 
to maintain that percentage should you receive an award for the design 
and development contracts from NASA? If not what level of investment 
would you anticipate contributing for the design and development 
contract phase?

A3. Please see the answer to Question 1 above. Additionally, we would 
intend to maintain a level of investment that minimizes government 
costs and would strive to maintain our original business model and 
carry the original assumptions. However, as mentioned in the answer to 
question 1 above, the NASA acquisition strategy, schedule and ultimate 
requirements continue to evolve, all of which affect the business model 
and the required costs to be amortized over the life of the system. As 
a result, the exact percentages of our investment relative to the total 
system development cost are likely to change in an iterative fashion as 
the NASA plans become clearer.
Responses by Dr. George Sowers, Vice President,
United Launch Alliance, Englewood, CO

Question Submitted by Chairman Ralph Hall

Q1.  How confident are you about NASA's and FAA's ability to coordinate 
their requirements for commercial crew launches? Have you seen any 
evidence yet that the two agencies are attempting to define roles and 
responsibilities, and to minimize overlap?

A1. ULA strongly supports both Congress' and NASA's efforts to develop 
a commercial capability to meet U.S. obligations to deliver crew to and 
from the International Space Station. ULA has been extremely encouraged 
at the level of cooperation between NASA and the FAA in working jointly 
to develop and coordinate requirements and certification processes for 
commercial crew launches. Both agencies are bringing their expertise 
and unique experience to work cooperatively towards the goal of 
developing a safe and affordable domestic capability to transport crew 
to low earth orbit. NASA has decades of human spaceflight experience 
which directly complements the FAA's decades of experience certifying 
commercial and civilian aircraft, and licensing of commercial space 
launches. ULA is confident that both agencies will work cooperatively 
to define mutually beneficial roles and responsibilities, while 
proactively seeking input from the commercial crew service providers.

Question Submitted by Ranking Member Eddie Bernice Johnson

Q1.  NASA's plan requires that development and certification of the 
commercial crew systems to occur within a tight timeline, requires the 
commercial systems to be capable of safe and reliable flight operations 
by 2016, makes use of new and unproven government-industry development 
and safety approaches, and has development and operations costs that 
are still unknown. In that regard, please provide the following 
questions:

a.  What is the evidence that you believe provides that justification 
for congress to invest in this commercial crew initiative, and

A1 a. The primary justification to invest in the commercial crew 
initiative is that the nation needs this strategic capability to 
maintain our nation's leadership in human spaceflight and is required 
to meet U.S. obligations to the ISS partners. We should have an urgency 
to get a commercial service up and operating as quickly as possible to 
close the U.S. Human Spaceflight ``Gap'' and to continue to exploit the 
investment that we've made in the ISS.

  The Government of Russia is NASA's sixth largest contractor, 
receiving over $350M per year. Not only does this represent thousands 
of high tech jobs sent overseas, but it's ceding our leadership as a 
space-faring nation. Furthermore, the Russian Soyuz vehicle now 
represents the only means to send crew to the station. The recent 
failure of that normally reliable craft reminds us that the very 
existence of the ISS is now in jeopardy, and that we are reliant on a 
single fragile lifeline that we have little insight into or control 
over.

  Finally, the establishment of a commercial crew initiative has the 
potential to stimulate an entire new economic sector with thousands of 
high tech jobs. For example, Bob Bigelow is a visionary with a dream of 
a fleet of private space stations. His customer base will be countries 
that want a space program but afford time on the ISS. But Bob needs a 
safe and affordable transportation system to orbit. NASA is in a unique 
position to create a transportation system that can address the 
nation's needs for access to ISS, while also providing an opportunity 
to unleash the power of the U.S. entrepreneur in Low Earth Orbit.

b.  What your company realistically would require from the U.S. 
Government to make this initiative a success

A1 b. The private sector has the expertise to provide crew 
transportation safely and can provide the best value to the taxpayer. 
The companies competing for the commercial crew service include those 
with decades of experience in NASA's human spaceflight program, such as 
Boeing. Newer companies bring fresh ideas and the entrepreneurial 
spirit like Sierra Nevada, Blue Origin and SpaceX. The private sector 
already possesses the world's most reliable rocket with the Atlas V.

  In order to make the commercial crew initiative a success, U.S. 
Industry needs the Congress to commit to provide adequate development 
funding. With adequate funding, Atlas could be ready to support test 
flights in 2014 and operational flights in 2015.

Q2.  What is your understanding of how third-party liability and 
indemnification will be addressed for both launch and reentry and for 
on-orbit operations of any commercial crew transportation system used 
for ISS servicing?

a.  How important an issue is liability and indemnification to any 
decision your company might make to enter into a Phase 1 or Phase 2 
development contract with NASA for a commercial crew system, or to 
enter into a service contract with NASA to transport astronauts to the 
ISS?

A1 a. Liability and indemnification are very important considerations 
to ULA. With the addition of crew members, gaps in coverage exist 
currently for ISS on-orbit activities under existing indemnification 
regimes like the Commercial Space Launch Act, and the unavailability of 
insurance for certain potential claims, it is important that our 
company be protected against new and significant risks associated with 
these missions. Gaps in statutory liability coverage and lack of 
insurance for on-orbit activities have the potential to expose 
companies to significant risk in the event of damage to the ISS or 
injury to its occupants and crew members during on-orbit activities.

b.  Do you plan to purchase insurance for your systems as part of your 
business plan, and how confident are you that adequate insurance 
coverage will be available privately? If it isn't, what do you plan to 
do?

A1 b. ULA intends to purchase insurance for third party liability 
claims associated with the ascent phase of the mission--up to 
separation of the crew capsule from the launch vehicle second stage. 
This is consistent with our existing CSLA and NASA Act obligations. 
However, this coverage only protects against third party liability 
claims for bodily injury and property damage. In addition, we intend to 
seek waivers from crew members or rely on statutory and/or prime 
contract protections to protect us against claims from crew members in 
the event of a launch accident. Insurance may also be an option to 
protect against crew member claims, although cost and availability has 
not been fully determined. Although we have no performance obligations 
beyond the ascent phase, we intend to request coverage from the prime 
contractor for any potential crew member or third party claims beyond 
this phase. To our knowledge, insurance coverage for on-orbit 
activities is unavailable and we have not examined coverage for crew 
re-entry activities because we will not be performing that phase of the 
mission.

Q3.  In you prepared statement, you note that the Atlas 5 is the only 
launch vehicle certified by NASA to carry Category 3 missions, ``a 
category reserved for NASA's most important science missions''. What 
did it take for ULA to achieve Category 3 certification and how does 
that compare to the requirements for commercial crew certification as 
you understand them?

A3. NASA Policy requires that launch vehicles are selected based on the 
complexity and risk of the payload. As such, NASA has identified a 
rigorous certification process that includes such things as a NASA 
Flight Margin Verification (FMV) which is verification by NASA that the 
launch vehicle meets the predicted vehicle and performance parameters. 
In addition, all flight anomalies and mission failures are required to 
be resolved. NASA also requires a comprehensive IV&V assessment of all 
analyses, involving independent modeling, model evaluation, and/or 
analytical review.

  In order to ensure the highest levels of safety, ULA envisions an 
equivalent assessment that builds upon the Category 3 Certification, 
with particular emphasis on launch vehicle designs and operations that 
my pose a safety hazard to the flight crew.

Question Submitted by Representative Paul Broun

Q1.  What Obligation does your company have under space act agreements 
to report anomalies to NASA?

Q2.  What information do you believe your company is obligated to 
provide NASA about anomalies under a space act agreement?

Q3.  How long after an anomaly is detected, observed, or identified, do 
you believe your company is obligated to report such an anomaly to NASA 
under a space act agreement?

Q4.  What Obligation does your company have under traditional 
contracting to report anomalies to NASA?

Q5.  What information do you believe your company is obligated to 
provide NASA about anomalies under traditional contracting?

Q6.  How long after an anomaly is detected, observed, or identified, do 
you believe your company is obligated to report such an anomaly to NASA 
under traditional contracting?

Q7.  What Obligation does your company have under the modified FAR 
acquisition to report anomalies to NASA?

Q8.  What information do you believe your company is obligated to 
provide NASA about anomalies under a modified FAR acquisition?

Q9.  How long after an anomaly is detected, observed, or identified, do 
you believe your company is obligated to report such an anomaly to NASA 
under modified FAR acquisition?

A1-9. Regardless of the contacting method, ULA standard policies 
require prompt identification, government customer notification, and 
initiation of an investigation are key tenets of successfully resolving 
and learning from anomalies. ULA has instituted processes to ensure 
that when an anomaly occurs, a proper investigation is performed, 
proper leadership is involved, independent oversight is included, and 
ULA and customer management team members are regularly briefed on the 
status of the investigation. For example, within hours following the 
occurrence of a major anomaly, ULA notifies Customer/government 
representative(s) and major subcontractor/partner representative(s).

  In addition to these formal notifications, government awareness is 
often instantaneous since NASA or Air Force representatives typically 
participate in launches and major tests. ULA accommodates this 
participation even if the operation is not specifically for that 
government customer. Depending on the level of anomaly, customers and 
government representatives are invited to participate in the Anomaly 
Investigation Teams and Oversight Boards. All of this is consistent 
with ULA's practice of providing open and detailed technical insight to 
the U.S. Government.

Question Submitted by Representative Jerry Costello

Q1.  NASA's FY 2012 budget request proposes a total of $4.25billion 
over five years, or $850 million a year through 2016, to fund the U.S. 
government's share of commercial crew capabilities development for one 
or more systems. What do you believe, in terms of a percentage of total 
development costs, the private sector might realistically contribute?

A1. ULA is providing the flight-proven Atlas V launch vehicle as one 
element of the overall commercial crew capability. Atlas V was 
developed by the Lockheed Martin Corporation as part of the Evolved 
Expendable Launch Vehicle (EELV) Program. Lockheed Martin invested 
nearly $2.0B in the development of the Atlas V.

  ULA will not be providing the entire crew transportation services 
from launch through landing, and as such, is not in a position to 
comment on the total development costs for the services. ULA has 
identified the relatively few enhancements required to Atlas V for the 
commercial crew initiative. These enhancements will be funded via a 
combination of contracted activities and company funded development.

a.  What percentage is your company planning to contribute?

A1 a. ULA embraces a philosophy of ``Continuous Improvement'' whereby 
we fund initiatives that improve our efficiency and reduce our costs. 
We are currently investing approximately $40M per year in initiatives 
that will directly benefit all our customers, including the commercial 
crew initiative.

b.  Is private sector investment contingent on additional, non-
financial U.S. government support too? If so, what would that support 
involve?

A1 b. ULA does not have a need for additional, non-financial U.S. 
government support for the commercial crew initiative.

Q2.  What is your reaction to NASA's proposed approach to human-rating 
future commercial crew transportation systems? Do you believe NASA's 
proposed approach will both ensure astronaut safety and facilitate 
eventual FAA licensing of launches for non-government customers? Are 
there any changes you would like to see made to the approach?

A2. If NASA's commercial crew program is to be successful, every effort 
must be undertaken to ensure the highest possible level of safety and 
reliability. A key element of this is the rigorous process of human 
system certification. Under a Space Act Agreement with NASA, we are 
conducting a comprehensive assessment of the Atlas design against 
NASA's stringent human certification requirements. This entails a part-
by-part, system-by-system review of the design, analysis and test 
pedigree of the Atlas. We are also performing a detailed analysis of 
the hazards faced by the crew and their mitigation as well as a 
Probabilistic Risk Assessment for the launch of crew. Our expectation 
is that the Atlas will fare very well. This is because of the rigor and 
attention to detail we applied during the original design and 
development process as well as the flight demonstrated performance of 
the system through 28 successful missions.

  The importance of insight and rigorous human certification criteria 
has been highlighted by the recent Soyuz failure. For new, unproven 
vehicles, you need the rigor even more, in addition to establishing a 
track record of demonstrated and repeatable success.

  We have been impressed with the thoroughness and rigor that NASA has 
used to determine how Atlas met their requirements. Based on this 
experience, it is our belief that NASA will not compromise astronaut 
safety solely to develop a commercial crew capability.
Responses by The Hon. Paul Martin, Inspector General,
National Aeronautics and Space Administration

Question Submitted by Ranking Member Eddie Bernice Johnson

Q1 a.  Your report, NASA's Challenges Certifying and Acquiring 
Commercial Crew Transportation Services, states that some of NASA's 
potential commercial crew partners are building spacecraft for the 
first time, and design and development are under way without fully 
defined and finalized requirements. What are the risks of developing 
systems without a set of finalized requirements?

A1 a. Having finalized requirements enhances vehicle reliability, 
improves mission success, maximizes crew safety, and reduces risks. In 
addition, final requirements clearly communicate to NASA's commercial 
partners the design, development, testing, and operations parameters 
they must meet to achieve certification of their systems. To mitigate 
the risks of commercial crew partners building spacecraft for the first 
time without fully defined and finalized requirements, NASA refined the 
requirements identified in the December 2010 ``Commercial Crew 
Transportation System Certification Requirements for NASA Low Earth 
Orbit Missions'' (Certification Requirements) and on December 8, 2011, 
NASA released baseline versions of its commercial crew requirements 
relating to missions to the International Space Station (ISS). Known as 
the ``1100-series,'' these documents provide additional information to 
commercial partners regarding roles and responsibilities, technical 
management processes supporting certification, crew transportation 
system and ISS services requirements, and the application of technical 
and operations standards. The release of these documents should help 
communicate NASA's requirements, standards, and processes for 
commercial transportation system certification.

Q1 b.  Do you agree that NASA has adequately mitigated such risks?

A1 b. It remains to be seen whether NASA has adequately mitigated these 
risks. However, NASA has taken steps to date to ensure that commercial 
partners understand the Agency's health and medical, engineering, and 
safety and mission assurance requirements. As previously stated, in 
addition to issuing its December 2010 Certification Requirements NASA 
recently released baseline versions of its 1100-series documents 
relating to missions to the ISS.

  In addition, as we discussed in our June 2011 report, the use of 
funded Space Act Agreements limits Government control compared to 
traditional procurement contracts based on the Federal Acquisition 
Regulations (FAR). \1\ Specifically, under such agreements NASA cannot 
dictate specific system concepts or elements or mandate compliance with 
its requirements. Accordingly, continuing to use Space Act Agreements 
in the later stages of the acquisition process could pose risks that 
the systems developed by commercial partners may ultimately not meet 
NASA's human-rating requirements and that costly and time-consuming 
redesigns will be required. To mitigate this risk, at the time we 
issued our report NASA appeared to be moving away from funded Space Act 
Agreements toward FAR-based contracts (which allow for more direct 
Government involvement). However, in mid-December 2011 NASA announced 
plans to shift back to funded Space Act Agreements due to concerns 
about overall program funding levels.
---------------------------------------------------------------------------
    \1\ ``NASA's Challenges Certifying and Acquiring Commercial Crew 
Transportation Services,'' NASA Office of Inspector General (June 20, 
2011) accessible at http://oig.nasa.gov/audits/reports/FY11/IG-11-
022.pdf.

Q2.  Your report goes on to say ``In this type of environment, there is 
a risk that during the period of contract performance NASA's 
requirements may change so significantly that contractors can 
successfully argue that the Agency is changing the contract's scope, in 
which case NASA could be required to pay the contractor to make 
necessary modifications.'' Do you feel that there is a likelihood 
NASA's requirements will change during the contract? Is this a common 
trait in development efforts? Has NASA adequately accounted for this 
---------------------------------------------------------------------------
cost risk?

A2. Changes in requirements are not uncommon in large scale development 
efforts. NASA's requirements for crew transportation to the ISS may 
change based on the needs of the ISS Program and the Agency's future 
exploration goals. However, NASA has taken steps to minimize this 
possibility. For example, the Agency has reduced its list of 
requirements to those it believes are essential to ensure safe and 
reliable systems. In addition, when possible NASA will allow 
contractors to propose alternative methods for meeting Agency 
requirements. Finally, NASA's approach of dividing its acquisition 
process into phases that separate system design from development, test, 
evaluation, and certification should help limit the Agency's financial 
risk.

Question Submitted by Representative Paul Broun

Q1-3.  What obligations do companies have to report anomalies to NASA 
under Space Act Agreements? What information do you believe companies 
are obligated to provide NASA under a Space Act Agreement? How long 
after an anomaly is detected, observed, or identified, do you believe a 
company is obligated to report such an anomaly to NASA under a Space 
Act Agreement?

A1-3. NASA establishes its expectations with regard to reporting by 
partner companies in each Space Act Agreement. For example, NASA's 
funded Commercial Crew Development 2 (CCDev2) Space Act Agreement with 
Sierra Nevada Corporation requires the company to hold quarterly 
project status briefings with NASA personnel describing the progress 
made using a mutually agreed upon quantifiable performance method, any 
difficulties encountered and corrective action necessary, and the 
company's plans to move forward. Similarly, the unfunded CCDev2 Space 
Act Agreement with Excalibur Almaz, Inc. requires the company to hold 
project status briefings with NASA at each milestone review. To the 
extent that an anomaly would impact the company's ability to achieve 
progress or complete an agreed-upon milestone, the Office of Inspector 
General would expect the company to report such an event to NASA.

  Moreover, with respect to funded agreements, partner companies will 
not receive payment until they demonstrate successful completion of 
each specified milestone. Further, NASA may terminate agreements for 
failure to demonstrate progress and timely achievement of milestones. 
For example, in October 2007 NASA terminated its funded Space Act 
Agreement with Rocketplane Kistler due to the company's failure to meet 
agreed-upon milestones.

Q4-6.  What obligation does a company have under traditional 
contracting to report anomalies to NASA? What information do you 
believe a company is obligated to provide NASA under traditional 
contracting? How long after an anomaly is detected, observed, or 
identified, do you believe a company is obligated to report such an 
anomaly to NASA under traditional contracting?

A4-6. Reporting requirements vary by contract based on factors such as 
the types of supplies or services purchased, the type of contract 
vehicle selected, and the dollar value of the acquisition. Specific 
reporting requirements for technical, cost, and schedule anomalies are 
reflected in the final negotiated contract. Generally, NASA's FAR-based 
contracts require the contractor to perform monthly program status 
reviews to communicate the status of the technical effort, program 
schedule, and resource conditions, and provide a summary of all open 
anomalies, problem reports, and program technical issues that may 
impact the contracted work. Contractors are also required to submit 
monthly financial management reports that describe actual and planned 
costs and labor hours, short-term cost projections, estimates to 
complete, and contract values. Finally, pursuant to NASA regulation, 
contractors may be required to notify the Government of any mishaps 
within 1 hour of occurrence.

Q7-9.  What obligation does a company have under the modified FAR 
acquisition to report anomalies to NASA? What information do you 
believe a company is obligated to provide NASA under a modified FAR 
acquisition? How long after an anomaly is detected, observed, or 
identified, do you believe a company is obligated to report such an 
anomaly to NASA under a modified FAR acquisition?

A7-9. We anticipate any ``modified FAR acquisition'' undertaken as part 
of NASA's Commercial Crew Program will be negotiated similar to a 
traditional FAR-based contract described above.

Q10.  Please explain, in detail, the role of NASA's Safety and Mission 
Assurance Office in the design, development, construction, testing and 
acquisition of hardware associated with commercial crew services.

A10. NASA's Office of Safety and Mission Assurance (OSMA) has been 
involved in the development of the Commercial Crew Program from its 
inception. Many of the requirements that the commercial partners must 
adhere to are derived from OSMA policies and standards. In addition, 
according to NASA's plans at the time of our audit, OSMA personnel will 
participate as members of the NASA Performance Integration Teams that 
will be embedded at contractor locations during the acquisition phases 
of the program. These teams will gain insight into the contractor's 
progress through observation, document reviews, tests, and compliance 
evaluations, and will work side-by-side with contractor personnel to 
provide expertise and aid in the resolution of technical issues. The 
insight gained will be used to determine whether the contractor has 
successfully completed agreed-upon milestones.

Question Submitted by Representative Jerry Costello

Q1.  In describing fixed-price contracts, your report, NASA's 
Challenges Certifying and Acquiring Commercial Crew Transportation 
Services, makes the following caution: ``[A]lthough fixed-price 
contracts provide the maximum incentive for contractors to perform 
effectively while controlling costs, they also place on the contractor 
the maximum risk of loss if it is unable to so. This situation can 
create incentives for a contractor to ``cut corners'' to protect its 
profit margin.'' How can NASA guard against creating such incentives?

A1. As previously discussed, NASA planned to embed at contractor 
locations Performance Integration Teams and chair or co-chair program 
control and technical review boards to review the verification of 
requirements and recommend disposition when a requirement cannot be met 
by the contractor. The insight and collaboration provided by the 
Performance Integration Teams, along with the oversight provided by the 
boards, is designed to identify developmental challenges and prevent 
the contractor from cutting corners.

Q2.  Given the possibility of NASA having only one provider, what would 
be NASA's recourse if the provider cannot deliver at the agreed-to 
fixed price, other than paying for the cost increase?

A2. A determination would first have to be made regarding whether the 
cost increase is due to a requirement change that is outside the scope 
of the original contract. The contractor is responsible for absorbing 
cost increases caused by changes that are within the original scope of 
the contract. However, if the contractor becomes insolvent or refuses 
to proceed, NASA's only recourse may be to purchase more seats aboard 
Russia's Soyuz vehicle. As stated in our report, because of the long 
lead-time required for procuring Soyuz seats and planning a mission to 
the ISS, NASA would have to make the decision to purchase additional 
Soyuz seats for flights in 2016 and beyond by spring 2013--at least 
three years before commercial partners are expected to be ready to 
provide transportation services.

  Additionally, Congress would have to grant another waiver from the 
restrictions on paying Russia for ISS-related activities contained in 
the Iran-North Korea-Syria Nonproliferation Act because the current 
waiver expires in 2016.

Q3.  Do you have any examples at NASA or in the Federal government 
where firm fixed price was used for development programs, both 
successfully and unsuccessfully?

A3. NASA has most frequently used cost-plus-award-fee contracts for its 
development programs. Moreover, for approximately 18 years federal 
agencies were prohibited from using fixed-price contracts for 
development efforts except in limited circumstances. \2\ Consequently, 
we are not aware of any recent examples of successful development 
programs using fixed price contracts.
---------------------------------------------------------------------------
    \2\ Section 818 of the 2007 Defense Authorization Act repeals 
Section 807 of the National Defense Authorization Act for fiscal year 
1989, which prohibited the use of firm fixed-price contracts except in 
limited circumstances.
---------------------------------------------------------------------------
Responses by Mr. William H. Gerstenmaier, Associate Administrator,
Human Exploration and Operations Mission Directorate,
National Aeronautics and Space Administration

Question Submitted by Chairman Ralph Hall

Q1.  Are any changes in launch indemnification being contemplated, 
especially for flights carrying NASA astronauts?

A1. On December 15, 2011, NASA announced that it will continue to use 
competitively awarded, funded Space Act Agreements (SAAs) rather than 
transitioning to contracts for the next phase of the Commercial Crew 
Program (CCP). Commercial launch and reentry activities under SAAs are 
subject to licensing by the Federal Aviation Administration (FAA). The 
Commercial Space Launch Act (51 U.S.C. Sec.  50901, et. seq.) 
prescribes methods to indemnify the licensee for third-party liability 
arising during the licensed activities.

  For future phases of commercial crew development, NASA's approach to 
allocating third-party liability between the Government and industry 
will be dependent on NASA's approach to FAA licensing, which is still 
under development. For any commercial launch and reentry activity that 
requires an FAA license, the Commercial Space Launch Act 
indemnification provisions will apply. For launch and reentry 
activities of NASA missions that do not require an FAA license, NASA 
intends to use contract provisions that match the intent of the FAA 
authority to limit third-party liability. Contract provisions similar 
to those used in NASA's Launch Services (NLS) contracts, which are 
commercial, may be incorporated into future CCP contracts to allocate 
liability, but this is still being reviewed.

Q2. (a)  NASA is proposing the next phase of the Commercial Crew 
program to be a firm-fixed price procurement. As an experienced program 
manager do you believe that NASA's requirements in developing human 
spaceflight systems are mature enough for NASA's industry partners to 
bear all of the technical, safety, and schedule risks with a fixed-
price contract?

Q2. (b)  Given the track record of previous attempts to build a 
replacement for the Space Shuttle over the past 20 years, why is NASA 
so confident that the technical, safety, and schedule risks have been 
mitigated enough to allow for a firm-fixed price procurement?

A2 a. On December 15, 2011, NASA announced a modified competitive 
acquisition strategy designed to make the best use of available 
resources and to define the most cost effective path to the achievement 
of a commercial crew capability, as directed by Congress. Instead of 
transitioning to firm-fixed price contracts for the next phase of the 
Program, the Agency plans to continue to use multiple, competitively 
awarded funded Space Act Agreements (SAAs). Using competitively-awarded 
SAAs instead of contracts will allow NASA to maintain multiple partners 
during this phase of the Program, and provide NASA with the flexibility 
to adjust technical content and funding levels based on available 
funds. This new acquisition strategy will allow the Agency to preserve 
competition and maintain momentum to provide a U.S.-based commercial 
crew launch capability at the earliest possible time.

A2 b. NASA recently completed the baseline technical and safety 
requirements for a crew transportation system. The requirements 
documents are complete (i.e., there are no items yet ``to be 
determined'') and they reflect over two years of effort on the part of 
the Agency. There were several draft versions that were released to 
industry, and NASA received and addressed extensive comments to the 
earlier drafts. The requirements are publicly available at http://
commercialcrew.nasa.gov/page.cfm?ID=28 for use by the commercial 
partners during the SAA phase. Thus, NASA believes that the 
requirements are sufficiently mature to enable the Agency to 
confidently enter the next phase of the Program.

Q3.  Launch abort systems are one of the most critical and technically 
challenging features to design, integrate, and test. What are NASA's 
plans for verifying the performance of each company's systems? For 
instance, will they be required to successfully flight-test their 
launch abort systems?

A3. In future phases of the Commercial Crew Program, NASA will manage 
the crew transportation system certification process to ensure that 
commercial partners have met NASA requirements--including crew safety 
requirements--in their certification plans. Crew transportation system 
certifications will culminate with a successful mission to and from the 
International Space Station (ISS), or a comparable target. Results of a 
commercial partner's tests, analyses, demonstrations, and/or 
inspections of spacecraft systems, including launch abort systems, will 
be formally evaluated to obtain NASA concurrence of the commercial 
partner's progress towards certification. To date, NASA has not 
dictated that a specific test program be followed for all crew 
transportation systems. Instead, NASA plans to evaluate the overall 
test program for each specific system.

  Following the NASA determination of readiness, NASA will facilitate 
an Agency-level review to grant the commercial partners approval to 
transport NASA and NASA-sponsored personnel to the ISS, based on 
evidence of satisfactorily completing the crew transportation system 
certification.

  It should be noted that, as part of its efforts to support the 
development of safe, reliable, commercial transportation systems, NASA 
has provided technical assistance to companies that participated in the 
Commercial Crew Development (CCDev) effort, and the Agency anticipates 
continuing to provide ``lessons learned'' information to its Commercial 
Crew Program partners.

Q4.  What steps is NASA taking to coordinate requirements and 
regulations with the Federal Aviation Administration to ensure 
compatibility?

A4. Both NASA and the Federal Aviation Administration (FAA) envision a 
state where the FAA licenses commercial human spaceflights provided by 
a robust industry, from which the government and the private sector can 
purchase transportation services. The FAA has already developed and 
implemented processes and procedures for licensing and regulating 
commercial space activities to protect the safety of the public. 
Additional regulations for protection of crew safety are in 
development.

  Although it is not a regulatory Federal agency like the FAA, NASA is 
responsible for assuring the safety of the public, as well as NASA 
crews/workforce and assets during NASA or NASA-sponsored space 
operations. In support of those responsibilities, NASA is currently 
developing the certification requirements and program processes for 
commercial transportation of NASA crews to the ISS.

  The requirements and processes of these separate agencies must be 
carefully coordinated and aligned to assure that both agencies' roles 
are accomplished with thoroughness and rigor while remaining consistent 
in areas of mutual consideration. At the same time, it will be critical 
to the success of the industry ventures to minimize the burden of 
Government requirements and regulations imposed by multiple agencies. 
Early collaboration between NASA and the FAA during the formulation of 
requirements, certification processes and regulatory compliance 
processes will encourage an efficient and effective synergy between 
NASA and the FAA in the execution of their responsibilities.

  In collaboration with the FAA, NASA has recently baselined the 
initial certification and operations requirements for the services it 
wishes to acquire from commercial providers. NASA will continue to 
partner with the FAA for the purposes of determining common standards 
and uniform processes to ensure both public safety and protection of 
cargo, crews, and spaceflight participants for the NASA-sponsored 
missions. NASA and the FAA will work towards minimizing the duplication 
of requirements, developing a streamlined process and addressing 
indemnification issues. This will be accomplished by clearly defining 
roles and responsibilities of each agency, sharing relevant data and 
jointly performing assessments to enable the commercial partner to be 
successful in support of missions with and without NASA-sponsored 
personnel. NASA and the FAA are in the process of documenting 
agreements that solidify each agency's commitment to this partnership.

Q5.  According to the IG, NASA will not be ``human rating'' commercial 
systems that will fly NASA astronauts. Instead, the Agency is planning 
to ``certify'' commercial vehicles to carry NASA astronauts. What is 
the difference between ``human rating'' NASA vehicles and simply 
certifying commercial systems to carry NASA astronauts?

A5. The term `human rating' is intentionally not used by NASA when 
referring to the certification of commercial systems because it implies 
a broader context of certification to fly any humans on any missions. 
NASA's current efforts to define a certification process only involve 
Agency-sponsored personnel on low Earth orbit (LEO) missions to the 
ISS. NASA will not be involved in the certification of commercial 
systems when they are used to transport non-Agency-sponsored personnel.

Question Submitted by Ranking Member Eddie Bernice Johnson

Q1.  NASA has stressed the importance of competition as a means for 
achieving cost- effectiveness during development of the commercial crew 
systems.

     If appropriated funding is only enough for one development 
contract, how much confidence can Congress have in the cost-
effectiveness of that development plan, especially given NASA's 
critical need for the capability?

     Are you prepared to go forward in the event there is only 
one contractor at the end of the day? What, if any alternative, do you 
have?

     If there is only one contractor, you would be in effect 
setting up a monopoly in commercial crew transportation services. How 
comfortable would you be with that, and what does that mean for the ISS 
in the event of a launch failure from that single contractor?

A1. NASA agrees that a key objective of the CCP is to maintain as many 
viable commercial vendors as possible in order to keep the cost of crew 
transportation services down and reduce the risk that U.S. astronauts 
might be grounded by a technical anomaly. The Agency's ability to fund 
more than one commercial crew provider is contingent upon the 
availability of appropriated funds. While the $406M for the Commercial 
Crew Program funded in the Consolidated and Further Continuing 
Appropriations Act of 2012 (P.L. 112-55) will enable the Agency to move 
the Program forward, NASA has had to reassess its acquisition strategy 
for this Program to maximize the effectiveness of limited resources.

  On December 15, 2011, NASA announced a modified competitive 
procurement strategy designed to make the best use of available 
resources and to define the most cost effective path to the achievement 
of a commercial crew capability, as directed by Congress. Instead of 
transitioning to contracts for the next phase of the Program, the 
Agency plans to continue to use multiple, competitively awarded funded 
Space Act Agreements (SAAs). Using competitive SAAs instead of 
contracts will allow NASA to maintain a larger number of partners 
during this phase of the Program, and provide NASA with the flexibility 
to more easily adjust to various funding levels. This new acquisition 
strategy will allow the Agency to preserve competition and maintain 
momentum to provide a U.S.-based commercial crew launch capability at 
the earliest possible time.

  This new strategy has resulted in an estimated availability date for 
U.S. commercial crew services likely by 2017. NASA's current exception 
to the Iran, North Korea, and Syria Nonproliferation Act (INKSNA) 
extends through June 2016. In order to procure transportation and 
rescue services using the Russian Soyuz spacecraft, the Agency will 
require modifications to INKSNA. Separate from the need for INKSNA 
relief for Soyuz crew transportation and rescue services, INKSNA relief 
will be needed for Russia-unique ISS goods and services for the life of 
the ISS Program. Given the lead-time required to manufacture Soyuz 
spacecraft, contractual arrangements for crew rotation and rescue for 
launch in the spring of 2016 should be in place by the spring of 2013. 
As NASA has testified, some modification of the INKSNA provisions will 
likely be required for the continued operation of ISS and other space 
programs after 2016. The Administration plans to propose appropriate 
provisions and looks forward to working with the Congress on their 
enactment.

  NASA plans to procure U.S. commercial crew transportation and rescue 
services from one or more U.S. commercial providers, depending on 
funding availability. Having more than one domestic capability will 
provide the advantages of keeping costs low through competition, and 
ensuring that if one vendor's vehicle is grounded due to an anomaly, 
NASA would still retain a domestic option for the transport and rescue 
of its astronauts to the ISS. Having a contract in place with Russia, 
if we have the necessary INKSNA modification, would provide another 
layer of redundancy that would ensure that the Agency could meet its 
transportation obligations in the event of a commercial vendor stand-
down in a single vendor scenario but this would force the program to 
again rely on foreign providers for transportation services.

  The Agency believes that it will be able to fund multiple commercial 
crew transportation providers at least for the next phase of the 
program. Funding only a single provider would entail greater technical 
risks for the Agency and reduce the providers' incentive to keep the 
costs of crew transportation down. The GAO recently concluded that 
using competition for CCP was a ``good practice'' in its report, 
``Acquisition Approach for Commercial Crew Transportation Includes Good 
Practices but Faces Significant Challenges.'' (GAO 11-282). If NASA is 
limited to funding a single provider, the Agency will assess its 
options, risks, and resources availability to determine the feasibility 
and impacts of having a single U.S. provider. Adequate funding will be 
important to maintaining the ability to retain multiple providers.

Q2.  How will the international partnership ``certify'' the crew rescue 
capability of commercial crew vehicles, or will certification be solely 
a NASA decision?

A2. It is NASA's responsibility to provide crew transportation and 
rescue capability for U.S., European, Japanese, and Canadian astronauts 
(the Russians are responsible for providing these capabilities for 
their cosmonauts). NASA is responsible for certifying the crew 
transportation and rescue capabilities of the commercial service 
providers from whom it procures services, though the Agency would keep 
the other ISS Partners apprised of its review. NASA responsibilities 
include assessment of compliance with the ISS Visiting Vehicles policy, 
thereby ensuring that the safety and integrity of the ISS will be 
maintained for all concerned parties.

Q3.  I understand that the Phase 1 design contract will last 
approximately two years and that an RFP for the Phase 2 development 
contract could be issued about halfway into Phase 1. Please explain the 
rationale for issuing a development RFP when work on the design Phase 
is not complete? How does that approach meet the objective of reducing 
risk through a two-phase procurement strategy?

A3. NASA has recently re-assessed its approach to the Commercial Crew 
Program in light of available funding (please see response to question 
#1), so the phasing of the design and development work is under review. 
However, in general, the overlapping approach was adopted to reduce 
development risk while at the same time ensuring that the period 
between the retirement of the Space Shuttle and NASA's ability to send 
astronauts to the ISS aboard new U.S. vehicles was kept to a minimum, 
without sacrificing safety considerations.

Q4.  How much weight will you give to a commercial proposer's business 
strategy when it comes time to award contracts for the initial design 
and later for the development of commercial crew systems to meet NASA's 
needs? Is a proposer's ability to obtain revenue from markets other 
than NASA ISS flights a requirement, and if so, by what timeframe?

A4. On February 7, 2012, NASA released an Announcement for Proposals 
(AFP) for the next phase in Commercial Crew development. The effort is 
known as Commercial Crew Integrated Capability (CCiCap). Proposals from 
industry will be due on March 23, 2012, and NASA expects to award 
multiple funded Space Act Agreements (SAAs) in the July/August 
timeframe. The overall CCiCap strategic goal is to advance multiple 
integrated commercial crew transportation system concepts to the stage 
of an orbital crewed demonstration flight capability as soon as 
possible while ensuring crew safety and considering potential customer 
standards.

  NASA has been and will continue to refine its cost modeling 
capability to help understand potential crew transportation system 
development costs. In addition, NASA will evaluate the total government 
investment being requested by participants in their Commercial Crew 
Integration Capability (CCiCap) proposals to determine the 
effectiveness of their proposed approach and to establish a confidence 
factor for each company's likelihood of successful performance.

Q5.  Witnesses on the first panel testified that should the ISS 
international partnership open up to other countries, there would be a 
possibility for an expanded market to provide services for the other 
partners who would then need access to the ISS. Have the international 
partners contemplated inviting new partners to the ISS? What would be 
involved in expanding the partnership? What would be entailed in 
allowing access to other potential partners? Does NASA have plans to 
seek an expanded partnership?

A5. Expanding the ISS partnership would entail significant multi-
lateral negotiations, including extensive discussions on the allocation 
of Space Station crewing, resources, and research time. In addition, if 
a hypothetical new partner were to provide their own hardware or 
vehicle for use with the ISS, such equipment would need to be assessed 
and certified as being safe for use in or near the Station, and their 
systems would have to be compatible with those used aboard ISS. While 
the addition of new partners is a possibility, NASA and its current ISS 
partners have no plans to seek an expanded partnership at this time. 
However, the ISS partnership will continue enabling research 
opportunities for non-partner countries. Such participants are 
currently sponsored by an existing ISS partner.

Question Submitted by Representative Paul Broun

Q1.  What obligations do companies have to report anomalies to NASA 
under space act agreements?

A1. Just like FAR-based contracts, there is no standard requirement 
that companies report anomalies to NASA under Space Act Agreements. 
However, a company may be required to report anomalies as part of its 
performance under a Space Act Agreement if that obligation is 
negotiated between NASA and the company and included in the Space Act 
Agreement. For example, in order to receive a milestone payment for a 
demonstration mission under its COTS Space Act Agreement, SpaceX is 
required to provide NASA with an identification of any anomalies 
associated with the mission along with its preliminary assessment 
regarding the cause of the anomaly.

Q2.  What information do you believe companies are obligated to provide 
NASA under a space act agreement?

A2. Just like FAR-based contracts, there is no standard requirement 
that companies report anomalies to NASA under Space Act Agreements. 
However, a company may be required to report anomalies as part of its 
performance under a Space Act Agreement if that obligation is 
negotiated between NASA and the company and included in the Space Act 
Agreement. For example, in order to receive a milestone payment for a 
demonstration mission under its COTS Space Act Agreement, SpaceX is 
required to provide NASA with an identification of any anomalies 
associated with the mission along with its preliminary assessment 
regarding the cause of the anomaly.

Q2.  How long after an anomaly is detected, observed, or identified, do 
you believe a company is obligated to report such an anomaly to NASA 
under a space act agreement?

A2. If a Space Act Agreement includes a requirement for a company to 
report anomalies to NASA, the Space Act Agreement will also specify the 
time frame for the report. For example, if reporting anomalies is a 
requirement for a milestone payment then the report would be due at the 
same time other documentation is provided to NASA to support the 
milestone payment.

Q4.  What obligation does a company have under traditional contracting 
to report anomalies to NASA?

A4. There is no standard contract requirement regarding anomaly 
reporting. When needed, a clause is tailored for the specific contract.

Under the previous acquisition strategy for the Commercial Crew 
Program, the Integrated Design Contract (IDC) would have required the 
Contractor to notify the Government of qualification or test anomalies 
involving the Crew Transportation System (CTS) design (e.g., launch and 
orbital vehicles, systems, subassemblies, components, software) and 
similar launch and orbital vehicles that might affect the CTS design. 
Under the contract, the Contractor would have been responsible for 
conducting any investigation of test anomalies and presenting any 
findings and proposed corrective actions to the Government. In 
addition, the Government would have had the right to conduct its own 
investigation of any anomaly. The Contractor would have been required 
to cooperate with any Government investigation and to allow the 
Government to observe and participate in any Contractor-led 
investigation.

Q5.  What information do you believe a company is obligated to provide 
NASA under traditional contracting?

A5. Each contract includes data reporting and deliverable provisions as 
appropriate for the purpose and requirements of that contract. Under 
the IDC draft RFP, NASA identified the information to be provided by 
prospective Contractors through use of a Data Requirements List (DRL)/
Data Requirements Description (DRD). This Data Requirements List (DRL) 
set forth the data requirements in each Data Requirements Description 
(DRD) describing the data required for the contract. There were 
fourteen (14) detailed DRL/DRDs contained in the draft RFP for IDC.

Q6.  How long after an anomaly is detected, observed, or identified, do 
you believe a company is obligated to report such an anomaly to NASA 
under traditional contracting?

A6. NASA Policy Directive (NPD) 8621.1, for Mishap and Close Call 
Reporting, Investigating, and Recordkeeping, requires that Contractors 
notify NASA of anomalies within 24 hours. Anomalies that are classified 
as mishaps or high-visibility close calls must be reported to NASA 
telephonically as soon as practicable, and followed up within 24 hours 
in writing to HQs with detailed descriptions. These NPD reporting 
requirements were incorporated into the IDC contract as part of DRL 
CCIDC-S-001.

Q7.  What obligation does a company have under the modified FAR 
acquisition to report anomalies to NASA?

A7. There is no standard contract requirement regarding anomaly 
reporting. When needed, a clause is tailored for the specific contract.

Under the previous acquisition strategy for the Commercial Crew 
Program, the Integrated Design Contract (IDC) would have required the 
Contractor to notify the Government of qualification or test anomalies 
involving the Crew Transportation System (CTS) design (e.g., launch and 
orbital vehicles, systems, subassemblies, components, software) and 
similar launch and orbital vehicles that might affect the CTS design. 
Under the contract, the Contractor would have been responsible for 
conducting any investigation of test anomalies and presenting any 
findings and proposed corrective actions to the Government. In 
addition, the Government would have had the right to conduct its own 
investigation of any anomaly. The Contractor would have been required 
to cooperate with any Government investigation and to allow the 
Government to observe and participate in any Contractor-led 
investigation.

Q8.  What information do you believe a company is obligated to provide 
NASA under a modified FAR acquisition?

A8. Refer to answer provided for Question 5. Under the IDC 
solicitation, NASA used a more streamlined, commercial approach to 
limit the quantity of deliverables and reporting requirements while 
still ensuring NASA access and insight into information generated by 
the Contractor in performance of the contract.

Q9.  How long after an anomaly is detected, observed, or identified, do 
you believe a company is obligated to report such an anomaly to NASA 
under modified FAR acquisition?

A9. NASA Policy Directive (NPD) 8621.1, for Mishap and Close Call 
Reporting, Investigating, and Recordkeeping, requires that Contractors 
notify NASA of anomalies within 24 hours. Anomalies that are classified 
as mishaps or high-visibility close calls must be reported to NASA 
telephonically as soon as practicable, and followed up within 24 hours 
in writing to HQs with detailed descriptions. These NPD reporting 
requirements were incorporated into the IDC contract as part of DRL 
CCIDC-S-001.

Q10.  Please explain, in detail, the role of NASA's Safety and Mission 
Assurance Office in the design, development, construction, testing and 
acquisition of hardware associated with commercial crew services.?

A10. NASA's Office of Safety and Mission Assurance (OSMA) is governed 
by NASA Policy Directive (NPD) 1000.0A, the NASA Governance and 
Strategic Management Handbook and NASA Procedural Requirements (NPR) 
7120.5, NASA Program and Project Management. For the Commercial Crew 
Program (CCP), as with other NASA programs, a Chief Safety and Mission 
Assurance Officer (CSO) has been assigned to carry out the roles of the 
SMA Technical Authority for CCP. The CSO reports independently through 
the Center SMA Director, the Center Director, and then to the Chief, 
OSMA.

  OSMA, along with the other two NASA Technical Authorities and the 
Mission Directorate, were key contributors to, and are key stakeholders 
of, the Commercial Crew Transportation System Requirements Document 
(ESMD-CCTSCR-12.10). This document includes the appropriate set of 
safety, reliability, maintainability, and quality assurance policies, 
procedures, and requirements which must be met before NASA will certify 
a commercial provider to fly NASA or NASA-sponsored crew aboard their 
vehicle. Included are requirements and standards that govern the safety 
and mission assurance aspects of design, development, construction, and 
testing of commercial vehicles that will be used to transport NASA 
crew. The requirements defined herein must be met prior to flying NASA 
crew, regardless of the acquisition or procurement strategy followed.

  As far as acquisition, the Chief, OSMA, is involved in NASA 
Acquisition Strategy and Procurement Strategy forums for each NASA 
Program. Currently, the strategy for CCP is for NASA to procure 
transportation services, not hardware. The services contract will 
include the mechanisms necessary for the appropriate amount of 
government insight needed to assure verification of the requirements in 
ESMD-CCTSCR-12.10. NASA will perform assessments to determine if the 
contractor has met all these requirements. If all requirements have 
been successfully met, NASA will grant CCTS Certification. If NASA 
cannot verify these requirements as having been met, NASA will not 
grant Certification.

Question Submitted by Representative Jerry Costello

Q1.  What is NASA's backup plan if commercial crew systems are not 
available in the 2015-2016 timeline you anticipate? What contingency 
plan does NASA have for ensuring its requirements to service the ISS 
will still be met?

     What will you do if there is an incident that requires a 
stand-down after you have started commercial crew flights? Will the 
Russians be willing and able to provide a backup crew transport 
capability without a crew transport contract extension already in 
place?

     At what point would NASA have to make a decision to extend 
its contract with the Russians for the use of Soyuz seats to transport 
NASA crews to the ISS, and what conditions would be required for NASA 
to make that decision?

A1. While the $406M for the Commercial Crew Program (CCP) funded in the 
Consolidated and Further Continuing Appropriations Act of 2012 (P.L. 
112-55) will enable the Agency to move forward with its plans to 
advance commercial services for crew transportation and rescue 
capabilities in support of the International Space Station (ISS), NASA 
has had to reassess its acquisition strategy for this Program.

  On December 15, 2011, NASA announced a modified competitive 
procurement strategy designed to make the best use of available 
resources and to define the most cost effective path to the achievement 
of a commercial crew capability, as directed by Congress. Instead of 
transitioning to contracts for the next phase of the Program, the 
Agency plans to continue to use multiple, competitively awarded funded 
Space Act Agreements (SAAs). Using competitive SAAs instead of 
contracts will allow NASA to maintain a larger number of partners 
during this phase of the Program, and provide NASA with the flexibility 
to more easily adjust to various funding levels. This new acquisition 
strategy will allow the Agency to preserve competition and maintain 
momentum to provide a U.S.-based commercial crew launch capability at 
the earliest possible time.

  This new strategy has resulted in an estimated availability date for 
U.S. commercial crew services likely by 2017. Thus, additional Soyuz 
purchases will be necessary to fill the gap until commercial crew 
becomes available. Fabrication of Soyuz vehicles must begin 
approximately 36 months prior to launch. Contractual arrangements for 
crew rotation and rescue services for launch in spring 2016 should be 
in place by spring 2013.

  NASA's current exception to the Iran, North Korea, and Syria 
Nonproliferation Act (INKSNA) extends through June 2016. In order to 
procure transportation and rescue services using the Russian Soyuz 
spacecraft, and for Russia-unique ISS goods and services for the life 
of the ISS Program, the Agency will require modifications to INKSNA. 
Given the lead-time required to manufacture Soyuz spacecraft, 
contractual arrangements for crew rotation and rescue for launch in the 
spring of 2016 should be in place by the spring of 2013. As NASA has 
testified, some modification of the INKSNA provisions will likely be 
required for the continued operation of ISS and other space programs 
after 2016. The Administration plans to propose appropriate provisions 
and looks forward to working with the Congress on their enactment.

  NASA plans to procure U.S. commercial crew transportation and rescue 
services from one or more U.S. commercial providers, depending on 
funding availability. Having more than one domestic capability will 
provide the advantages of keeping costs low through competition, and 
ensuring that if one vendor's vehicle is grounded due to an anomaly, 
NASA would still retain a domestic option for the transport of its 
astronauts to the ISS. Having a contingency contract in place with 
Russia, presuming appropriate INKSNA modifications, would provide 
another layer of redundancy that would ensure that the Agency could 
meet its transportation obligations in the event of a commercial vendor 
stand-down in a single vendor scenario but this would force the program 
to again rely on foreign providers for transportation services.

Q2.  Do you envision commercial spaceflight participants to be sitting 
on the same commercial crew flights as NASA astronauts? Would including 
spaceflight participants add risks and liability concerns, and if so, 
what would NASA require of the commercial providers to mitigate those 
risks and liability concerns?

A2. It is a central part of NASA's CCP strategy that the commercial 
providers be able to sell human space transportation services to 
customers other than the Agency. Thus, NASA does envision the 
possibility that crew transportation system missions will include both 
NASA and non-NASA personnel at some point. There would need to be other 
agreements on the use of ISS resources if a commercial crewmember 
wanted to visit the ISS. For example, the ISS partnership would likely 
require compensation for consumables and resources consumed or used by 
the commercial crewmember.

  Including spaceflight participants on missions involving NASA 
personnel may add some unique risks to the flight, depending on the 
flight training and acceptance requirements of the spaceflight 
participants. Once those flight training and acceptance requirements 
have been established, NASA will be able to specifically address/
mitigate any risk or liability concerns.

Q3.  What is the plan for crew rescue vehicle stay time requirements at 
the ISS once NASA transitions to the use of commercially provided crew 
transportation to the ISS?

A3. NASA's requirements for crew rescue include the ability to rapidly 
and safely evacuate crewmembers from the ISS during a six-month 
Expedition, or ``increment.'' Currently, this capability is provided by 
the Russian Soyuz spacecraft, which remains docked to the ISS for the 
entirety of a given increment, so that it is close at hand in the event 
of an anomaly which might require evacuation.

  Requirements for commercially provided crew transportation systems 
were recently baselined by the Agency. The following are the relevant 
excerpts regarding crew rescue:

``3.1.2.2 Return Crew

   The CTS shall return 1, 2, 3, and 4 NASA crew during a single entry/
landing. [R.CTS.011] [I]

   Rationale: Four NASA crew are required to be transported and 
returned to the ISS to meet the USOS demand for crew time based on full 
utilization of the ISS to perform science and support the ISS National 
Laboratory Program. All docking and undocking operations are a 
significant impact to the completion of ISS science, resulting in the 
determination by the ISS Program that the most efficient crew rotations 
strategy is to launch and return four crewmembers on a single vehicle. 
Additionally, the CTS must be able to accommodate one, two, three, or 
four crewmembers in a single launch or landing to provide flexibility 
in the ISS crew rotation plan. The spacecraft's secondary objective is 
to serve as the rescue vehicle for all personnel that were launched 
onboard and must have the capability to return all crewmembers in the 
event of an early mission termination or ascent abort.

3.1.2.3 Docked Duration

   The CTS shall be capable of being docked to the ISS for 210 days to 
provide an assured crew return capability for four NASA crew. 
[R.CTS.012] [I]

   Rationale: The ISS requires continuous presence of the spacecraft to 
support sustained operations. The 210 days provides 30 days of 
contingency on the nominal 180-day turnaround.

3.1.2.4 Rotation Intervals

   The CTS shall be capable of exchanging up to four NASA ISS 
crewmembers every 150 to 210 days. [R.CTS.013] [I]

   Rationale: The nominal crew rotation will occur at approximately 180 
days based on the ISS human research program medical data collection 
needs. It is possible for this rotation to be altered by one month 
(earlier or later) in order to accommodate other overall ISS Program 
requirements or anomaly resolution/response.''
                              Appendix II

                              ----------                              


                   Additional Material for the Record




                   Additional Material for the Record
Statement submitted by Representative Jerry Costello
Committee on Science, Space, and Technology,
U.S. House of Representatives

    Mr. Chairman, thank you for holding today's hearing to receive 
testimony on the accomplishments and challenges of the National 
Aeronautics and Space Administration's (NASA's) Commercial Crew 
Development Program.
    Since 2009, NASA has committed to developing a commercial crew 
system that utilizes innovation and entrepreneurship to build safe and 
affordable vehicles for transporting astronauts to and from low-earth 
orbit.
    With the retirement of the Space Shuttle earlier this year, and 
NASA's contract for Russian crew services set to end in five years, 
commercial crew systems are an important part of human spaceflight's 
future and will ensure we fully utilize the International Space Station 
(ISS) through at least 2020.
    While NASA's commercial crew development activities offer exciting 
opportunities for the future, these public-private partnerships 
represent a new approach to acquisition and human spaceflight that pose 
unique questions and challenges for the agency, its commercial 
partners, and Congress. I look forward to hearing how NASA and the six 
companies participating in the program are working together to ensure 
that the program remains efficient, cost-effective, and, most 
importantly, safe for our astronauts.
    I look forward to hearing from our witnesses more about the 
progress made and the challenges that remain in achieving NASA's goal 
of a viable commercial system by 2016.
    First, I would like to understand how confident NASA is in the cost 
and schedule estimates for achieving U.S. commercial crew services by 
about 2016 as well as the basis for those estimates. Second, I would 
like to understand what steps NASA and its commercial partners are 
taking to ensure that future U.S. commercial crew transportation 
systems are safe. Third, I would like to understand if there are trade-
offs on risks given NASA's plans for a fixed government investment in 
the development of those systems.
    I welcome our panel of witnesses and look forward to their 
testimony. I yield back the balance of my time.
                   Additional Material for the Record
Letter submitted by Representative Dana Rohrabacher,
Committee on Science, Space, and Technology,
U.S. House of Representatives

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