[Senate Hearing 112-847]
[From the U.S. Government Publishing Office]
S. Hrg. 112-847
RISKS, OPPORTUNITIES, AND OVERSIGHT OF COMMERCIAL SPACE
=======================================================================
HEARING
before the
SUBCOMMITTEE ON SCIENCE AND SPACE
of the
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED TWELFTH CONGRESS
SECOND SESSION
__________
JUNE 20, 2012
__________
Printed for the use of the Committee on Commerce, Science, and
Transportation
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SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ONE HUNDRED TWELFTH CONGRESS
SECOND SESSION
JOHN D. ROCKEFELLER IV, West Virginia, Chairman
DANIEL K. INOUYE, Hawaii KAY BAILEY HUTCHISON, Texas,
JOHN F. KERRY, Massachusetts Ranking
BARBARA BOXER, California OLYMPIA J. SNOWE, Maine
BILL NELSON, Florida JIM DeMINT, South Carolina
MARIA CANTWELL, Washington JOHN THUNE, South Dakota
FRANK R. LAUTENBERG, New Jersey ROGER F. WICKER, Mississippi
MARK PRYOR, Arkansas JOHNNY ISAKSON, Georgia
CLAIRE McCASKILL, Missouri ROY BLUNT, Missouri
AMY KLOBUCHAR, Minnesota JOHN BOOZMAN, Arkansas
TOM UDALL, New Mexico PATRICK J. TOOMEY, Pennsylvania
MARK WARNER, Virginia MARCO RUBIO, Florida
MARK BEGICH, Alaska KELLY AYOTTE, New Hampshire
DEAN HELLER, Nevada
Ellen L. Doneski, Staff Director
James Reid, Deputy Staff Director
John Williams, General Counsel
Richard M. Russell, Republican Staff Director
David Quinalty, Republican Deputy Staff Director
Rebecca Seidel, Republican General Counsel and Chief Investigator
------
SUBCOMMITTEE ON SCIENCE AND SPACE
BILL NELSON, Florida, Chairman JOHN BOOZMAN, Arkansas, Ranking
DANIEL K. INOUYE, Hawaii JOHN ENSIGN, Nevada
JOHN F. KERRY, Massachusetts ROGER F. WICKER, Mississippi
MARIA CANTWELL, Washington MARCO RUBIO, Florida
MARK PRYOR, Arkansas KELLY AYOTTE, New Hampshire
MARK WARNER, Virginia
C O N T E N T S
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Page
Hearing held on June 20, 2012.................................... 1
Statement of Senator Nelson...................................... 1
Statement of Senator Hutchison................................... 46
Statement of Senator Boozman..................................... 48
Witnesses
William H. Gerstenmaier, Associate Administrator, Human
Exploration and Operations, National Aeronautical and Space
Administration................................................. 2
Prepared statement........................................... 3
Pamela Melroy, (Colonel, USAF, (Ret.), Director of Field
Operations for FAA Commercial Space Transportation............. 10
Prepared statement........................................... 11
Gerald L. Dillingham, Ph.D., Director, Physical Infrastructure
Issues, U.S. Government Accountability Office.................. 16
Prepared statement........................................... 17
Michael N. Gold, Director, D.C. Operations and Business Growth,
Bigelow Aerospace.............................................. 31
Prepared statement........................................... 33
Captain Michael Lopez-Alegria, USN (Ret.), President, Commercial
Spaceflight Federation......................................... 35
Prepared statement........................................... 37
Appendix
Hon. John D. Rockefeller IV, U.S. Senator from West Virginia,
prepared statement............................................. 59
Aerospace Industries Association, prepared statement............. 59
Response to written questions submitted to William H.
Gerstenmaier by:
Hon. Kay Bailey Hutchison.................................... 65
Hon. John Boozman............................................ 70
Response to written questions submitted to Colonel Pamela Melroy
by:
Hon. Bill Nelson............................................. 73
Hon. Kay Bailey Hutchison.................................... 74
Hon. John Boozman............................................ 77
Response to written questions submitted to Gerald L. Dillingham,
Ph.D. by:
Hon. Bill Nelson............................................. 78
Hon. Kay Bailey Hutchison.................................... 79
Hon. John Boozman............................................ 81
Response to written questions submitted to Michael N. Gold by:
Hon. Kay Bailey Hutchison.................................... 82
Hon. John Boozman............................................ 83
Response to written questions submitted to Captain Michael Lopez-
Alegria, USN (ret.) by:
Hon. Kay Bailey Hutchison.................................... 85
Hon. John Boozman............................................ 87
RISKS, OPPORTUNITIES, AND OVERSIGHT OF COMMERCIAL SPACE
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WEDNESDAY, JUNE 20, 2012
U.S. Senate,
Subcommittee on Science and Space,
Committee on Commerce, Science, and Transportation,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10 a.m. in
room SR-253, Russell Senate Office Building, Hon. Bill Nelson,
Chairman of the Subcommittee, presiding.
OPENING STATEMENT OF HON. BILL NELSON,
U.S. SENATOR FROM FLORIDA
Senator Nelson. Good morning. We are starting promptly
because the Senate will have a series of votes that will start
shortly after 11 o'clock and this will be one vote right after
another in what we call ``vote-orama.'' Obviously, I would wait
until our Ranking Member got here, but in view of the fact that
we are so constrained and both Kay and John are on their way,
let me just say good morning and thank you all for being here.
This hearing is timely in the risks, opportunities, and
oversight in commercial space considering the fact that SpaceX
has had the success that they have, and by the end of the year,
we expect to see Orbital Sciences launching with cargo to the
Space Station as well. And so it is a time to step back and
take a look at what is going on in the whole venture of
commercial space, what we have learned, what the current issues
are.
John, I was saying I was killing time so that we can get
right on in it. If it is OK with you, we will just dispense
with the opening statements.
Now, what I would like you to do so we can get in everybody
and that we can get in questions, I want each of you to confine
your remarks to about 5 minutes, and then we will get into it
and elaborate on your remarks with regard to our questions.
So let me just say, a star-studded panel. Bill
Gerstenmaier, the Associate Administrator, is going to talk
about NASA's perspective on commercial space. Dr. Dillingham
from GAO is going to speak on some of the work GAO has done
regarding commercial space and, in particular, a recent study
that GAO has done. And then we have two Space Shuttle
astronauts. It turns out that they actually flew together on
STS-92. Colonel Pam Melroy and Captain Michael Lopez-Alegria.
And Pam is here representing the FAA and Michael is here on his
newly appointed being president of the Commercial Spaceflight
Federation. If you can keep all that crowd together, you are
Merlin, the magician. And we have Michael Gold from Bigelow,
and they are developing space habitats.
So thank you all for being here, and with that, we will
start with you, Mr. Gerstenmaier.
STATEMENT OF WILLIAM H. GERSTENMAIER, ASSOCIATE
ADMINISTRATOR, HUMAN EXPLORATION AND OPERATIONS,
NATIONAL AERONAUTICAL AND SPACE ADMINISTRATION
Mr. Gerstenmaier. Thank you very much. Thanks for allowing
me to represent the team that supports human spaceflight for
NASA. I look forward to sharing my thoughts on the risks,
opportunities, and oversight of commercial space.
First, in order to accept a risk, there must be an
opportunity or the risk is not warranted. The opportunity
associated with commercial space is that it allows NASA to
obtain a critical service for the International Space Station
with reduced cost and oversight. These two things, reduced cost
and oversight, are allowing NASA to focus its talents on the
bigger goals, utilization of the ISS and developing the next
generation of hardware and skills that will allow us to extend
human presence into the solar system beyond low-Earth orbit.
In the past, NASA needed to work hand in hand with our
contractors not only ensuring the requirements were being met,
but also helping to design and build the systems needed for
low-Earth orbit. The hardware and systems needed for low-Earth
orbit simply did not exist.
Today that story is very different. There are avionic
systems, hardware systems, manufacturing tools and techniques
readily available for use in low-Earth orbit. The ISS has
developed the techniques needed for sustained human presence
with reasonable risk in low-Earth orbit. However, the highly
reliable and maintainable systems necessary for beyond low-
Earth orbit do not yet exist, and NASA is focused on developing
these systems. The ISS is being used to test and refine many of
these systems needed for beyond low-Earth orbit. The new
challenge for NASA is to develop these new techniques and
systems for beyond low-Earth orbit. The challenge of operating
days to months away from earth is dramatically more difficult
than just being hours away in low-Earth orbit.
In addition to preparing for human journeys beyond low-
Earth orbit, NASA must also use the ISS national laboratory
activity to expose commercial industry to the advantages of
space-based research for terrestrial applications. If industry
can see the direct benefits of space-based research for gaining
new insight and competitive advantage for products and services
that these companies are developing for use on the Earth, then
these commercial companies will want to utilize space without
Government involvement. ISS is an avenue for companies to
explore the benefits of space research at low risk and low
cost. Commercial transportation will be critical to these
companies using space for research. So NASA is embracing a new
method of doing business for low-Earth orbit that will enable a
bigger future for human space exploration and allow use of the
ISS to its fullest extent.
Another risk associated with commercial spaceflight is
assuming the transportation to and from low-Earth orbit is
easy. The technical challenges will be larger than initially
anticipated by the companies. NASA will need to allow extra
time for these services to materialize. NASA, with the support
of the administration and Congress, correctly anticipated this
risk by adding STS-135 to add extra margin for ISS cargo. We
also need to be prepared for a failure or a problem during one
of these missions. This is normal and we will need to protect
with adequate margin. Further, we cannot afford a major stand-
down for a problem. We need to anticipate and not overreact to
these problems. We should learn from these problems and
continue moving forward without extensive external
investigations. These problems will occur and should not be
viewed as a major failure.
Crew-related transportation, however, will require extra
safety considerations beyond the safety requirements for cargo.
Our NASA and industry teams have prepared for this handover to
industry for years. Working with our international partners on
ISS allowed NASA experience in working with equivalent
standards. NASA needed to look at different ways of
accomplishing tasks and protecting safety. The international
partners also gave us experience in allowing the approach and
berthing to ISS on the first flight of a new vehicle. The
international partner experience gave us techniques that NASA
is applying on the commercial cargo flights. The NASA team was
fully ready for this transition to commercial cargo
transportation.
NASA is all about doing seemingly impossible tasks. NASA
does this through preparedness and innovation. We are
constantly looking for new ways to accomplish our tasks.
Commercial spaceflight is just one of the many ways we are
opening up exploration to new partners or finding different
ways of working with our established partners. We will apply
lessons learned from the commercial crew and cargo to SLS and
MPCV. We will continue to challenge our perception of what is
possible by expanding human presence beyond low-Earth orbit
while operating and expanding the benefits of space exploration
to folks here on Earth.
I look forward to answering your questions. Thank you.
[The prepared statement of Mr. Gerstenmaier follows:]
Prepared Statement of William H. Gerstenmaier, Associate Administrator,
Human Exploration and Operations, 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 views on the
Risks, Opportunities and Oversight of Commercial Space and our specific
efforts to support the development of commercial cargo and crew
transportation systems. NASA has worked closely with commercial
industry for our entire fifty-four year history. U.S. industry has been
a part of every NASA program since our inception. As a government
agency, we contract with industry to best utilize the unique attributes
of the private sector for each particular activity. NASA investments
have allowed U.S. industry to develop tremendous capabilities over the
past five decades that have reduced costs to tax payers and expanded
U.S. markets, creating billion dollar industries and hundreds of
thousands of jobs. Space transportation has followed this well-worn
path: government investment in space launch capability led to
commercial ownership and operation of nearly all U.S. launch vehicles
today.
NASA is pleased with the progress our industry partners have made
in the development of commercial cargo transportation systems, as
demonstrated on May 31, 2012, with the successful conclusion of the
SpaceX demonstration flight to and from the International Space Station
(ISS); this mission achieved all of the milestones originally intended
to be met over two separate flights. Moreover, the mission was
completed at significantly less cost to the American taxpayers than if
we had pursued a traditional, cost-plus development contract approach.
Data review and discussions--a required part of the milestone
activity--are continuing so we can learn as much as possible from this
mission. The success of our industry partners in these endeavors is
critical to ensuring the effective utilization of the ISS. U.S.
commercial cargo resupply capability will ensure the continued
operation of the ISS and the utilization of its formidable research
facilities as a U.S. National Laboratory. American commercial crew
transportation and rescue services will enable the United States to fly
its own astronauts to and from Station, end our sole reliance on
foreign governments, and provide needed redundancy in the system. We
are committed to launching our crew from U.S. soil on spacecraft built
by American companies as soon as possible. This approach is good for
our program, international commitments, the American taxpayer, and the
U.S. economy. Commercial crew transportation will also allow us to
increase the ISS complement to 7 from 6. This will allow for increased
utilization on ISS. Partnering with the commercial space industry to
provide access to low-Earth orbit (LEO) is enabling the Agency to
increasingly focus on developing its own systems for sending astronauts
on missions of exploration into deep space, and promote the development
of an economy in LEO. However, achieving timely success in this
critical endeavor will require that the industry partners receive
robust funding from NASA.
International Space Station
The ISS represents an unparalleled capability for human space-based
research that cannot be pursued on Earth, as well as a platform for the
development and test of exploration technologies and systems. The ISS
supports research across a diverse array of disciplines, and it is also
a place to conduct technology development efforts. Research and
Development (R&D) conducted aboard the ISS holds the promise of next-
generation technologies, not only in areas directly related to NASA's
exploration efforts, but in fields that have numerous terrestrial
applications as well. The ISS will provide these opportunities to
scientists, engineers, and technologists through at least 2020. Beyond
being a feat of unparalleled engineering and construction, as well as
international collaboration, the ISS is a place to learn how to live
and work in space over a long period of time and foster new markets for
commercial products and services. The ISS is a facility in which
commercial companies can explore the benefits of space-based research
as part of the ISS National Laboratory. Finally, the ISS will be
critical to NASA's future missions of exploration beyond LEO.
The ISS will continue to meet NASA's mission objective to prepare
for the next steps in human space exploration. The ISS is NASA's only
long-duration flight analog for future human deep space missions, and
it provides an invaluable laboratory for research with direct
application to the exploration requirements that address human risks
associated with deep space missions. It is the only space-based,
multinational research and technology test bed available to identify
and quantify risks to human health and performance; identify and
validate potential risk mitigation techniques; and develop
countermeasures for future human exploration.
In the areas of human health, telemedicine, education, and Earth
observations from space, there are already demonstrated benefits from
ISS research. ISS crews are conducting human medical research to
develop knowledge in the areas of: clinical medicine, human physiology,
cardiovascular research, bone and muscle health, neurovestibular
medicine, diagnostic instruments and sensors, advanced ultrasound,
exercise and pharmacological countermeasures, food and nutrition,
immunology and infection, exercise systems, and human behavior and
performance. Many investigations conducted aboard ISS will have direct
application to terrestrial medicine. For example, the growing senior
population may benefit from experiments in the areas of bone and muscle
health, immunology, and from the development of advanced diagnostic
systems. Telemedicine and reduction in medical device size and
complexity are needed on ISS. These same needs are present in
terrestrial medicine today. ISS medical devices have tremendous synergy
with hardware being developed for hospital and home use today. Vaccine
development research, station-generated images that assist with
disaster relief and farming, and education programs that inspire future
scientists, engineers, and space explorers highlight just some of the
many examples of research that can benefit humanity.
On August 31, 2011, NASA finalized a cooperative agreement with the
Center for the Advancement of Science in Space (CASIS) to manage the
portion of the ISS that operates as a U.S. National Laboratory. CASIS,
an independent, nonprofit research management organization, will help
ensure the Station's unique capabilities are available to the broadest
possible cross-section of U.S. scientific, technological, and
industrial communities, developing and managing a varied R&D portfolio
based on U.S. national needs for basic and applied research; establish
a marketplace to facilitate matching research pathways with qualified
funding sources; and stimulate interest in using the national lab for
research and technology demonstrations and as a platform for science,
technology, engineering, and mathematics education.
Through CASIS, users can utilize the unique microgravity
environment of space and the advanced research facilities aboard
Station to enable investigations that may give them the edge in the
global competition to develop valuable, high technology products and
services. Furthermore, the envisioned demand for access to the ISS
could increase the demand for the providers of commercial crew and
cargo systems. Both of these aspects of the U.S. segment of ISS as a
National Laboratory will help establish and demonstrate the market for
research in LEO beyond the requirements of NASA.
Commercial Cargo Transportation Systems
As you know, NASA is developing and procuring cargo resupply
services under two different approaches: Commercial Orbital
Transportation Services (COTS) to develop and demonstrate commercial
cargo transportation systems; and Commercial Resupply Services (CRS) to
procure cargo resupply services to and from the ISS.
Commercial Orbital Transportation Services
As part of COTS, NASA has partnerships with Space Exploration
Technologies, Inc. (SpaceX) and Orbital Sciences Corporation (Orbital)
using funded Space Act Agreements (SAAs). These agreements include a
schedule of fixed payment performance milestones culminating in
demonstration flights to the ISS that validate vehicle launch,
spacecraft rendezvous, ISS berthing, and re-entry for disposal or
return safely to Earth.
Both COTS partners continue to make progress in developing and
demonstrating their systems.
In December 2010, as part of the first SpaceX COTS
demonstration flight, the SpaceX Falcon 9 rocket successfully
launched, and the accompanying Dragon spacecraft successfully
orbited the Earth and safely returned to the Pacific Ocean. In
December 2011, NASA announced its decision to combine the
flight objectives of SpaceX COTS demonstration flights 2 and 3
into a single mission. On May 22, 2012, SpaceX launched its
second COTS demonstration flight, and three days later, the
Dragon spacecraft was berthed to the ISS. The mission, which
accomplished the remaining COTS demonstration goals for SpaceX,
was brought to a successful conclusion on May 31, with the
deorbiting and splashdown of the Dragon capsule and return of
the cargo on board to NASA.
Orbital Sciences Corporation has been using NASA assets at
Stennis Space Center for engine acceptance testing and Wallops
Flight Facility (WFF) for launch vehicle and spacecraft
processing and integration as it prepares for its COTS
demonstration flight. Launch Pad 0A at WFF is scheduled for
completion and turnover to Orbital in June/July 2012. A short-
duration hot-fire test of the first stage system is scheduled
immediately after launch pad commissioning. Orbital's Antares
launch vehicle maiden test flight is scheduled for late summer,
and it will include a Cygnus spacecraft mass simulator.
Orbital's COTS demonstration mission to ISS is scheduled by end
of calendar year 2012.
Both companies are continuing to make sound progress in these
activities, and NASA expects to see both the completion of the COTS
effort and the beginning of operational cargo deliveries to ISS under
CRS later this year. The SpaceX COTS activity will be complete in
approximately 60 days after a detailed mission review.
Commercial Resupply Services
On December 23, 2008, NASA awarded CRS contracts to Orbital and
SpaceX for the delivery of cargo to the ISS after the retirement of the
Shuttle. We are planning, based on current commercial cargo schedules,
for one commercial cargo service flight to be flown in 2012. This
flight will be in addition to the COTS remaining demonstration flight
which will carry some cargo.
NASA ordered 12 CRS flights valued at $1.6B from SpaceX.
With the successful completion of all of its COTS milestones,
SpaceX is scheduled to fly its first CRS flight in the fall of
2012. There are five missions currently in the processing flow,
and both cargo and external hardware manufacturing and
integration activities are underway. There are three SpaceX
cargo missions planned each Fiscal Year from FY 2013 through FY
2016. The recently completed COTS demonstration flight included
CRS upmass and downmass, delivering to ISS 1,014 pounds of
supplies including experiments, food, clothing and technology.
On its return trip to Earth, the capsule carried science
experiments that will be returned to researchers hoping to gain
new insights provided by the unique microgravity environment in
the station's laboratories. In addition to the experiments,
Dragon returned a total of 1,367 pounds of hardware and cargo
no longer needed aboard the Station.
NASA ordered 8 CRS flights valued at $1.9B from Orbital. The
timing of Orbital's first cargo service flight is dependent on
successful completion of their COTS demonstration flight
milestones by the end of 2012. There are five missions
currently in the processing flow, and cargo integration
activities and detailed planning have begun. The company is
slated to fly one CRS mission in FY 2013, two CRS missions each
Fiscal Year from FY 2014 through FY 2016, and one CRS mission
in FY 2017.
NASA is pleased with the steady progress both companies continue to
make in their cargo vehicle and launch systems development efforts.
NASA anticipated that our commercial cargo partners would experience
inevitable start-up challenges associated with these technologically
ambitious endeavors. Both the Agency and these partners have spent many
years preparing for the full utilization phase of ISS. We are beginning
to see the fruits of these transportation planning and development
efforts this year.
Commercial Crew Program
The Commercial Crew Program (CCP) will 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
partner with U.S. industry, providing technical and financial
assistance during the development phase. In the longer term, the Agency
plans to be a customer for these services, buying transportation
services for U.S., Canadian, European, and Japanese astronauts to the
ISS.
Commercial Crew Development
To date, NASA's investments have been aimed at stimulating efforts
within the private sector to develop and demonstrate human spaceflight
capabilities through the Commercial Crew Development (CCDev)
initiative. Since 2009, NASA has conducted two CCDev solicitations,
requesting 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 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 May
31, 2012, Blue Origin had successfully completed seven of ten
milestones and NASA had paid $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 testing
milestones include launch abort engine and orbital maneuvering
engine static test firings, landing air bag and parachute drop
demonstrations, wind tunnel testing, service module propellant
tank and system testing, and launch vehicle Emergency Detection
System interface testing. As of May 31, 2012, Boeing had
successfully completed ten of sixteen milestones and NASA had
paid $85.0 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. 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 May 31,
2012, SNC had successfully completed eleven of fifteen
milestones and NASA had paid $68.8 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 and other crew systems. 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. As of May 31, 2012, SpaceX had successfully completed
seven of eleven milestones and NASA had paid $55.0 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 May 31, 2012, ATK,
ULA, and EAI had all successfully completed four of five milestones.
Commercial Crew Integrated Capability
The next stage of the acquisition lifecycle will be a series of
competitively awarded agreements with the intent of having no more than
two and a half (2.5) partners further advance their integrated design
and development efforts. This effort is referred to as Commercial Crew
Integrated Capability (CCiCAP) and the specific content, scope, and
duration of CCiCAP was communicated in an announcement for proposals,
released on February 7, 2012. The announcement asks industry to propose
a base period that will run from award through May 2014. This base
period will include completing major design efforts through critical
design review for an integrated transportation system, and also major
risk reduction demonstrations and tests such as uncrewed flight tests,
abort tests, and landing tests.
The announcement also calls for industry to propose optional
milestones beyond the base period to achieve a crewed orbital
demonstration flight. Goals for such a demonstration flight include
achieving at least three days on-orbit with a system that could
accommodate at least four crew members. NASA will decide in the future
whether to execute and fund any of the proposed optional milestones,
and the decisions will be based on a number of factors including
available budget and the partners' progress under the base period.
NASA is currently in a procurement ``black out'' period for CCiCAP,
during which the Agency is evaluating proposals. After careful analysis
of the proposals is completed, NASA expects to announce awards in the
late-July/August timeframe.
Commercial Crew Certification and Services
Before a provider can deliver ISS services to NASA, it must be
certified to ensure that it meets NASA's technical and safety
requirements. Finally, NASA plans to competitively award services
contracts to obtain crew transportation and emergency return services
for the ISS. The details of this acquisition approach are still being
developed and finalized; due to the nature of the certification
requirements, NASA anticipates using FAR-based contracts for this
effort. We intend to have this procurement strategy substantially
complete by the award of CCiCAP. Current agreements have the FAA
certifying the launch and entry portions of these missions for public
safety.
NASA's acquisition strategy is taking into consideration the need
to balance commercial design and schedule flexibility with government
insight and oversight responsibilities throughout all program phases.
The Agency is using Space Act Agreements to support the development of
commercial crew transportation capabilities that NASA could eventually
buy, and will use competitively-awarded FAR-based contracts for the
certification of available capabilities and to procure crew
transportation services to and from the ISS. This approach will
accommodate maturation of the commercial designs and vehicle programs
at varying rates. Based on the availability of funding and industry
performance, this strategy allows for adjustments in program scope, and
enables a domestic capability to transport crewmembers to the ISS
likely by 2017, based on the readiness of U.S. commercial providers to
achieve NASA certification.
Human Rating/Safety
The CCP represents a shift in near Earth space transportation
operations to the private sector, freeing NASA (and NASA's limited
resources) to pursue other human spaceflight goals, including
developing the hardware, and concepts necessary to set out on human
missions of exploration beyond LEO. The Space launch system and Orion
vehicle are two of the first systems being developed to explore deep
space.
Within this new paradigm, NASA will maintain its stringent safety
requirements and standards. The Agency has always used contractors to
build our space systems; however, as we transition to a commercially-
driven marketplace for these services, our partners will take a greater
responsibility for systems safety. In these programs, NASA is using an
approach that allows the commercial providers more freedom to pursue
cost-effective and innovative development approaches, but still allows
the Agency 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, but rather only evolutionary development, which is a key
factor in enabling a unique insight/oversight approach. NASA will
maintain crew safety by way of a crew transportation system
certification, and no system will receive this certification until the
Agency has confidence that our personnel and those of our International
Partners will be safe.
NASA is committed to managing the requirements, standards, and
processes for 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.
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, the NASA Office of the Chief Engineer, the NASA Office of the
Chief Health and Medical Officer, and the NASA Aerospace Safety
Advisory Panel. The FAA will protect for public safety.
Challenges
There are many challenges confronting the development of a viable
commercial crew transportation system. These include securing stable
and adequate financial resources, overcoming specific technical issues,
and finding the optimal level of NASA involvement. The challenge of
securing stable and adequate funding has been consistently cited as the
top risk to commercial crew development and NASA's stable support and
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 a stable market demand, plus adequate financial and technical
assistance for the development of these systems. NASA believes that by
providing assistance in both 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 the requested funding level for NASA's commercial crew
initiative. This Congressional support will incentivize industry in
obtaining investment capital above the amounts appropriated by Congress
to 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. In order to mitigate the risk
associated with technical challenges, NASA plans to support multiple
(but no more than 2.5) commercial providers, thereby obtaining the
benefits of competition and insulating the Agency in the event a
commercial provider cannot complete its development effort. In
addition, NASA plans to be fully supportive of 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. NASA insight is critical to ultimately
certifying the systems as safe crew transportation missions; however,
we must be careful to avoid excessive oversight which would hinder
industry's innovative approaches at achieving substantial cost savings
relative to traditional government development programs.
Coordination with the Federal Aviation Administration
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 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. In support of this, NASA and the
FAA recently signed a Memorandum of Understanding (MOU) that harmonizes
standards for commercial space travel of government and non-government
astronauts to LEO and the ISS. The two agencies will expand
collaborative efforts to provide a stable framework for the U.S. space
launch industry, avoid conflicting requirements and multiple sets of
standards, and advance both public and crew safety.
Indemnification under the Commercial Space Launch Act
The Administration supports extending the Commercial Space Launch
Act, as amended, (CSLSA) ``indemnification'' provision, 51 U.S.C.
Sec. 50915, for commercial launch and reentry operators for five years
beyond its current statutory expiration date of December 31, 2012. This
support is in line with the Commercial Space Transportation Advisory
Committee (COMSTAC) finding that extension of indemnification past
December of this year is ``critical to the viability of the commercial
launch industry in the U.S.'' COMSTAC recently issued a recommendation
reiterating its support.
Conclusion
Following the example of many successful industries in past, the
United States is now entering a new era in spaceflight that harnesses
the innovation and ingenuity of the private sector. This capability
will provide cargo and crew access to LEO, while NASA once again pushes
the boundaries of human exploration. The ISS has now entered its
intensive research phase, and this phase will continue through at least
2020. In order to realize the promise of this facility, NASA will be
relying on U.S. industry to provide cargo resupply and disposal
services, as well as crew transportation and rescue services. And while
there are still challenges ahead, the recent success of the SpaceX C2+
mission is a harbinger of the enormous potential of procuring cargo
services from private entities. Commercial cargo services will enable
the delivery and recovery of research equipment and scientific samples
that will make possible ISS R&D efforts critical to long-duration
spaceflight, as well as the utilization of the Station as a National
Laboratory by other U.S. Government and nongovernmental organizations.
Establishing routine cargo services will be a challenge, but the teams
are ready for this challenge. ISS has benefits to NASA research as well
as benefits to the terrestrial population. The international team that
assembled this tremendous facility can serve as a model for real
international cooperation.
The area of commercial crew transportation also faces challenges.
Human spaceflight is a very difficult endeavor, and NASA's industry
partners will have the responsibility for the full end-to-end system.
The Agency cannot guarantee their success; however, NASA is structuring
an enabling approach that provides the highest probability of success.
NASA's current path is a solid approach for developing and acquiring
crew transportation services in a manner that is cost effective, and
provides for crew safety. We need the support of this Committee to
authorize the funding required for this effort with appropriate
oversight that enables full and effective implementation of the
program. Procuring commercial crew transportation services from U.S.
industry will allow NASA to focus its resources on the development of
vehicles that will take our astronauts beyond LEO for the first time
since 1972. This new deep space exploration era will start with
increasingly challenging test missions beyond LEO to cis-lunar space,
which will be used to test systems and retire risks associated with
longer-duration human missions to multiple destinations, first to near-
Earth asteroids (NEAs), and ultimately to Mars as a part of a sustained
journey of exploration in the inner solar system.
Successful U.S. private enterprise and affordable commercial
operations in LEO will enable expanded markets, increased U.S. jobs,
lower costs, increased reliability, and a sustainable step in America's
expansion into space. Exploring space challenges our researchers,
scientists, students, and engineers to solve problems that are beyond
our current technical capability. No one nation or individual alone can
meet these challenges. We must work as a team. Solving these challenges
bring new benefits to all citizens of the Earth and changes the way we
think.
Mr. Chairman, I would be happy to respond to any question you or
the other Members of the Committee may have.
Senator Nelson. Thank you, Mr. Gerstenmaier.
Kay, with your permission, we are going to dispense with
the opening statements since we are racing the clock, and we
will put everybody's opening statement in the record.
Senator Hutchison. Perfect. I want to hear from the
witnesses and hope we have a chance also for questions. Thank
you.
Senator Nelson. Thanks.
Colonel Melroy?
STATEMENT OF PAMELA MELROY, (COLONEL, USAF (RET.),
DIRECTOR OF FIELD OPERATIONS FOR FAA
COMMERCIAL SPACE TRANSPORTATION
Col. Melroy. Chairman Nelson, Ranking Member Boozman, and
Senator Hutchison, thank you for inviting me to speak with you
today.
America recently witnessed a turning point in
transportation to low-Earth orbit when a domestic commercial
company, SpaceX, launched its Falcon 9 rocket from Cape
Canaveral. The Dragon capsule successfully berthed with the
International Space Station and later safely reentered the
Earth's atmosphere, demonstrating the ability to deliver and
return cargo for NASA.
Both the launch and the reentry of the SpaceX mission were
licensed by the Federal Aviation Administration's Office of
Commercial Space Transportation.
The Office was established in 1984 with a mission to ensure
protection of the public during commercial launch and reentry
activities. I have spent the lion's share of my career in space
operations, and I can assure you that even with a rigorous
framework of safety measures, space transportation is not
without risk. Therefore, the FAA requires operators to purchase
insurance to cover the maximum probable loss that a launch or
reentry could cause to third parties and their property. By
statute, claims by or against spaceflight participants are not
covered by this insurance, since it is only for third-party
damages.
In the case of a very low probability event with a
likelihood of happening of less than 1 in 10 million, the
second tier of the risk-sharing regime would result in the
conditional U.S. Government payment of third-party claims in
excess of maximum probable loss insurance. After hearing that
mouthful, you can understand why it is commonly referred to as
indemnification.
The Government's liability exposure is capped at $1.5
billion, adjusted for inflation, with payments subject to
congressional appropriation.
The U.S. Government has never been called on to make a
payment since indemnification became law in 1988. Congress has
maintained the regime's functionality and effectiveness over
the past 24 years by enacting five extensions. The FAA supports
extending the indemnification provision for an additional 5
years. A stable regulatory environment and predictable, risk-
based financial responsibility requirements are critical to
investor confidence and cost-effective business plans.
In addition to financial risk allocation, planning is in
place for how to respond in the event of an accident. The FAA,
the National Transportation Safety Board, and the Air Force
have a joint memorandum of agreement that calls out our roles
and responsibilities in the event of a mishap investigation. We
value this partnership, respect each other's expertise, and are
confident that our many joint exercises and discussions have
prepared us to work together effectively in the future.
With regards to human spaceflight, by law, the FAA may not
propose regulations for occupant safety until October of 2015.
We anticipate that a comprehensive occupant safety regulatory
framework will be a major undertaking and will involve
significant public comment and input.
NASA is planning to contract with the private sector to
transport NASA astronauts to the ISS, as you heard from Mr.
Gerstenmaier. The FAA and NASA have signed an historic
agreement addressing commercial space travel of astronauts to
and from the ISS. We have agreed that FAA licensing for public
safety will be required for operational flights to the ISS.
Crew safety and mission assurance will remain NASA's
responsibility. This approach allows us to integrate our areas
of expertise, and share lessons learned as progress is made. We
are grateful to NASA for paving the way for commercial crew
transportation, and recognize that industry will benefit from
our cooperation.
As the industry evolves, and the Government's reliance on
commercial vehicle increases, it may be necessary to revisit
some of the statutes and regulations that govern commercial
space transportation. We look forward to working with the
interagency community and with Congress to ensure the domestic
commercial space transportation industry will continue to
create jobs, fuel innovation, and drive economic growth.
Again, I am grateful for this opportunity to speak before
you today, and I am happy to answer any questions you may have.
[The prepared statement of Ms. Melroy follows:]
Prepared Statement of Pamela Melroy (Colonel, USAF, Ret.), Director of
Field Operations for FAA Commercial Space Transportation
Chairman Nelson, Ranking Member Boozman, and Members of the
Subcommittee:
Good morning. Thank you for inviting me to speak with you today.
America recently witnessed a turning point in transportation to
low-Earth orbit, when a domestic commercial company, SpaceX, launched
its Falcon 9 rocket from Cape Canaveral, placing its Dragon capsule on
a successful course to berth with the International Space Station
(ISS). This flight successfully demonstrated SpaceX's ability to
deliver cargo for NASA. Later, Dragon safely re-entered the atmosphere
and splashed down off the West Coast of the United States,
demonstrating the domestic commercial ability to bring back scientific
samples and other supplies. Both the launch and reentry for the SpaceX
mission were licensed by the Federal Aviation Administration's (FAA)
Office of Commercial Space Transportation.
The Office was established by statute in 1984, with a mission to
ensure protection of the public, property, and the national security
and foreign policy interests of the United States during commercial
launch and reentry activities--like those demonstrated by SpaceX. The
Office also has a Congressional mandate to encourage, facilitate, and
promote commercial space transportation. In carrying out our safety
responsibilities, we develop and issue regulations; grant licenses,
permits, and safety approvals; and conduct safety inspections during
every licensed or permitted launch. We grant licenses for launch,
reentry, and the operation of launch and reentry sites or
``spaceports,'' as they are popularly known. We issue permits for
experimental reusable suborbital rockets launched or reentered for
demonstrating compliance with license requirements, testing new design
concepts, equipment, or operating technologies, and crew training. By
law, permitted activities are not eligible for the government's
conditional provision of payment of third-party claims exceeding a
launch operator's required financial responsibility, also commonly
referred to as ``indemnification.''
Keeping Pace with Market Growth
The growing importance of the FAA's mission is evident, given
recent expansion of commercial space transportation industry activity
and the promise of more to come. In the suborbital domain, several new
commercial providers expect to enter regular service within the next
five years. We are funding a study, to be released this summer, to
evaluate the potential growth in commercial suborbital activity. As for
Earth-to-orbit commercial transportation, initiatives are on the verge
of expanding well beyond traditional unmanned satellite launches. The
most advanced of these new initiatives includes SpaceX cargo flights
servicing the ISS and similar services by Orbital Sciences Corporation,
through their contracts with NASA's Commercial Resupply Services (CRS)
program. Like those of SpaceX, Orbital Sciences' flights will be
licensed by the FAA. NASA estimates that commercial manned flights can
be accomplished within the next five years. Beyond vehicle development
and operations, several states are creating or expanding spaceports and
the associated infrastructure to service evolving markets.
Typically, space operations require years for development. As a
result, an accurate understanding of the full extent of the FAA's
activities requires considering not only launches but also extensive
pre-launch preparatory functions. For example, there were limited
licensed launch operations in Fiscal Year (FY) 2011, involving three
licensed launches and two permitted launches. However, intense
preparation and testing also occurred, which we expect will result in
increasing licensed and permitted launch operations in FY 2012 and FY
2013. In FY 2012, two licensed launches have already taken place. As
for pre-launch licensing and permitting activity, in FY 2011 there were
two new licenses, five license renewals, and one new permit. So far in
FY 2012, we have already issued three new licenses, one license
renewal, and one new permit. In addition, we are carrying out
evaluations of three license applications and one permit application,
as well as ten pre-application consultations for licenses and permits.
This activity, coupled with informal inquiries from current and
potential commercial launch developers, demonstrates a continued
interest in commercial space operations.
Highlighting the increasing volume of the FAA's ``behind-the-
scenes'' activities helps demonstrate not only market potential but
also the growing workload of the Office of Commercial Space
Transportation's dedicated professional staff. Field Offices are
critical both to our understanding of transportation operations and to
enhancing our key relationships with other U.S. Government entities,
such as NASA and the Air Force. To address this need, we are moving
headquarters staff to field assignments, recruiting new field
personnel, and adding contractor support where appropriate to maximize
efficiency. By increasing our field presence, FAA provides operational
safety oversight, speeds up communications and efficiency, and
strengthens partnerships with the many stakeholders in commercial space
operations.
Further reinforcing the FAA's commitment to the commercial space
transportation industry, the Office of Commercial Space Transportation
funds research through the FAA's Center of Excellence in Commercial
Space Transportation. This initiative is a dynamic research partnership
comprised of government, academia, and industry that involves matching
U.S. Government and private-sector funding to pursue a variety of
projects relating to a broad spectrum of areas vital to industry safety
and growth. The Office of Commercial Space Transportation also carries
out a variety of education and outreach initiatives, designed to
increase awareness of opportunities for companies, investors, potential
transportation customers, and the general public.
Public Safety Protection
The FAA authorizes and oversees launch, reentry, and the operation
of launch and reentry sites. Since 1989, we have licensed 207 launches
with no loss of life, serious injuries, or significant property damage
to the general public. Safety inspection is a core function of FAA
oversight. Inspections involve the monitoring of all licensed and
permitted commercial space transportation activities. Activities
include those conducted by the licensee/permittee, its contractors and
subcontractors. FAA inspectors use approved safety inspection plans,
templates, and checklists to conduct and document inspections. A safety
inspection encompasses more than flight activities alone. Inspectors
also monitor and participate in mission dress rehearsals, safe and arm
checks, flight termination system installation and checkout, accident
investigation, and other activities related to public safety.
Inspections are coordinated with other relevant agencies.
Liability Risk-Sharing Regime
Even with a rigorous framework of safety measures, space
transportation is not without risk. As part of its licensing and
permitting mission, the FAA administers financial responsibility and
risk-sharing requirements for commercial launch and reentry operators.
The Commercial Space Launch Act requires a licensee or permittee, any
customer, contractors, and subcontractors, and the government to waive
claims among themselves. In this ``cross-waivers'' arrangement, each
party involved in a launch agrees not to bring claims against the other
parties and is financially responsible for damage or loss it sustains
to its own property. With the exception of the U.S. Government, each
party is also responsible for claims associated with death or injury to
its own employees, resulting from activities carried out under a
license or permit.
Beyond first party losses, the risk-sharing regime places the first
tier of risk of financial loss due to third-party damages squarely on
the commercial company. The operator must cover the maximum probable
loss that a launch or reentry could cause to third parties and their
property. The FAA calculates a required amount of financial
responsibility to ensure coverage of this maximum probable loss, or
``MPL.'' We assess the risk that a license applicant's proposed launch
or reentry activity might pose to ``third parties''--in other words,
the public on the ground not involved in the launch or reentry. The MPL
methodology is based on a variety of carefully integrated factors,
including historical experience with unmanned expendable launch
vehicles and their payloads. Our office assesses the debris field
resulting from a series of assumed failures along a launch or reentry
trajectory, models the probability of failure of the activity, and
ascertains the presence of property or potential casualties. The
maximum financial responsibility requirement that the FAA could require
of an operator is $500 million for claims by third parties, and $100
million for claims for U.S. Government property. Commercial launch
companies generally demonstrate financial responsibility through the
purchase of private liability insurance. By statute, the insurance
policy must name all launch participants as additional insureds. This
includes the U.S. Government and its contractors and subcontractors
participating in launch. Also, by statute, claims by or against space
flight participants are not covered by this insurance, which is only
for third-party damages.
Only in the case of a very low probability event--one with a
likelihood of happening of less than 1 in 10 million--would the second
tier of the risk-sharing regime be activated. This second tier provides
for the conditional U.S. Government payment of claims in excess of the
amount of financial responsibility required of a commercial company. As
mentioned above, this statutory risk balancing mechanism is commonly
referred to as ``indemnification.'' Here, the government's liability
exposure is capped at $1.5 billion, adjusted for inflation since 1988,
and payments are subject to Congressional appropriation. This coverage
is for third-party claims only; space flight participants, or the loss
of the property of the launch operator, are not covered by this tier.
Any claims above this amount would comprise a third tier of risk, which
is the responsibility of the commercial company.
Since the financial responsibility and risk-sharing regime for
launch activities became law in 1988, there has not been a need for any
liability payments. Congress has maintained the regime's functionality
and effectiveness over the past twenty-four years by enacting five
extensions of the regime. In 1998, Congress broadened the regime to
include reentry in addition to launch. Ongoing support for extension of
the regime is a testament to bipartisan efforts recognizing the need
for developing a strong commercial launch industry to serve government
and commercial interests.
Importance of Extending ``Indemnification''
The FAA supports extending the ``indemnification'' provision for
five years beyond its current statutory expiration date of December 31,
2012. This support is in line with the 2011 Commercial Space
Transportation Advisory Committee (COMSTAC) finding that extension of
indemnification past December of 2012 would be ``critical to the
viability of the commercial launch industry in the US.'' COMSTAC issued
a recommendation in May of 2012 reiterating its support for extension.
Should the indemnification provision expire, all other portions of
the financial responsibility and risk-sharing framework would remain in
force. Accordingly, the FAA would continue to be charged with licensing
launches and reentries subject to minimum financial requirements. The
remaining statutory requirements would only provide license applicants
with an amount of financial responsibility that represents the maximum
probable loss without regard to the maximum possible loss.
If the indemnification provision were to expire, increased demand
for private insurance to address more than the maximum probable loss
could lead to higher insurance costs. Companies with fewer resources
could struggle to manage risk, and investors could be discouraged from
providing capital to companies with catastrophic risk exposure, further
restricting access to capital and suppressing growth. A stable
regulatory environment, including predictable, risk-based financial
responsibility requirements and certainty in allocating risk, is
critical to securing investor confidence and willingness to place
capital at risk.
The current financial responsibility and risk-sharing framework was
created with Congress recognizing the emergence of foreign launch
services made competitive through government subsidies and preferential
foreign national laws. The emerging U.S. commercial launch industry
requires a stable and predictable risk-sharing program, including
government indemnification of claims in excess of maximum probable
loss, in order to plan future operations and encourage investment.
Maintaining the current risk-sharing regime through a five year
extension of indemnification would contribute to meeting this need.
Fostering growth of this vital industry will produce public benefit in
the form of national security, technological capacity, and national
pride, by enabling domestic access to space for government and
commercial users and contributing to U.S. aerospace preeminence.
Accident Investigation
In addition to providing for appropriate government-industry risk
sharing, planning is in place for the investigational procedures that
will be necessary in the event of an accident. The FAA requires
licensees to comply with their previously approved accident
investigation plan, including immediate notification to the FAA
Washington Operations Center in the event of a fatality or serious
injury, or notification within 24 hours in the event of a mishap, which
includes both accidents and incidents.
The FAA has also established a strong working relationship with the
National Transportation Safety Board (NTSB) to familiarize the NTSB
with commercial space flight. The NTSB has supported the FAA in
developing plans for managing a mishap investigation as well as
training and preparing the commercial space industry for a mishap. The
FAA Office of Commercial Space Transportation Mishap Program Manager
works directly with the NTSB on a frequent basis. Additionally, the
FAA, NTSB and the Air Force have a joint Memorandum of Agreement (MOA)
that calls out roles and responsibilities for mishap investigation.
This MOA has been in place for several years. The FAA and NTSB, in
coordination with NASA, the Air Force, and commercial space flight
companies have reviewed mishap scenarios on a frequent basis at both
the eastern and western launch ranges, in order to exercise roles and
responsibilities in the event of a launch or reentry mishap. The NTSB
will respond to a commercial space launch or reentry accident in a
similar fashion to that in the commercial airline industry, if the FAA
declares an accident has occurred in accordance with established FAA
regulatory definitions in 14 C.F.R. Part 401. In the event of an
accident, the FAA is prepared to carry out its investigatory
responsibilities as outlined in the joint MOA. We value this
partnership, respect each other's expertise, and are certain that the
many discussions and joint exercises have prepared us to work together
effectively in the future.
Approaches to Human Space Flight
As human space flight begins to evolve, the current financial
responsibility and risk-sharing regime is well suited to cover emerging
activities such as commercial crew. Since MPL coverage only applies to
third-party damage, the MPL estimate would not be impacted by whether
the launch includes a commercial crew or space flight participants. The
MPL is not an estimate of risk to crew or space flight participants,
but rather, to third parties, including members of the public and non-
flying U.S. Government employees. Space flight participants and crew
are not third parties.
By law, the FAA may not propose regulations for occupant safety
until October 2015, except under certain circumstances. We anticipate
that occupant safety regulations will be a major undertaking, and will
require a comprehensive regulatory framework to eventually be proposed
through a suite of rulemaking activities. Implementing this framework
will take time, and will involve significant public comment and input.
NASA is planning to contract with the private sector to transport
NASA astronauts to the ISS within a few years. NASA and the FAA have
agreed that FAA licensing will be required for operational flights to
the ISS. Recently, the FAA and NASA signed a historic agreement to
coordinate standards for commercial space travel of government and non-
government astronauts to and from low-Earth orbit and the ISS. The two
agencies will collaborate to expand efforts that provide a stable
framework for the U.S. space industry, avoid conflicting requirements
and multiple sets of standards, and advance both public and crew
safety. The agreement establishes policy for operational missions to
the ISS. Commercial providers will be required to obtain a license from
the FAA for public safety. Crew safety and mission assurance will be
NASA's responsibility. This approach allows both agencies to
incorporate experience and lessons learned as progress is made. Beyond
this, the FAA's role involving flights carrying NASA astronauts is
still under consideration. We are grateful to NASA for paving the way
for commercial crew transportation, and recognize that industry will
benefit from our cooperation to ensure compatibility between
operational requirements for NASA missions and regulations for
commercial customers.
The FAA's top priority is public safety, and, when the time
arrives, will extend to appropriately protect occupants from risks.
However, we must also leverage our existing knowledge of human space
flight safety in a way that does not restrict innovation. This is in
accordance with the Congressional mandate that human space flight
regulatory standards evolve as the industry matures so that regulations
neither stifle technology development nor expose crew or space flight
participants to avoidable risks.
Planning for the Future
As the industry evolves, and the Government's reliance on
commercial vehicles changes, it may be necessary to revisit some of the
statutes and regulations that govern commercial space transportation.
Specifically, the FAA's statutory authority may require expansion and
adjustments to definitions to ensure public safety. For example, there
may be a need for greater regulatory authority in the areas of
transportation on orbit as well as launch and reentry. We look forward
to working with the interagency community and Congress as the industry
matures and evolves.
The U.S. commercial space industry continues to achieve new
milestones. Beyond servicing the ISS, companies may soon be
transporting participants to commercial orbital facilities like those
being developed by Bigelow Aerospace.
As the pace of change accelerates, the current launch liability
risk-sharing regime remains good public policy and should be extended.
As Congress has recognized, the development of the commercial space
transportation industry enables the United States to retain its
competitive position internationally, contributing to the national
interest and U.S. economic well-being. Extending indemnification and
the current risk-sharing regime will continue to enable industry to
attract and maintain a growing customer base, in the face of
international competitors offering robust protection against risk.
With the help and leadership of Congress, the domestic commercial
space transportation industry will continue to move forward--fueling
innovation, creating jobs, and driving economic growth.
Again, I am grateful for this opportunity to speak before you
today, and I am happy to answer any questions you may have.
Senator Nelson. Thank you, Colonel.
Dr. Dillingham?
STATEMENT OF GERALD L. DILLINGHAM, Ph.D.,
DIRECTOR, PHYSICAL INFRASTRUCTURE ISSUES,
U.S. GOVERNMENT ACCOUNTABILITY OFFICE
Dr. Dillingham. Thank you, Mr. Chairman, Ranking Member
Boozman, Senator Hutchison, for inviting GAO to appear before
you this morning.
My testimony focuses on four aspects of the U.S. commercial
space launch industry: first, the trends and forecasts in the
industry; second, the challenges that FAA faces in overseeing
and promoting the industry; third, some of the factors that
Congress may want to consider as it determines the future of
commercial space launch indemnification for third parties; and
fourth, some of the challenges to U.S. global competitiveness
as the industry grows and matures.
With regard to the industry trends, as detailed in our
written statement, the number of FAA-licensed launches has been
generally lower since a peak of 22 launches in 1998. Our work
shows that, despite the low number of launches in recent years,
important commercial spaceflight research and development
activities continue to take place. The number of commercial
space launches is expected to increase in the years ahead as
NASA begins procuring commercial cargo transportation services
to the International Space Station and private industry
continues developing vehicles for space tourism. Additionally,
private companies and State governments have been developing
spaceports to accommodate the anticipated space tourism flights
and expand the Nation's launch capacity.
With regard to the second area of our testimony, we have
identified several challenges that FAA will need to address as
it carries out its oversight responsibilities for a changing
and maturing space launch industry. These challenges include
ensuring that it has the proper mix of skills and personnel in
place to effectively handle industry growth. FAA must also
ensure that its regulations on licensing and safety
requirements at Federal launch sites for expendable launch
vehicles will also be suitable for operations at commercial
spaceports. The agency must also be mindful of potential
conflicts of interest in overseeing the safety of commercial
space launches while promoting the industry. And with the
transformation of the Nation's air traffic control system to
NextGen, FAA will need to accommodate spacecraft that are
transitioning to and from space through the national airspace
system.
With regard to the factors that Congress may want to
consider with regard to indemnification, our written statement
discusses: first, the potential increased cost for the Federal
Government of this risk-sharing regime as a result of the
expected increase in manned commercial launches; second, the
Federal Government's potential exposure to liability as a
result of FAA's process for calculating maximal probable loss;
and third, the lack of Federal indemnification coverage for on-
orbit activities.
We have also identified some factors that may have a
negative impact on U.S. global competitiveness. These factors
include relatively high U.S. launch prices when compared to
other countries--such as China, Russia, and France--and the
limitations on U.S. technology exports, which could affect
launch company abilities to sell their services abroad.
And finally, Mr. Chairman, there is also the fact that the
commercial space launch industry operates without the benefit
of a national strategy. The situation has resulted in multiple
Federal agencies having responsibilities for space activities,
and most have developed their own strategies for meeting their
responsibilities. A national strategy could identify and fill
any gaps in Federal policy.
Thank you, Mr. Chairman. This concludes my oral statement.
I will be pleased to respond to any questions from you, the
Ranking Member, or Senator Hutchison.
[The prepared statement of Dr. Dillingham follows:]
Prepared Statement of Gerald L. Dillingham, Ph.D., Director, Physical
Infrastructure Issues, U.S. Government Accountability Office
June 20, 2012
Highlights of GAO-12-836T, a testimony before the Subcommittee on
Science and Space, Committee on Commerce, Science, and Transportation,
U.S. Senate
Commercial Space Transportation
Industry Trends, Government Challenges, and International
Competitiveness Issues
Why GAO Did This Study
The commercial space launch industry is changing as NASA plans to
begin procuring commercial cargo transportation services to the
International Space Station later this year and companies are
developing vehicles that could carry passengers for space tourism
flights. FAA is responsible for overseeing the safety of commercial
space launches and promoting the industry. A catastrophic commercial
space launch accident could result in injuries or property damage to
the public, or ``third parties.'' In anticipation of such an event,
launch companies are required to purchase launch insurance, per
calculations done by FAA and, under the Commercial Space Launch Act,
the Federal Government is potentially liable for claims above that
amount of purchased insurance. Unless reauthorized, the indemnification
provision expires this year.
This testimony addresses (1) trends and forecasts in the commercial
space launch industry and challenges FAA faces in overseeing and
promoting the industry, (2) preliminary information on issues
concerning Federal indemnification for third party losses, and (3)
challenges to global competitiveness for the U.S. commercial space
launch industry. This statement is based on a past GAO report and
testimonies on commercial space launches, updated with information GAO
gathered from FAA and NASA on industry trends and recent FAA and NASA
actions, and on-going work on Federal indemnification. GAO is making no
recommendations in this statement.
What GAO Found
Since a peak of 22 U.S. commercial space launches in Fiscal Year
1998, the annual number of launches generally ranged from 4 to 9
launches. The number of commercial space launches is expected to
increase in the next 8 years as the National Aeronautics and Space
Administration (NASA) plans to procure 51 launches from commercial
cargo companies to resupply the International Space Station. FAA also
expects space tourism to begin in the next several years, although no
companies have applied for a FAA launch license and companies
developing these services have experienced delays in the past. FAA
faces several challenges overseeing the commercial space launch
industry. For example, FAA expects its licensing and oversight
responsibilities to expand in anticipation of an increased private
sector role, suggesting that FAA and Congress must remain vigilant so
that potential conflicts in FAA's safety oversight and industry
promotion roles do not occur. Also, as the commercial space launch
industry grows and FAA continues to implement NextGen--FAA's effort to
develop a more automated, aircraft-centered, satellite-based air
traffic management system--the agency will have to manage a mix of
earth-based aircraft and space vehicles. FAA has begun to consider
integrating spaceflight operations into NextGen. In past work, GAO
recommended that FAA take several actions to improve its oversight of
commercial space launches, including monitoring indicators of space
tourism safety. FAA has taken some steps to address the
recommendations.
Several factors have implications for Federal indemnification
policy. For example, under the current policy, the potential increase
in the number of commercial space launches increases the probability of
a catastrophic accident and the possibility of a cost to the Federal
Government. Also, GAO's preliminary work has raised questions about the
soundness of the method currently used by FAA to calculate the amount
of insurance that launch companies must purchase: FAA has not updated
crucial components, such as the cost of a casualty, and its method is
outdated, according to insurance industry officials and risk modeling
experts. If the current indemnification policy is eliminated, the
actual effects on the global competitiveness of the U.S. commercial
space launch industry are unknown, in part, because it is not known
whether launch customers might choose foreign launch companies over
U.S. companies. However, launch companies said that the lack of
government indemnification would decrease their global competitiveness
by increasing launch costs.
The competitiveness of U.S. commercial space launch companies is
affected by higher launch prices than those charged by companies in
other countries and U.S. export controls, which affect U.S. companies'
ability to sell services abroad. The U.S. Government has responded to
foreign competition by providing the U.S. launch industry research and
development funds, use of Federal launch facilities, and
indemnification for a portion of third-party claims.
Prepared Statement of Gerald L. Dillingham, Ph.D., Director, Physical
Infrastructure Issues, U.S. Government Accountability Office
Chairman Nelson, Ranking Member Boozman, and Members of the
Subcommittee:
Thank you for the opportunity to testify today on the commercial
space industry. Historically, commercial space launches took place
primarily at Federal launch sites and carried payloads (generally
satellites) into orbit using unmanned vehicles that were only used
once. The Federal Aviation Administration (FAA) is responsible for
overseeing the safety of these launches and promoting the industry.
Over the last several years the industry has begun to change. For
instance, several companies are in the process of developing and
testing manned, reusable launch vehicles for commercial space tourism.
In addition, since the Space Shuttle fleet was retired in 2011, the
National Aeronautics and Space Administration (NASA) plans to begin
procuring commercial cargo transportation services to the International
Space Station (ISS) later in 2012. With the successful mission of
SpaceX's Dragon last month, the capability to do so has been
demonstrated. NASA also intends to procure commercial manned launches
to carry its astronauts to the ISS beginning in 2017.\1\ Private
companies and states are developing commercial spaceports--sites used
for commercial (nongovernment) spacecraft launches to support the
expected growth in commercial space launches. To foster a competitive
environment for the U.S. space launch industry, the Federal Government
provides, under the Commercial Space Launch Act Amendments of 1988
(CSLAA),\2\ among other things, potential indemnification for a portion
of third party liability claims that could arise from a catastrophic
launch-related incident that results in injury or damage to uninvolved
people or property.\3\,\4\ This legislation expires at the
end of 2012, and Congress will need to determine whether to end,
reform, or continue current commercial space launch indemnification.
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\1\ Since NASA retired its Space Shuttle program in July 2011, it
lacks a domestic capability to send crew and cargo to the ISS. To
maintain the ISS through 2020, as required by the NASA Authorization
Act of 2010, NASA is relying on international partners and commercial
vehicles to transport cargo. Pub. L. No. 111-267, Sec. 501 All
commercial cargo missions for NASA thus far have been demonstration
missions conducted under Space Act agreements, which involve NASA
providing significant funds to private industry partners to stimulate
the development of large-scale commercial space transportation
capabilities. Pub. L. 85-568, 72 Stat. In order to transport crew, NASA
is currently purchasing seats on the Russian Soyuz vehicle. However,
NASA has awarded a number of Space Act agreements to domestic private
sector companies to stimulate development and demonstration of
commercial human spaceflight capability, with an eventual goal of
procuring crew transportation services in 2017. For more information on
utilizing the ISS, see GAO, NASA: Significant Challenges Remain for
Access, Use, and Sustainment of the International Space Station, GAO-
12-587T (Washington, D.C.: Mar. 28, 2012). For more information on
Space Act agreements, see GAO, Key Controls NASA Employs to Guide Use
and Management of Funded Space Act Agreements Are Generally Sufficient,
but Some Could Be Strengthened and Clarified, GAO-12-230R (Washington,
D.C.: Nov. 17, 2011).
\2\ Pub. L. No. 100-657, 102 Stat. 3903 (1988).
\3\ 51 USC Sec. 50915.
\4\ The Federal Government, subject to appropriations, provides
indemnification for losses that exceed the maximum probable loss up to
a limit of $1.5 billion adjusted for post-1988 inflation; in 2012, this
amount was approximately $2.7 billion. For each launch, FAA determines
the maximum probable loss, which is the amount of third party losses
against which a launch company must protect by buying third party
liability insurance.
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My testimony today focuses on: (1) trends and forecasts in the U.S.
commercial space launch industry, (2) challenges FAA faces in
overseeing and promoting the industry, (3) preliminary information on
factors for Congress to consider as it determines the future of
commercial space launch indemnification, and (4) challenges to U.S.
global competitiveness as the commercial space industry grows and
matures. This statement is based on our prior testimonies and report on
commercial space issues and has been updated with information we
gathered from FAA and NASA on industry trends and recent FAA and NASA
activities.\5\ It is also based on on-going work we are conducting for
this committee and the U.S. House of Representatives' Committee on
Science and Technology. Additional information on our scope and
methodology is provided in each issued product. We conducted the work
on which this is based in accordance with generally accepted government
auditing standards. Those standards require that we plan and perform
the audit to obtain sufficient, appropriate evidence to provide a
reasonable basis for our findings and conclusions based on our audit
objectives. We believe that the evidence obtained provides a reasonable
basis for our findings and conclusions based on our audit objectives.
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\5\ See GAO, Commercial Space Launch Act: Preliminary Information
on Issues to Consider for Reauthorization, GAO-12-767T (Washington,
D.C.: June 6, 2012); Commercial Space Transportation: Industry Trends
and Key Issues Affecting Federal Oversight and International
Competitiveness, GAO-11-629T (Washington, D.C.: May 5, 2011);
Commercial Space Transportation: Development of the Commercial Space
Launch Industry Presents Safety Oversight Challenges for FAA and Raises
Issues Affecting Federal Roles, GAO-10-286T (Washington, D.C.: Dec. 2,
2009); and Commercial Space Launches: FAA Needs Continued Planning and
Monitoring to Oversee the Safety of the Emerging Space Tourism
Industry, GAO-07-16 (Washington, D.C.: Oct. 20, 2006).
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Background
In 1984, the Commercial Space Launch Act required the Secretary of
Transportation to ``encourage, facilitate, and promote commercial space
launches by the private sector.'' \6\ Under the Act, FAA was charged
with regulating the U.S. commercial space launch industry, which it
does through licensing, compliance monitoring, and safety inspection
activities. FAA licenses all commercial launches and reentries that
take place in the United States and overseas by U.S. citizens or
companies to ensure the safety of the public and property, to ensure
compliance with international obligations of the United States, and to
protect the national security and foreign policy interests of the
United States.\7\ FAA is also responsible for licensing the operation
of all U.S. spaceports from which commercial launches may occur. In
addition to its safety oversight and regulatory responsibilities, FAA
is tasked with facilitating the strengthening and expansion of the U.S.
space launch infrastructure. In 2004, the Commercial Space Launch
Amendments Act of 2004 \8\ gave FAA the specific responsibility of
overseeing the safety of space tourism. However, FAA is prohibited from
regulating crew and passenger safety before October 2015, except in
response to high risk incidents, serious injuries or fatalities, or an
event that poses a high risk of causing a serious or fatal injury.
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\6\ 51 U.S.C. 50903.
\7\ FAA issues four types of licenses: a launch license (for
expendable launch vehicles), a reusable launch vehicle mission license,
a reentry license, and a launch or reentry site operator license. The
first three types of licenses are issued to the operator of a launch
vehicle, and the fourth is issued to the operator of a spaceport. FAA
also issues experimental permits for test flights of reusable launch
vehicles.
\8\ Pub. L. No 108-492.
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Other Federal agencies also support the commercial space launch
industry. NASA supports the industry by providing infrastructure and
operations support and encouraging private sector investment in its
launches and other activities. The Department of Defense (DOD), through
the Air Force, provides infrastructure, operations support, guidance,
and safety oversight for government and commercial launches at its
launch sites. The Department of Commerce (Commerce) is also responsible
for promoting the commercial space industry.
In addition, similar to other countries such as China, France, and
Russia, the U.S. Government provides indemnification for a portion of
claims by third parties for injury, damage, or loss that result from
FAA-licensed commercial launch-related incidents, provided Congress
appropriates funds for this purpose.\9\,\10\ Prior to
issuing a launch or reentry license, FAA determines the amount of third
party losses against which a launch company must protect by buying
third party liability insurance. FAA determines this by calculating the
maximum probable loss, which is an estimate of the maximum third party
losses likely to occur from a commercial space launch.\11\ The Federal
Government, subject to appropriations, provides indemnification for
losses that exceed the maximum probable loss up to a limit of about
$2.7 billion.\12\ Parties involved in launches--for example, passengers
and crew--are not considered third parties, and thus damages to them
would not be covered under the indemnification program.\13\ The
commitments of the United States or other countries to pay third party
claims have never been tested. Globally, there has never been a third
party claim for damages from a commercial space launch failure that
reached the level of government indemnification.
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\9\ 51 USC 50914(a)(1)(A).
\10\ China, France, and Russia provide more indemnification
coverage than the United States. These countries each have an
indemnification regime in which the government states that it will
assume a greater share of the risk compared to that of the United
States because each country places no limit on the amount of government
indemnification.
\11\ More specifically, the maximum probable loss is based on
estimates of losses from events having greater than a 1 in 10 million
chance of occurring.
\12\ The $2.7 billion limit on the Federal Government's liability
is for 2012; this amount is adjusted for inflation each year.
\13\ A crew includes any employee who performs activities directly
relating to the launch, reentry, or other operation relating to the
vehicle that carriers human beings. 51 U.S.C Sec. 50902(2). A
passenger--also called a spaceflight participant--is an individual who
is not crew, carried aboard a launch vehicle or reentry vehicle. 51
U.S.C Sec. 50902(17).
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The Number of FAA-Licensed Space Launches Peaked in 1998, but an
Increase Is Anticipated
Launch Trends
Since 1989, FAA has licensed 207 commercial space launches. Since a
peak of 22 launches in Fiscal Year 1998, the annual number of launches
generally ranged from 4 to 8 launches. (See fig. 1.) Space launches by
private sector companies were relatively high in the late-1990s as U.S.
commercial launch companies responded to the increase in global demand
for commercial satellite launch services. Since then, the demand for
commercial launches has generally declined, except for slight increases
in Fiscal Years 2004 and 2008. The increase in Fiscal Year 2004 was due
in part to the inclusion of 4 demonstration flights by SpaceShipOne and
the increase in Fiscal Year 2008 was due, in part, to the return to
service of one of the most common launch vehicles following a failure
in the previous year.\14\ Since Fiscal Year 2009, FAA has licensed 13
commercial space launches, including the launch of the Falcon 9 rocket
that carried the Dragon capsule that docked with the International
Space Station last month.
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\14\ SpaceShipOne, which resembles an airplane, was launched from
an airplane into space, where it traveled nearly 70 miles above the
earth, and returned to the original launch site.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Source: GAO analysis of FAA data.
Note: These numbers include launches by Sea Launch--a multinational
consortium that is licensed by FAA because one of its principals is a
U.S. company. The numbers also include 5 launches by SpaceShipOne--4 in
Fiscal Year 2004 and 1 in Fiscal Year 2005--which were not FAA-licensed
as they were demonstration flights. All launches were orbital, except
those of SpaceShipOne, which were suborbital.
Despite the low number of licensed launches in recent years,
according to FAA, research and development activity in commercial
spaceflight continues and the tests associated with this activity are
not captured in launch numbers. According to industry experts that we
spoke with, since 2006 the commercial space launch industry has
experienced a steady buildup of research and development efforts,
including ground tests and low-altitude flight tests of reusable
rocket-powered vehicles that are capable of numerous takeoffs and
landings. (See fig. 2 for examples of commercial spacecraft being
developed.) These activities do not require licensing. In 2006, FAA
began issuing experimental permits to companies seeking to conduct test
launches of reusable space launch vehicles that could be used for
manned commercial flights.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Sources: Virgin Galactic (left); Blue Origin (middle); and XCOR
Aerospace (right).
The number of commercial space launches is anticipated to increase
in the years ahead as NASA begins procuring commercial cargo
transportation services to the ISS and private industry continues
developing vehicles for space tourism flights. As previously noted,
SpaceX recently completed the first commercial mission to deliver cargo
to the ISS and bring back scientific samples and other supplies. (See
fig. 3.) As a result of this success, SpaceX will begin to fly its 12
missions under NASA's Commercial Resupply Services contract for
delivery of cargo to the ISS. Orbital Sciences Corporation has also
been awarded a contract for cargo resupply missions to the ISS through
2016, but has yet to conduct any demonstration missions. Together, the
companies are scheduled to complete about 39 percent of NASA's planned
launches to the ISS through 2020. (See table 1.)
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Source: NASA.--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 1.--NASA's Planned Launches to Resupply the ISS from 2012 to 2020 (as of March 2012)
----------------------------------------------------------------------------------------------------------------
Vehicle 2012 2013 2014 2015 2016 2017 2018 2019 2020 Total
----------------------------------------------------------------------------------------------------------------
European Automated Transfer Vehicle (ATV) 1 1 1 0 0 0 0 0 0 3
a
Japanese H-II Transfer Vehicle (HTV) a 1 1 1 1 1 1 1 1 1 9
SpaceX 2 2 2 3 3 0 0 0 0 12
Orbital 1 2 1 2 2 0 0 0 0 8
Follow-on commercial resupply b 0 0 0 0 0 5 5 5 4 19
Total 5 6 5 6 6 6 6 6 5 51
----------------------------------------------------------------------------------------------------------------
Source: GAO analysis of NASA data.
a The ATV and HTV are unmanned vehicles that have flown to the ISS.
b NASA does not have contracts with commercial providers or negotiated agreements with international partners
for flights from 2017 through 2020.
FAA expects space tourism activity to begin in the coming years
and, while companies are developing vehicles to provide space tourism
services, the industry has experienced delays in its development in the
past. The prospect for commercial space tourism materialized in 2004
with the successful flights of SpaceShipOne, which have been the only
manned commercial flights to date. Virgin Galactic, which formed a
joint venture with Scaled Composites to develop SpaceShipTwo, is the
farthest along among the space tourism companies and has taken deposits
from more than 500 customers to reserve a place on a future flight.
However, Virgin Galactic has not yet applied to FAA for a launch
license and its planned schedule for flights has experienced delays in
the past. The planned and anticipated increase in launches, from NASA
and potentially from space tourism, has implications for FAA's
oversight responsibilities and the Federal Government's potential
liability in providing third party indemnification, as we discuss later
in this statement.
Commercial Spaceports
In the United States, private companies and state governments have
been developing additional spaceports to accommodate the anticipated
space tourism flights and expand the Nation's launch capacity. There
are currently eight nonfederal FAA-licensed spaceports as well as two
private facilities each with one resident launch provider--Blue Origin
and Sea Launch--which are termed sole-site operators. (See fig. 4.) In
addition, state governments and local communities have proposed
establishing commercial spaceports in six additional locations.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Sources: FAA and GAO.
a Private facility with a sole site operator.
Both states and FAA have provided support for the development of
commercial spaceports. States have provided economic incentives to
developers to build spaceports to attract space tourism that could in
turn provide economic benefits to localities. For example, New Mexico
provided approximately $209 million to construct Spaceport America \15\
and the Florida Space Authority, a state agency, invested over $500
million in new space industry infrastructure development at Cecil Field
Spaceport, including upgrades to the launch pad, a new space operations
support complex, and a reusable launch vehicle support complex. In
addition, Virginia recently enacted legislation to provide $9.5 million
annually to support the capital needs, maintenance, and operating costs
of facilities owned and operated by the Virginia Commercial Space
Flight Authority--including the Mid-Atlantic Regional Spaceport--and
has provided state tax exemptions for companies launching payloads from
the spaceport or doing space-related business activities in Virginia.
However, according to a senior FAA official, continued state support
for spaceports in the current fiscal environment has been mixed. The
official added that although there are eight licensed spaceports, there
has not been launch activity at all of them. Until there is a launch
provider that begins operations and brings revenue to a spaceport,
support is difficult to justify. In addition, Federal support for
spaceports has been affected by the fiscal environment. In 2010, FAA
distributed a total of $500,000 in appropriated funds to four
spaceports in the first Commercial Space Transportation Grants. Since
then it has drawn from its operations budget to sustain the program.
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\15\ Approximately $133 million came from state appropriations. The
remainder came from tax bonds collected from Dona Ana and Sierra
counties in New Mexico.
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FAA Faces Several Significant Challenges as It Oversees a Changing
Commercial Space Launch Industry
As it oversees a changing commercial space launch industry, FAA
faces various challenges. These include addressing a potential growth
in its licensing and oversight workload, ensuring that its safety
regulations are equally suitable for commercial spaceports and Federal
launch sites, avoiding potential conflicts between its dual roles of
safety oversight and industry promotion, and adequately accommodating
space flight in its air traffic management system.
Potential Industry Growth and FAA's Workload
FAA expects its licensing and oversight responsibilities of
commercial space launches to expand in the next few years with the
licensing of NASA-contracted launches as NASA begins this year to use
new commercially-developed and operated vehicles to deliver cargo and
later crew to the ISS. NASA plans to contract with commercial launch
companies for these services. FAA and NASA announced on June 18, 2012,
that FAA will license NASA-contracted vehicles and services. FAA
expects the number of commercial launches to increase as private
companies work toward providing flight services to paying passengers.
FAA requires either a launch and a reentry license or a permit. As
mentioned earlier in this statement, manned commercial launches have
not occurred since 2004, and Virgin Galactic is the company closest to
developing a vehicle for space tourism, but it has not filed for FAA
licenses. Therefore, it is not clear when FAA's workload would be
affected by space tourism.
As of November 2011, FAA's workload included 15 active launch
licenses, 8 active launch site operator licenses, and 2 active
experimental permits. FAA evaluates applications for launch licenses by
reviewing the safety, environmental, payload, and policy implications
of a launch and determining the launch company's insurance liability or
financial responsibility. FAA's licensing process is described in fig.
4.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Source: GAO presentation of FAA information.
According to FAA officials, FAA's Office of Commercial Space
Transportation has 72 full-time staff, as of June 2012, to oversee
commercial space launches. FAA's Fiscal Year 2013 budget request
includes resources to hire an additional 10 safety experts to evaluate
license applications, conduct safety inspections, and provide oversight
in its field offices.
FAA expects its workload to increase over the next several years as
it begins to develop safety regulations for commercial human
spaceflight. Although a moratorium on FAA regulations for passenger
safety has been extended to October 2015, we have previously
recommended that FAA identify and continually monitor indicators of
space tourism industry safety.\16\ Although FAA was not able to address
our recommendation directly because there have been no launches with
passengers, it is taking other steps--e.g., reviewing NASA's
certification of space launch vehicles as worthy of transporting humans
(i.e., human rating) and its own aircraft certification processes--that
will help FAA be prepared to regulate passenger safety. We believe that
these are reasonable preliminary steps to regulate crew and passenger
safety.
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\16\ GAO-07-16.
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Suitability of Safety Regulations for Spaceports
As noted earlier, spaceports are being developed to accommodate
anticipated commercial space tourism flights. However, FAA faces
challenges related to regulating commercial spaceports. Specifically,
FAA must ensure that its regulations on licensing and safety
requirements for launches and launch sites, which are based on safety
requirements for expendable launch vehicles (i.e., vehicles that are
only used once and do not return to Earth) at Federal launch sites,
will also be suitable for operations at commercial spaceports. We have
reported that the safety regulations for expendable launch vehicles may
not be suitable for space tourism flights because of differences in
vehicle types and launch operations, according to experts we spoke
with.\17\ Similarly, spaceport operators and experts we spoke with
raised concerns about the suitability of FAA safety regulations for
commercial spaceports. Experts told us that safety regulations should
be customized for each spaceport to address the different safety issues
raised by various types of operations, such as different orbital
trajectories and differences in the way that vehicles launch and return
to earth, whether vertically or horizontally. To address these
concerns, we reported that it will be important to measure and track
safety information and use it to determine if the regulations should be
revised. We did not make recommendations to FAA concerning these issues
because the Commercial Space Launch Amendments Act of 2004 required the
Department of Transportation (DOT) to commission an independent report
to analyze, among other things, whether expendable and reusable
vehicles should be regulated differently from each other, and whether
either of the vehicles should be regulated differently if carrying
passengers. The report, issued in November 2008, concluded that the
launch of expendable vehicles, when used to lift reusable rockets
carrying crew and passengers, as well as launch and reentry of reusable
launch vehicles with crew and passengers should be regulated
differently from the launch of expendable vehicles without humans
aboard. The report also noted that the development of a data system to
monitor the development and actual performance of commercial launch
systems and to better identify different launch risk factors and
criteria would greatly assist the regulatory process.\18\
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\17\ We recommended that FAA develop a formal process for
consultations between its Office of Commercial Space Transportation and
Office of Aviation Safety about licensing reusable launch vehicles. In
response, the two offices developed an agreement defining their roles
and responsibilities regarding the review of hybrid aircraft/launch
vehicles. See GAO-07-16.
\18\ The Aerospace Corporation, et al., Analysis of Human Space
Flight Safety, Report to Congress (El Segundo, CA: Nov. 11, 2008).
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Dual Oversight and Promotion Roles
In 2006, we reported that FAA faced the potential challenge of
overseeing the safety of commercial space launches while promoting the
industry.\19\ While we found no evidence that FAA's promotional
activities--such as sponsoring an annual industry conference and
publishing studies of industry trends--conflicted with its safety
regulatory role, we noted that potential conflicts may arise as the
space tourism sector develops. We reported that as the commercial space
launch industry evolves, it may be necessary to separate FAA's
regulatory and promotional activities. Recognizing the potential
conflict, Congress required the 2008 DOT-commissioned report to discuss
whether the Federal Government should separate the promotion of
commercial human spaceflight from the regulation of such activity. The
2008 commissioned report concluded there was no compelling reason to
remove promotional responsibilities from FAA in the near term (through
2012) noting that FAA allocated approximately 16 percent of the
commercial space budget in Fiscal Year 2008, which was significantly
less than what was allocated for activities directly related to safety.
FAA's requested allocation for promotional activities is 12 percent of
the commercial space budget request for Fiscal Year 2013, according to
an FAA official. The report further stated that periodic review of the
issue was warranted as the commercial space launch industry changed. We
continue to concur with the commissioned report's assessment and see no
need for Congress to step in at this time to require a separation of
regulatory and promotional activities since resource allocations for
promotion remains at a relatively low level, and few commercial space
launches are occurring. However, FAA and Congress must continue to
remain vigilant that a situation in which FAA jeopardizes the public
interest by subordinating it to that of the commercial space launch
industry does not occur.
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\19\ GAO-07-16.
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Spaceflight and NextGen
NextGen--FAA's efforts to transform the current radar-based air
traffic management system into a more automated, aircraft-centered,
satellite-based system--will need to accommodate spacecraft that are
transitioning to and from space through the national airspace system.
As the commercial space launch industry grows and spaceflight
technology advances, FAA expects that the agency will need tools to
manage a mix of diverse aircraft and space vehicles in the national
airspace system. In addition, the agency will need to develop new
policies, procedures, and standards for integrating spaceflight
operations into NextGen. For example, FAA will have to define new upper
limits to the national airspace system \20\ to include corridors for
flights transitioning to space; establish new air traffic procedures
for flights of various types of space vehicles, such as aircraft-
ferried spacecraft and gliders; develop air traffic standards for
separating aircraft and spacecraft in shared airspace; and determine
controller workload and crew rest requirements for space operations.
FAA has begun to consider such issues and generally includes them in
its concept of operations for NextGen.
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\20\ The national airspace system currently extends to 60,000 feet
above mean sea level.
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Factors Congress Should Weigh Concerning Commercial Space Launch
Indemnification
Several factors have implications for Federal indemnification
policy. These include the potential for manned launches, the soundness
of FAA's calculation of maximum probable loss, a gap in the
indemnification policy, and the potential effects that ending Federal
indemnification could have on the global competitiveness of the U.S.
commercial space launch industry.
Potential Manned Launches
Our ongoing work indicates that the expected increase in manned
commercial launches raises a number of issues that have implications
for the Federal Government's indemnification policy for third party
liability. First, the number of launches and landings covered by
Federal indemnification could increase with NASA's planned manned
launches, which will be FAA licensed. NASA expects to procure from
private launch companies two manned launches per year to the ISS from
2017 to 2020.\21\ In addition, the development of a space tourism
industry may also increase the number of launches and landings covered
by Federal indemnification, but the timing of tourism launches and
landings is uncertain.
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\21\ NASA-contracted launches for its science missions are not
currently covered by CSLAA; rather, NASA requires its launch
contractors to obtain insurance coverage for third party losses. The
amount of the insurance required by NASA is the maximum amount
available in the commercial marketplace at reasonable cost, but not to
exceed $500 million per launch. The facts and circumstances for claims
in excess of this amount would be forwarded by NASA to the Congress for
its consideration 51 U.S.C. Sec. 20113 (m) (2). NASA-contracted
launches for the Commercial Resupply Services to the ISS will be
licensed by FAA under CSLAA, and will be covered by CSLAA
indemnification.
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According to insurance company officials with whom we spoke, the
potential volume of manned launches for NASA and for space tourism
could increase the overall amount of insurance coverage needed by
launch companies, which could raise insurance costs, including those
for third party liability.\22\ By increasing the number of launches,
the probability of a catastrophic event is also increased, and any
accident that occurs could also increase future insurance costs,
according to insurance company officials. A catastrophic accident could
also result in third party losses over the maximum probable loss, which
would invoke Federal indemnification, provided Congress appropriates
funds for this purpose.
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\22\ Launch providers obtain insurance in addition to that for
third party liability, including coverage of assets, such as the launch
vehicle.
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Second, because newly developed manned launch vehicles have a
limited launch history, they are viewed by the insurance industry as
more risky than ``legacy'' launch vehicles. Insurance company officials
told us that a launch vehicle such as United Launch Alliance's Atlas V,
which launches satellites and may be used for future manned missions,
is seen as less risky than new launch vehicles, such as SpaceX's Falcon
9, which could also be used for manned missions. According to insurance
company officials with whom we spoke, they expect to charge higher
insurance premiums for newly developed launch vehicles than legacy
launch vehicles given their different risk profiles. Insurance company
officials' opinions varied as to when a launch vehicle is deemed
reliable--from 5 to 10 successful launches. They also told us that
whether vehicles are manned is secondary to the launch vehicle's
history and that the launch's trajectory--over water or land--is also
considered in determining risk and, consequently, the price and amount
of third-party liability coverage.
Third, having people on board a space vehicle raises issues of
informed consent and cross waivers, which could affect third party
liability and the potential cost to the Federal Government. CSLAA
requires passengers and crew on spaceflights to be informed by the
launch company of the risks involved and to sign a reciprocal waiver of
claims (also called a cross waiver) with the Federal Government--
meaning that the party agrees not to seek claims against the Federal
Government if an accident occurs. CSLAA also requires cross waivers
among all involved parties in a launch. Two key issues dealing with
cross waivers include the estates of spaceflight passengers and crew
and limits on liability for involved parties. One issue is the estates
of spaceflight passengers and crew, which are considered third parties
to a launch, are not covered by informed consent and cross waiver of
claims, according to two insurance companies and one legal expert.
Another issue, according to two insurance companies and two legal
experts, requiring cross waivers among passengers, crew, the launch
company, and other involved parties may not minimize potential third
party claims as they would not place limitations on liability.
Maximum Probable Loss
The potential costs to the government under CSLAA--that is, the
Federal Government's exposure to liability--depends on FAA's maximum
probable loss calculation, which assesses a launch's risk. If the
calculation is understated, then the government's exposure to liability
is higher; conversely, if the calculation is overstated, then launch
companies are required to purchase more insurance than intended.
Therefore, it is important that FAA use an appropriate process for
determining the maximum probable loss. Our preliminary work identified
several issues that raise questions about the soundness of FAA's
maximum probable loss methodology:
FAA uses a figure of $3 million when estimating the cost of
a single potential casualty--that includes either injury or
death--which FAA officials said has not been updated since they
began using it in 1988. Two insurers, as well as
representatives of two risk modeling companies that specialize
in estimating damages from catastrophic events, said that this
figure is likely understated. Because this number has not been
adjusted for inflation or updated in other ways, it may not
adequately represent the potential current cost of injury or
death caused by commercial space launch failures.
FAA's methodology for determining potential property damage
from a commercial space launch starts with the total cost of
casualties and adds a flat 50 percent to that cost as the
estimate of property damage, rather than specifically analyzing
the number and value of properties that could be affected in
the event of a launch failure. One insurer and two risk
modelers said that FAA's approach is unusual and generally not
used to estimate potential losses from catastrophic events. For
example, officials from both modeling companies noted that the
more common approach is to model the property losses first and
derive the casualty estimates from the estimated property
losses. One modeler stated that FAA's method might
significantly understate the number of potential casualties,
noting that an event that has a less than 1 in 10 million
chance of occurring is likely to involve significantly more
casualties than predicted under FAA's approach. Moreover, a
2007 FAA review conducted with outside consultants said that
this approach is not recommended because of observed instances
where casualties were low yet forecasted property losses were
very large.
More broadly, FAA's method does not incorporate what is
known in the insurance industry as ``catastrophe modeling.''
One modeler told us that catastrophe modeling has matured over
the last 25 years--as a result of better data, more scientific
research, and advances in computing--and has become standard
practice in the insurance and reinsurance industries.
Catastrophe models consist of two components: a computer
program that mathematically simulates the type of event being
insured against and a highly detailed database of properties
that could potentially be exposed to loss. Tens of thousands or
more computer simulations are generated to create a
distribution of potential losses and the simulated probability
of different levels of loss. In contrast, FAA's method involves
estimating a single loss scenario. FAA officials told us that
they have considered the possibility of using a catastrophe
model. However, they expressed concern about whether the more
sophisticated approach would be more accurate, given the great
uncertainty about the assumptions--such as the probability and
size of potential damages--that must be made with any model.
Also, both experts and FAA officials told us that developing a
catastrophe modeling capability would entail significant costs.
FAA officials said that they believe the maximum probable loss
methodology is reasonable and produces conservative results. The same
officials noted that they periodically evaluate their current maximum
probable loss methodology, but acknowledged that they have not used
outside experts or risk modelers for this purpose. They agreed that
such a review could be beneficial, and that involvement of outside
experts might be helpful for improving their maximum probable loss
methodology. As we finalize our review of CSLAA indemnification policy,
we will address any additional Federal actions needed in response to
our analysis.
Gap in Federal Indemnification
Officials from the insurance industry and space launch companies,
as well as an expert, characterized the lack of coverage of on-orbit
activities--that is, activities not related to launch or reentry, such
as relocating a satellite from one orbit to another orbit--as a gap in
Federal indemnification, but they did not agree on the need to close
this gap. FAA licenses commercial launches and reentries, but does not
license on-orbit activities. Federal indemnification only applies to
FAA-licensed space activities. One expert noted that Federal oversight
of on-orbit activities may be needed to provide consistency and
coordination among agencies that have on-orbit jurisdiction. He pointed
out that the Federal Communications Commission and the National Oceanic
and Atmospheric Administration have jurisdiction over their satellites
and NASA has jurisdiction over the ISS. Thus, according to the expert,
there should be one Federal agency that coordinates regulatory
authority over on-orbit activities. On the other hand, officials from
two launch companies told us that they did not believe that on-orbit
activities need to be regulated by FAA or that Federal indemnification
coverage should be provided.
According to senior agency officials, FAA may seek statutory
authority over on-orbit activities, although not for satellite or
spectrum usage. An insurer told us that having FAA in charge from
launch to landing would help ensure that there were no gaps in
coverage. According to this insurer, this would help bring stability to
the insurance market in the event of an accident as involved parties
would be clear on which party is liable for which activities. Congress
would decide whether FAA's on-orbit authority would include licensing
on-orbit activities. If FAA were granted the authority to license on-
orbit activities, this would increase the potential costs to the
Federal Government for third party claims as its exposure to risk would
increase.
Indemnification and U.S. Competitiveness
Our on-going work indicates it is difficult to predict how
insurance premiums or other costs might change as well as the
availability of coverage if indemnification were eliminated. In
addition, we do not know whether or to what extent launch customers
might choose foreign launch companies over U.S. companies. Furthermore,
it is difficult to separate out the effects of withdrawing
indemnification on the overall competitiveness of the U.S. commercial
space launch industry. Many factors affect the industry's
competitiveness, including other U.S. Government support, such as
research and development funds, government launch contracts, and use of
its launch facilities, in addition to the third party indemnification.
Our work to date suggests that while the actual effects on
competition of eliminating CSLAA indemnification are unknown, several
launch company representatives and customers with whom we spoke said
that in the absence of CSLAA indemnification, higher costs and
increased risk would directly affect launch companies and indirectly
affect their customers and suppliers. The same participants said that
two key factors--launch price and launch vehicle reliability--generally
determine the competitiveness of launch companies. According to two
launch customers, launch prices for similar missions can vary
dramatically across countries. For example, two customers said that a
similar launch might cost about $40 million to $60 million with a
Chinese company, about $80 million to $100 million with a French
company, and approximately $120 million with a U.S. company. Other
considerations also would be involved in selecting a launch company,
according to launch customers with whom we spoke. For example, some
said that export restrictions for U.S. customers could add to their
costs or prevent them from using certain launch companies. One launch
customer also said that it considers the costs of transporting the
satellite to the launch site as well as other specific aspects of a
given launch.
U.S. launch company representatives said that the lack of
government indemnification would decrease their global competitiveness
by increasing launch costs. Those officials said their costs would
increase as a result of their likely purchase of greater levels of
insurance to protect against third party losses, as the launch
companies themselves would be responsible for all potential third party
claims, not just those up to the maximum probable loss amount. Some
launch companies told us that they would likely pass additional costs
on to their customers by increasing launch prices. Two launch customers
told us that in turn, they would pass on additional costs to their
customers.
Launch company representatives and customers said that ending CSLAA
indemnification would also decrease the competitiveness of U.S. launch
companies because launch customers would be exposed to more risk than
if they used launch companies in countries with government
indemnification. For example, representatives from several launch
companies and customers said that if some aspect of the launch payload
is determined to have contributed to a launch failure, they could be
exposed to claims for damages from third parties and therefore might be
more likely to use a launch company in a country where the government
provides third party indemnification. Some also noted that the
increased potential for significant financial loss for third party
claims could cause launch companies, customers, or suppliers to decide
if it was no longer worthwhile to be involved in the launch business,
resulting in lost jobs and industrial capacity. Lastly, one industry
participant pointed out that some suppliers, such as those that build
propulsion systems, have to maintain significant amounts of
manufacturing capacity whether they build one product or many. If there
are fewer launches, the cost of maintaining that capacity will be
spread among these fewer launches, resulting in a higher price for each
launch. To the extent that the Federal Government is a customer that
relies on private launch companies for its space launch needs, it too
could face potentially higher launch costs.
Alternatives for Addressing Space Launch Risk
Because launch failures and changing market conditions could change
the amounts of coverage available in the private market, you have
expressed interest in other possible ways of managing catastrophic
risk. While we have not conducted specific work to analyze the
feasibility of alternative approaches for providing coverage currently
available through CSLAA, FAA and others have looked at possible
alternatives to CSLAA indemnification and we have examined different
methods for addressing the risk of catastrophic losses associated with
natural disasters and acts of terrorism.\23\ These events, like space
launch failures, have a low probability of occurrence but potentially
high losses. Some methods involve the private sector, including going
beyond the traditional insurance industry, in providing coverage, and
include the use of catastrophe bonds or tax incentives to insurers to
develop catastrophe surplus funds. Other methods aid those at risk in
setting aside funds to cover their own and possibly others' losses,
such as through self-insurance or risk pools.\24\ Still other methods,
such as those used for flood and terrorism insurance, involve the
government in either providing subsidized coverage or acting as a
backstop to private insurers.\25\
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\23\ See FAA, Liability and Risk-Sharing Regime for U.S. Commercial
Space Transportation: Study and Analysis and Aerospace Corporation,
Study of the Liability Risk-Sharing Regime in the United States for
Commercial Space Transportation. See also GAO, Catastrophe Insurance
Risks: The Role of Risk-Linked Securities and Factors Affecting Their
Use, GAO-02-941 (Washington, D.C.: Sept. 24, 2002); Catastrophe
Insurance Risks: The Role of Risk-Linked Securities, GAO-03-195T
(Washington, D.C.: Oct. 8, 2002); and Natural Disasters: Public Policy
Options for Changing the Federal Role in Natural Catastrophe Insurance,
GAO-08-7 (Washington, D.C.: Nov. 26, 2007).
\24\ See GAO, Catastrophe Insurance Risks: Status of Efforts to
Securitize Natural Catastrophe and Terrorism Risk, GAO-03-1033
(Washington, D.C.: Sept. 24, 2003). Self-insurance occurs when an
entity assumes the risk for its losses and can involve the formation of
an insurance company solely for that purpose. Risk pooling occurs when
two or more entities agree to set aside funds to help pay for the
others' losses.
\25\ See GAO, Flood Insurance: FEMA's Rate-Setting Process Warrants
Attention, GAO-09-12 (Washington, D.C.: Oct. 31, 2008) and Terrorism
Insurance: Status of Efforts by Policyholders to Obtain Coverage, GAO-
08-1057 (Washington, D.C.: Sept. 15, 2008).
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Use of any such alternatives could be complex and would require a
systematic consideration of their feasibility and appropriateness for
third party liability insurance for commercial space launches. For
example, according to a broker and a risk expert, a lack of loss
experience complicates possible ways of addressing commercial space
launch third party liability risk, and according to another risk
expert, any alternative approaches for managing this risk would need to
consider key factors, including the
number of commercial space launch companies and insurers and
annual launches among which to spread risk and other associated
costs;
lack of launch and loss experience and its impact on
predicting and measuring risk, particularly for catastrophic
losses; and
potential cost to private insurers, launch companies and
their customers, and the Federal Government.
As such, alternatives could potentially require a significant
amount of time to implement.
Several Factors Hinder the Competitiveness of the U.S. Commercial Space
Launch Industry
The competitiveness of the U.S. commercial space launch industry is
affected by high launch prices and export controls, which affect its
ability to sell its services abroad. Based on several measures of
global competitiveness, the U.S. commercial space launch industry has
generally trailed Russia and France in recent years. For example, in 8
of the last 10 years, U.S. commercial space launch companies generated
less revenue that either Russia or France. U.S. companies generated no
commercial launch revenue in 2011 because they conducted no
launches.\26\ (See fig. 5.)
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\26\ The one FAA-licensed launch that occurred in 2011 was by Sea
Launch, which is a multinational company, not a U.S. company.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Source: GAO analysis of FAA data,
Note: International revenue data for 2012 is not available.
We previously reported that as the U.S. commercial space launch
industry expands, it will face key competitive issues, including high
launch prices and export controls, that affect its ability to sell its
services abroad.\27\ Foreign competitors have historically offered
lower launch prices than U.S. launch providers, as mentioned previously
in this statement. The U.S. Government has responded to foreign
competition by providing the commercial launch industry support,
including research and development funds, government launch contracts,
use of its launch facilities, and, as already discussed,
indemnification for third-party losses that exceed the maximum probable
loss.\28\
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\27\ GAO-07-16.
\28\ There have been no commercial space launch accidents that
resulted in third-party losses that required government
indemnification.
---------------------------------------------------------------------------
Industry representatives that we interviewed told us that export
licensing requirements affect the ability of the U.S. commercial space
launch industry to sell launch vehicles abroad because they can deliver
chemical, biological, and nuclear weapons. In previous work, a senior
Commerce official told us that the U.S. commercial space launch
industry had asked Congress to consider amending the statute that
restricts space manufacturing items for export. A change in statute
would allow for the Department of State (State) and DOD to review
individual items for export, as they do for other industries.
Finally, the commercial space launch industry operates without the
benefit of a national strategy. Numerous agencies--including FAA, NASA,
State, and Commerce--are responsible for space activities and have
developed their own strategies. A national space launch strategy could
identify and fill gaps in Federal policy concerning the commercial
space launch industry, according to senior FAA and Commerce officials.
According to those officials, the need for an overall U.S. space launch
policy, which includes commercial space launches, was being discussed
within DOT and across other departments as part of the administration's
review of national space activities, but developing a national policy
had not yet begun. Guidance on launch acquisitions will, however, be
included in the updated National Space Transportation Policy, which is
currently under development and a date for issuance has not been
publically announced.
Concluding Observations
In closing, despite the decrease in FAA-licensed commercial
launches since Fiscal Year 1998, commercial space launch is a dynamic
industry with newly developing vehicles and missions. As the
realization of space tourism nears and NASA relies more heavily on
commercial providers to deliver cargo and crew to the ISS, the number
and types of flights may increase, which will have implications for FAA
oversight and Federal indemnification support. As we previously
recommended, FAA should continue to take steps to gather and review
launch data that will enable it to be prepared to regulate human
spaceflight when the regulation moratorium expires in 2015. In
addition, as the industry changes and grows, continually assessing
Federal liability indemnification policy to ensure that it protects
both launch companies and the Federal Government will be important. As
we complete our analysis of Federal indemnification, we will more fully
address any additional Federal actions needed in response to these
developments. Finally, the potential changes to the industry may
present the conditions under which a subsequent review of FAA's dual
role in promoting and overseeing commercial space launch safety is
warranted.
Chairman Nelson, Ranking Member Boozman, and Members of the
Subcommittee, this concludes my prepared statement. I would be pleased
to answer any questions at this time.
Senator Nelson. Thank you, Doctor.
Mr. Gold?
STATEMENT OF MICHAEL N. GOLD, DIRECTOR,
D.C. OPERATIONS AND BUSINESS GROWTH,
BIGELOW AEROSPACE
Mr. Gold. I would like to thank you, Chairman Nelson,
Ranking Member Boozman, and Senator Hutchison, for this
opportunity to testify.
Also, since I do not get to do this every day, I would like
to take a moment to acknowledge my fellow witness, Bill
Gerstenmaier, whose steady hand and tireless quiet leadership
has made him one of the most respected and admired leaders in
the space industry today.
Unlike Mr. Gerstenmaier, this is the first time a Bigelow
Aerospace official has testified before Congress. I, therefore,
would like to begin with some background on our company.
Bigelow Aerospace was founded in the spring of 1999 by
Robert T. Bigelow with a mission to revolutionize space
commerce via the development and deployment of inflatable or,
as we prefer to call them, expandable space habitats.
Expandable habitats provide greater volumes than traditional
metallic structures, as well as enhanced protection from
radiation and physical debris. When NASA ran out of funding for
their own inflatable habitat program more than a decade ago,
Bigelow Aerospace picked up the torch and rescued this
promising technology which we will use to construct the world's
first private sector space station.
In order to prove and demonstrate our designs and
capabilities, Bigelow Aerospace deployed two sub-scale
prototype habitats, Genesis I and Genesis III, a scale model of
which is to my left, and they were launched in 2006 and 2007
respectively. And I still cannot believe I got the models
through security.
[Laughter.]
Mr. Gold. These launches were conducted in Russia aboard a
converted Russian nuclear missile and launched from an active
Russian nuclear missile site. Having spent the better part of 3
years traveling back and forth to Siberia, I can assure you
that we were not going there to enjoy the pleasant weather.
Instead, Bigelow Aerospace was driven to Russia by one simple
issue: price.
At the right price, we believe there is a substantial
business case for commercial human spaceflight activities.
Specifically, Bigelow Aerospace is focusing on what we term
sovereign clients,'' which are international space agencies,
foreign governments or companies that wish to enjoy the
benefits of orbital human spaceflight services. Bigelow
Aerospace is actively courting these sovereign entities to
lease space aboard our first station which will be comprised of
a single or potentially several BA 330 habitats.
Bigelow Aerospace is also a strong supporter of
microgravity research and development. We have conducted
extensive discussions with numerous public and private
officials both in the U.S. and abroad and we believe there are
real and substantial benefits that companies and countries can
enjoy, particularly in the pharmaceutical and biotech sectors,
by gaining access to orbital microgravity R&D facilities.
However, to seize these opportunities, pricing must be kept
under control, and in the aerospace world, prices are driven to
a surprising degree by the laws and regulatory framework that
hardware is developed and operates under.
I would like to take this opportunity now to address a few
of these critical issues.
First and foremost, there has been a great deal of debate
over the use of Space Act Agreements versus the Federal
Acquisition Regulations. Recently, Congressman Wolf and
Administrator Bolden reached an understanding that NASA would
continue to use SAAs through CCiCap and that future commercial
crew procurements would be implemented under the auspices of
the FAR. Such a strategy directly parallels the successful
cargo programs of COTS and CRS. This was not just a compromise,
but was always the right thing to do and we applaud Congressman
Wolf's and Administrator Bolden's efforts which have only made
the commercial crew program stronger.
That being said, I would be remiss if I did not bring to
the Committee's attention what I believe to be a gross
distortion of the law surrounding Space Act Agreements.
Specifically, a review of relevant agency policy directives and
GAO decisions demonstrate that NASA can mandate safety
requirements under the auspices of a SAA. The current belief at
NASA is that the Government cannot enjoy direct benefits of any
kind from a Space Act Agreement and that to levy safety
requirements would violate this inherent limitation. I believe
that such an interpretation of the law is simply wrong. Per
NASA's own policy directives, funded SAAs are to be used--and I
quote--to accomplish an agency mission. Moreover, in reviewing
this very issue, the GAO stated that SAAs can be used so long
as the principal purpose of the program is to stimulate the
commercial market from which both the private sector and the
Government can purchase services. These GAO decisions appear to
actually encourage NASA to share requirements since, if the
transportation systems are to eventually support Government
acquisitions, this would be impossible to accomplish without
companies fully understanding and complying with the agency's
mandatory safety needs. Because there are differing legal
opinions on this topic I would strongly encourage the Committee
to reach out to the ultimate arbiter of this issue, the GAO,
for their advice and guidance.
Of equal importance to how a system is procured is who
regulates it. We at Bigelow Aerospace have always been staunch
advocates for strong, common sense safety practices. We believe
that there is no better place for regulatory authority to
reside than with the FAA-AST. Led by the very capable Dr.
George Nield and supported by an exceptional staff, including
my fellow witness and astronaut, Pam Melroy, the FAA-AST has
experience in working with civil, commercial, and military
launches and thereby has an unparalleled broad swath of
knowledge to draw upon. In stark contrast to the FAA, NASA is
not a regulatory agency. Administrator Bolden himself has made
it publicly and explicitly clear that NASA should never become
a regulatory agency. In order to enjoy the opportunity
presented by commercial space, the risk of regulatory confusion
must be eliminated as quickly as possible. Therefore, we hope
that the Committee will work with the FAA, NASA, and commercial
space companies to firmly ensconce regulatory authority over
commercial space activities with the FAA since the AST is the
only Federal entity with the staff, capabilities, and
background to effectively play this role.
I hope this testimony has been helpful and look forward to
answering any questions the Committee may have.
[The prepared statement of Mr. Gold follows:]
Prepared Statement of Michael N. Gold, Director, D.C. Operations and
Business Growth, Bigelow Aerospace
I appreciate this opportunity to testify in regard to the oversight
of commercial space activities, particularly because the pace of
Bigelow Aerospace's development and our ability to attract customers
are both inherently tied to the future success of the commercial crew
program. However, before addressing the opportunities and risks that we
see ahead I will begin by providing some brief background on our
company. Bigelow Aerospace was founded in the spring of 1999 by Robert
T. Bigelow. A Las Vegas native, Mr. Bigelow is dedicating his time and
a significant amount of his personal fortune to Bigelow Aerospace's
mission to revolutionize space commerce via the development and
deployment of inflatable, or, as we prefer to call them, expandable
space habitats. Expandable habitats provide greater volumes than
traditional metallic structures, as well as enhanced protection from
radiation and physical debris. Moreover, expandable habitats deliver
these benefits while using less rocket fairing space, mass, and money.
When NASA ran out of funding for expandable habitats more than a decade
ago, Bigelow Aerospace picked up the torch and rescued this promising
technology, which we will use to construct the world's first private
sector space station.
In order to prove and demonstrate our designs and capabilities,
Bigelow Aerospace deployed two sub-scale prototype habitats, Genesis I
and Genesis II, which were launched in 2006 and 2007 respectively. To
fly these spacecraft Bigelow Aerospace contracted with ISC Kosmotras, a
joint Russian-Ukrainian company that takes decommissioned SS-18s (the
old backbone of the Soviet nuclear arsenal and designated `Satan' by
NATO) replaces their nuclear warheads with commercial fairings, and
subsequently uses this retrofitted rocket, called the ``Dnepr'', for
global commercial space launch. In 2004, Bigelow Aerospace contracted
with Kosmotras to launch the Dnepr with our unique expandable habitat
prototypes from an active nuclear missile base in Siberia. Having spent
the better part of three years traveling back and forth to this nuclear
missile site, I can assure you that we were not going there to enjoy
the good weather. Instead, Bigelow Aerospace was driven to Russia by
one simple issue, price. While I cannot divulge the cost of our
launches, I can tell the Committee that Kosmotras offered us a price
that was a third of the closest domestic competitor. A lack of
competitive pricing is one of the greatest risks that the commercial
crew and cargo programs will face.
If reasonable costs are maintained for crew transportation systems
we believe there is a substantial business case for commercial human
spaceflight. Specifically, Bigelow Aerospace is focusing on what we
term `sovereign clients', which are international space agencies or
foreign governments that wish to enjoy the benefits of human
spaceflight and orbital activities. Bigelow Aerospace is actively
courting these sovereign clients to lease space aboard our first
station which will be comprised of two or more BA 330 habitats (BA 330
habitats provide roughly 330 cubic meters of internal volume and can
support a crew of up to six). Bigelow Aerospace is also a strong
supporter of microgravity research and development. We have conducted
numerous discussions with public and private officials, both in the
U.S. and abroad, and we believe that there are real and substantial
benefits that companies and countries can enjoy, particularly in the
pharmaceutical and biotech sectors, by gaining the capability to
conduct microgravity R&D.
However, as mentioned previously, pricing remains a principal
programmatic risk, and this is certainly true for either the sovereign
client or the microgravity market. Non-competitive domestic rocket
pricing is what drove Bigelow Aerospace overseas previously, and is a
real and present threat to prevent the next generation of commercial
space activities from taking root here in America. Therefore, in its
oversight of the commercial crew and cargo programs, we strongly urge
this Committee to focus as much as possible on price, ensuring that
both the commercial crew and cargo programs deliver services at costs
that allow for the development of a truly commercial space industry.
In regard to the costs of space transportation systems, hardware
expenses often have little to do with the actual pricing of services,
which are driven to a surprising degree by the laws and regulatory
framework that they are developed and operate under. I would like to
take this opportunity to briefly address several of these issues.
First and foremost, there has been a great deal of debate over the
use of Space Act Agreements versus the Federal Acquisition Regulations
(``FAR''). Recently, Congressman Frank Wolf and Administrator Charles
Bolden reached an understanding that NASA would continue to use Space
Act Agreements (``SAAs'') throughout the life of the Commercial Crew
Integrated Capability (``CCiCap'') program while future commercial crew
procurements would be implemented under the auspices of the FAR.
Congressman Wolf also asked that the FAR strategy be developed now in
order to eliminate any gap between CCiCap and the actual procurement of
services. Such a strategy directly parallels the successful cargo
program comprised of the Commercial Orbital Transportation Services
(``COTS'') initiative and the Commercial Resupply Services contracts,
wherein cargo delivery capabilities were developed and demonstrated via
the SAA-driven COTS program, leading to the immediate implementation of
a FAR-based procurement for services under CRS. What Congressman Wolf
and the Administrator laid out wasn't just a compromise, but was always
the right thing to do, and we applaud their efforts.
However, I would be remiss if I did not bring to the Committee's
attention what I believe to be a gross distortion of the law
surrounding Space Act Agreements. Specifically, a review of relevant
GAO decisions and policy directives demonstrate that NASA can in fact
conduct certifications and mandate safety requirements under a SAA.
NASA's current understanding of the situation is that the government
cannot directly benefit in any way from a SAA and that to levy safety
requirements would therefore violate this inherent limitation. I
believe that such an interpretation of the law is simply wrong. Per
NASA's own policy directives, funded SAAs are meant to be used to
``accomplish an Agency mission''. Moreover, in reviewing this very
issue the GAO stated that SAAs can be used so long as the principal
purpose of the program is to stimulate a commercial market from which
both the government and private sector can purchase services. To meet
our needs, Bigelow Aerospace has certainly shared our requirements with
potential crew transportation providers, and I see nothing in the
relevant GAO decisions that would prevent NASA from doing the same. As
a matter of fact, the GAO decisions appear to actually encourage NASA
to integrate the Agency's requirements, since if these transportation
systems are to meet not just private sector needs but support
government acquisitions as well, this would be impossible to accomplish
without receiving mandatory Agency safety requirements. Per his
dialogue with Congressman Wolf, Administrator Bolden has stated that
the primary purpose of the commercial crew program is to service the
International Space Station. In other words, this program is being used
to accomplish an Agency mission, and therefore no artificial
limitations should placed on what NASA can do relative to safety and
certification regimes under SAA auspices. Since there are differing
legal opinions on this topic, I would strongly encourage this Committee
to reach out to the ultimate arbiter of the issue, the GAO, for their
advice and guidance.
Of equal importance to how a system is procured is who regulates
it. We at Bigelow Aerospace have always been staunch advocates for
strong, commonsense safety practices, and we believe that there is no
better place for Federal regulatory authority to reside than with the
Federal Aviation Administration's Office of Commercial Space
Transportation (``FAA-AST''). Led by the very capable Dr. George Nield,
and supported by an excellent staff including my fellow witness and
astronaut Pamela Melroy, the FAA-AST has experience in working with
civil, commercial, and military launches, and thereby has an
unparalleled broad swath of knowledge to draw upon. In stark contrast
to the FAA, NASA is not a regulatory agency, and Administrator Bolden
himself has made it publicly and explicitly clear that NASA is not and
should never become a regulatory agency. In order to enjoy the
opportunity presented by commercial space the risk of regulatory
confusion must be eliminated as quickly as possible. Therefore, we hope
the Committee will work with the FAA, NASA, and commercial space
companies to firmly ensconce regulatory authority over commercial space
activities with the FAA-AST, since the AST is the only Federal entity
with the staff, capabilities, and background to effectively play this
role.
Yet another regulatory risk is America's obsolete and
counterproductive export control regime. Second only to gravity, the
International Traffic in Arms Regulations (``ITAR'') had the greatest
chance of preventing our spacecraft from leaving the Earth. With the
recent release of the Section 1248 report, both the Department of
Defense and the Department of State are now on the record that export
control reform can be implemented without risking national security. As
a matter of fact, I believe export control reform is unique in that it
would bolster both national defense and commerce simultaneously. To
address this problematic issue that has festered for over a decade, I
urge the Members of this Committee to support including export control
reform measures within the Fiscal Year 2013 National Defense
Authorization Act. I would also like to enter into the Congressional
record the attached law review article published in 2009 addressing the
Constitutional shortcomings of the ITAR.
Finally, I would like to end my testimony by addressing the future
opportunity that continuing a balanced approach for NASA's human
spaceflight activities will provide. Expandable habitats were
originally developed to take astronauts to Mars, and we would very much
like to see this technology come full circle and again be used for
beyond-Low Earth Orbit (``LEO'') exploration activities. Our BA 330s
could be stationed at L1 or L2, or serve as habitats on the surface of
the Moon. Moreover, expandable habitat technology is eminently
scalable, and we could leverage heavy-lift capacity to, in a single
launch, place massive structures in space that could provide roughly
2,100 cubic meters of internal volume. Like NASA, Bigelow Aerospace
desperately needs commercial crew capability to support our LEO
operations, but we also could make great use of a heavy-lift system to
support U.S. Government and international human exploration activities.
Commercial crew and heavy-lift should not be viewed as competitors but
instead as complimentary capabilities, with both playing a vital role
in supporting America's future in space.
I hope this testimony has been helpful, and look forward to
answering any questions the Committee may have.
Senator Nelson. Thank you, Mr. Gold.
Captain Lopez-Alegria?
STATEMENT OF CAPTAIN MICHAEL LOPEZ-ALEGRIA, USN (RET.),
PRESIDENT, COMMERCIAL SPACEFLIGHT FEDERATION
Mr. Lopez-Alegria. Chairman Nelson, Ranking Member Boozman,
and Senator Hutchison, thank you for the opportunity to testify
today on the exciting future of commercial spaceflight.
Last month, Space Exploration Technologies launched the
Dragon spacecraft atop its Falcon 9 rocket to the International
Space Station, successfully completing the demonstration phase
of its Commercial Orbital Transportation Services agreement
with NASA. For the first time since the Space Shuttle retired,
the world watched as Americans accomplished a new achievement
in space. With the Shuttle Orbiters headed for their final
homes, Dragon showed us that America's leadership in space is
alive and well and that by partnering with commercial
spaceflight companies, NASA continues to do great things.
But recent success is not limited to SpaceX. While Dragon
was berthed to the Space Station, the Sierra Nevada Corporation
conducted a captive carry test of its winged Dream Chaser
vehicle for the first time, and United Launch Alliance, Blue
Origin, and others in NASA's commercial crew program are also
making strong progress. We expect to see more exciting
accomplishments in the months to come.
The Commercial Spaceflight Federation is the industry
advocate for companies that are working to make commercial
human spaceflight a reality. The CSF's members include
spaceports, vehicle builders, service providers, robotic
explorers, and suppliers that are building a web of commercial
activity in space. The industry builds on two venerable
American traditions: our entrepreneurial and inventive spirit
and our half-century of leadership in human spaceflight.
In commercial spaceflight, as in any nascent high-tech
industry, approaches to solve thorny problems vary greatly.
Safety is paramount for all our members, and it is important to
permit the industry to mature before allowing regulation to
artificially limit technical approaches and, by extension,
stifle innovation. To that end, we support the language in the
Commercial Space Launch Amendments Act of 2004 that allows
industry the space to rapidly innovate and adopt technical and
safety improvements without the threat of regulation unless
based on data from a serious safety incident, and we applaud
the extension of this learning period to at least October 2015.
Further, we support the extension of the FAA regime that
shares third party liability risk with launch providers
required to purchase extensive insurance policies and the
Government stepping in above that level. Termination of this
regime would require American launch providers to purchase
greater amounts of insurance. Simply put, that expense will
either be passed on to the customers, putting the U.S.
providers at significant market disadvantage vis-a-vis their
Russian, French, and Chinese competitors, or be absorbed,
causing likely unsustainable reductions in revenue. Either
scenario could well lead to their exit from the market and
result in the Federal Government paying the full cost of
maintaining the national defense-related launch industry base,
not to mention the significant loss of high-tech American jobs.
Having commanded the International Space Station, I share
with this committee an understanding of its great value to
America and indeed to the world, and I want to especially thank
Senators Nelson and Hutchison for your tireless support over
the many years. The ISS represents an unparalleled capability
for space-based research and technology demonstration, but its
full utilization potential is dependent on robust cargo and
crew transportation. To this end, we support the highest
possible funding for NASA's commercial crew program in the
Fiscal Year 2013 and beyond to restore our national crew
access, to bring NASA investment in high-tech jobs back to
America, and to ensure that this gap in American human
spaceflight capability ends soon and forever.
Space is no longer exclusively the domain of professional
astronauts. I launched on a Soyuz in 2006 to the ISS with one
spaceflight participant, and I landed 7 months later with
another. In fact, every single available seat on the Soyuz has
been sold with unfulfilled demand even as the price has
increased over the years. According to Space Adventures, the
CSF company that brokered these flights, the market demand for
similar voyages on an American vehicle would be 5 to 10 times
greater. As the CSF's members develop a U.S. commercial crew
capability and plans for private on-orbit facilities progress,
we expect this market to flourish.
In the suborbital arena, many companies are competing to be
the first to launch a reusable vehicle to space since
SpaceShipOne. Space flight has the unique ability to inspire
students and suborbital commercial spaceflight will open space
to a large population of young people as prices for small
experimental payloads to suborbit will be within reach for
foundations and even school districts. With frequent, regular
flights to space, citizen-astronauts will be teachers and
mentors to countless pupils inspiring the next generation of
science, technology, engineering, and mathematics students.
I greatly appreciate the opportunity to provide testimony
for this hearing and I look forward to working with all of you,
and your staff, as the Commercial Spaceflight Federation
promotes the development of this promising American industry,
pursues ever-higher levels of safety, and shares best practices
and expertise throughout the industry.
[The prepared statement of Mr. Lopez-Alegria follows:]
Prepared Statement of Captain Michael Lopez-Alegria, USN (Ret.),
President, Commercial Spaceflight Federation
Introduction
Chairman Nelson, Ranking Member Boozman, and Members of the
Subcommittee, thank you for inviting me to testify on behalf of the
commercial spaceflight industry.
Last month, SpaceX launched a Dragon spacecraft atop its Falcon 9
rocket to the International Space Station (ISS), successfully
completing the demonstration phase of its Commercial Orbital
Transportation Services (COTS) agreement with NASA. For the first time
since the Space Shuttle retired last year, the world watched as
Americans accomplished a new achievement in space. People across the
country cheered when Dragon launched, berthed and landed safely, and
all of us here joined them. With the Shuttle orbiters headed for their
final homes, Dragon showed the American people that America's
leadership in space is alive. By partnering with commercial spaceflight
companies for cargo and crew companies in addition to its other great
work, NASA continues to do great things.
At the same time, many other companies are making progress here on
Earth and in the skies, using similar, innovative partnerships with
NASA. Two days before Dragon was unberthed from the Space Station to
return home, Sierra Nevada Corporation flew its winged Dream Chaser
vehicle for the first time in a captive carry test. Not long before,
another commercial aerospace company, Boeing, tested its CST-100
capsule by dropping and landing it with parachutes and airbags. The
Commercial Crew Program is moving forward rapidly, and we expect to see
more exciting accomplishments in the months to come.
In the suborbital arena, many companies are competing to be the
first to launch a reusable vehicle to space since SpaceShipOne,
including Armadillo Aerospace, Blue Origin, Masten Space Systems,
Virgin Galactic and XCOR Aerospace. The reusability and quick
turnaround of these vehicles will offer frequent opportunities for
scientists and the interested public to launch to space on a regular
schedule, on safe and reliable vehicles, for a relatively affordable
price. This will improve the value of research conducted on other
platforms while transforming STEM education. In addition, these
suborbital vehicles will speed learning and likely form the basis for
fully reusable orbital systems that hold the promise to fundamentally
transform the space industry.
The Commercial Spaceflight Federation is the industry organization
for the companies that are competing in these new space races,
companies that are working to make commercial human spaceflight a
reality. The Federation's members are spaceports, vehicle builders,
launch services providers, robotic explorers, suppliers and many others
that are building a web of commercial activity in space. The industry
is concentrated in the United States, and builds on two venerable
American traditions: our entrepreneurial and inventive spirit,
epitomized by heroes like Benjamin Franklin, Orville and Wilbur Wright,
and the many creators of the modern Internet; and our half-century of
leadership in human spaceflight, from Mercury, Gemini and Apollo to the
Space Shuttle and the International Space Station.
These companies are made up of people who are passionate about
space, who were inspired by NASA to reach for the stars, and who are
living their dream: To open up space to the American people, and help
NASA explore the solar system. Across the nation, we have seen how our
excitement engages young people, giving them pride in their country and
encouraging them to enter Science, Technology, Engineering and
Mathematics disciplines.
On behalf the members of the Commercial Spaceflight Federation, I
would like to provide this subcommittee with our observations and
recommendations on the following issues: commercial partnership in NASA
programs; the importance of extending the current risk-sharing regime;
and overall commercial space regulation as it relates to the safe,
efficient growth and promotion of the industry. Finally, I will discuss
several market sectors that will benefit from safe, reliable U.S. space
transportation capabilities and provide the basis for future market
growth.
NASA Programs
When Dragon was berthed to the Space Station last month, the media
declared the dawn of a new commercial space age. Those who have been
paying attention know that this is not the true beginning, but perhaps
the end of the beginning. SpaceShipOne flew in 2004, winning the X
Prize and sounded the starting gun for a new suborbital space race.
NASA started the COTS program in 2006 to develop a reliable and
affordable American capability to resupply the Space Station through
public-private partnerships codified in Space Act Agreements. Congress
supported and funded the program, displaying faith in America's
tradition of ingenuity, invention and competition.
Those who work on complicated NASA programs often must overcome
tough technical and organizational challenges to achieve their goal.
The COTS program has proven that complex tasks can be accomplished with
Space Act Agreements, offering NASA a new tool that it can deploy in
other areas. NASA's projects are generally big--big ideas, big
vehicles, big teams and big costs. Because Space Act Agreements are
milestone-based, companies are only paid when they perform and NASA is
able to remove a company for not progressing according to those
milestones. Because they are fixed-price, the cost of schedule delays
is borne by the companies, rather than the taxpayers. The success of
the COTS program shows that a lean team can accomplish a big mission,
and has set the stage for commercial companies to move beyond hauling
cargo to carrying crew.
NASA's Commercial Crew Program is also a public-private partnership
with commercial space companies that utilizes competition to develop
safe, affordable, and reliable systems to carry astronauts to and from
the ISS and relieve our reliance on our Russian partners. As the
program has progressed, NASA has worked with Congress to plan its full
arc, culminating in an outline for the program that preserves
competition while ensuring that NASA has the insight it needs to
certify the vehicles to carry NASA astronauts. The companies in this
competition believe that with appropriate funding and management, they
can fly crew to the ISS by as early as 2015. We hope that with a shared
agreement on the program plan, Congress will see fit to fund the
Commercial Crew Program as close to the President's request as
possible. Every year that the Commercial Crew Program is delayed or its
milestones prolonged due to funding, NASA sends approximately $400
million to Moscow. Keeping this domestic program strong will reduce our
dependence on aging Russian infrastructure, protect our investment in
the ISS, fully realize the its potential, and create jobs here at home.
At the same time, NASA is working hard with another sector of the
industry--the suborbital vehicle builders. Companies like XCOR
Aerospace, Virgin Galactic, Masten Space Systems, Blue Origin, and
Armadillo Aerospace are racing to safely and efficiently launch
scientists and citizens on reusable vehicles that can reach the edge of
space. These vehicles will provide high-quality microgravity and access
to the upper atmosphere at a reasonable price for scientists across the
country, and a life-changing view of the Earth and weightless
experience for participants.
NASA's Flight Opportunities Program has agreed to purchase flights
on these vehicles for scientists and engineers who have experiments
that require microgravity or access to space. Because suborbital
launches will be flexible, safe, affordable and frequent, they offer an
opportunity to perform scientific experiments that otherwise wouldn't
fly and test instruments in real environments, supplanting ineffective
ground or expensive flight testing, and developing new technologies
faster.
By making a small commitment through the Flight Opportunities
Program, NASA has provided certainty to the market and demonstrated
that suborbital vehicles are exciting new tools for science and
engineering. There has been one rocket flight under this program
already, and in the next two years we expect to see many more, out of
spaceports across the country.
Finally, NASA works with many innovative companies on specific
projects that bear great fruit for the Nation. NASA's Innovative Lunar
Demonstrations Data (ILDD) program is leveraging and incentivizing
private sector investment in exploration beyond Earth orbit, extending
a COTS-like model to lunar exploration, so that risk remains with the
private sector and fixed-price payment is made only for successful
completion of pre-determined milestones. One of our members, Moon
Express, and five other U.S. companies were selected by NASA for the
ILDD program in 2010, with the first private lunar robotic landings
anticipated in 2014 or 2015. The data from this program will contribute
to NASA's efforts to create a sustainable and affordable space
exploration program beyond low-Earth Orbit.
FAA Risk-sharing Regime
Under the Commercial Space Launch Amendments Act (CSLAA), the
industry is regulated by the Federal Aviation Administration's Office
of Commercial Space Transportation (FAA AST). FAA played an important
role in the recent SpaceX mission to the space station, licensing both
the launch and the re-entry of the Dragon spacecraft.
The CSLAA designates the FAA AST as the licensing agency for
commercial space launch and reentry. As described in greater detail
below, in order to obtain a launch license, a provider is required to
purchase insurance against possible damage to third parties that could
result from a launch or reentry. It also provides for risk sharing by
the U.S. Government should third-party damages exceed the required
insurance amount. To date, third-party claims have never surpassed the
required insurance amount; therefore, this provision has had zero cost
on the taxpayers since it was instituted in 1988.
The FAA AST's insurance requirements are based on their calculation
of the Maximum Probable Loss (MPL), which is the maximum amount of
damage to the uninvolved public that could possibly be done in any
launch or entry of the vehicle in 99.99999 percent of cases. The
company must purchase insurance up to the MPL. Above this figure, which
averages around $100 million and has a maximum of $500 million, the
Federal Government may provide additional coverage for the next $2.7
billion, dependent on expedited Congressional appropriation. If there
were to be any damage above this level, the liability would be the
responsibility of the parties involved with the launch, such as the
launcher and payload provider. The coverage provided by the CSLAA's
risk-sharing regime only applies to damage to uninvolved third parties.
It does not cover damage suffered by the launch provider, payload
provider, crew, or spaceflight participants.
This regime has been in place since 1988 and it is important to
provide certainty to the marketplace. The launch industry's primary
foreign competitors in Russia, Europe, and China receive even stronger
liability protections from their governments (see Table 1). In fact,
none of the other large spacefaring nations has a limit on the total
amount of government risk sharing. The law expires at the end of the
2012 calendar year, and in order to protect and enhance American
competitiveness in the launch market, it is important that it be
extended.
Table 1.--Liability Risk-Sharing Regimes for Various Countries
----------------------------------------------------------------------------------------------------------------
Third Party
Liability Number of Launch Licensee's Required Limit on Government
Country Insurance Tiers of Third- Party Liability Risk Assumption
Requirements Risk-Sharing Insurance ($US)
----------------------------------------------------------------------------------------------------------------
United States Yes 3 MPL, not exceeding Up to $2.7 billion
$500 million
----------------------------------------------------------------------------------------------------------------
France Yes 2 $72 million No limit
----------------------------------------------------------------------------------------------------------------
China Yes 2 $100 million No limit
----------------------------------------------------------------------------------------------------------------
Russia Yes 2 $80-$300 million No limit
(vehicle dependent)
----------------------------------------------------------------------------------------------------------------
Japan Yes 2 $42-$168 million No limit
(vehicle dependent)
----------------------------------------------------------------------------------------------------------------
*Vedda, J.A. ``The Study of the Liability Risk-Sharing Regime in the United States for Commercial Space
Transportation.'' The Aerospace Corporation, August 2006.
If the risk-sharing provision expires, American launch providers
may have to purchase additional insurance from risk-averse insurers, or
if that is not available, exit the market. In addition, this would act
as a deterrent for any new entrants into the marketplace. If these
companies become uncompetitive on the world market, high-tech American
jobs will be lost. America's share of the commercial launch market is
currently not large, but companies with competitive pricing and
reliable services are demonstrating that America can recapture
commercial launch market share that it has ceded over the last three
decades.
Because of the safety measures taken by industry, the regulations
issued by the FAA AST and the very small probability of significant
damage (1 in 10 million), the Federal Government has never had to pay
one cent in the 24 years the regime has been in place. Highly unlikely,
but damaging, risks are the hardest to insure in any insurance market,
and the space insurance market is relatively small. This creates a
potential market failure that the government can solve with minimal
risk and virtually no cost, and we encourage you to extend the risk-
sharing regime for as long as possible to provide certainty to launch
companies and customers whose plans are often made years in advance.
The Government Accountability Office (GAO) has suggested certain
changes to the calculation of the MPL. We have no objection to making
modifications to that calculation, and look forward to working with FAA
AST and Congress to accomplish that, as long as the benefit outweighs
the cost. It should be noted that there are many endemic uncertainties
in the calculation of any loss of this type, and an exceptionally
detailed analysis could be an unwise use of taxpayer funds if it leads
to no more precision in calculating the MPL.
Regulation
Over its two decades of existence, the FAA AST has appropriately
focused its efforts on promoting the commercial space industry,
protecting the uninvolved public from harm and encouraging continuous
safety improvement throughout the industry. CSF has worked closely with
the agency to make certain that vehicles are safe for participants and
the uninvolved public. AST has issued several regulations to improve
safety, and we are developing industry consensus standards to ensure
that best safety practices are shared throughout the trade.
Congress passed the Commercial Space Launch Amendments Act in 2004,
which directed the FAA AST to issue regulations to protect third
parties and the crew of any manned vehicle, and established an informed
consent regime for spaceflight participants. In the absence of specific
data indicating a safety risk, the FAA AST was constrained from
regulating for passenger safety ``in the dark,'' until an eight year
learning period had passed. That learning period was broadly supported
by the Congress for good reason--to enable a new industry to mature,
and to provide the regulator with real-world data on which to base
sound regulatory policy.
Many observers expected there would be many commercial human
spaceflights by the time the learning period expired in 2012, which
would allow FAA to regulate with a robust set of data about safety.
Unfortunately, the industry did not develop as quickly as expected,
largely due to industry behaving with extreme caution and developing
safe systems prior to any flight. Consequently, no commercial human
spaceflights have occurred since 2004, providing no data on which to
develop sound regulatory policy. For this reason, we thank Congress for
acting in January to extend the learning period through October 1,
2015, with an eye toward restoring the original intent of the learning
period provision.
Despite the passage of time, the concerns that led to the
establishment of the learning period are still valid. There are no hard
data from commercial human spaceflights on which to base regulations.
Spacecraft designs are in flux, and regulations would be very difficult
to draft in a way that would not eliminate some potential designs, most
of which are impossible to evaluate at this point. In addition, in a
nascent industry like commercial spaceflight, safety lessons are
learned and applied rapidly, and regulation could easily fall behind.
These factors mean that regulation should be data-driven and careful, a
conclusion that has been implemented in the establishment of the
learning period.
We share a concern with FAA AST that the end of the learning
period, whenever it may come, represents a drastic change in regulatory
environment. Recently, based on continued requests from CSF and in
compliance with Congressional report language, FAA AST has started to
provide industry with information on the general approach that it is
planning to take toward regulating for spaceflight participant safety
when the learning period expires. We support those efforts
wholeheartedly and look forward to ongoing conversations with FAA AST
and Congress about our common goal of protecting spaceflight
participants, crew and the public. We also encourage FAA AST to work
with us to share data that they have gathered on safety issues with the
industry, in a form that does not compromise confidential or
proprietary information, so that best practices can be quickly and
effectively spread throughout the industry.
There are other existing regulations that have a detrimental impact
on American aerospace companies and our national security. The
International Traffic in Arms Regulations (ITAR) have been ripe for
reform for many years, and the House recently took the first step in
that direction by including a provision in the National Defense
Authorization Act of 2012 that would allow the President to remove
communications satellites and other related technologies from the U.S.
Munitions List so that they could be more appropriately regulated
through the Department of Commerce.
Over the last decade, much of the commercial space launch business
has moved overseas. There are many reasons for this, including
subsidies from foreign governments, but ITAR has also played a major
role. The U.S. market share of satellite exports has decreased from 75
percent in 1995 to 40 percent in the last decade since the regulations
went into effect. Returning some of that business would not only
strengthen our defense industrial base but restore the U.S. market
share and ultimately result in the creation of high-tech jobs here in
America.
Therefore, we strongly support efforts to reform ITAR by returning
to the President the ability to move satellites and related items from
the U.S. Munitions List to the Commerce Control List, where they can be
more appropriately regulated as dual use items. We particularly support
the immediate removal of commercial space items, such as manned
suborbital vehicles, from the Munitions List, and we look forward to
working with Congress and the Executive branch to create an export
control regime that better protects our national security and keeps
high-tech jobs here in America.
Federal Government Demand for Commercial Services
The International Space Station is an invaluable resource to the
science and research community if it is fully utilized. It will also be
an important market for both commercial launch service providers and
researchers. Current NASA plans involve the purchase of six seats per
year aboard Soyuz flights to the ISS at a cost of about $400 million
per year. The result is that at any one time there are three Unites
States Orbital Segment astronauts available to perform utilization
tasks in addition to their other duties.
Due to the necessity of performing spacecraft operations,
maintenance and other tasks, these three crewmembers are having a
difficult time achieving the NASA target of 35 research hours per week.
Indeed, a November 2009 GAO report cited ``limited crew time as a
significant constraint for science on board the ISS.'' The ISS is
outfitted and will be provisioned to increase its full time crew
complement from six to seven. The fourth USOS crewmember will
dramatically increase the research capacity of the ISS.
All of the vehicles being proposed in the Commercial Crew Program
have the capacity to carry seven crewmembers. While four would remain
aboard as long duration astronauts, there are many options under
consideration for the remaining three seats: They could be used for
short duration sortie missions by NASA or other international partner
astronauts; they could be likewise filled by highly specialized
researchers in a program akin to the use of payload specialist aboard
the Space Shuttle; they could be filled with science-related up-mass
that is critical to onboard research; or they could be sold to non-
professional space flight participants to offset the costs to NASA. The
realization of cost-effective and reliable commercial service to the
ISS will provide NASA with myriad flexible options to optimize the
utilization of our national orbital asset.
NASA Administrator General Charlie Bolden testified in March that
he expects ISS to operate past 2020 and that conversations were already
under way with international partners on this topic. Equipment
reliability aboard the ISS has surpassed engineering expectations, and
there are no immediate maintenance concerns that could require
deorbiting. NASA and our international partners have yet to identify
any technical reason the ISS would need to close down before 2028.
Given the large investment the American taxpayers have made, we support
measures to preserve and extend the ISS and believe that there will
continue to be an ISS commercial crew market beyond 2020.
In addition, regardless of the long-term fate of the ISS, we
believe that NASA and other government agencies will have a long-term
need for cost-effective, reliable and safe crew and cargo access to
low-Earth orbit. Two hundred years after Lewis and Clark set off to
find the Northwest Passage, the Federal Government continues to require
the services of geologists, naturalists and other scientists in the
Western states. We expect that NASA and the rest of the Federal
Government will similarly continue to have a need, and as prices drop
and volume increases, those markets will grow.
Finally, suborbital spaceflight companies will also provide
services to the Federal Government, from testing of components that
will later fly on high-value missions for NASA or DoD, to science
experiments that test microgravity regimes that are otherwise much more
expensive to achieve. And these examples are just the start--as the
capability arises, many more may arise. As one example, in 2007 NASA
Administrator Michael Griffin said, ``If I was still at the helm of
NASA when [suborbital spaceflight] became available, I would guarantee
you that we would use it to begin entry-level training of astronauts.''
Other Demand for Commercial Services
Historically, space has been the domain of science, defense and
communications. Scientists have been studying the Earth, the solar
system and the universe, through spacecraft for decades, but in many
ways that study has only just begun. Scientists at universities and
research centers across the country are interested in flying
experiments, interplanetary probes and satellites to space. Scientists
in countries that do not have active space programs have wanted to fly
missions to space for years, but have had little opportunity.
Furthermore, a 2010 Avascent study found that astronauts from only
50 of the world's 195 nations have gone to space, and very few of those
nations have had continued access. But many nations and companies see
astronauts and space research as valuable commodities, and they
represent a largely untapped market for commercial space. These
customers are interested in access to space for scientific and
industrial research, but also for public relations, advertisement and
other purposes.
Over the last decade, private astronaut access to space has become
a reality. Space Adventures, a member of the Commercial Spaceflight
Federation has sold several trips to the ISS on Russia's Soyuz rocket
to private individuals. In fact, every additional seat available on the
Soyuz has been sold, with unfulfilled demand, even as the price has
increased over the years. As our members develop an American commercial
crew capability, and plans for private on-orbit facilities progress, we
expect that market to flourish. According to a market analysis
performed by Futron in 2010, 60 percent of surveyed individuals are
more likely to fly on a more convenient American vehicle than the Soyuz
alternative.
On the suborbital front, the Southwest Research Institute, another
CSF member, has purchased six seats on suborbital vehicles, with
options for more, to allow researchers to perform experiments that
would otherwise be unattainable. Other researchers have expressed great
interest as well, with more than 400 people attending the Next-
Generation Suborbital Researchers Conference in February. Competitors
in the Google Lunar XPRIZE competition, who are planning to return data
from rovers on the Moon, are also looking for rides to space. As
capabilities increase, flight rates rise and prices fall, we expect a
great deal more interest.
The commercial satellite market is an international market with
many billions of dollars in revenue each year. Historically, satellite
providers have only been able to choose from a limited set of
commercial space capabilities, primarily launch and on-orbit maneuvers.
However, as new techniques emerge from the commercial space sector, we
expect the commercial satellite industry to become a customer for a
wider set of services.
Spaceflight has a unique ability to inspire students, and
commercial spaceflight offers the opportunity to open space to a large
population of young people as prices for small experimental payloads to
suborbit may be just a few thousand dollars, well within reach for
foundations and even school districts. With frequent, recurring flights
to space, citizen-astronauts could be teachers and mentors to countless
pupils and more students could have a role in an experimental payload
that flies to space. Many education programs could be birthed from
safe, reliable flights to space, stimulating the next generation of
STEM students.
The first airplane companies could not conceive of the many uses
that their vehicle would one day be put to, uses that now include rapid
package delivery and commuting to work. An early computer pioneer named
Howard Aiken said in 1952, ``[o]riginally one thought that if there
were a half dozen large computers in this country, hidden away in
research laboratories, this would take care of all requirements we had
throughout the country.'' Clearly, we do not have certain knowledge in
any detail of the markets that will emerge for the commercial space
industry. What we can say is that the currently available markets for
government and private access to space are large enough for a
successful industry and that there are many possible avenues for
growth.
Many of our member companies were founded by experienced business
leaders who have led highly successful companies involved in many
sectors of the economy. They have invested a large amount of their
capital into these businesses. If they did not believe there would be a
market outside of the government, that level of investment would be
unlikely. It is difficult to predict several years ahead what the most
important sector of an emerging market will be, and it is likely that
our members have somewhat different opinions on each sector. However,
we believe that markets have been demonstrated to exist and that they
will grow rapidly as capabilities increase, volume increases and prices
are reduced.
Conclusion
The last month has been an important one for commercial space, with
successes and exciting new announcements across the industry. I greatly
appreciate the opportunity to provide testimony for this hearing and I
look forward to working closely with all of you and your staff as the
Commercial Spaceflight Federation promotes the development of this
promising American industry, pursues ever higher levels of safety, and
shares best practices and expertise throughout the industry.
Senator Nelson. Thank you all. This is very good.
This is an important time for us to have this hearing
because we are in the state of change from a reliable system of
the Space Shuttle now bringing in commercial but, in parallel,
continuing NASA's mission of exploring the heavens, of getting
outside of low-Earth orbit. And it is all coming into the
consciousness of the American people. The success of SpaceX, as
we already mentioned, and on July 2, the first piece of flight
hardware for the big rocket arrives, and it will be arriving at
the Kennedy Space Center and will be assembled. And its first
test flight will occur in 2014. And of course, this is NASA's
program that they refer to as the space launch system with the
capsule being dubbed Orion. So this is a very important time
that we get it right and that the success that we have had thus
far is quite promising.
I am going to ask just a couple of questions and turn it
over to my colleagues and I will wrap up.
But, Mr. Gerstenmaier, since you all rotate three
astronauts to and from the station every 6 months--most of
these commercial vehicles are designed to hold seven people. So
how many commercial crew flights per year is NASA planning to
buy, and how many seats will NASA make use of on each flight?
And then I want to talk to you about how much cost savings that
you are looking for that we are going to achieve per seat over
and above what we currently pay to the Russians on Soyuz.
Mr. Gerstenmaier. In terms of flights to ISS, we are
anticipating staying with the rotation period of about 180 days
as we have had. So that would be about two flights per year. We
would definitely increase the crew size on ISS to seven crew
members. We currently have six crew members on ISS. We would
add one more. The Space Station was designed to operate at a
full complement crew of seven. We think that will increase the
research capability on board station, allow us to do more
national lab research and be more effective in utilizing the
Space Station. So we will definitely use four seats from the
commercial providers.
In terms of the other seats, we are still off investigating
what makes sense. Would it be better to carry some cargo in
those seats? Would it be better to carry crew, other
participants? Could we do other things with those? We are still
off investigating what the right mix is.
We are also exploring a little bit what the right duration
is. We may do some extended missions on board Space Station on
the order of a year or so, and that is to gain some experience
with the kind of durations we may need in space for Mars-type
missions.
So we are still off looking at those exact numbers, but I
would say we are on the order of about two flights per year
with a confirmed four seats on those flights. And then we are
looking at how we could use those other seats effectively.
In terms of prices, we are still working that through the
commercial crew program. We will see what the commercial
providers come in at. We have budgeted the seat price at
roughly what we pay for the Soyuz activity. That is just a
budgeting number. That is not what we expect the seats to cost.
We expect there to be a cost reduction, but I think it is a
little too early for us to pick a particular value for that
cost reduction.
Senator Nelson. In light of Mr. Gold's experience of going
and finding a much cheaper rocket, do you expect those costs to
come down considerably? In his case it was cargo. In your case
we are asking the question about crew.
Mr. Gerstenmaier. Again, I believe the prices will be
cheaper than what we will have to pay for the Soyuz vehicle in
terms of seat price. Exactly how much that is a function of the
design, the ops concept, and all of the work that comes in
front of us. So, you know, we have got a lot of work in front
of us. We put our safety requirements out for the commercial
providers to go look at. We are in the middle of this
commercial crew capabilities activity where we are going to go
on to the next phase of SpaceX with some providers to move
forward. And until we really get a chance to see what those
numbers are, it is tough to speculate exactly what that delta
will be, but I expect it to be less expensive than Soyuz.
Senator Nelson. Under what appears to be going to be the
number coming out of the NASA appropriations bill for
commercial crew, $525 million, with a down select to two and a
half competitors, when do you think that with $525 million --
what is the realistic time that we will first launch crew? Is
it 2016?
Mr. Gerstenmaier. What we have done is in the President's
budget, which we have submitted to you where we show
essentially a higher number in 2013, but say, if we just had
the $525 million in 2013 and then we had an increase in the
following years, in 2014, 2015, 2016, and 2017, if we get that
increase similar to what the President had requested and what
we have requested in our submit to you, if we get those kind of
levels, we think we would have crew available in the 2017
timeframe. Some of our providers think they can deliver crew
earlier than 2017. We have heard estimates as early as
potentially 2015. But from a NASA perspective, we kind of have
to protect for the worst case. So we want to make sure that we
have looked at the outer bounds of that so if there are
schedule delays or problems that have occurred, which are
routine in our business--as you can see, even with cargo some
of the flights are a little later than the commercial companies
had projected. But we are protecting for that 2017 date with
the hopes that the commercial providers can do better than that
and deliver earlier than the 2017. But we will need funding on
the level of what we have asked for in the President's request.
Senator Nelson. It is true that some of the competitors are
saying that they could go earlier. Whether it is 2015 or 2017
and being able to deliver seven crew members, then I think the
obvious thing is that you get around to 2020 and the Space
Station is not going to be deactivated.
Before I turn it over to Senator Hutchison, would you just
reaffirm for everyone that they understand some of the
magnitude of the experiments that are going on on the Space
Station such as a vaccine for salmonella that is in its final
FDA trials here on Earth that was developed on board the
properties of near 0 G on the station and a vaccine for MRSA
that is in its first stages of FDA trials here on Earth? Would
you confirm or expand on that?
Mr. Gerstenmaier. One of the unique properties we see in
space is that viruses and bacteria mutate into a variety of
forms in space. And we are not exactly sure why that occurs. We
have some researchers that are looking at the phenomenon, why
it occurs. But the industry is potentially able to take
advantage of that because you get a variety of salmonella that
can then be returned to the Earth. They can then look at that,
determine which genes get turned on, and then essentially
modify that salmonella such that it is strong enough to cause
an immune reaction in a human system but not actually give you
the disease. So, therefore, you are able to create a vaccine in
a much shorter amount of time than you could ever in ground-
based research because you take advantage of the fact that you
end up with a whole variety of virus and bacteria.
As you discussed earlier, it also can apply to MRSA, to
other things, to influenza viruses, et cetera. So this offers a
potential avenue of a way to get better pharmaceutical or
better drug productions for us in general. So it is much like
when we went to Africa to look for new plant species and things
to create new drugs. We are now using the unique properties
that these viruses and bacteria do in space to essentially
create a new industry.
There are also areas in materials, combustion, other areas
that will have the same promise, and our intent is to try to
expose commercial industry to these properties, let them
understand for their individual industries what the benefits of
space-based research are. Then this essentially creates
potentially a new economy based on space-based research which
could have dramatic impacts. And that is the ultimate goal of
what we are trying to do at station over these next several
years.
Senator Nelson. And I bring that attention to that subject
because many people have missed that very good piece of news of
what is happening on board the Space Station where six humans
are right now. And it is timely that you spoke of that, Mr.
Gerstenmaier, because when we adjourn this hearing to go vote
at 11:30, this very same topic is the topic of discussion with
two astronauts that have been on the Space Station and this
will occur in the Rayburn foyer at 11:30 this morning.
Senator Hutchison, I want to turn to you.
STATEMENT OF HON. KAY BAILEY HUTCHISON,
U.S. SENATOR FROM TEXAS
Senator Hutchison. Thank you very much, Mr. Chairman. I
certainly appreciate your continued interest.
Senator Boozman, I have to say you have stepped up to the
plate and done your homework, and I appreciate so much the good
job you are doing as ranking member.
Senator Nelson. And I just want to say so that everybody
understands how much we are going to miss Senator Hutchison.
She is the reason that there is a designated national
laboratory on the Space Station, and she has been consistently
the promoter of the International Space Station, and the next
hearing that we have in this subcommittee will be on that
subject. Thank you.
Senator Hutchison. Well, thank you.
Let me say that I was very excited, as I know everyone was,
with the SpaceX, the Dragon success. That just is a wonderful
milestone. To get equipment and payload to the Space Station
and dock is wonderful.
And what I would have said in my opening statement, which I
will put in the record--but we are paying a heavy price for the
Russian Soyuz spacecraft. And the reason that we are paying
hundreds of millions of dollars--and it will be in the billions
before we are finished--is because we were not able to fund
adequately to close the gap for a commercial crew vehicle
following on to the shuttle retirement. We knew it was coming.
Senator Nelson and I worked in every way possible. We have
worked with three administrations, and we have never had the
adequate support to plan ahead and not have the gap that is
here.
I do not want that to happen again as we are looking
forward, which NASA, as our space exploration agency, should be
doing. We know what the next mission is going to be. We do not
know what we are going to be finding, just like we did not know
when we went to the Moon what we would find exactly and what we
would gain from it. And the gains have been enormous, which we
know.
But now we know that we have got to utilize the Space
Station. We believe that commercial is the way to do it in an
efficient way to put people there to do the experiments, and
the Space Station will be our major focus until at least the
year 2020.
But we know that after that, the next horizon is beyond
low-Earth orbit. And what Senator Nelson and I have tried to
do--and Senator Boozman has been so helpful--is to assure that
we are not shortchanging the future by only focusing on the
present and having the same thing happen where kids start
saying, well, gosh, why are we giving up space exploration in
2020 because everything is shut down because we did not look to
the future?
So here is my question, Mr. Gerstenmaier. You are the one
that, I think, does have a vision for what we can and must do
for the future beyond low-Earth orbit. Can we be assured going
forward that the allocations for NASA will adequately fund the
crew vehicles to use the Space Station and hopefully--I cannot
wait to find out what the alphamagnetic spectrometer might
bring us, having seen the hits myself at Johnson Space Center.
Can we, though, be assured that NASA will fully fund the
commercial crew vehicle and the commercial efforts up to that
time and also continue the progress so that in 2020--well,
before 2020, but in 2020 when the Space Station will possibly
go away that we will have a fully ready-to-go, heavy launch
vehicle with a capsule on it for astronauts, that we will have
a mission ready so that we are not going to see what happened
frankly this year, when they took the exact amount out of heavy
launch and put it into commercial.
Now, we rebalanced that. We are going to fully fund
commercial, and with the down select to two, we will do that.
And I know Congress, with the leadership of Senator Boozman and
Senator Nelson going forward and the other people who are going
to be coming into Congress, are going to want to do the same
thing. Will NASA do that kind of balanced budgeting going
forward rather than this constant pull as if there is a
competition between the present and the future? Mr.
Gerstenmaier?
Mr. Gerstenmaier. I am responsible for human spaceflight,
and what I mean by human spaceflight is it is both. It is the
commercial aspect and it is also the vehicles that go beyond
low-Earth orbit, the Orion and the heavy lift launch vehicle.
And within the tight budget constraints, it is my job to
balance those, that we deliver programs in a timely manner that
best serve what we need as a Nation. And we are working really
hard to go do that.
As Senator Nelson talked about earlier, the final weld is
occurring today on the Orion test capsule that will be used in
2014 to go be the first vehicle to return at 80 percent of the
lunar velocity into the atmosphere to make sure that works.
That is going to get delivered to Florida on July 2, as he
talked about. That final weld is actually occurring in New
Orleans today and the teams are being careful with that weld,
and if they need to take a little extra time, they may. And we
may have to do something with July 2, but we will do the right
thing overall. But the teams are really focused and moving
forward.
We just completed a systems design review for the heavy
lift launch vehicle. We are starting to lay out the plans to
get that work done. We are going to test that vehicle down at
Stennis in December 2016 in support of its first flight in
2017. We now, for the first time, have detailed schedules laid
out. We know when the first drawings for that heavy lift launch
vehicle need to be delivered, and those drawings start being
released in August of this year.
So we have real concrete plans to keep moving the Orion
forward, move the SLS forward, and with your help for funding,
we will keep all these programs moving forward as well as
commercial crew.
And it is not about one or the other, as you very
accurately described. Human spaceflight is about all of these,
and we need to work as a team to pull this off to make this
happen so we can continue to be a leader in space and continue
to be where we are. So we treat it just as you describe. This
is a package. There is a role for commercial spaceflight in
low-Earth orbit. There is a role for us beyond low-Earth orbit.
We need to find that balance to move those forward to keep
human spaceflight in this Nation strong.
Senator Hutchison. Well, thank you. That is a wonderful
answer. And I just hope that there will no longer be budget
proposals from the President, whoever that will be next year,
that will appear to cut back on the future and fund the present
because we have an authorization bill that assures both. We
support both. I am going to see the SpaceX operation in Texas
in July. I am very excited about it. I do not want to see next
year another instance of what we saw this year, Mr.
Gerstenmaier, and I just hope that we can see that commitment
on the part of NASA and the President's OMB. And believe me, I
did not like what OMB did in the last administration or the one
before that either. So I am balanced in my disappointment in
this commitment, but since you are here now, I do hope that you
will assure that the budget that comes from the President's
office will reflect what you and I have both said is our goal.
And I know that the two Senators here agree.
Thank you very much.
Senator Nelson. Well, thanks to you and Senator Mikulski
and Congressman Wolf and Congressman Fatah, you all have
basically kept NASA's appropriations level while every other
agency is feeling the effects of the increased austerity that
we have been facing as a result of the budgetary problems. So
again, we thank you, Senator Hutchison.
Senator Boozman.
STATEMENT OF HON. JOHN BOOZMAN,
U.S. SENATOR FROM ARKANSAS
Senator Boozman. Thank you. And again, I just want to echo
that is such good advice--and it is just difficult in these
tough fiscal times--of the statement about do not shortchange
the future, you know, as you focus on the present. And again,
you two have worked so hard to make sure in this particular
case that that is not being done. And that has been a real
challenge.
Let me ask something that I would like to get your all's
opinion on real quick, and I think this is important. While the
U.S. cooperative programs with Russia were expanding in the
1900s, including Russia joining the Space Station International
Partnership in 1993, it also became clear that Russia was a
source of sensitive technology to Iran. The Iran
Nonproliferation Act of 2000 was enacted to help stop foreign
transfers to Iran of weapons of mass destruction, missile
technology, and advanced conventional weapons technology
particularly from Russia.
One of the things that that Act did was to ban payments by
any agency of the U.S. Government to Russian Government
agencies for work on the International Space Station. This
provision has raised difficulties regarding U.S. access to the
Space Station. In 2005, Congress amended the act to exempt
Soyuz flights to the Space Station from the ban through 2011,
and in 2008 the exception was further extended through June
2016.
It has been said that without further extension of this
exception the current restrictions will severely limit the U.S.
from sustaining and fully utilizing the Space Station. The
United States would have no means of transporting our
astronauts to and from the Space Station, and equally
important, relief is needed to clearly enable NASA partnerships
with some U.S. commercial partners for Space Station crew and
cargo services that utilize Russian space technologies.
So with the planned extension of the Space Station
operations to at least 2020, it seems that an extension beyond
2016 is needed.
So can you comment on that and just kind of clarify your
thoughts and where you think we need to go in that regard? I
will start with you, Mr. Gerstenmaier.
Mr. Gerstenmaier. As I have previously testified here, I
think we will likely require some exceptions to the Iran, North
Korea, Syria Nonproliferation Act as you described. We need
that for a variety of activities. We do basic engineering with
the Space Station and other activities of which we have to pay
for or we even barter for services, and we will likely need
some relief for that restriction that sits in front of us.
Senator Boozman. And what would be the consequence if we
did not get the relief?
Mr. Gerstenmaier. We would still have to work with our
partners. The way we understand the restriction is it also does
not allow us to barter. I think it says for goods as well as
funding. So we barter for a lot of engineering analysis and
other things. We would not be able to have the support that we
need to operate the Space Station without some relief to that
Act. And we will still continue to work with our Russian
partners. Maybe they would donate that engineering service and
that research service without bartering for it. I do not know
if that is the case or not.
It goes back to, I think, some earlier testimony that was
given down here. The commercial folks really need some
certainty of where they are going and to be forward, and to sit
there with this uncertain thing going forward I think
potentially impacts the ability for use ISS in the most
effective manner.
Senator Boozman. So the uncertainty is as much a problem as
anything.
Mr. Gerstenmaier. Yes, because I think we could debate
whether we could work around this in some way. There may be a
way legally to get through it. It will take us a significant
amount of time to do that, and while we are going through that
period, there is a fair amount of uncertainty with that. But
they might be better able to address it from their perspective.
Senator Boozman. Ms. Melroy?
Col. Melroy. Thank you, Senator. We have been informed of
the same things that Mr. Gerstenmaier has said. Industry has
also told us the same things, and we support our NASA
colleagues in this.
Senator Boozman. Dr. Dillingham?
Dr. Dillingham. That issue is something that we have not
looked at at this point in time.
Senator Boozman. Mr. Gold?
Mr. Gold. Our company has, of course, conducted extensive
operations in Russia, and if I could just add some fuel to the
fire of your concerns, I think we also have a broken export
control regime. Mr. Gerstenmaier correctly points out
uncertainties. We never knew what to expect relative to
technology that we could share or could not share. Our export
control system is obsolete and counterproductive. Second only
to gravity, the ITAR had the greatest potential to keep us from
launching, and we need to get reform language into the National
Defense Authorization Act to take care of this issue so we can
protect our technology in a better fashion.
Senator Boozman. Yes, sir?
Mr. Lopez-Alegria. Senator, it is clear that we are quite
interested in providing Commercial Crew services to the ISS
and, therefore, we sort of need the ISS to be there for us. So
it appears that the current legal thinking is that some relief
will be required for NASA to be able to pursue that. Excluding
perhaps the Russian Soyuz, or even not thinking about the Soyuz
situation, there are some other things that are important for
the survival of the ISS. So even leaving that part out of the
equation, we support whatever is necessary to ensure future use
of the Space Station.
Senator Boozman. Very good.
Dr. Dillingham, I think Mr. Gold referred to you as kind of
the final authority on some of these things. Tell us about--can
you update us on the status? You know, we have been talking
about indemnification. I think everybody on the panel has
mentioned that. You have had some recommendations to the FAA
regarding the process. Can you give me a further update on what
is happening with your recommendations?
Dr. Dillingham. Yes, Senator. We looked at the insurance
regime, and as we talked to many people in the industry--the
launchers, the launch providers, and FAA, and it was clear that
third-party indemnification is very important for the industry
to mature and move on in that area.
One of the things that we had discussions with FAA about
was the maximum probable loss calculations and the way that is
currently done by FAA because it has an effect on the potential
liability for the Federal Government. If it is done one way,
there could be more liability for the Federal Government. If it
is done another way or done incorrectly, in any case, it could
cost more for launch companies.
And FAA agrees that their maximum probable loss calculation
is rather dated, and they also agree that it is something that
they would like to update to more modern techniques so that
they could be more definitive in the insurance and the risks
that the Government would be exposed to. And they also, of
course, indicate that it is not going to be free to do that. So
the indemnification regime is important. However, that part of
it, we think, is something that needs to be relooked at after
all of these years.
Senator Boozman. Should we extend it before your
recommendations are put into effect?
Dr. Dillingham. I think so. You know, we did not talk to
anyone in the industry who said that this is something that
should not be extended. Indemnification is present in all of
our competitors around the world. You have heard the captain
say this morning--and we heard it several times in our work--
that in terms of competition, without that, it could have a
potentially negative impact on our ability in a competitive
way, raise the cost of launches, send business across the
water, and impact our national defense as well and our
industrial base. So, yes, it is very important. We did not get
any strong sense that it should not be extended.
Senator Boozman. So we should extend, but this would be a
good time to clean it up a little bit.
Dr. Dillingham. Exactly, sir.
Senator Boozman. Thank you, Mr. Chairman.
Senator Nelson. Thank you, Senator.
Just a passing comment on that indemnification. For the
commercial companies--and this started way back in the 1980s
when we were first trying to get some commercial activity--
companies have to know what they can buy insurance for. And if
they know that, given the fact that there is always a
possibility, albeit remote, that you could have a catastrophic
event on an urban population, extremely remote with all the
safety that is put into the launching, but if they know that
they have to buy insurance to protect them for catastrophic
insurance up to a billion and a half and that the Government is
going to indemnify them on any catastrophic thing above a
billion and a half, then that is a cost of doing business that
commercial companies can figure into their overall cost. And
that is why we have simply got to continue this.
I want to get back to you, Mr. Gerstenmaier. NASA did a
contract for cargo resupply way back in 2008, long before
anyone had demonstrated the capability. This is in a previous
administration. So it has nothing to do with the orientation of
any particular administration. And now, having spent $800
million in the demonstration flights for cargo, NASA has paid
almost $1 billion under the ISS cargo resupply contract even
though we have not actually had the official start of the
contract. And that would come later, presumably this year, with
another SpaceX launch successfully delivering cargo. And
Orbital Sciences does not even yet have a working launch pad.
So why is the Government making these payments and what is the
services that NASA has received?
Mr. Gerstenmaier. This is pretty typical of most of our
launch contracts, even for our expendable launch vehicles. If
you look at the payment schedule, after we give authority to
proceed to a contractor, generally the payments occur with
certain milestones, for example, when hardware is ready at some
state to move forward, et cetera. So our commercial resupply
services contracts are the same way. There are certain
milestones, certain design reviews, certain activities that
occur for preparation of which they are paid. And it turns out
the majority of the funding is actually paid before the actual
launch occurs. And then when the launch occurs, the final
payment typically occurs. That is typical throughout our
industry, and that is the way we have done things. That is the
way the CRS contracts are started and the way they are
structured.
So we have gotten positive work on these. If you go look at
Orbital, for example, you can see what work is actually down
there. They have several launch vehicles ready. They have a
fleet of engines ready to go supply and support. They have
their Cygnus capsule on board or down in Wallops ready to get
launched. It has been through thermal vacuum testing. They have
done a significant amount of work building a control center in
Reston to monitor that activity. So they have spent those funds
and are essentially preparing for this activity to deliver
cargo.
The unfortunate thing in our business is it takes a long
time for us to get ready. So we really have to start with these
kind of lead times, typically 3 to 4 years, to do earnest work
before we are ready to actually go deliver the activity or the
service we want out the other side.
We started the CRS contracts when we did because we knew
the shuttle was going to retire in the 2010 timeframe at that
point. And if we were going to be able to keep Space Station
resupplied and realize the vision of Space Station of doing
this research, we had to get moving. Even though it was an
uncertain environment, we had to take some risk and move
forward with these providers and lay out a reasonable plan to
go forward. And that is what we did in 2008.
And I think if you look at their state of readiness, it is
a little bit later than we had anticipated, but they have
delivered the hardware. They have delivered the services. They
are poised to deliver the cargo just like we had anticipated
when we issued those contracts back in 2008.
Senator Nelson. That is a very complete answer. And
congratulations on your progress to this point.
Mr. Gold, I wanted to ask you about your business plan. Do
you have a business plan going forward that the launch services
are going to be what the Russians have charged you on the basis
of what you already have in orbit? And of course, what we have
seen is the delivery of different crew going up. We have seen
it from $20 million per passenger several years ago to over $60
million per passenger now. So what is your business plan to put
crew on your larger vehicle of getting them up there?
Mr. Gold. Senator, just like NASA, we are extraordinarily
dependent on the success of the commercial crew program. It is
why we are here today. It is why we care about commercial crew.
I can assure you that if we are forced to abide by the
pricing that currently exists for Soyuz, our business plan and
frankly any business plan would be unsustainable. Those prices
must come down from the $60 million-plus range. They must come
down dramatically for there to be a business case from the
private sector.
However, if you do not mind, Senator, I would also like to
mention that the Committee should not limit its view to pricing
alone. Per my opening testimony, there are substantial
regulatory issues that are as important as pricing. As Ranking
Member Boozman pointed out, we are facing serious export
control issues, and if I may, I would like to share a quick
anecdote with you on that front.
When I first traveled to Moscow, it was myself and a
handful of our engineers. Across the aisle from us were a dozen
former card carrying members of the Communist Party. Yet, it
was not them but me as an American citizen who traveled with
not one but two Government monitors breathing down my neck,
listening intently and prepared to tell me what I could or
could not say. Worse yet, I was paying for this monitoring to
the tune of roughly $140 per hour per monitor plus room and
board and all of their travel expenses. We paid around $300,000
to $400,000 in direct costs to the Government for monitoring
and probably about $1 million in ITAR compliance overall. I
would joke with the Russians that the KGB may have spied on
them back in the day, but at least they had the good courtesy
to do it for free.
[Laughter.]
Mr. Gold. And I would not be so upset if we were actually
contributing to national security. Per, again, Ranking Member
Boozman's comments, there are definitely some technologies that
we have to be very careful with. But again, to give you an
example, we had a stand, and the purpose of the stand was to
keep our spacecraft off of the ground. It was round and had
four legs coming out. If you put some silverware on top of it,
maybe a nice tablecloth, the stand would be indistinguishable
from a metal coffee table. Despite its benign nature, we had to
have two security guards watching that coffee table full-time
plus we had to pay two Government monitors to watch our guards
watching the coffee table. Now, I can only imagine the national
security implications of this table technology leaking out to
the Russians, which they could then share with the Iranians or
the Chinese, who could subsequently serve coffee or even tea on
it. Therefore, beyond pricing, there are some significant
regulatory issues that have to be dealt with in order for a
true commercial business case to come to fruition.
Senator Nelson. Of course, but I can tell you that because
we were not minding the store back in the 1980s and we started
allowing American satellites to be launched on the Chinese
launch vehicle, the Long March, significant American technology
was transferred, and it was not supposed to be. And so clearly,
when you come to the national security interests, you do have
interests and you got to pay attention to them. And the Chinese
are successful today in part because they got a lot of our
technology that was supposed to be kept from them, even though
a number of those aerospace companies insisted that they be
able to sell their very sophisticated satellites for a Chinese
launch vehicle. So there is a balance that you have to achieve
here.
Well, if you get yourself around the regulatory--and by the
way, this INKSNA--we do not have any choice. We have to pass
that because we simply cannot let that get in the way of us
moving ahead with the space program.
Not counting NASA, how many people in the private sector
are willing to pay how much to fly up to your vehicle?
Mr. Gold. Well, let me first say when it comes to people--
and if I could dispose of some misperceptions relative to
Bigelow Aerospace. I have been told that we are building a
space hotel. I have even been told that we are building a space
casino. I can assure you that neither is the case. This is what
happens when you come from Las Vegas.
Our business case is based upon a model that is not overly
different than the ISS where you will have countries on one end
of the spectrum--take Japan, for example, that has a robust
human spaceflight program but with all of the budget problems
they are facing would like to get more astronaut seats and more
capability for less money. Then on the other hand, take a
country like Singapore, which has never had a human spaceflight
program before and would like to do so for the first time,
particularly if they could get through it without breaking the
bank.
That is really where we are going, plus the excellent point
that you raised previously relative to microgravity research
and development. I really believe we are grossly
underestimating the impact of that on our overall economy and
particularly on the pharma and biotech sectors. You mentioned
some of the good vaccine research that is going on. That is
just scratching the surface. We have had conversations with
Johns Hopkins about cancer research that could eventually have
dramatic results. But we have to develop regular, robust, and
reliable access to space to bring that to fruition. The
microgravity revolution will happen in pharma and in other
sectors. The question is will it happen in America or will it
happen in China.
Senator Nelson. Would you give the Committee just a glimpse
of some of that additional microgravity research that you think
is very promising?
Mr. Gold. Certainly, sir. I am a lawyer not a biologist, so
please forgive any inaccuracies.
For example--and this is the conversation we were recently
having with Johns Hopkins, when you are developing a cancer
drug in a 2-D terrestrial environment, you can spends hundreds
of millions of dollars and years on a therapeutic only to find
out that the drug does not work. It makes your hair fall out.
You grow a third arm. It's bad. There will also be drugs that
could have created significant benefits to human health and in
terms of the economy that were dropped because of false
negatives.
When you get into the microgravity environment, it
basically simulates the human body, which is a 3-D, suspended
set of matrices, in a fashion that cannot be done
terrestrially. By properly simulating the human body in
microgravity you can get real results in terms of what drugs
will work and what drugs will not work. This capability could
save pharmaceutical companies hundreds of millions of dollars,
if not billions, just by giving the industry data as to what
drug to bet on moving forward.
I think we have already seen some examples of this on the
ISS with Amgen that did studies relative to osteoporosis. They
were able to determine what the right drug was to invest their
money in. You know, forget Las Vegas, pharmaceuticals are a big
gamble, and if you can provide that extra information, that is
something that every pharmaceutical company is going to need.
Senator Nelson. I think the American people are suddenly
going to fixate on that once we see come out of the FDA trials
the first major vaccine that is going to have a profound effect
here on Earth as a result of the research that occurred in the
properties of near 0 G on the station.
Anybody else want to comment on any of this?
[No response.]
Senator Nelson. OK. Then let me ask. Colonel, how does
the--let us pick up on this regulatory thing. And the FAA is
going to be involved in that. How does the prohibition on
regulation hamper your ability to discuss, plan, and propose
future safety regulations for spaceflight passengers and crew?
Col. Melroy. Well, Senator, protection of humans in space,
especially when you are not specifically looking at a single
mission, but are instead covering a broad array of vehicle
types and uses, will be a major undertaking. Therefore, we
would like to have an extended discussion that is very specific
with industry about making sure that we are not stifling
innovation, and, at the same time, we are trying to avoid risks
that we know about.
Under the Administrative Procedure Act, we have some
restrictions on the way that we can discuss potential
regulations until we are in a rulemaking, and at this time, we
cannot propose regulations. Therefore, we have to keep our
conversation very general and on overarching topics. But, we
will work with that. We are working with our industry advisory
group, COMSTAC, and plan to work within the constraints of the
law.
Senator Nelson. Do you want to pick up on regulations?
Senator Boozman. Yes, sir, just for a second. Thank you,
Mr. Chairman.
Let me ask you, Mr. Gerstenmaier. Under the new agreement
for a limited number of commercial partners under the Space Act
Agreements, how will NASA ensure that its safety standards and
human readiness requirements will be met by the vehicles being
developed?
Mr. Gerstenmaier. We have approached that several ways. We
have published all our safety requirements now, which are
available to industry to take a look at. They are in a series
of documents that sit out there. So this is different than we
have done before. We have actually got all those requirements
out there so industry can see those and can start implementing
and designing to those requirements.
We are starting to think about now what our right strategy
is, how we move forward. We are going to do Space Act for this
next phase, and then we want to go into a commercial contract,
a FAR-based contract activity, for the actual certification and
demonstration phase. We are in the process now of discussing
internal to the agency exactly how we do that flow and how we
do that movement into that larger certification contract. In
there, there will be some phase-in period or some kind of
phase-in contract where we will be able to actually work and
ensure that we have the right insight and the right oversight
to work directly for these unique safety requirements. But we
are going to again try to limit our interface and interaction
to really just the safety requirements, the things that we
determined throughout the years are really critical to
protecting crew safety.
So we are still in the process of that, and in the next
several weeks or so, we will be able to discuss with you in
more detail exactly some more specifics of how that strategy
lays out. But we definitely are thinking about that, but the
big advantage now is the contractors can see our requirements.
They know exactly what we expect from a human safety
standpoint, and that is a big plus for them as they move
forward.
Senator Boozman. That really does seem to be a key in the
sense that it has got to be done right. I mean, there are no
ifs, ands, or buts. And yet, hopefully we can figure out a way
to ensure safety and do it where it is as cost efficient as
possible because that is going to be a real key to whether or
not it is viable going forward.
I do want to congratulate SpaceX for their very successful
mission.
And with that, Mr. Chairman, I yield back.
Senator Nelson. And Mr. Gold and Captain Lopez, having some
assurance of the safety by NASA with their regulations I assume
is going to be extremely important to you for your customers.
Do you want to make a comment?
Mr. Gold. It is extremely important. Again, we need the
commercial crew program to go well and produce an affordable,
safe product. Frankly, we shared many of the concerns of
Congressman Wolf in regard to ensuring that we have a FAR-based
procurement that is being developed in parallel to the SAA-
driven activity so that when that SAA activity finishes, there
can be a clean handoff from the SAA development to the
procurement phase, just like we have done with COTS and CRS.
Additionally, per my opening testimony, we believe that Mr.
Gerstenmaier's hands should be untied relative to providing
mandatory safety requirements even under the context of a Space
Act Agreement, particularly if the future crewed options are to
be triggered under the current CCiCap regime. We disagree with
NASA legal's assessment that this cannot be done. Again, I
would urge the Committee to go to the GAO for additional
insight into this issue.
Senator Nelson. Captain?
Mr. Lopez-Alegria. Senator, I would say that I think the
approach that Mr. Gerstenmaier outlined is an appropriate one
in that NASA is hands off during the design and development of
tests of these vehicles to assure the most rapid decisionmaking
and basically get to a critical design stage as soon as
possible, but that they should have oversight when it comes to
safety.
Now, which form that oversight takes place, if it has to be
a FAR-type contract or if it can be a Space Act Agreement, that
is sort of beyond my purview as I am not an attorney like Mr.
Gold. But I think the principle that NASA has the final say-so
on safety is key.
Senator Nelson. The final question. Mr. Gerstenmaier, since
NASA science launches are not licensed by the FAA, does that
mean there is no Government indemnification for these launches?
Mr. Gerstenmaier. Well, I will have to take that for the
record and go look at that. I believe that under our NLS
contract, those are FAA-licensed. Pam, can you help me?
Col. Melroy. I believe there is one that has been licensed
and falls under the CSLA indemnification regime. I am not an
expert, but I do understand that there is a separate
indemnification process for missions that are executed by and
for NASA.
Senator Nelson. OK. If you all will check that and let us
know.
[The information requested follows:]
NASA-contracted launches for NASA's science missions are not
generically covered by an indemnification authority. For these
missions, liability coverage for third-party claims is formed in three-
tiers: (1) NASA contractually requires its launch providers to obtain
insurance coverage for third party losses. The amount of the insurance
required by NASA is the maximum amount available in the commercial
marketplace at reasonable cost, but does not exceed $500 million for
each launch. (2) To the extent claims are not fully compensated by the
liability insurance, the NASA administrator has the ability to consider
third party claims under the meritorious claims authority, Statute 51
USC 20113(m)(1) l, up to $25,000. (3) To the extent
meritorious claims exceed the first two tiers of coverage, the facts
and circumstances for such claims would be forwarded by NASA under
Statute 51 U.S.C. Sec. 20113 (m)(2) l to the Congress for
its consideration.
---------------------------------------------------------------------------
\l\ 51 USC 20113
(m) Claims Against the United States.--In the performance of its
functions, the Administration is authorized--
(1) to consider, ascertain, adjust, determine, settle, and pay, on
behalf of the United States, in full satisfaction thereof, any claim
for $25,000 or less against the United States for bodily injury, death,
or damage to or loss of real or personal property resulting from the
conduct of the Administration's functions as specified in section
20112(a) of this title, where such claim is presented to the
Administration in writing within 2 years after the accident or incident
out of which the claim arises; and
(2) if the Administration considers that a claim in excess of
$25,000 is meritorious and would otherwise be covered by this
subsection, to report the facts and circumstances to Congress for its
consideration.
---------------------------------------------------------------------------
In order for an agency to indemnify a contractor under the broad
coverage of Public Law 85-804, the contractor must provide evidence and
the agency must make case-by-case determinations that the contract
activity will require the contractor to undertake ``unusually hazardous
or nuclear risks'' and will ``facilitate the national defense.'' If a
science payload includes a nuclear power source, a different
indemnification mechanism could apply for liability resulting from the
contract work involving that nuclear power source. Indemnification
provided under the Price Anderson Amendments Act (PAAA) is only
relevant to NASA launches that carry a nuclear power source provided by
the Department of Energy (DOE) as only DOE has authority to provide
PAAA coverage to its contractors and subcontractors. Such
indemnification covers a contractor's ``public liability,'' meaning
legal liability arising out of a nuclear incident or precautionary
evacuation involving injury or damage to persons or property related to
a radioactive release, up to $12 billion in the case of nuclear
incidents occurring within the United States and up to $500 million for
incidents occurring outside the United States.
For SLS/MPCV, it may be possible to indemnify under Public Law 85-
804 as we did with Shuttle, but the specific circumstances of the
activity, the risk, and the available commercial insurance would need
to be evaluated at the time a contractor requested such relief.
Senator Nelson. And then are we to assume that there is the
normal indemnification when you all get into the big rocket,
the SLS and Orion?
Mr. Gerstenmaier. Yes. That will be the standard thing we
have done in the past for the shuttle program, et cetera. We
will work out the details associated with that, but it will be
similar to what we have done with previous manned programs like
the shuttle and other aspects.
Senator Nelson. I want to thank the witnesses for being
especially very much to the point and mindful of the time. And
we have even made it to the finish line with 10 minutes to
spare when the votes are being called. Thank you all. Have a
good day.
The meeting is adjourned.
[Whereupon, at 11:20 a.m., the hearing was adjourned.]
A P P E N D I X
Prepared Statement of Hon. John D. Rockefeller IV,
U.S. Senator from West Virginia
Washington, D.C.--The United States has long been a world leader in
using space for societal and commercial benefits. Satellites, for
example, provide us with instant communication, the indispensable
Global Positioning System--or GPS--for navigation, and weather data to
inform forecasts that prevent loss of life and property. While the
original investment for each of these examples came from the Federal
Government, the commercial sector went on to make them profitable
industries.
The commercial sector is now looking at space transportation and
the market that may emerge as the next big business opportunity, and
that's what this hearing will consider here today. NASA's purpose in
the development of domestic commercial space flight capabilities is to
lower the cost of getting crew and cargo back and forth to the
International Space Station.
Lowering the cost of access to space is not just important to NASA,
but to the defense and intelligence communities, as well as satellite
broadcasting and communications providers, just to name a few. But if
NASA's investment is to pay off in seeding this ``commercial''
industry, there are tough questions that need to be asked regarding the
taxpayers' investment. What have these programs cost NASA so far; how
are the funded companies performing; and, above all, how cost effective
will these service providers be once NASA has invested in their
development?
It is important to remember that as soon as there is a domestic
capability, NASA is required by law to stop purchasing Russian Soyuz
seats to get to the International Space Station. What is to stop a
company from turning around and charging the Government a fortune to
access our space station? Much has been said about not wanting the
government to pick winners and losers, which is why we should not lock
in a dominant player at this stage of the game. Key to the premise of
competition, however, is whether or not a viable market for commercial
space emerges beyond the Federal Government.
As these companies work to attract private investment, we hear
repeatedly that they need certainty and stability both for investors
and the emerging market; however, ``certainty'' and ``stability'' only
seem to apply in certain situations. Many companies have advocated that
extending the government's indemnification of third party liability
adds certainty and stability; however, some of these same companies
argue that FAA regulation at this time does not. Many advocated and
were successful in obtaining a continued moratorium on FAA's regulation
of crew and passenger safety until October 2015 in the FAA
Reauthorization. I didn't like this provision then, and I don't like
this provision now, as it increases the chances that regulation will be
decided in reaction to an accident. Space flight is inherently risky
and we know accidents happen.
With these questions in mind, I welcome our witnesses here today to
help the Committee with its policy deliberations and oversight
responsibilities in this area.
______
Prepared Statement of the Aerospace Industries Association
Chairman Rockefeller, Ranking Member Hutchison, Subcommittee
Chairman Nelson and Ranking Member Boozman and distinguished members of
the Subcommittee, I appreciate the opportunity to submit testimony to
the Committee regarding the commercial space industry and its role in
the Nation's space program. On behalf the Aerospace Industries
Association, I would like to emphasize the importance of renewing the
Commercial Space Launch Act risk management provision, eliminating the
sunset provision of the Act, and removing the indemnification cap for
space launch activities. In addition, another important concern is the
expansion of the excess intercontinental ballistic missile (ICBM)
assets and the effect on the U.S. industrial base.
The Aerospace Industries Association (AIA) represents over 350
aerospace manufacturing companies and their highly-skilled employees.
These companies make the spacecraft, launch vehicles, sensors, and
ground support systems employed by NASA, NOAA, the Department of
Defense, the National Reconnaissance Office (NRO), other civil,
military and intelligence space organizations throughout the globe, and
many of the commercial communication satellites. This industry sustains
nearly 3.5 million jobs, including much of the high-technology work
that keeps this Nation on the cutting edge of science and innovation.
The U.S. aerospace manufacturing industry remains the single largest
contributor to the Nation's balance of trade, exporting $89.6 billion
and importing $47.5 billion in relevant products, for a net surplus of
$42.1 billion.
U.S. space launch capabilities are essential to our Nation's
security and its ability to lead in space exploration. To sustain this
capability, a healthy U.S. space launch industrial base is needed; as
with aviation, to mitigate cyclical impacts, this industrial base would
ideally serve military, civil government and commercial customers.
Unfortunately, in recent years, our Nation's space launch industrial
base has been struggling to adapt to reduced demand by government--
especially due to the end of the Space Shuttle program--and downward
pressures on DOD, NASA and NOAA budgets that threaten to exacerbate the
risk to the industrial base. Furthermore, international launch
providers have been aggressively bidding and winning commercial
opportunities, often with the help of their governments in the form of
either financial assistance or low cost financing. The sad reality is
that the U.S. launch services industry has had a minimal share of the
commercial worldwide market for launches; indeed, in 2011, there were
NO commercial orbital launches from a U.S. space port.
Nonetheless, recent private sector investments by U.S. industry--
including AIA member companies ATK, Aerojet, Boeing, Lockheed Martin,
Northrop Grumman, Sierra Nevada, SpaceX and Virgin Galactic as well as
others--and supportive policies by government agencies are enabling the
emergence of new domestic space launch capabilities. These new systems
have the potential to increase the U.S. share of the commercial launch
market while also opening up exciting new markets. These companies have
made their investments within the existing domestic launch business
climate and domestic policy framework, but they face a challenging
international competitive environment.
Many foreign launch providers competing against U.S. companies
already benefit from generous indemnification rules. For example, the
European company Arianespace is required to purchase insurance up to
just 60 million Euros (roughly $75 million). Any damages above this cap
are the guaranteed responsibility of the French government.\1\
---------------------------------------------------------------------------
\1\ Study of the Liability Risk-Sharing Regime in the United
States for Commercial Space Transportation by J. A. VEDDA, Center for
Space Policy and Strategy, National Space Systems Engineering, The
Aerospace Corporation. 1 August 2006, Page 58.
---------------------------------------------------------------------------
Mr. Chairman, the U.S. space launch industry is not seeking any
subsidy. Instead, the U.S. commercial space launch industry requires a
stable and predictable business environment enabled by maintaining the
existing launch risk mitigation framework for the foreseeable future.
FAA's launch indemnification program has been in place for over twenty
years--providing critical risk management enabling the emergence of a
U.S. commercial launch market, benefiting the broader U.S. space
industry, U.S. technological leadership, and ultimately, the U.S.
consumer through the launch of U.S. communications satellites--without
ever costing U.S. taxpayers a dime.
Under the existing program, the risk exposure of the Federal
Government is managed; FAA controls the level of company insurance
required by establishing the Maximum Probable Loss coverage required
for each license and Congress ultimately controls the government's
assessment of loss legitimacy since a specific Appropriation is
required to pay any claims. Moreover, given that the current U.S. risk
approach has been in place for so long, it is not clear how much
additional underwriting capability is available in the space insurance
market; adding new uncertainty will harm U.S. industry.
For the United States to adopt a purely laissez-faire approach to
the U.S. commercial launch business, which competes in an international
launch market where its Chinese, Japanese, European, and Indian
competitors all operate under comparable risk management frameworks
would amount to unilateral disarmament: Even if commercial companies
could insure for the additional risk exposure commercially, it would
add costs their competitors do not include, thus making commercial U.S.
launch sales more difficult.
But our rationale for continuing indemnification support is not
narrowly focused on its benefits for industry--it also provides
benefits for the U.S. Government. When U.S. launch rates were
relatively high, the costs for all users--including the U.S.
Government--were more affordable as the fixed costs of launch
infrastructure and investments were spread out over a wider base of
customers.
To better understand the importance of providing space launch risk
mitigation legislation, understanding the history of U.S. commercial
space launch is essential. Two decades ago, American space launch
capabilities were a major player in the market--with a high percentage
of worldwide commercial launches leaving from our spaceports.
Figure 1 shows how large the U.S. share of commercial space launch
was from 1990--to 2001. The benefits to the U.S. economy were also
significant; in 1999, according to a study by the FAA's Office of
Commercial Space Transportation, commercial space transportation and
enabling industries were responsible for $3.5B in economic activity and
over 28,000 jobs--by 2009, those numbers had shrunk to $827M and just
under 4,000 jobs.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
FIGURE 1--Commercial GEO Payloads Launched by Country from 1990-
2001.
Source of data: FAA Office of Commercial Space Transportation.
The U.S. launch market share began a precipitous decline (see
FIGURE 2) as a result of the collapse of the Soviet Union--which
brought large numbers of Soviet developed Russian and Ukrainian launch
capabilities into the market with a cost structure far below U.S.
prices. Additionally, in this same timeframe, there was the advent of
the more capable Ariane 5 launch vehicle, developed by the European
Space Agency.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
FIGURE 2--Commercial GEO Payloads Launched by Country from 2001-
2011.
Source of data: FAA Office of Commercial Space Transportation.
In subsequent years, U.S. Government launch costs have risen
substantially--partially due to the shift of commercial satellite
launches to much lower cost foreign systems. This has also adversely
impacted the space industrial base--an industry base significantly
impacted already by the wind down of the Space Shuttle program. The
success of the new launch ventures is also important to the Federal
Government since they offer the real potential to reverse this trend.
Recent Space Launch Developments
Fortunately, American industry has been making investments to
capture new space launch business opportunities utilizing innovative
new systems--from launching commercial communications satellites more
cheaply to supporting the International Space Station and creating new
opportunities for private citizens to experience space flight. These
investments--and the willingness of the private sector to commit their
own resources to create new U.S. launch capabilities is a uniquely
American development; no other nation in the world has a significant
private sector effort underway--yet, in the U.S., a number of new
systems, with a mix of private and government contract funding are in
operation or under development. With good insight from the FAA's Office
of Commercial Space Transportation and the workforce and design
expertise developed by over fifty years of space launch investments by
NASA and DOD, these new systems should soon enable our Nation to regain
its space launch leadership while creating new markets and thousands of
new U.S. jobs.
Figure 3 shows the projections by the FAA COMSTAC (Commercial Space
Transportation Advisory Committee) of the potential for 300 commercial
space payloads that will require 128 commercial launches through 2021.
It should be stressed that this market forecast is a conservative
estimate based only on existing markets; future markets for suborbital
or orbital launch systems are not included but could potentially
greatly increase the number of missions. These space launch investments
have also been made in a business environment where, for over two
decades, the U.S. Government has understood the need for a statutory
risk management framework, enabling industry to pro-actively manage the
potential liability in the event of a catastrophic accident. This space
launch indemnification program is modeled after similar liability
provisions for other industries that the government has sought to
nurture, including nuclear power (e.g., the Price-Anderson Act) and
homeland security related safety technology.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
FIGURE 3--Commercial Space Launch Market Forecast 2012-2021.
Source of graph: 2012 Commercial Space Transportation Forecasts,
FAA Commercial Space Transportation and the Commercial Space
Transportation Advisory Committee
Mitigating Space Launch Risks
The current FAA approach to risk management has three tiers with
substantial industry responsibility:
Tier 1: The FAA calculates the maximum probable loss (MPL) that
could result from the licensed launch--that is the damage that
could result to uninvolved third parties from the most likely
worst case scenario. The launch provider, as the licensee, is
required to purchase private insurance for the MPL covering all
parties involved with the launch, including the U.S.
Government. The MPL is capped at $500 million, though rarely is
that full amount required by the FAA's calculations.
Tier 2: Subject to Congressional appropriations following a
Presidential request, the U.S. Government is authorized to pay
up to a $2.7 billion cap for third-party claims that exceed the
insurance coverage and therefore the FAA calculated maximum
probable loss. It should be noted that payments of claims are
not automatic and no funds are committed to this regime.
Congress can approve such payment and appropriate funding to
implement it only if and when a claim is made. To date, no loss
has ever occurred that would have triggered this regime, and
Congress has never been asked to appropriate funding for the
CSLA.
Tier 3: Any third-party claims above the Tier 2 cap are the
responsibility of the licensee or the liable party.
The CSLA's risk management regime assures adequate liability
coverage in case of catastrophic launch-related events, minimizes
government risk exposure, avoids any need for annual outlays while also
supporting the U.S. space and national security industrial base. It
also strengthens U.S. international competitiveness in a global space
launch market characterized by foreign providers offering government
indemnification as a standard and discriminating feature of their
services.
By maintaining continuity in the business environment, CSLA
supports existing launch service providers and encourages new U.S.
entrants into the launch business, ultimately enabling the development
of new commercial innovative space markets--both for suborbital and
orbital vehicles. In the end then, CSLA helps to keep vital space
launch jobs in the United States.
Based on the 2004 Congressionally-mandated FAA Study of the
Liability Risk-Sharing Regime in the United States for Commercial Space
Transportation conducted by The Aerospace Corporation, the FAA
Commercial Space Transportation Advisory Committee (better known as
COMSTAC) has strongly endorsed and recommended to the Secretary of
Transportation continuation of the commercial space launch risk
management regime in the CSLA. The Congressional Budget Office (CBO)
has also previously estimated that extending the agency's
indemnification authority would have no significant budgetary effect
for 5 years following its proposed extension in 1999. The current risk
management regime is exactly the same regime assessed by the CBO in
1999.\2\
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\2\ The CBO's assessment of H.R. 2607, The Commercial Space
Transportation Competitiveness Act of 1999 stated that ``Based on
information from DOT, we estimate that extending the agency's
indemnification authority would have no significant budgetary effect
over the next five years. DOT has never had to pay claims to third
parties for incidents involving commercial space vehicles or services.
Thus far, the costs associated with incidents have been small and have
been covered by private insurance.'' H.R. 2607 became Public Law No:
106-405 in 2000, extending the risk management regime to 2004, which
was extended again in 2009.
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Risks of Non-Renewal
The CSLA regime enables U.S. launch providers, like their foreign
competitors, to operate without ``betting the company'' with every
single launch. In a competitive market with narrow returns, the loss of
the risk management regime would cause U.S. companies to reconsider the
risks and benefits of staying in the commercial launch business,
suspend activity, and even exit the market.
Failure to renew CSLA would unnecessarily hamstring U.S. companies'
ability to compete in the international launch services market. Without
the risk management regime, U.S. launch providers appear riskier and
more costly to prospective launch customers in a market with numerous
foreign launch providers whose governments indemnify launches. As if
harming U.S. commercial market competitiveness would not be bad enough,
the U.S. civil and national security space communities could also
experience increased launch costs for essential government payloads for
communications, weather observation, remote sensing, GPS, and other
satellite systems that are an integral part of our Nation's
infrastructure and economy. Without a renewal of the regime, our
Nation's space industrial base could be foregoing business that would
share the fixed cost of space launch from government programs with the
commercial market--savings that could be passed on to the taxpayer.
Non-renewal of the risk management regime could also mean an
outright exit from the commercial launch market by U.S. providers,
making it much harder to sustain high technology space launch jobs in
the United States. We cannot afford to drive away highly skilled
technical jobs to foreign countries, where the regulatory frameworks
provide better critical risk management tools. Lastly, a non-renewal
could impede new U.S. entrants to the commercial launch market,
discourage future space launch innovation and entrepreneurial
investment. Without a level playing field for competition, new U.S.
entrants could find it highly undesirable to begin their business
ventures in the United States, reversing recent trends.
Updating Space Launch Risk Management for the 21st Century
FAA's space launch indemnification approach began in 1988 when the
Congress enacted amendments to the Commercial Space Launch Act (CSLA)
of 1984, establishing a regulatory regime for FAA-licensed commercial
space launches that included a risk management regime for third-party
losses resulting from launch-related activities. Today, this risk
management regime factors into all U.S. commercial space launch
business decisions and provides a more level playing field for U.S.
competitors. The FAA's launch risk indemnification backstop has been
renewed 5 times since 1988--creating the reasonable expectation that it
will be renewed in the future without completely eliminating the
business uncertainty. But developing space launch systems is a long
term effort--not uncommonly five years or more--and launch contracts
are typically signed at least two years prior to launch. AIA believes
the sunset provision of this law should be eliminated thereby
increasing business confidence and promoting additional new investment.
FAA's three tier approach has never been utilized; losses to date
have been relatively minor and have never exceeded the commercially-
insured Maximum Probable Loss threshold let alone the cap on the
Federal Tier 2 limit. Given that any Tier 2 payout would require a
specific Appropriation anyway, AIA recommends that the Tier 2 cap
should be dropped and that Tier 3 should be eliminated entirely.
In conclusion, the Aerospace Industries Association sees the
continuation of U.S. space launch indemnification as an exceedingly low
risk means to support to our Nation's vital space launch industrial
base that provides substantial upside potential to enable new markets,
create new jobs, and assure U.S. space technology leadership for the
21st century. U.S. industry is investing capital and innovative ideas
to support this new future and U.S. Government agencies and the
Congress have also taken important steps that have helped foster these
new initiatives. It would be a shame if these nascent capabilities were
to be limited in its potential or even founder due to the lack of a
level playing field with foreign competitors.
In order to allow U.S. companies to compete on a more level playing
field for hundreds of new payload opportunities and creating thousands
of new jobs:
AIA recommends the Congress renew the Commercial Space
Launch Act risk management provision (Section 70113(f) of title
49 of Public Law 111-125) well in advance of its expiration on
December 31, 2012.
Given the long lead times for space launch development and
operations, the need for stable policies to promote investment
and to maximize our industry's ability to be competitive,
Congress should eliminate the sunset provision of the Act or at
least extend them for a much longer time than in the prior
renewals.
To be consistent with our international competitors, AIA
recommends the Congress remove the indemnification caps beyond
Tier 1 for space launch activities.
Excess Intercontinental Ballistic Missile (ICBM) assets
The U.S. Government makes use of excess Minuteman and Peacekeeper
ICBM assets for orbital launches of small satellites and suborbital
launches of missile defense targets. According to section six of the
2005 U.S. Space Transportation Policy, excess U.S. ICBM assets shall be
retained for government use only under certain conditions, including
certification that their use has very limited impact on the U.S. space
transportation industry. Unfortunately, limited use of these excess
assets has not been the case and will pose increasing risks to future
investment in civil, commercial, and military small space
transportation options.
From 2000 through 2011, twenty three excess ICBM asset missions
were conducted. This number is equal to the 23 combined launches of
Pegasus, Taurus, Falcon 1, and Athena over the same timeframe. In AIA's
view, using excess assets at a level equal to industry's sales
adversely impacts the space transportation industrial base. Indeed, for
smaller payloads, excess ICBM assets are nearing monopoly status. In
2010-2011 eight of nine small launches were excess ICBMs.
Increased reliance on excess missile assets converted to space
transportation uses may seem convenient and cost-effective in the short
term. Over the longer term, this short-sighted practice could
negatively impact broader industry investment in small launch
capabilities. AIA believes that these excess assets are jeopardizing
industry's ability to support future mission requirements and may
necessitate significant future investment to re-establish U.S.
production capabilities.
AIA recommends that current law (the Commercial Space Act of 1998,
P.L. 105-303) that allows for the conversion of ballistic missiles into
space transportation vehicles be amended. In order to provide access to
space for small-and medium-class government payloads, while sustaining
and promoting growth in the U.S. space launch services industry, the
use of excess ballistic missile assets as launch vehicles should be
limited to only the launch of Federal Government technology
demonstration satellites. In addition, improving the method of
calculating the true cost of excess ICBM storage, transport, and
conversion to a space launch vehicle should be addressed in the updated
policy.
Thank you for the opportunity to submit testimony on behalf of the
U.S. space industry.
______
Response to Written Questions Submitted by Hon. Kay Bailey Hutchison to
William H. Gerstenmaier
Commercial Orbital Transportation System--COTS
Question 1. Please provide details of the steps required to
transition SpaceX to performance under its Commercial Resupply Services
contract. Please include information regarding the review and analysis
of data from what appears to have been a very successful COTS 2+3
combined demonstration flight.
Answer. It is important to note that Commercial Orbital
Transportation Services (COTS) and Commercial Resupply Services (CRS)
are separate activities; the work under CRS is not a transition from
COTS. SpaceX has been working under contract to NASA to provide cargo
delivery services since SpaceX was awarded a CRS contract in December
2008. SpaceX delivered cargo under CRS during its COTS demonstration
and has already completed milestones under the CRS contract for the
five missions currently in process. This work has been focused in three
main areas--(a) cargo processing, (b) mission planning and overall
vehicle performance, and (c) completion of the visiting vehicle safety
requirements. All three of these key areas were demonstrated during the
COTS demonstration mission.
SpaceX and NASA have completed several post flight reviews and
lessons learned sessions reviewing the COTS demonstration mission and
improvements in each of the key areas have been identified. Examples of
the improvements include an updated process for review and testing of
software upgrades, updates to cargo packing both on the ground and on
orbit, changes in how quickly flight data will be accessible after the
spacecraft has returned, and updates in telemetry and tracking. These
improvements have been included into the standard verification work and
mission planning that supported the first CRS mission in October 2012
and will continue to be performed prior to every CRS mission.
With the successful completion of the COTS C2+ flight, SpaceX has
accomplished all objectives necessary to demonstrate they can transport
cargo to the ISS and return cargo to Earth. NASA is currently reviewing
post flight data with SpaceX, as has been the standard practice with
all demonstration flights. Two formal reviews have taken place to date.
The final review was held in August 2012 and coincided with the
transmittal of the mission final report to NASA. The next flight flown
in October 2012 was the first operational mission under the CRS
contract.
Additionally the ISS technical and safety integration teams have
been working with SpaceX since August 2006 when the COTS Space Act
Agreements (SAA) began. The interactions and the information and
products provided by SpaceX have been of high quality and have enabled
the ISS program to safely integrate SpaceX capabilities and operations
into the program.
Question 2. What is your confidence level regarding that the
ability of the Orbital Sciences Corporation to launch its demonstration
mission this year? Are there any technical concerns with the launch
vehicle and/or the Cygnus system?
Answer. Orbital Sciences continues to make progress in preparing
their ground and flight systems for their upcoming test and
demonstration flights. Critical vehicle testing on the pad is required
prior to the test mission. Orbital is planning to complete the wet
dress rehearsal and hot fire pad tests by the end of January. The
launch of the Antares test flight will occur soon after the tests are
complete. Orbital's demonstration mission to the ISS could be flown
approximately 2-3 months after the Antares test flight, pending nominal
pad refurbishment activities. Currently, Orbital Sciences is processing
the test and demonstration flight launch vehicles and spacecraft with
no major anomalies being identified. Orbital is conducting Joint
Integrated simulations with the ISS program in preparation for the COTS
demonstration flight as well as progressing through the ISS visiting
vehicle verification process. As with the development of all complex
space systems, there is always a chance of uncovering technical issues
during this period but NASA and its partners will work to mitigate any
issues that may arise.
Question 3. Can you summarize, to the extent possible, the
technical issues that have impeded the launch pad development at the
Wallops Island launch complex?
Answer. The state of Virginia's Mid-Atlantic Regional Spaceport
(MARS) is responsible for construction and operation of the launch pad
that Orbital Sciences will use for their COTS demonstration as well as
ISS operational flights. Pad construction has been a clean sheet effort
versus refurbishing an existing facility. As pad construction
progressed, technical issues arose that are not atypical with
construction of extremely complex infrastructure intended to distribute
fuel and super-cold oxidizer at the precise flow rates and pressures
needed to support launch vehicle loading and launch. Technical
challenges were discovered when these super-cold fluids were introduced
into transport lines for the first time. Additionally, as pad systems
were activated, problems arose that required rework and increased the
time-frame needed to complete the pad. Pad turnover has now been
completed.
Question 4. While there have been slips to Commercial Cargo
demonstration flights, what is the production status for the hardware
needed for follow-on cargo resupply flights, which are needed to supply
ISS. Are they slipping as well or are these contractors ready to fly,
once they have demonstrated their capabilities in the upcoming
demonstration flights?
Answer. The current ISS Flight Program includes three SpaceX and
two Orbital CRS missions to ISS by the end of calendar year 2013.
Production status is as follows.
SpX-1: The Dragon launched atop a SpaceX Falcon 9 rocket
from Cape Canaveral Air Force Station in Florida, on October 7,
2012. It carried 882 pounds of cargo to the complex, including
260 pounds of crew supplies, 390 pounds of scientific research,
225 pounds of hardware and several pounds of other supplies.
This included critical materials to support 166 scientific
investigations, of which 63 were new. Returning with the Dragon
capsule was 1,673 pounds of cargo, including 163 pounds of crew
supplies, 866 pounds of scientific research, and 518 pounds of
hardware. Dragon splashed down in the Pacific Ocean October 28,
2012. The splashdown successfully ended the first contracted
cargo delivery flight contracted by NASA to resupply the
International Space Station.
SpX-2 (FY13 Q2): The interstage, the first stage and second
stage have been shipped to the Cape. The Dragon capsule and
trunk are in final assembly and are planned to shipped to the
Cape in December.
SpaceX-3: This is the first CRS mission with upgraded Falcon
Version 1.1. Production schedule for the new launch vehicles
are being developed. The thrusters are scheduled to be complete
in February 2013. The service section is planned to be mated in
January with final closeout scheduled in April 2013. The dragon
module has a planned completion date of May 2013. The current
schedule has the Dragon capsule and trunk ready to ship to the
Cape in June 2013.
Orb-1: The first stage core of the Antares launch vehicle
has been delivered to the Wallops Flight Facility (WFF). The
first stage engines are scheduled for shipment to Stennis Space
Center (SSC) for testing and shipment back to WFF in January
2013. The upper stack avionics cylinder is in system testing
through March 2013. The Castor 30B (upper stack engine) final
assembly is complete and stored awaiting a shipment due to WFF.
The pressurized cargo module of Cygnus is also complete with
planned delivery to WFF in April. The service module is
currently undergoing Final Integrated Systems Test with
shipment to WFF planned for March 2013.
Orb-2: The current plan for the Orb-2 launch vehicle is to
use the refurbished core from the 7K-test article. One first
stage engine is integrated into the test article and will be
refurbished and used for Orb-2 after the hot fire test. The
second first stage engine is scheduled for delivery to WFF in
February 2013. The upper stack avionics cylinder and payload
cone are complete. The avionics system is being assembled and
testing will occur from November through January 2013. The
Castor 30B is in production and will ship to WFF in April. The
pressurized cargo module of Cygnus is complete and integration
testing is in progress. The planned delivery date to WFF is
June 2013. The service module is undergoing spacecraft
assembly, with the Initial Integrated System Test completed.
Component testing is underway with Final Integrated System Test
planned for completion in March 2013.
Question 5. How much cargo was transported to ISS and back to Earth
during the SpaceX demonstration flight? How does that payload
capability compare with the payload transport requirements for the
full-up operational SpaceX system? What additional effort, NASA
support, and resulting government funding is required to meet the
payload requirements under the SpaceX Cargo Resupply Services contract?
Answer. During the May SpaceX COTS demonstration mission, the
Dragon capsule delivered about 525 kilograms to the ISS as upmass under
the CRS contract. On the return trip, Dragon carried science
experiments to be returned to researchers. Including the experiments,
Dragon returned a total of about 665 kilograms of hardware and cargo no
longer needed aboard the Station as downmass under the CRS contract.
The Dragon has the capacity to carry 3,200 kg of upmass internally or
externally. As a practical matter, the internal carrying capacity will
likely be limited by the volume available and will be about 1,600 kg.
The capsule can return approximately 1,400 kg of downmass, which, at
the projected 3 flights per year, should be sufficient to meet all ISS
projected return requirements.
In terms of NASA support to SpaceX under the CRS contract, on
December 23, 2008, the Agency ordered 12 CRS flights valued at $1.6B
from SpaceX. These funds are paid to SpaceX under a milestone structure
based on progress for each flight.
Question 6. Now that SpaceX has completed their cargo demonstration
flights, can you tell us how much government funding, including the
cost for the use of government facilities and NASA personnel expertise,
was required to complete the SpaceX cargo vehicle development effort?
Answer. Commercial Orbital Transportation Services (COTS) is the
only NASA effort that directly funds the cargo vehicle development
effort and NASA has provided $396M to SpaceX under the COTS Space Act
Agreement. NASA also budgeted and spent approximately $40.1M through
October 31, 2012, for NASA's efforts to manage and support the
commercial cargo development effort. This includes the cost of
government facilities and NASA personnel expertise provided through the
program office. However, the NASA does not track the cost to support
the individual providers, SpaceX and Orbital. Also, NASA does not track
additional, indirect support provided for the cargo development effort
by other Programs such as ISS.
Question 7. I understand that there were a large number of issues
to resolve prior to this last flight by the SpaceX team. How was NASA
involved in the resolution of those issues, and what level of NASA
resources were required to resolve those issues? Please include figures
regarding the civil servant time applied to support commercial
activities?
Answer. NASA's primary role is to monitor the progress of its
commercial partners through an assessment of the milestones and to make
payment for successfully completed milestones. NASA provides expert
technical assistance; as requested or where considered necessary, via
the NASA COTS Advisory Team (CAT) discipline experts drawn from across
the Agency. CATs selectively support commercial partner reviews and
consult on technical issues as requested. More extensive NASA support
requires reimbursement for services or facility use via Reimbursable
Space Act Agreements. Commercial Partners also receive ISS integration
and certification support for their visiting vehicles. NASA has spent
$40.1M of the funds appropriated for the COTS program since 2006
managing and supporting the COTS effort of both commercial partners,
and approximately $16.8M of that cost (through October 31, 2012) is
NASA civil servant labor. See Answer to question 6 for more details.
Question 8. According to the schedule associated with the CCDev
Space Act Agreement between NASA and SpaceX, the recent SpaceX flight
was almost 2\1/2\ years late. Now that the demonstration phase is
complete, along with government funding that went with it, will NASA
hold SpaceX to its contractually mandated delivery schedules and other
terms under the CRS firm fixed price contract they have signed?
Answer. It is important to note that the Commercial Orbital
Transportation Services (COTS) Space Act Agreement (SAA) with SpaceX is
distinct from both the Commercial Crew Development (CCDev) SAA and the
Commercial Resupply Services (CRS) cargo contract. In the case of the
latter, the contract calls for the delivery of a minimum of 20 metric
tons of cargo to the ISS, as well as the return or disposal of 3 metric
tons of cargo from the orbiting complex. The contract is a firm-fixed
price, Indefinite Delivery Indefinite Quantity procurement with a
period of performance from January 1, 2009, through December 30, 2015,
and NASA pays SpaceX for only those milestones that are successfully
met.
When awarding the CRS contracts, NASA understood that the
management of these contracts would be challenging for both NASA and
the contractors. The contractors have the difficult job of producing
the launch and cargo vehicles. NASA has the difficult job of
orchestrating multiple missions to the ISS along with managing all of
the on orbit activities. Under these conditions it is expected that
schedules will be changed and both NASA and the CRS contractors have
requested changes in the mission dates and consideration for the
mission moves have been negotiated.
Launch windows for CRS flights to the ISS are baselined at the
Vehicle Baseline Review (VBR) as provided for by the CRS contract. If
SpaceX is not able to meet the contractual launch window, NASA
negotiates with SpaceX an equitable adjustment to the value of the
contract depending on the length and nature of the delay.
Question 9. NASA has committed to transitioning to firm fixed price
contracts for the purchase of ISS resupply services. Fixed price
contracts allocate risk of delay to the contractor, so any schedule
delay should result in consideration paid to NASA. Will this in fact be
the case as NASA and the ISS service providers transition to firm fixed
price contracts?
Answer. Please see the response to question #8, above. NASA will
only pay its CRS contractors when they meet milestones. At the Vehicle
Baseline Review (VBR), NASA and the contractor jointly reach agreement
on a 90 day launch window. After VBR, either NASA or the contractor can
request a launch delay of up to 30 days without penalty. Any delays
beyond 30 days need to be negotiated and could result in an equitable
adjustment, change in delivery schedule or change in the period of
performance.
Question 10. Administrator Bolden has stated that the procurement
of actual ISS cargo services will be conducted under FAR-based fixed
price contracts. Can you provide assurance that any future competition
for either crew or cargo servicing will be under FAR-based contracts
open to all bidders?
Answer. The procurement of actual ISS cargo services for the direct
benefit of NASA were awarded as FAR-based fixed price contracts. Future
competitions for both crew and cargo servicing will be awarded using
competitive FAR-based contracts.
Question 11. NASA officials and the Director of OSTP continue to
state that the use of commercial services for crew and cargo transport
to low Earth orbit will free up more resources for exploration beyond
LEO. However, NASA continues to press for additional funding for
commercial crew development, while reducing funding for SLS and Orion.
Can you explain this contradiction between NASA officials' public
statements and their funding requests?
Answer. NASA is committed to operating and utilizing the
International Space Station (ISS) and preparing for the next crewed
missions of exploration beyond low Earth orbit (LEO). Now that the
Space Shuttle has been retired, it is important to provide funding for
the development of commercial crew systems that will enable the U.S. to
resume flying its astronauts to the ISS on American-made vehicles as
soon as possible. Once developed, these vehicles will allow NASA to
spend less on LEO crew transportation through the purchase of domestic
services than would be the case if the Agency had to build, operate,
and maintain its own spacecraft for this purpose. This in turn enables
NASA to focus more of its resources on the development and operation of
launch vehicles and spacecraft for beyond LEO missions. If commercial
crew or cargo were acquired in a typical cost-plus procurement manner,
the cost would likely be higher than the current program. This new
approach is providing cost avoidance.
Commercial Crew Development Program
Question 12. Under the new agreement for a limited number of
commercial partners under Space Act Agreements, how will NASA ensure
that its safety standards and human rating requirements will be met by
the vehicles being developed?
Answer. NASA cannot impose requirements or standards on commercial
companies via Space Act Agreements. However, NASA can terminate a Space
Act Agreement if it determines that a commercial company's planned
performance of an activity under that Agreement presents an
unacceptable risk to human life. A clause to this effect is included in
the CCiCap Space Act Agreements (SAAs).
In the case of the future Commercial Crew contracts for missions to
the ISS, separate from the CCiCap activities, crew safety standards and
human rating requirements will be applied and verified via FAR-based
certification contracts. Thus, providers who wish to provide ISS crew
transportation services in the future are incentivized to take NASA's
human rating standards into account as they develop their vehicles.
Question 13. What is NASA's authority to oversee crew safety under
NASA's use of Space Act Agreements (SAAs)?
Answer. Please see response to question 12, above.
Question 14. Please explain how NASA can ensure crew safety without
contractual requirements.
Answer. Please see the response to 12. Furthermore, NASA intends to
use FAR-based contracts for system certification and for flights
involving NASA crew, so NASA's requirements and standards will be
imposed.
Question 15. Who within NASA will certify that the commercial crew
launches are ``go for launch''?
Answer. For commercial crew launches, the commercial company, in
coordination with the FAA, will be responsible for determining that
they are ``go for launch.'' NASA will not be certifying such flights
for launch. NASA crew flights will only be performed under contracts,
not Space Act agreements. The contracts will include terms to ensure
crew safety. NASA intends that the FAA will license those flights for
public safety.
NASA has not yet determined the details of how the flight readiness
and mission management processes will be performed. At a minimum, NASA
will have responsibility to certify that the NASA crew members are ``go
for flight.'' Furthermore, NASA will be responsible for verifying that
a commercial company's transportation system fully meets NASA's human
rating requirements prior to any launch involving NASA crew.
Question 16. Are you considering the use of additional activities
to ensure these vehicles can be certified for operational use, and to
avoid the possibility of additional time and money being needed to
bring them into compliance after this current development phase is
finished?
Answer. Yes, NASA is developing a comprehensive strategy for
certifying commercial crew transportation systems to NASA requirements,
which will include methods of mitigating the risks that companies'
designs will require costly modifications down the road to receive
operational certification. NASA communicated this strategy to Congress
before the CCiCap agreements were awarded.
Question 17. The track record for Commercial Cargo development is
poor regarding proposed vs. actual schedules. For example, SpaceX's
original Demo 1 flight date was in September, 2008, but the actual
flight was in December 2010; SpaceX's original Demo 2 flight date was
June 2009, and as we all know now they flew just last month; and
finally Orbital's original Demo 1 flight date was in December 2010, but
the Current Plan is later this year. And Commercial Cargo is much
simpler than Commercial Crew. What is your level of confidence in the
Commercial Crew offerors making the promised readiness dates?
Answer. NASA is confident that if Congress funds the program to the
level requested in the FY 2013 President's Budget that commercial crew
transportation will be available by the end of calendar year 2017. The
commercial participants have stated that they could make services
available before 2017.
Question 18. NASA has said that both commercial crew and
exploration launches will use the same safety and human rating
requirements, in particular ``emergency egress'' among those that will
drive significant costs. Were these particular (and overall)
requirements used and accounted for in all cost analyses to date?
Answer. Yes, NASA's cost estimates incorporate certification costs
associated with meeting NASA's crew transportation certification
requirements. NASA's understanding of these costs continues to mature
as better data becomes available.
Question 19. Is it true that the requirements for emergency crew
return would preclude any vehicle from delivering crew members to the
space station and then departing for a secondary destination?
Answer. NASA's requirements for ISS Crew transportation services,
which are reference for CCiCap and will be mandated on future
commercial crew contracts, include a capability for the CTS to remain
docked to the ISS for up to 210 days to provide assured crew return for
four NASA crew members. The ISS requires continuous presence of crew
return spacecraft. However, these requirements do not preclude a
vehicle from delivering crew members to the ISS and then departing, as
long as there were sufficient crew return spacecraft at the ISS to
enable full crew return.
INKSNA -Iran, North Korea and Syria Non-proliferation Act
Question 20. Can you tell us the key reasons why the exception in
the Iran, North Korea, Syria Non-Proliferation Act should be extended
to enable us to purchase Russian goods and services for spaceflight?
Answer. Without further modification, INKSNA would have severely
limited the U.S. from sustaining and fully utilizing the ISS and from
pursuing a robust human exploration strategy that includes Russian
capabilities. The Congress provided NASA with relief from INKSNA in the
recently passed Space Exploration Sustainability Act.
Question 21. What are the risks to the International Space Station
if the ISS INKSNA exception is not extended?
Answer. See answer to question 20 above.
Question 22. NASA has testified that INKSNA waiver language is
needed whether we continue to buy Soyuz seats or not. Do you know what
the current plan and status is for bringing proposed INKSNA language to
the Congress from the Administration?
Answer. NASA is very grateful that Congress has passed H.R. 6586,
the Space Exploration Sustainability Act, which extends the INKSNA
exemption by 4 years and removes restrictions on non-ISS, human space
flight-related activities. The relief provided in this legislation
meets the Agency's need, and was the product of very hard work in both
the House and the Senate, for which NASA is profoundly thankful.
ITAR Reform
Question 23. There appears to be some movement recently in
discussions regarding the ITAR reform process. Do you know if there is
a plan for bringing a package of reforms to the Congress that would
allow our aerospace industry to be truly competitive in the world
market?
Answer. NASA has been supporting the Administration's efforts to
reform the U.S. export control program and to revise the export control
lists. Thus far, the Departments of State and Commerce have published
proposed rules for nine of 19 categories of the United States Munitions
List (USML) administered by the State Department. The State Department-
proposed rules set forth what would remain in a given USML category,
while the companion Commerce Department-proposed rules map out what
would be moved from the USML. The Departments of Commerce, Defense, and
State can provide more information on this effort.
______
Response to Written Questions Submitted by Hon. John Boozman to
William H. Gerstenmaier
Question 1. NASA's budget documents indicate that in the transition
from the Space Act Agreement phase to a certification phase, NASA will
have to ``accommodate redesign as necessary to ensure compliance with
agency requirements.'' What is NASA doing to minimize the need to
significantly redesign commercial partners' crew systems to ensure they
meet agency requirements?
Answer. NASA baselined and released the future certification
requirements for industry to begin using as reference to mature their
designs. All partners have access to the requirements and standards
NASA will use for the future contracts for ISS.
For commercial crew services, crew safety standards and human
rating requirements will be applied and verified via FAR-based
certification contracts. Thus, providers who wish to provide ISS crew
transportation services in the future are incentivized to take NASA's
requirements into account as they develop their vehicles reducing the
likelihood of significant redesign.
Question 2. Does NASA have an estimate as to how much it might cost
to ensure compliance?
Answer. Please see response to #1, above. Costs associated with
redesign due to non-compliance will be partner-specific and NASA's
understanding of these costs continues to mature as better data becomes
available.
Question 3. Do the savings presented by using a Space Act Agreement
outweigh the lack of insight and oversight provided by a Space Act
Agreement?
Answer. Collaboration with industry in the early stages via Space
Act Agreements allowed the Government and industry to mutually leverage
each others' investments. As the program moves further into the
development phase, NASA plans to use a Federal Acquisition Regulation
(FAR)-based contract for certification of commercial systems prior to
flying crew on these systems. The Agency intends to structure the
certification effort to permit the Agency to fully evaluate the
proposed systems and accommodate any necessary redesign to ensure
compliance with NASA safety, performance, and mission success
requirements. The provider(s) awarded a certification contract will not
only be required to meet the NASA requirements in order to fly NASA
personnel, but they will also have to show verified compliance of how
the design and hardware will meet these requirements. The use of Space
Act Agreements to support commercial development does not change the
need to fully review and certify any system selected to transport NASA
crew. NASA believes the combination of both FAR-based contracts and
SAAs throughout various elements of the programs strikes an appropriate
balance of cost effectiveness and insight and oversight.
Question 4. Is NASA comfortable that the level of insight and
oversight during this critical phase of development is sufficient to
provide the government with sufficient information to eventually
certify a vehicle and ensure obtaining the best price possible when
buying commercial crew services?
Answer. Please see response to #1, above, regarding vehicle
certification. NASA has made awards to three companies in the latest
phase of SAAs (CCiCap). The Agency believes the competitive environment
provides strong incentive for the companies to align with NASA's
certification requirements in order to remain competitive in the future
certification and services phases. Having multiple companies competing
against each other will help ensure the best price possible for the
Government and will help enable voluntary adherence to safety
requirements.
Question 5. Recently, the FAA and NASA signed an agreement to
coordinate standards for commercial space travel of government and non-
government astronauts to and from low-Earth orbit and the ISS. Can you
please describe this agreement and responsibilities from the NASA point
of view? Can you assure me that NASA will retain the ability to ensure
that commercial crew carriers meet the same safety requirements that
our other human spacecraft meet?
Answer. The nature of the Federal Aviation Administration's (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 and impose its
requirements by contract. NASA will partner with the FAA to advance
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 and developing a streamlined
process.
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. In support of this, NASA and the
FAA recently signed a Memorandum of Understanding (MOU) to support the
transition to commercial transport of government and non-government
persons to LEO in a manner that avoids conflicting requirements and
multiple sets of standards. In developing these standards, the parties
will exchange knowledge and best practices in the various disciplines
of space flight, including safety.
Question 6. As you know, the long term goal of U.S. human space
flight and exploration efforts is to expand permanent human presence
beyond low-Earth orbit. But in order to do so, the United States must
have assured access to the ISS for our astronauts and must design and
build the new rockets to take us beyond low-Earth orbit: the Space
Launch System and Orion crew capsule. The government must work in
cooperation with the U.S. commercial sector in order to accomplish
these objectives. Space, however, is an unforgiving environment,
resulting in unusually hazardous risks, which can be a deterrent to
commercial sector participation. It has been the U.S. policy since at
least 1958 to provide its private sector contractors some assurance
that engaging with the government in such unusually hazardous
activities will not put their business at total risk should there be a
catastrophic failure resulting in damages to third parties through use
of an indemnification regime.
The Commercial Space Launch Act authorizes the FAA to license
launch and reentry activities other than those activities the
Government carries out for the Government. Who has the responsibility
to determine when activities under NASA contracts are Government
activities carried out for the Government?
Answer. NASA has the responsibility to determine when activities
under NASA contracts are Government activities carried out for the
Government. NASA decides whether any particular launch is a government
launch (where it substantially directs or controls the launch) or a
commercial launch depending on the needs of the program. As part of the
program formulation and acquisition processes, the roles for NASA and
the contractor, including the roles related to the conduct of launch
are established based on the best interests of the Government and the
public, consistent with law and policy. As an example of this
decisionmaking process, NASA recently determined that all launches
supporting ISS crew transportation services will be commercial, thus
licensed by the FAA. NASA and FAA entered into an MOU for Achievement
of Mutual Goals in Human Space Transportation on June 4, 2012, to among
other things, work together to reach a common understanding and
approach for meeting that objective.
As noted, the Commercial Space Launch Act, provides the Secretary
of Transportation (acting by delegation through the FAA Office of
Commercial Space Transportation) authority to license and permit
commercial launches and reentries. The Secretary's authority does not
apply to ``(1) a launch, reentry, operation of a launch vehicle or
reentry vehicle, operation of a launch site or reentry site, or other
space activity the Government carries out for the Government . . .'' 51
U.S.C. 50919(g). Therefore, launch and reentry activities that are not
commercial (carried out by NASA for the Government) are not licensed by
the FAA.
NASA has the responsibility as part of its program formulation and
acquisition processes to determine whether activities under NASA
contracts retain for the Government NASA direction and control, and are
thus Government activities carried out for the Government or are
commercial launches.
Question 7. NASA had used authority under Public Law 85-804 to
provide third-party indemnification assurances for Shuttle launches.
What authority does NASA intend to use for SLS and Orion launches? Or
for future science payload launches under the Launch Services Program,
for example?
Answer. NASA was able to provide indemnification to its Shuttle
contractors under P.L. 85-804 (50 U.S.C. Sec. Sec. 1431-1435) for
claims for unusually hazardous risks because NASA was able to make the
determination that doing so facilitated the national defense. Recall
that the DoD was a user of the Shuttle.
Similarly, in order for NASA to be able to utilize the authority of
P.L 85-804 for other launch programs such as NASA Launch Services
(NLS), Space Launch System (SLS), and the Multipurpose Crew Vehicle,
(MPCV or Orion), the Agency would have to demonstrate a nexus between
the commercial contract requirements and facilitating the national
defense. Otherwise, NASA has no authority to provide P.L. 85-804
indemnification to its contractors even for activities that are
unusually hazardous.
Under the NLS contract, NASA utilizes its meritorious tort claim
authority (51 U.S.C. Sec. 20113(m)). It is not an indemnification
authority. It covers third-party claims against the contractor arising
from performance of the contract, but NASA may only pay claims up to
$25,000 (above any claims covered by insurance). Claims in excess of
$25,000 would be forwarded by NASA to the Treasury for consideration of
payment from the judgment fund under 31 U.S.C. Sec. 1304. NASA may
certify such claims to facilitate payment from the judgment fund.
At this time, NASA has not determined whether any indemnification
protection would be available to the SLS and Orion contractors.
However, the Agency's meritorious tort claim authority may be provided
to them. Likewise, future science payloads under the NLS contact may be
protected through the Agency's meritorious tort claim authority, as is
currently available under NASA's NLS contract with its launch service
providers.
Question 8. In the past, budget estimates were requested for the
life cycle costs to develop the commercial crew vehicle. Can you share
this information now, based on the risk/cost/safety trades NASA is
currently making? What are the key risks for the safety of commercial
crew?
Answer. NASA has recently collected detailed technical information
from our CCiCAP partners for projected cost/schedule requirement to
complete development and achieve a crewed flight demonstration. NASA
will use this information as input to cost and schedule models to
support an independent cost assessment, develop a more rigorous project
plan, and inform updates of NASA's budget estimates for the
certification phase 2 as part of the FY 2014 budget request. Each
partner concept has its own unique risks and they are tracked by the
companies, with NASA insight.
Question 9. While U.S. cooperative programs with Russia were
expanding in the 1990s, including Russia joining the space station
international partnership in 1993, it also became clear that Russia was
a source of sensitive technology to Iran. The Iran Nonproliferation Act
of 2000 was enacted to help stop foreign transfers to Iran of weapons
of mass destruction, missile technology, and advanced conventional
weapons technology, particularly from Russia.
Among other things, that Act banned cash or ``in kind'' payments by
any agency of the U.S. Government to Russian Government agencies or to
any entity under their jurisdiction or control for work on the
International Space Station or for obtaining goods and services
relating to human spaceflight. This provision has raised difficulties
regarding U.S. access to the International Space Station. When the
President in 2004 announced that the Space Shuttle would be retired in
2010, the Russian Soyuz became the only vehicle available after that
date to transport astronauts to and from the ISS. In 2005 Congress
amended INA to exempt Soyuz flights to the ISS from the ban through
2011 and in 2008 the exception was further extended through June 30,
2016. Is a further extension necessary? If so, why?
Answer. Without further modification, INKSNA would have severely
limited the U.S. from sustaining and fully utilizing the ISS and from
pursuing a robust human exploration strategy that includes Russian
capabilities. The Congress provided NASA with relief from INKSNA in the
recently passed Space Exploration Sustainability Act.
______
Response to Written Questions Submitted by Hon. Bill Nelson to
Colonel Pamela Melroy
FAA Regulatory Authority
Question 1. If the moratorium on regulation expired today--what
would be the FAA's process and time-frame for developing and
implementing regulations? Do you see benefits in starting this process
as soon as possible?
Answer. Rulemakings on complex technical subjects often involve
substantial preparation that includes studying an issue and consulting
with stakeholders before proposed regulations can be drafted. The FAA
is currently in this period. The impact of the moratorium on this phase
is that draft regulations may not be issued for public review and
discussion, only general issues. The benefit of starting the rulemaking
process as soon as possible would be that more substantive discussions
could be made in the near term. This would provide stakeholders the
opportunity to comment and provide feedback on the most relevant issues
that require the FAA's fullest consideration up until the appropriate
time to issue regulations arrives. If the moratorium expired today, our
``best case'' estimate is that a final rule could be issued in mid-
2016. This would include submitting the project to the FAA Office of
Rulemaking for review at the end of 2012, following the standard
process timeline, and publishing proposed rules for comment in late
summer 2014. This is the normal timeline; complex rules generally take
more time, and the FAA believes that 4 to 5 years is more realistic.
Under current law, with the moratorium set to expire on October 1,
2015, we estimate that following the standard rulemaking process, a
final rule could potentially be in place March 2019. Realistically, we
expect that it is most likely the final rule would be published in
2020.
Question 2. Would you agree that regulations necessarily inhibit
innovation, or could they provide a more certain environment in which
commercial companies can innovate?
Answer. I disagree that regulations always inhibit innovation. When
the appropriate time comes to regulate, I believe well-written,
performance-based regulations would provide a valuable ``checklist'' to
industry regarding what safety precautions to consider, assure
investors and insurers that safety is being addressed, and allow great
flexibility in technology solutions. Thoughtful, quality regulations
can elevate the safety of an industry while still allowing innovation.
Question 3. The FAA has no authority to regulate on-orbit
activities, including commercial satellites, and in the future, crewed
spacecraft. In fact, the FCC has more authority to regulate on-orbit
activities than the FAA.
Ms. Melroy, what are some of the risks and consequences of not
having any regulations, besides those of the FCC, for on-orbit
activities of commercial spacecraft?
Answer. As the industry evolves, and the government's reliance on
commercial vehicles changes, private U.S. operators of transport
spacecraft could operate outside international orbital debris
mitigation norms, and thereby unnecessarily threaten the long term
sustainability of space. The orbital debris environment continues to
worsen and there is much international activity directed at ensuring
the long term sustainability of space. It is essential that all
government and private operators of spacecraft follow common sense
debris mitigation measures. The government only oversees a portion of
private spacecraft operators with regard to collision avoidance and
orbital debris mitigation--the FCC and NOAA regulate communications and
remote sensing spacecraft, respectively. The operation in orbit of
transport spacecraft is not regulated.
For manned vehicles, many hazards exist for occupants of spacecraft
on-orbit. Having no regulatory authority over the on-orbit phase of
flight could increase the risk of those occupants for a significant
portion of the mission.
Question 3a. Are there some clear areas--perhaps orbital debris
mitigation--where an appropriate level of regulation could be helpful
to your industry?
Answer. Yes. Some members of industry and the insurance community
have told us that single, clear regulatory oversight of collision
avoidance, orbital debris mitigation, and the protection of humans on
board spacecraft are areas where balanced, well-crafted regulations and
safety oversight could provide business certainty and reassure
investors and insurers who do not have expertise in the area of space
transportation that adequate safety oversight exists.
______
Response to Written Questions Submitted by Hon. Kay Bailey Hutchison to
Colonel Pamela Melroy
Regulation of Commercial Spaceflight
Question 1. As you indicate in your statement, an important part of
your and the FAA's responsibility is observing and accumulating data on
the various vehicle development and testing activities. What is FAA
able to do to prepare for eventual regulation of on-orbit activities
during the ``moratorium'' ending in 2015?
Answer. The FAA is making good progress in preparing for the
challenge of regulating occupant safety of commercial human space
transportation after the moratorium ends in 2015. We have assembled a
team to define the approach and do the groundwork for this regulatory
framework. The team's activities include:
Studying other human safety requirements such as the NASA
Commercial Crew Program requirements, aviation safety
regulations, and various human rating studies.
Identifying and documenting ground rules and assumptions to
ensure we are focusing on known, reasonably avoidable risks and
realistic operations in the near term.
Soliciting industry input on a variety of technical topics
through our Commercial Space Transportation Advisory Committee,
COMSTAC.
Studying the current industry designs of human spacecraft to
understand the different ways current commercial providers are
thinking about addressing occupant safety.
Identifying best practices and lessons learned for the use
of standards and guidance documents from other regulatory
organizations and NASA.
With regards to any eventual private commercial human space
transportation that would occur in Earth's orbit, neither the FAA, nor
any other Federal agency, has the authority to issue regulations that I
believe may eventually be necessary to fully protect these occupants
against known hazards. We are, and will continue to be focused on
understanding orbital transportation safety issues and other issues
such as orbital debris caused by launch and reentry. We will also
collaborate with our colleagues at NASA, NOAA, the Department of
Defense, and other agencies as appropriate.
Question 2. Can you suggest any needed legislative language to
enable your ability to carry out those activities in anticipation of
your eventual authority to develop a regulatory regime for commercial
spaceflight?
Answer. The FAA will continue to work within its regulatory
authority in anticipation of a regulatory regime for commercial
spaceflight. At this time, we are engaging in general conversations
with stakeholders. However, absent certain circumstances, the FAA may
not issue draft regulations for public review and discussion before
October 1, 2015. Our ability to propose rules will impact stakeholders'
ability to provide comment and input for the consideration of the FAA
on issues more relevant to what might exist down the road as
regulations.
With regard to orbital activities, as the industry evolves, and the
government's reliance on commercial vehicles changes, it may be
necessary to revisit some of the statutes and regulations that govern
commercial space transportation. Specifically, the FAA's statutory
authority may require expansion and adjustments to definitions to
ensure public safety. For example, there may be a need for greater
regulatory authority in the areas of transportation on orbit as well as
launch and reentry.
Question 3. Currently there is no regulatory authority for the on-
orbit activities of commercial space vehicles. What are your views as
to when the appropriate time would be to consider legislation that
would enable that kind of authority? Do you have an opinion as to who
should or shouldn't regulate this regime?
Answer. In 1984, Executive Order 12465 designated the Department of
Transportation as the lead Federal agency for encouraging and
facilitating the commercial space transportation activities occurring
at that time. Since then, the Department's role has been supported by
Congressional action with Congress giving the Secretary of
Transportation, acting by and through the FAA Office of Commercial
Space Transportation, authority over launch and reentry. The regulation
of launch and reentry includes transportation issues that may occur in
Earth's orbit at the end of launch and at the beginning of reentry. At
this time, the operation in orbit of commercial transport spacecraft is
not regulated.
Earlier this year, prior to the FAA reauthorization, the
Administration endorsed the concept of giving the FAA safety oversight
of commercial on-orbit transportation. As mentioned in my previous
response, as the industry evolves, and the government's reliance on
commercial vehicles changes, it may be necessary to revisit some of the
statutes and regulations that govern commercial space transportation. I
believe the U.S. commercial space industry will continue to achieve new
milestones. In addition to the SpaceX's Dragon servicing of the ISS
last June, companies may soon be transporting participants to
commercial orbital facilities like those being developed by Bigelow
Aerospace. On behalf of the FAA Office of Commercial Space
Transportation, we look forward to working with the interagency
community and Congress as the industry matures and evolves.
Question 4. As a former shuttle commander--and the second woman to
command a space shuttle--what can you share from your personal vantage
point about the current commercial crew development efforts? Do you
have a sense they are being undertaken in a way that will ensure the
maximum safety and efficiency of operations?
Answer. Personally, I am pleased to see many of my colleagues who
have joined the commercial providers to advise them regarding safety
requirements and I believe they are keeping the lessons learned from
human space flight firmly in mind. I believe that the commercial
providers are attempting to find the best balance between mission
capability, cost-efficiency, and safety. The FAA and NASA have been
working for the past several years in a partnership arrangement toward
ensuring commercially-developed human-rated systems for low-Earth orbit
are safe and effective. Leveraging the previous launch and mission
experience from these two agencies ensures the maximum safety and
efficiency of operations for these commercial human space flight
missions.
Question 5. Does FAA have the resources and tools it needs to
regulate and license commercial space launches and re-entries? On orbit
activities?
Answer. The FY 2013 President's Budget Request represents the best
prioritization and allocation of U.S. Government resources, given the
challenges and opportunities facing our Nation. The FAA team is working
with intensity and efficiency to manage a growing level of activity,
much of which is expected to result in a significant increase in the
number of commercial launches. FAA's dedicated professional staff must
have the time and tools necessary to carry out vital functions.
Particularly significant is our finding that Field Offices are critical
both to our understanding of transportation operations and to enhancing
our key relationships with other U.S. Government entities, such as NASA
and the Air Force. The field is where it's happening, and the FAA must
be there to provide operational safety oversight, speed up
communications and efficiency, and strengthen partnerships with the
many stakeholders in commercial space operations. To address this
urgent need, we are moving headquarters staff to field assignments,
recruiting new field personnel, and adding contractor support where
appropriate to maximize efficiency.
While the FAA has authority over launch and reentry, the FAA does
not have authority to regulate the operation in orbit of commercial
transport spacecraft. As mentioned previously, as the industry evolves,
there may be a need to consider expanding or modifying the FAA's
statutory authority to ensure safety in the areas of transportation on-
orbit as well as launch and reentry.
We look to the continued support of the public and of Congress as
we move forward in carrying out our mission to encourage, facilitate,
and promote commercial space launches by the private sector while
protecting the public safety, national security, and foreign policy
interests of the United States.
Question 6. Are you concerned about conflict of interest at FAA
between safety and promotion and if so what should be done about it?
Answer. We respect the wisdom of Congress in directing the
Secretary of Transportation, and through subsequent delegation, the FAA
Office of Commercial Space Transportation (AST), to have regulatory
oversight of the public safety for commercial launch and reentry and to
``encourage, facilitate, and promote'' the commercial space
transportation industry. To simplify, we will refer to these latter
roles as ``promotion.'' The safety and promotional roles of the FAA are
essential, and reinforce each other. One of the most important means of
promoting the growth of any industry is to provide assurance of safety,
at levels appropriate for that particular industry's phase of
development. Furthermore, the FAA's promotional role is needed to
encourage economic growth in an industry sector facing unique
technical, policy, and economic challenges. As Congress has recognized,
promoting the U.S. commercial space launch industry contributes to U.S.
aerospace preeminence. Further, a U.S. commercial space launch industry
is essential to assure access to space for Government and commercial
users.
At this time, access to and activity in the space environment are
physically difficult, and opportunities involving space are still not
well understood in the business community. Promotional activities
include education, technical research, market studies, facilitation of
industry dialogue, and outreach to enhance public awareness. The FAA
Center of Excellence for Commercial Space Transportation (COE-CST) is
an excellent example of the FAA's vital promotional role. The COE-CST
represents an expansion of a highly successful FAA network of COEs in
non-space fields, focused on key aviation technology and safety issues.
Each COE involves a partnership between the FAA and major universities
to carry on research vital to improvement and growth of transportation
services. There is a one-to-one match of Federal and university-team
resources to fund the COEs. University-led teams arrange the
participation of industry as well as non-Federal Government entities.
Both financial and in-kind contributions help university teams satisfy
their requirement for matching funds. For the COE-CST specifically,
research initiatives are divided into four categories: (1) space
traffic management and operations, (2) space transportation operations,
technologies, and payloads, (3) human spaceflight, and (4) space
transportation industry viability.
The investment community, insurance firms, legal establishment--and
most of all, potential customers--are reassured when Government
provides promotional initiatives to highlight unfamiliar opportunities,
coupled with appropriate safety regulations to reduce risk. When the
United States desperately needs new job creation, we should not deprive
the marketplace of vital promotional and regulatory support.
Although the FAA's promotional and regulatory roles are mutually
supportive, we do recognize the need for these functions to be kept
independent of specific promotional activities. Accordingly, AST's
licensing and inspection teams operate separately from the other units
of AST. By maintaining a sound safety decisionmaking process, embracing
a strong safety culture, and remaining vigilant to potential safety
concerns, the FAA effectively satisfies both the public's need for
safety and our Nation's need for a growing commercial space
transportation industry.
______
Response to Written Questions Submitted by Hon. John Boozman to
Colonel Pamela Melroy
Federal Aviation Administration
Question 1. By law, the FAA may not propose regulations for
occupant safety until October 2015. In your testimony you state that
you anticipate that occupant safety regulations will be a major
undertaking, and will require a comprehensive regulatory framework to
eventually be proposed through a suite of rulemaking activities. Can
you describe your efforts in this regard? And how you see the roles of
FAA and NASA regarding public safety and mission assurance?
Answer. The FAA is making good progress in preparing ourselves for
the challenge of regulating occupant safety of commercial human space
transportation after the moratorium ends in 2015. We have assembled a
team to define the approach and do the groundwork for this regulatory
framework. The team's activities include:
Studying other human safety requirements such as the NASA
Commercial Crew Program requirements, aviation safety
regulations, and various human rating studies.
Identifying and documenting ground rules and assumptions to
ensure we are focusing on known, reasonably avoidable risks and
realistic operations in the near term.
Soliciting industry input on a variety of technical topics
through our Commercial Space Transportation Advisory Committee,
COMSTAC.
Studying the current industry designs of human spacecraft to
understand the different ways current commercial providers are
thinking about addressing occupant safety.
Identifying best practices and lessons learned for the use
of standards and guidance documents from other regulatory
organizations and NASA.
Regarding our roles, the FAA is currently responsible for public
safety for commercial launches and reentries. NASA is responsible for
all aspects of safety--public and crew--and mission assurance for its
government-owned and operated space vehicles such as the International
Space Station (ISS) and Orion Multi-Purpose Crew Vehicle. For
commercial crew services to and from the ISS, NASA and the FAA have
agreed that the FAA will oversee public safety through its regulations
and NASA will oversee mission assurance and crew safety through its
contracts.
Question 2. You also state that the FAA is funding a study, to be
released this summer, to evaluate the potential growth in commercial
suborbital activity. What prompted this study?
Answer. The commercial suborbital reusable vehicle (SRV) industry
represents an important new economic sector in its own right, as well
as a potential source of near-term revenue helping developers pursue
longer-term orbital system design. Given the relative novelty of
commercial SRVs, and the widespread uncertainty regarding potential
customer demand for such services, the FAA Office of Commercial Space
Transportation (AST) commissioned a market demand study to be carried
out by a highly respected market research firm, The Tauri Group. AST
collaborated with Space Florida to fund this effort and the study was
released on July 31, 2012.
One of the hallmarks of this market research initiative was open
and continuing communication with stakeholder groups, both within and
outside the suborbital vehicle development community. Extensive contact
with potential customer groups yielded valuable information concerning
the course that market expansion might take. And, although human
spaceflight services were considered a very important source of market
demand, it was important to have the study address several other market
areas as well (e.g., test/demonstration, scientific research). By
appropriately characterizing market scope, as well as intensively
interacting with both prospective providers and potential customers,
the study promises to make a significant contribution to better
understanding space-related business opportunities.
Question 3. Recently, the FAA and NASA signed an agreement to
coordinate standards for commercial space travel of government and non-
government astronauts to and from low-Earth orbit and the ISS. Can you
please describe this agreement and responsibilities from the FAA point
of view? Can you assure me that FAA will insist that commercial crew
carriers meet the same safety requirements that our other human
spacecraft meet?
Answer. The FAA and NASA have complementary and interdependent
interests in ensuring commercially-developed human-rated systems for
low-Earth orbit are safe and effective. Our agencies have been working
in a partnership arrangement in achieving our common interests for the
past several years and recently signed a Memorandum of Understanding
for the Achievement of Mutual Goals in Human Space Transportation.
Through this agreement our agencies commit to support the transition to
commercial transport of Government and non-Government participants to
low-Earth orbit in a manner that precludes conflicting requirements and
multiple sets of standards. This agreement further states NASA intends
that all launches supporting ISS crew transportation services will be
licensed by the FAA for public safety. More specifically, the FAA will
license for public safety on launch and reentry consistent with our
authority, and crew safety and mission assurance will remain the
responsibility of NASA for all phases of flight (launch, on-orbit, and
reentry).
The FAA will ensure the commercial crew carriers meet the same
launch and reentry public safety requirements that other orbital
missions have previously as the licensing process, applicable
regulations, and application reviews and assessments are the same.
Given the moratorium on regulating occupant safety, the FAA may not
exercise its authority to ensure commercial crew missions meet the same
occupant safety requirements of other past human space flight missions
absent certain circumstances including a death, serious injury, or an
unplanned event that posed a high risk of death or serious injury. To
date the only U.S. orbital human space flight missions have been
carried out by NASA. We are, and will continue to be focused, and will
collaborate with NASA, on understanding orbital transportation safety
issues. When the time comes to regulate occupant safety, the FAA will
do so ever mindful of what we have learned from NASA's experience and
will also draw from our own expertise to best ensure that commercial
human space flight is safe for occupants and the public alike.
______
Response to Written Questions Submitted by Hon. Bill Nelson to
Gerald L. Dillingham, Ph.D.
Indemnification
Question 1. Dr. Dillingham, would you please compare the impact of
allowing the current indemnification policy to expire against the risk
to the government of extending the policy?
Answer. If the current indemnification policy is extended, the
Federal Government risks having to pay third-party claims in the event
of an accident; if the policy is ended, the risk becomes potentially
damaging the competitiveness of the U.S. commercial space launch
industry. However, comparing the impact of allowing the current
indemnification policy to expire against the risk to the government of
extending the policy is difficult as there are many unknowns regarding
the actual effects of ending indemnification. Specifically, we do not
know how ending indemnification would affect commercial space launch
companies. For example, launch companies' insurance premiums or other
costs and the availability of coverage might change. In addition, we do
not know whether or to what extent launch customers might choose
foreign launch companies over U.S. companies. Furthermore, it is
difficult to separate out the effects of withdrawing indemnification on
the overall price competitiveness of the U.S. commercial space launch
industry as the cost of third party liability insurance for launch
companies is small--about 1 percent of the dollar amount of coverage
they purchase. In addition, launch companies with whom we spoke said
that ending indemnification would increase their potential for
significant financial losses for third party claims, which could cause
them to reassess whether the benefits of staying in the launch business
outweigh the risks.
Our work also identified other ways of managing catastrophic risk
in lieu of extending or eliminating indemnification. Although we did
not conduct specific work to analyze the feasibility of alternative
approaches for providing coverage currently available through
indemnification, some of these approaches have been used in areas that
can result in catastrophic losses such as natural disasters. Some of
these methods involve the private sector, including going beyond the
traditional insurance industry, in providing coverage, and include the
use of catastrophe bonds or tax incentives to insurers to develop
catastrophe surplus funds. Other methods aid those at risk in setting
aside funds to cover their own and possibly others' losses, such as
through self-insurance or risk pools. Still other methods, such as
those used for flood and terrorism insurance, involve the government in
either providing subsidized coverage or acting as a backstop to private
insurers.
Question 2. If we decide to extend the indemnification policy, what
future industry conditions would indicate that we can phase it out?
Answer. The amount of third party liability coverage the insurance
industry is willing to provide for a single launch would be a key
factor indicating whether Federal indemnification could be phased out
because it would determine the extent to which the industry might be
able to potentially replace coverage available from the Federal
Government. While the maximum coverage available is currently around
$500 million, which is above the average FAA insurance requirement of
around $99 million per launch and the highest requirement for any
individual launch (around $260 million), this might not always be the
case. According to some insurers we spoke to, a space launch accident
with large third-party losses could significantly reduce the amount of
coverage insurers are willing to provide. Other factors that affect the
amount of coverage insurers are willing to provide include the number
of insurers in the space launch market, the size of the premiums
insurers are able to charge compared to the size of the potential
losses, and the affordability to launch companies of the higher
premiums insurers would need to charge for higher coverage amounts.
______
Response to Written Questions Submitted by Hon. Kay Bailey Hutchison to
Gerald L. Dillingham, Ph.D.
FAA Regulatory Activity
Question 1. In GAO's opinion, does FAA have the resources and tools
it needs to oversee commercial space launches and reentries? Eventual
on-orbit activity?
Answer. Yes, we believe that FAA currently has the resources and
tools it needs to oversee commercial space launches and reentries. In
2006, we raised concerns that FAA's experience in human spaceflight was
limited because its launch safety oversight had focused primarily on
unmanned launches of satellites into orbit using expendable launch
vehicles. Thus, we recommended that FAA assess the levels of expertise
and resources that will be needed to oversee the safety of the space
tourism industry and the new spaceports under various scenarios and
timetables. In response to our recommendations, FAA's Office of
Commercial Space Transportation hired 12 aerospace engineers. In
addition, since our report, FAA has established field offices at
Edwards Air Force Base and NASA's Johnson Space Center in anticipation
of increased commercial space launches including NASA-procured launches
to the International Space Station and space tourism flights.
Nonetheless, it will be important that FAA continue to monitor its
resources and tools as NASA-procured launches and space tourism flights
begin. FAA does not have statutory authority to regulate on-orbit
activities. Decisions the Congress makes about FAA's authority in the
future, such as whether FAA will license on-orbit activities, could
affect FAA's workload and need for expertise.
Question 2. Has GAO found any inherent conflict between FAA's dual
roles of both promoting and regulating commercial space activity? What,
if anything, should be done to monitor and evaluate this potential
conflict?
Answer. Yes, an inherent conflict exists between FAA's dual roles
to promote and regulate commercial space activity. However, we found no
evidence that FAA's promotional activities--such as sponsoring an
annual industry conference and publishing industry studies--have
negatively affected its regulatory role. We continue to stand by our
2010 assessment of the issue and see no need for Congress to step in at
this time to require a separation of regulatory and promotional
activities. However, FAA and Congress must remain vigilant that any
inappropriate relationship between FAA and the industry--which is
periodically asserted regarding FAA and the airline industry--does not
occur with the commercial space launch industry. The situation should
be monitored because potential conflicts may arise as the space tourism
sector develops.
Risk Indemnification
Question 3. How important is Federal third-party liability
indemnification to the growth of the commercial space launch industry?
Answer. The growth of the U.S. commercial space launch industry
will, in great part, depend on customer demand for launches carried out
by U.S. launch companies. Several launch company representatives and
customers told us that two key factors--launch price and launch vehicle
reliability--generally determine the competitiveness of launch
companies. To the extent that potential third-party liability coverage
provided by the Federal Government helps control or reduce the costs of
U.S. launch companies, it will be important for the competitiveness and
growth of the U.S. commercial space launch industry. While the actual
effects on competition of eliminating indemnification are unknown,
several launch company representatives said that the lack of government
indemnification would decrease their global competitiveness by
increasing launch costs.
Question 4. What do you believe would be an appropriate period of
time for an extension of FAA's indemnification authority?
Answer. While evaluating an appropriate period for an extension of
the U.S. indemnification program was not part of our work, Congress may
wish to consider at least two factors in determining a period of time
for a potential extension. First, a planned increase in the number of
manned commercial launches--expected to begin in 2017--could have
implications for the Federal indemnification program that are not yet
known. Second, if the commercial launch industry found it needs to
consider private, third-party liability insurance to replace coverage
currently provided by the government, this change could require a
significant amount of time to implement.
Question 5. What did your review find with regards to the need for
third-party insurance if on-orbit operations are regulated by FAA?
Answer. Our study found mixed views on the need for third-party
indemnification for on-orbit activities. FAA licenses commercial
launches and reentries but does not license on-orbit activities.
Federal indemnification only applies to FAA-licensed space activities.
Two launch companies with which we spoke do not believe that FAA needs
to regulate on-orbit activities or provide Federal indemnification as
activities between the launch company and the International Space
Station will be covered by NASA launch contracts. However, one
insurance company noted that other proposed manned launches--such as an
on-orbit ``hotel'' that is in development--will not be covered in NASA-
related contracts and will not be covered by any regulatory regime. If
FAA is granted authority to license on-orbit activities, then Federal
indemnification would be provided. If this were to occur, the Federal
Government's potential costs to cover third party claims may increase
as its exposure to risk increases.
Question 6. The capacity of the space launch insurance industry was
cited as a reason for the shared-risk third-party liability provisions
enacted into law in 1988. Has the insurance industry developed that
capacity to sustain third-party losses?
Answer. Some insurers and brokers suggested that the maximum amount
of private sector third party liability coverage the industry is
currently willing to provide is generally around $500 million per
launch. One broker said that no launch company thus far has pursued
private sector insurance protection above $500 million. Two insurers
said that there might be slightly more coverage available beyond $500
million, and one said that up to $1 billion per launch in liability
coverage might be possible in the private insurance market. According
to FAA data on commercial launches, the average maximum probable loss
is about $99 million. As a result, in the absence of Commercial Space
Launch Act Amendment (CSLAA) of 1988 indemnification, insurers could
still provide some of the coverage currently available through the
government under CSLAA. For example, if the maximum probable loss for a
launch is $100 million and the insurance industry is willing to offer
up to $500 million in coverage, the private market could potentially
provide $400 million in additional coverage.
Question 7. How can Congress determine if the insurance industry's
capacity for third-party liability can accommodate the anticipated
changes in and types of commercial space launches?
Answer. Whether the insurance industry has capacity to provide
third party liability coverage for future commercial space launches,
given the anticipated changes in the types of launches, would depend on
the amount of insurance coverage FAA required for those launches. It is
not yet clear how such changes might affect FAA's determination of the
required insurance coverage. However, the amount of such coverage the
insurance industry is currently willing to provide--around $500
million--is above the average amount of insurance required by FAA for a
launch license (around $99 million) and the highest amount currently
required for a single launch (around $260 million). As a result, even
if FAA were to double the highest amount of insurance required, the
insurance industry would currently have the capacity to provide that
coverage.
Other Questions for GAO
Question 8. What are some of the key factors that the Congress
should consider as it deliberates on the reauthorization of the
Commercial Space Launch Act?
Answer. The Federal Government's provision of third party liability
insurance is the only element of the Commercial Space Launch Act
Amendment (CSLAA) of 1988 indemnification policy that expires this
year. As Congress deliberates on its reauthorization, there are two key
factors raised by the planned increase in manned commercial launches.
First, we have recommended that FAA update how it assesses Federal
liability. FAA's methodology for determining the maximum probable loss
for a commercial space launch and reentry, which determines the amount
of insurance coverage launch companies must buy and the amount above
which government indemnification begins, is outdated and should be
reassessed.
Second, having people on board a space vehicle raises issues of
informed consent and cross waivers, which could affect third party
liability and the potential cost to the Federal Government. The CSLAA
requires passengers and crew on spaceflights to be informed by the
launch company of the risks involved and to sign a reciprocal waiver of
claims (also called a cross waiver) with the Federal Government--which
means that if an accident occurs the party agrees not to seek claims
against the Federal Government, which would have licensed the launch.
The CSLAA also requires cross waivers among involved parties in a
launch except for spaceflight passengers. However, according to
insurance companies and legal experts that we spoke with, requiring
cross waivers among crew, the launch company, and other involved
parties may not minimize potential third party claims as they would not
place limitations on liability. Without a limitation on liability,
insurance premiums for third party and other launch insurance coverage
could increase as the same small number of insurance companies insures
passengers, crew, launch vehicles, and third parties to a launch.
Launch and insurance companies believe that a limit or cap on passenger
liability could decrease uncertainty and, consequently, decrease the
price of insurance. As a result, according to the Federal Aviation
Administration, putting a limitation on spaceflight passenger liability
could foster the development of the commercial space launch industry
through lower costs for insurance and liability exposure.
Question 9. How does U.S. involvement in the commercial space
launch industry differ from foreign government involvement?
Answer. Our most recent work compared third party liability
coverage among countries. We found that the United States provides less
total third party liability coverage than China, France, and Russia,
according to published reports. Like the United States, each of these
countries requires launch companies to be responsible for third party
claims up to a certain amount (called first tier coverage) with
government coverage provided for claims above that amount. These
countries each have an indemnification regime in which the government
states that it will assume a greater share of the risk compared to that
of the United States because each country has no limit on the amount of
government indemnification. By comparison, the United States caps
government indemnification at $1.5 billion, adjusted for inflation,
beyond the first-tier insurance amount. However, U.S. Government
coverage, in some cases, begins at a lower level than that of the other
countries because U.S. coverage begins above the estimated maximum
probable loss, which averaged about $99 million for active FAA launch
and reentry licenses as of January 2012 and ranged from about $23
million to $267 million. The level at which government coverage begins
for the other three countries ranged from $79 million to $300 million.
However, for all these governments, including the United States',
commitments to pay third party claims have never been tested because
there has not been a third party claim that exceeded a private launch
company's insurance. In addition, like other countries, the United
States provides other forms of support for the commercial space launch
industry, including funds to develop launch vehicles, access to Federal
launch sites, and launch contracts.
______
Response to Written Questions Submitted by Hon. John Boozman to
Gerald L. Dillingham, Ph.D.
Question 1. Please provide an update on the status of your
recommendations to the FAA regarding their indemnification processes.
Answer. We recommended in our July 2012 report on commercial space
launch indemnification that FAA review and periodically reassess its
maximum probable loss methodology.\1\ DOT responded that it will
consider our recommendation.
---------------------------------------------------------------------------
\1\ GAO, Commercial Space Launches: FAA Should Update How It
Assesses Federal Liability Risk (Washington, D.C.: July 30, 2012).
Question 2. Should the Congress extend the indemnification
authority before GAO's recommendations are implemented?
Answer. The answer would depend on the importance Congress places
on the accuracy of FAA's determination of the amount of third party
liability insurance coverage that launch companies must obtain to
receive a launch license, as compared to the potential effect of
waiting to reauthorize the program. A more accurate determination could
better ensure that the Federal Government's exposure from the program
is neither overstated nor understated, but several launch companies and
customers we spoke with said that ending Federal indemnification could
potentially decrease the competitiveness of U.S. launch companies.
Congress may also want to consider that it is not yet clear whether an
improved methodology will increase or decrease FAA's estimates of the
maximum probable losses associated with FAA licensed launches.
______
Response to Written Questions Submitted by Hon. Kay Bailey Hutchison to
Michael N. Gold
Bigelow Inflatable Modules
Question 1. Can you provide any detail, or at least a general
description, of the microgravity research capabilities of your
inflatable modules?
Answer. As the name indicates, our BA 330 habitats will offer an
unprecedented 330 cubic meters of internal volume per module to support
microgravity research, development, and manufacturing. Although a
single BA 330 can operate as an independent space station, our habitats
allow for a modular approach, and with several habitats ganged
together, individual modules could be entirely dedicated to micrograv
R&D if NASA or any other client (or combination of clients) wishes to
lease the habitats for such activities. Moreover, as opposed to the
International Space Station (``ISS'') client astronauts aboard a
Bigelow station will be able to dedicate all of their time to
microgravity research and development (or whatever activity they so
choose) without the burden of station operations and maintenance which
will be addressed entirely by Bigelow Aerospace (``BA'') personnel. We
believe that this ability for client astronauts to focus exclusively on
microgravity R&D will dramatically enhance the quality and utility of
their work and help to ensure that public and private customers receive
substantial benefits from their orbital operations.
In regard to hardware, the BA 330 will offer customers unparalleled
flexibility in terms of the micrograv R&D environment. Our spacecraft
have been designed to allow for Bigelow Aerospace to tailor the
internal architecture to meet clients' needs in ways that might not be
possible aboard the ISS. We believe that this inherent flexibility will
be another contributing factor to ensure that clients receive
substantial value from their micrograv R&D activities.
Question 2. What are the key differences between the environment
provided there and that provided by the International Space Station,
from a scientific research perspective? (e.g., active rack isolation
capability.)
Answer. Volume is a key benefit of an expandable habitat
architecture versus a traditional rigidized metallic structure such as
the ISS. As mentioned above, with several BA 330s ganged together,
entire habitats could be exclusively dedicated to microgravity R&D and/
or manufacturing. Additionally, unlike the ISS which is an inherently
open environment, Bigelow Aerospace will provide sovereign clients with
the ability to conduct proprietary scientific research. Particularly in
the extremely competitive pharmaceutical and biotech world, this
ability to conduct work in a confidential manner will be critical in
enhancing the value of orbital activities for both countries and
companies.
Safety is also a vital issue both for conducting scientific
research and for overall space station operations. Bigelow Aerospace
expandable habitats will offer better protection than the ISS from both
physical debris and radiation. As a matter of fact, the ability of
expandable habitats to provide enhanced protection from radiation
during a long duration human mission to Mars is one of the primary
reasons that NASA initiated the `TransHab' program over 20 years ago.
Flight frequency and repeatability are also critical needs that the
micrograv R&D community requires. Particularly for scientific research
in the pharma/biotech industry, researchers must have the opportunity
to iterate experiments, just like in a terrestrial laboratory. Of
course, a key aspect of giving scientists this capability is ensuring
that costs are sufficiently low to allow for repeated, frequent
flights, and this is another difference between the ISS and BA
micrograv capabilities. Assuming safe, reliable, and affordable
commercial crew transportation comes to fruition, BA expects to be able
to offer its clients robust access to the microgravity environment at
costs that are substantially lower than those of the ISS, which will in
turn support more frequent launches and thereby dramatically improve
the ability to rapidly iterate experiments bolstering the quality and
utility of the microgravity R&D conducted aboard BA habitats.
Additionally, leasing volume and flying astronauts with Bigelow
Aerospace will be a relatively simple and straightforward process,
allowing researchers to focus on their work instead of on coping with
the substantial domestic and international bureaucracy that has grown
up around the ISS. Finally, the ability to fly a country's or company's
own personnel to conduct research rather than relying on others will be
a fundamental difference for scientists between working with Bigelow
Aerospace and the ISS.
Question 3. From an orbital mechanics point of view, would it even
be possible for a commercial crew or cargo vehicle to conduct a mission
in which it could make two separate ``stops'' in one flight--one to the
space station and one to a Bigelow module?
Answer. If a Bigelow station shared a similar orbit, inclination,
and altitude as the ISS, making separate stops at each space station
would be theoretically possible and potentially beneficial. Per my
prepared testimony, the key issue for this or any other crew/cargo
delivery is cost. If a model is adopted that provides an opportunity
along the lines of what we see happening with secondary payloads today,
wherein the launch cost paid by the secondary payload provider is
relatively minimal, then a spacecraft making more than one stop could
be attractive. However, if the price paid by the equivalent of a
secondary payload provider under this scenario becomes too high, then
the transaction costs and other inherent difficulties of such
operations lose their value.
Commercial Market
Question 4. You represent one of the potential customers for
commercial services, as well as a destination for such services. What
are your thoughts about the potential growth of a market for these
systems once they are operational?
Answer. The potential for growth is limitless. Bigelow Aerospace
envisions eventually operating not just one, but numerous stations in
LEO to support burgeoning commercial activities. Per my previous
testimony, we believe that there will be strong global demand for
astronautics opportunities and that microgravity research, development,
and manufacturing has great future potential. However, for this market
to develop commercial crew systems must not just be operational but
must be able to offer safe, reliable, and affordable services. If per-
seat prices remain at the current levels that NASA is paying for Soyuz
it would be extremely difficult if not impossible to close a private
sector driven business case.
Question 5. How important is Federal third-party liability
indemnification to the growth of the commercial space launch industry?
Answer. Extension of third party liability indemnification is
absolutely critical to the growth of the commercial space launch
industry. Without Federal third-party indemnification costs will rise
and some companies may even drop out of the field entirely. Per
testimony from the GAO before the House in June, the U.S. already
provides less third-party liability indemnification coverage for
commercial space launches than other nations such as France, Russia,
and China. Even discussing the possibility of abandoning the U.S.'s
already weak third-party indemnification has negative repercussions and
allowing the current indemnification regime to expire would represent a
substantial failure by Congress that could cripple America's commercial
space launch industry.
______
Response to Written Questions Submitted by Hon. John Boozman to
Michael N. Gold
Question 1. As a representative of a potential user of commercial
launch services, what is your view of the indemnification authority
provided to FAA by the CSLA?
Answer. Extending third-party indemnification is critical to the
future of the American commercial space launch industry. Per testimony
from the GAO before the House in June, the U.S. already provides less
third-party liability indemnification coverage for commercial space
launches than other nations such as France, Russia, and China. Even
discussing the possibility of abandoning the U.S.'s already weak third-
party indemnification has negative repercussions and allowing the
current indemnification regime to expire would represent a substantial
failure by Congress that could cripple America's commercial space
launch industry.
Moreover, in our view, such an extension could and should be
combined with lifting the FAA-AST's regulatory moratorium. Per my
testimony, the FAA-AST is the only organization with the proper staff,
structure and experience to play this regulatory role, and ensconcing
this authority with the FAA-AST will allow insurers, commercial crew
providers, and NASA to eliminate potential areas of confusion, as well
as bolstering Congress's ability to extend the third-party
indemnification regime with a high degree of confidence.
Question 2. Indemnification authority expires at the end of this
year. Should Congress extend it, and if so, how long?
Answer. Ideally, indemnification should be extended indefinitely.
Making the indemnification permanent would send a strong message to
companies, insurers, and global competitors that America is serious
about regaining its position as the world's commercial space launch
leader.
Question 3. What would be the impact if indemnification authority
was NOT extended?
Answer. Failure to extend indemnification authority would
unquestionably result in higher prices and could even force some
companies out of the crewed commercial space launch field entirely. In
addition to a broken export control system, failing to extend
indemnification authority would further aggravate a domestic regulatory
environment that provides significant advantages to America's European,
Chinese, and Russian competitors.
Question 4. In your prepared statement you mention that ISC
Kosmotras, the joint Russian/Ukrainian launch provider, was able to
offer a launch for one third the cost of U.S. domestic providers. You
recommend that this Committee focus on price, so as to deliver at costs
that allow for development of truly competitive services. Can you
provide some insight on how we should do that?
Answer. First and foremost, the Committee should request that the
GAO confirm NASA's ability to provide mandatory safety requirements
under a Space Act Agreement (``SAA''). Confirming that such
requirements may be developed and implemented under the auspices of a
SAA will help to avoid problems that could result in significant future
programmatic cost increases. Additionally, hearings should be held on a
regular basis with the Commercial Crew Integrated Capability
(``CCiCap'') participants and relevant NASA officials to establish what
the various spacecraft expenses will be. If astronaut seat costs
remains in the range of current Soyuz pricing then the Committee should
investigate why no progress has been made on costs and work with NASA
and the CCiCap participants to address any issues that would prevent
the commercial crew program from living up to its promise of providing
safe, reliable, and affordable transportation to Low Earth Orbit
(``LEO'').
Question 5. NASA has expressed a strong desire to keep as many
competitors in the process as long as possible. It is felt that this
will continue to drive the ultimate cost down. This is somewhat true as
long as there are multiple entities working in parallel on this
development. But the companies have to cover their costs. They have to
make some profit. In the end, final decisions will have to be made to
down-select, as NASA has now agreed to do during the CCiCap phase of
commercial crew development. Eventually, prices for crew transportation
will depend to some degree on how many competing companies survive.
That will depend on the market. In your view, will the market support
more than one commercial provider of crew transportation services?
Answer. As background, we fully support the agreement that was
struck between Congressman Wolf and Administrator Bolden to proceed
with no more than 2.5 CCiCap participants. While NASA may have a strong
desire to keep as many competitors in the process as long as possible,
this desire must be subordinated to harsh fiscal realities. In these
austere financial times, Federal funding has been and will continue to
be limited. Therefore, NASA must proceed cautiously and husband its
resources as carefully as possible by only providing CCiCap funding to
companies that have the greatest chance of successfully fielding safe,
affordable, and reliable commercial crew transportation systems.
Ultimately, we believe the market will support more than a single
commercial crew provider. Our hope is that at least two companies will
produce operational spacecraft avoiding U.S. public and private
reliance on a single system. Monopolies result in high prices and
little to no innovation, and with some of the recent problems
experienced by the Soyuz, NASA has already become all too familiar with
the financial and substantive dangers of complete dependence on a
single spacecraft.
Combined demand from Bigelow Aerospace and NASA will create
sufficient demand to support two providers. Moreover, Bigelow
Aerospace's future plans include launching multiple stations each
serving distinct customers and orbital market segments. With a growing
number of destinations in LEO, market opportunities for commercial crew
systems will increase providing sufficient demand for multiple entrants
and engendering robust and beneficial competition among such providers.
Question 6. While U.S. cooperative programs with Russia were
expanding in the 1990s, including Russia joining the space station
international partnership in 1993, it also became clear that Russia was
a source of sensitive technology to Iran. The Iran Nonproliferation Act
of 2000 was enacted to help stop foreign transfers to Iran of weapons
of mass destruction, missile technology, and advanced conventional
weapons technology, particularly from Russia.
Among other things, that Act banned cash or ``in kind'' payments by
any agency of the U.S. Government to Russian Government agencies or to
any entity under their jurisdiction or control for work on the
International Space Station or for obtaining goods and services
relating to human spaceflight. This provision has raised difficulties
regarding U.S. access to the International Space Station. When the
President in 2004 announced that the Space Shuttle would be retired in
2010, the Russian Soyuz became the only vehicle available after that
date to transport astronauts to and from the ISS. In 2005 Congress
amended INA to exempt Soyuz flights to the ISS from the ban through
2011 and in 2008 the exception was further extended through June 30,
2016. In your view, is a further extension necessary?
Answer. No, a further extension is neither necessary nor desirable.
While international cooperation in space is commendable, foreign
dependence is deplorable. Sending American taxpayer dollars and
astronauts to Russia as our only means of human spaceflight is an
embarrassment to NASA, the domestic space industry, and the Nation as a
whole. Over the course of the past twenty years NASA, reacting to the
leadership (or lack thereof) of past Congresses and Presidential
Administrations has initiated and subsequently canceled the National
Aero-Space Plane (X-30), the X-33, VentureStar, the X-34, the X-38, the
Space Launch Initiative, the Orbital Space Plane, the Crew Exploration
Vehicle, and the Orion (which has now been revived as the Orion Multi-
Purpose Crew Vehicle). Clearly, the traditional model that is being
followed via these programs is not working and has resulted in American
dependence on the Soyuz along with the loss of billions of dollars and
decades of time. Soyuz represents a crutch that would allow this
pernicious pattern to continue without serious repercussions. Our
recommendation is that this crutch be removed in order for the American
human spaceflight industry to regain the ability to stand on its own
two feet.
______
Response to Written Questions Submitted by Hon. Kay Bailey Hutchison to
Captain Michael Lopez-Alegria, USN (ret.)
Commercial Spaceflight Market
Question 1. You have made a point in your statement and elsewhere
that there does not need to be a ``choice'' between the development of
a commercial space launch capability and the development of the heavy-
lift and Orion crew exploration capability. Can you elaborate on that
point and about how that perspective can be more broadly shared by
advocates of both capabilities?
Answer. The NASA programs that utilize and support the commercial
spaceflight industry are non-competitive partners to SLS and Orion,
working toward a common goal of expanding the United States space
exploration capability. The programs have two different mission
objectives: NASA's goal when initiating the Commercial Orbital
Transportation Services (COTS) and Commercial Crew programs was to make
use of efficient commercial competitions for transportation to low-
Earth orbit and the International Space Station, so that NASA could
direct its resources and expertise towards exploration beyond. The
advancement of the commercial spaceflight industry helps reduce the
cost of access to space, therefore freeing up funds that NASA needs for
SLS, Orion and the rest of the deep space exploration architecture that
will use them.
Question 2. NASA is required by law to use commercial vehicles for
ISS transportation needs if they are available. Thus, for ISS
transportation, the Russian Soyuz would not represent a source of
competition. Do you see any other way in which U.S. commercial
transportation entities might be in competition with Soyuz? How do you
view the potential for that kind of competition and its impact on the
broader commercial market?
Answer. ISS transportation is not the sole market for commercial
launch providers. Satellites, scientific research payloads and space
tourism are all growing markets for commercial companies and are
markets in which the Soyuz could represent a source of competition. The
U.S. commercial providers project significant cost savings over the
Soyuz vehicle for crew transport to ISS, and we believe that commercial
companies will be extremely competitive on price, quality and safety in
several markets, with the Soyuz and other international vehicles.
Question 3. How important is Federal third-party liability
indemnification to the growth of the commercial space launch industry?
Answer. The commercial space launch industry is growing quickly and
many of the companies are still small and would have difficulty
carrying the financial burden of insuring launches without
indemnification. Without the third-party risk-sharing regime, these
companies would be forced to purchase more insurance, and that expense
would be passed on to the customer or absorbed by the company. Either
outcome would hurt the competitiveness of the American launch
industrial base, and discourage new companies looking to enter the
industry. Several overseas spaceflight companies receiving unlimited
indemnification from their governments, so it is vital for the U.S.
commercial space launch industry to have the regime in place to stay
competitive in the global marketplace.
Question 4. What are the main obstacles to Space Tourism?
Answer. The primary obstacles are availability of flights and
destinations, followed by expense and an uncertain regulatory
environment. Dennis Tito, the first ``space tourist,'' reportedly paid
$20 million to Space Adventures for his flight to the International
Space Station, and since that time seven additional flights have
occurred. In no cases have flights come available that were not filled,
even as the reported prices rose, suggesting that demand has
outstripped supply. Commercial orbital suppliers have been making
significant progress, and as those capabilities come online, supply
will increase. As in-space habitats and other destinations are
developed, demand will increase as well.
Meanwhile, several companies are rapidly developing suborbital
vehicles and accumulating flight reservations, with over 800 announced
so far. These flights, which have been quoted at price points of
$95,000-$200,000 per passenger, open the door to a much larger customer
base.
However, an unstable regulatory environment would threaten this
emerging industry. Human spaceflight is not easy, and these companies
are working through difficult design problems through rapid prototyping
and testing. Early human spaceflight regulations would short-circuit
that process and create serious problems for the industry.
Question 5. How does U.S. involvement in the commercial space
launch industry differ from foreign government involvement?
Answer. NASA is the undisputed leader among space agencies in
facilitating the development of commercial space launch, continuing
America's long tradition of independence and free enterprise. In many
other countries, spaceflight is solely the province of government. One
exception is the United Kingdom, which created the UK Space Agency in
2010 and promulgated a strategy to increase its development of
commercial space services. At this time, there are some commercial
space firms situated around the world, but few comparable to the
commercial industry in America. However, the success of American
commercial firms has begun to affect foreign space agencies that see
competitors to their government-supported companies, which could
trigger a broadening of the commercial space industry across the world.
When it comes to regulation, the picture is more complicated. All
of the largest foreign space faring nations completely indemnify
launches of their commercial space companies, above a relatively small
amount, for which the company generally buys insurance. This means that
their risk-sharing regime is only two-tiered, with no limit to the
government's indemnification. The U.S. on the other hand, has a three-
tiered system, with the government only covering up to $2.7 billion
past the Maximum Probable Loss (MPL).
Many other countries also feature much less restrictive export
restrictions on space hardware. America's ITAR regime is hurting our
space industrial base and raising prices for government purchases of
space equipment and services. As outlined in April's 1248 Report from
the Department of Defense, loosening some export controls would
engender a more vibrant industry while protecting our most advanced
technologies, and would in fact be a net benefit for national security.
Few countries have needed to contemplate the possibility of
commercial human spaceflight. The United Kingdom has begun to consider
policies on commercial human spaceflight regulation, and we are
optimistic that they will follow the licensing model that has been
pioneered here.
Question 6. The term ``commercial'' implies that a product or
service provider has other customers in addition to the U.S.
Government. Please provide any information you are able to share
regarding what customers other than NASA have been identified by the
commercial ISS service providers.
Answer. The current commercial ISS service providers are SpaceX and
Orbital, both of whom also sell their services to commercial customers.
Both companies have launched commercial payloads and have announced
future commercial payloads. Of the competing commercial crew companies,
all the winners of the latest round have announced that they are
launching on a ULA Atlas V or a SpaceX Falcon 9, vehicles with known
commercial customers.
But we anticipate that the prospect of human commercial
spaceflight, the advent of smaller micro-and nano-satellites and the
availability of regular flights will bring a broad array of new
commercial and non-NASA government customers, including those
interested in scientific research, earth observation, space
experiences, product sponsorship and media tie-in, and other
applications. As one example, only 50 of the world's 195 nations have
sent people to space, most through cooperative agreement with the other
governments. The advent of orbital commercial human spaceflight offers
some of the rest of those nations that opportunity.
______
Response to Written Questions Submitted by Hon. John Boozman to
Captain Michael Lopez-Alegria, USN (ret.)
Question 1. NASA has expressed a strong desire to keep as many
competitors in the process as long as possible. It is felt that this
will continue to drive the ultimate cost down. This is somewhat true as
long as there are multiple entities working in parallel on this
development. But the companies have to cover their costs. They have to
make some profit. In the end, final decisions will have to be made to
down-select, as NASA has now agreed to do during the CCiCap phase of
commercial crew development. Eventually, prices for crew transportation
will depend to some degree on how many competing companies survive.
That will depend on the market. In your view, will the market support
more than one commercial provider of crew transportation services?
Answer. The competition and assured capability that NASA gains from
having multiple vehicles in the competition is extremely valuable. I
believe that each of our member companies interested in competing for
the eventual Commercial Crew services contract has performed in-depth
proprietary research on the market for human spaceflight services. I
have not, and that makes it difficult to answer with certainty.
However, it is important to keep in mind that the market is dependent
on the price, and every Commercial Crew competitor has indicated that
they anticipate being able to offer NASA a price per seat below that of
the Soyuz. The men and women who run these companies are highly
successful businesspeople, and they would not be making that claim
without a deep understanding of their own market competitiveness.
Question 2. While U.S. cooperative programs with Russia were
expanding in the 1990s, including Russia joining the space station
international partnership in 1993, it also became clear that Russia was
a source of sensitive technology to Iran. The Iran Nonproliferation Act
of 2000 was enacted to help stop foreign transfers to Iran of weapons
of mass destruction, missile technology, and advanced conventional
weapons technology, particularly from Russia.
Among other things, that Act banned cash or ``in kind'' payments by
any agency of the U.S. Government to Russian Government agencies or to
any entity under their jurisdiction or control for work on the
International Space Station or for obtaining goods and services
relating to human spaceflight. This provision has raised difficulties
regarding U.S. access to the International Space Station. When the
President in 2004 announced that the Space Shuttle would be retired in
2010, the Russian Soyuz became the only vehicle available after that
date to transport astronauts to and from the ISS. In 2005 Congress
amended INA to exempt Soyuz flights to the ISS from the ban through
2011 and in 2008 the exception was further extended through June 30,
2016. Has your organization taken a position on whether or not a
further extension is necessary?
Answer. We support policies to ensure that the International Space
Station is safely maintained and utilized to the fullest extent
possible. If modifications to INKSNA are necessary to achieve that,
than they should be supported. We also believe that promptly creating
an American capability to supply crew to the International Space
Station is necessary to ensure safe maintenance and full utilization.