The Bumpy Path to the Launch Pad
Those early days were filled with drama getting the commercial space industry to a stable platform which would support the business of space transportation. Within the first two years, after a hard-fought interagency struggle over shuttle pricing, the companies were coming to OCST once again and saying, “OCST, you have to do something. We cannot operate under these conditions…” This time it was about the US Air Force contract to use the launch ranges.
Some Necessary Context
As one reads through this website, one cannot help but notice that NASA and the USAF seldom appear in a favorable light. In many instances, they even come across as opponents of the new industry, and at times are described in a manner that seems they were threatening the survival of the industry. However, if you asked the NASA Administrator or USAF Secretary whether the industry was important and needed to be supported, they would both unequivocally say, “yes”, and mean it. However, while top political leaders were saying this, institutional forces, culture, and instincts were at work.
The commercial industry and DOT’s role were brought into an oligopolistic world comprised of two “companies”, NASA and the USAF. At times they saw the new industry as a help, and sometimes as a threat. At times, they took simple actions based on their own internal agency interest that could unintentionally harm or kill the industry.
None of this was intentionally malicious. OCST and the commercial launch industry came into space occupied by two huge players, neither of which really wanted to make significant changes to create the necessary space for two new players which they really didn’t understand.
As narrated in an earlier section, the commercial industry and OCST were the by-product of an important battle between NASA and DOD/USAF, which DOD had lost. Although Americans saw the beautiful, pristine view of space through NASA’s eyes, behind the scenes were large bureaucratic battles between NASA and DOD for control and access to space. Prior to the space shuttle, NASA and the space programs of DOD (primarily USAF) had a symbiotic relationship. Cape Canaveral, the launch site for our most historic NASA launches, is owned and operated by the USAF as is Vandenberg Air Force Base which was used for all major polar orbit launches. While NASA owned the Delta and Atlas launch vehicles, the USAF owned the largest and most powerful vehicle, the Titan. They both used each others’ launch vehicles as necessary. When it got its space shuttle, and NASA got President Reagan to agree to eliminate the expendable launch vehicles, NASA had essentially eliminated the USAF from the launching business. Creating a private industry served a specific USAF objective: it restored the USAF’s access to space. (Note: At this point in time, “space” was a small part of the USAF mission. Only one relatively small organization, i.e. Space Command, represented this “side” function of the USAF, the real Air Force flew planes. Space at the time was not the career field that an aspiring, ambitious, up and comer would select, because “flying” and more specifically, “fighter jets” was where it was at. This made “access to space” an even more important issue for those in Space Command because, without a launch vehicle of its own, it could not get to space. The proposal of a “Space Corps” suggests that the paradigm is changing. )
Although everyone said they wanted this new industry to survive, no one wanted to change the status quo to make it happen. It was not just one thing, but many things. The Administration, especially NASA and USAF, thought an executive order was adequate and didn’t see any need for legislation. Agencies wanted to see Starstruck launch, but were skeptical about its safety and were reluctant to accelerate their reviews even though it threatened the company’s existence. Perhaps NASA supported the concept of a commercial industry, but it also wanted all available commercial cargo to fly on the shuttle, and undercut the prices of the commercial launch companies. The USAF would permit the industry to use its launch facilities as the executive order required, but only on terms favorable to the USAF. Both NASA and USAF levied impossible industry insurance requirements that were unaffordable and made policies unavailable.
Hence, much of this website is about changing the paradigm. If the descriptions sound like fights, actually they are about struggles of the “new guys” trying to find ways to push and shove the system to create breathing room and conditions so a new industry could grow. There was no end to this struggle. It included finding a pathway to legislation; trying to change the shuttle pricing model (genuinely a multi-agency battle); negotiating with the European Space Agency over subsidies; solving the liability insurance puzzle, changing the range use terms and conditions, and other issues mentioned on this site.
In the commercial world, the above scenario takes place daily on a huge, much more dramatic scale. In 2007 Nokia, Motorola, Sony and Blackberry had no plans to share market space with a new player, Apple; Apple had to take it. The same is true of retail and Amazon, or newspaper publishers and the internet.
It was the same for the commercial space industry, only with a slightly bizarre twist. The commercial space industry had to get its market share in a government marketplace. And many of the “commercial companies” were also former and/or current government contractors, accustomed to doing the government’s bidding. Fighting back was not in the new commercial companies’ DNA.
It is fortuitous that DOT was the lead agency. DOT, by nature, was an operational organization of 110,000 people. Its agencies built highways; managed a huge air traffic system; funded transit systems and airports; made pipelines, hazardous shipments, cars, airplanes, and trains safe; just to name a few things. DOT even had its own military service, i.e. the US Coast Guard. Thus the people in OCST came to the job with experience working with “no-nonsense doer” agencies like those in DOT or like NASA and the Air Force.
The Launch Range Agreements
Executive Order 12465 and the Commercial Space Launch Act gave the new commercial industry access to the national launch ranges, e.g. Cape Canaveral, Vandenberg, Wallops Island, White Sands, etc. While the companies had permission to use the facilities, the Executive Order and legislation provided minimal direction as to the terms and conditions for gaining access. Thus it was up to each agency overseeing the facilities to draft agreements/contracts that the companies would have to agree to in order to use the facilities.
In late 1986, the USAF issued a draft agreement that all commercial launch companies would have to sign as a condition of access to the launch facilities at Vandenberg and Cape Canaveral. The agreement was not a commercially viable contract. Having been written by government procurement experts, it was designed explicitly to put all the risk on the companies in order to protect US government interests. Its requirements for information disclosure, financial payment schedules, dispute resolution, contract termination, etc, would never be considered appropriate in a contract between two commercial parties. It was totally one-sided. However, without this agreement, companies could not gain access to the launch facilities they needed.
We approached the Air Force with the comments and opinions that the companies had expressed to us. The USAF officials were adamant; the agreement was reasonable in their opinion. When we raised specific examples, the response we got was, “No way are we going to change that.” Then the officials said, “If the companies have any problems, they should be talking to the USAF, not OCST.
The USAF issued a call to the companies for comments. The companies told us that if they responded to the USAF, they could not afford to be honest in their responses. They pointed out this was a “Catch 22”. The companies, who were also contractors to the USAF, could not complain to the same organization that managed their contracts without jeopardizing their business. But at the same time, they could not successfully operate as commercial operators under the onerous terms of the contract. That is why they had come to us.
There was nothing malicious about the USAF’s approach. They were acting as any government agency would have when dealing with a commercial entity in a new role. But the paradigm had to change. The problem was that the paradigm was not going to change without some mechanism to force the change.
We told the Air Force officials that we would have the companies submit their comments to us, and we would give the Air Force officials the comments. We asked the companies to provide their comments to COMSTAC. (Upon getting the lead agency role, Jenna Dorn had set about creating an advisory panel comprised of representatives from the space industry as well as industries with an interest. The advisory group was called the “Commercial Space Transportation Advisory Committee”, or COMSTAC. The committee was chaired by T. Allan McArtor, Senior Vice President for FEDEX Telecommunications.)
The comments posed a number of different challenges. The comments that came back were extensive and detailed. Virtually every section of the agreement was questioned. The contract was so one-sided, that traditional negotiations could produce only a less one-sided agreement, not the balanced agreement industry needed to operate. The nature of the changes that would have to be made to the agreement were beyond the authority of the USAF officials. Further, in order for the final agreement to be a balanced two-sided contract, it would run against what was considered to be traditional government interests. Already we had been told by the Air Force officials they were looking to make minor, not major changes.
Michael Goldfarb and I had reviewed all the comments and were confronted with a dilemma. How do we take these comments and turn them into something so powerful that it changed the paradigm to shape the final agreement without putting the individual companies at risk? How do we change the playing field in such a manner that this doesn’t become an endless process, never brought to completion. (Goldfarb was brought into OCST by Jenna Dorn, who considered him to be a big thinker, and he worked with her directly and on COMSTAC. He went to FAA with T. Allan McArtor; he later worked with Ross Perot and Ross Perot Jr; and finished up as an “aviation expert commentator” for CNN. While he was in OCST, he and I worked closely together on issues where we needed strategies to alter the playing field.)
It was my view that getting a solution to this problem was no different than getting the Department of State to transfer its “export launch license” to DOT or getting the Department of Justice to back off from their opposition to our proposed insurance rates. We could not force the USAF to change the agreement. The Air Force leadership, itself, had to want to change the agreement in ways that changed the paradigm. The only questions was how to get them to want that?
The COMSTAC Report
On January 30, 1987, Allan McArtor, sent Elizabeth Dole a ½” thick COMSTAC report, entitled Comments on the Draft U.S. Air Force “Expendable Launch Vehicle Commercialization Agreement”. The report contained the draft agreement broken down by section. Each section was followed by several pages of specific comments of each of the companies, however, none of the comments identified which company was its originator. It was virtually a side-by-side comparison of Air Force contract with the corresponding reaction from the entire industry. The comments were comprehensive, constructive, and fairly dispassionate. Occasionally some would compliment the USAF on a particular provision, and a few provisions had no comments. Replete throughout the comments on many provisions, however, appeared industry observations and remarks like these:
- “This is not compatible with a commercial approach to operation…
- “This is a deal breaker…”
- “This document not only fails to facilitate commercial activity, it was also produced exclusively for the large existing government contractors…”
- “There is no reason for the user to meet government quality assurance standards unless compensation is provided [to us] for…the additional costs.”
- “This article has the potential for causing potential customers and financiers to be very concerned…”
- “The disclosure of “all data” generated during the launch is a showstopper; it simply cannot be allowed.”
Taken together, it was possible to see how the agreement required a radical redesign and a departure from the traditional government thinking. The report was careful not to present the comments as criticisms of the Air Force, but instead as an “inside look” at the government’s commercialization process.
As a report from COMSTAC to the Secretary, the report was a public document and hundreds of copies had been printed. The space media and space community were interested in the barriers to a successful commercial space industry, and this report gave them an inside look. NASA and other agencies were interested from the perspective that they were still drafting their launch facility agreements. Congress also was interested. The report received wide coverage.
After getting over the initial shock and critical media reports about the agreement, Air Force officials got to work to try to come up with an innovative and completely new approach to the agreement. The Air Force asked for help, and for the first time, the industry with its long history of working as contractors to the government was working with the government as equals. The process became two-sided with the Air Force trying to understand the industry perspective and industry trying to help the Air Force devise ways that worked for both parties. It wasn’t easy. In the end, a fairly solid and equitable agreement was developed, at least as much as possible considering the emergency national defense needs that had to be accommodated.
Congressional interest in the national ranges continued, how the companies’ launch schedules were fitting into the overall government operations, and whether the companies could be competitive in that environment. On June 9, DOT Secretary, Sam Skinner, sent a report addressing their concerns, “Scheduling Commercial Launch Operations at National Ranges.” The report was favorable, pointing out that there were still some bugs, and offered recommendations for change.
On this issue, we had succeeded in changing the paradigm so that there was now room for commercial companies to operate. The two big players had conceded and made room for the incomers. There were many struggles like this, most much smaller in scale. Each time we succeeded, we created a more positive environment for the industry. Each time, however, we also walked away with more hard-earned scars.