NSDD ON COMMERCIALIZATION OF EXPENDABLE LAUNCH VEHICLES (ELVS)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP92B00181R001701600011-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 65
• Document Creation Date: December 27, 2016
• Document Release Date: December 29, 2011
• Sequence Number: 11
• Publication Date: April 28, 1983
• Content Type: MEMO

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28 April 1983
MEMORANDUM FOR: Deputy Director of Central Intelligence
FROM:
Director, Intelligence Community Staff
SUBJECT: NSDD on Commercialization of Expendable Launch Vehicles
(ELVs)
1. Action Requested: That you sign the attached memorandnmiforiarding
our comments on the subject NSDD on Commercialization of ELVs.
2. Background: In a 22 April memorandum (Tab 1), Judge Clark requested
comments on the subject NSDD and Implementing Guidelines on Commercialization
of Expendable Launch Vehicles (ELVs), (Tab 2) by 29 April 1983. Two related
issues are implicit in the subject NSSD:
Should the USG encourage and facilitate the commercialization
of US ELVs?
If yes, what is the proper pproach for facilitating the
commercialization of ELVs?
3. These issues have been addressed at this time because of the private
sector need for timely policy guidance to permit participation in a
competition for the launch of the Intelsat VI class of communication
satellites. ELV commercialization, however, has been under consideration for
some time and is consistent with the national space policy goal of expanding
"US private sctorijivestment and involvement in civil space and space-related
activities."
4. The study of this issue (Tab 3) was conducted by the SIG(Space) Space
Launch Policy Working Group which includes representation from the IC Staff
and the NRO Staff. The Working Group met with many of the companies that have
expressed interest in commercial ELV operations, reviewed a previous NASA
study of the issue, and conducted an economic analysis of the potential impact
on USG Shuttle operations. The Working Group endorsed commercialization of
ELVs and developed the implementing guidelines under consideration.
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5. The Working Group identified the following benefits to the USG that
could result from the commercialization of ELVs:*
- Enhancement of national security by having an alternative
nt of Shuttle roundin
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^ Tax revenues and reimbursements derived from the provision of
launch services;
Assumption by the private sector of overhead for ELV production
and launch operations previously borne by the USG;
A positive impact on the US balance of payments to the extent
that losses of launches to foreign competitors are reduced;
^ Complement to the Shuttle program to meet the demand of many
commercial users to have a US backup to the Shuttle to preclude
impacts caused by schedule perturbations;
An alternative for hazardous payloads or payloads that are
technically or economically not feasible to use with a manned
system;
An enhanced base of domestic technical production facilities
and associated manpower; and
Avoidance of some close-out costs associated with the
terminations of the present USG ELV contracts (and possible
partial recou ment of investment in residual boosters and
components).
6. The only disadvantage cited by the Working Group was the potential
economic effects that commercialization could have on the STS program. The
Working Group analyzed these economic effects using the following assumptions
and ground-rules:
? The concern is the loss of commercial and foreign users from
the STS to commercial ELVs, resulting in an increase in total
Shuttle operating cost to the USG.
Parenthetical statements added for completeness.
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The current four orbiter fleet will be maintained over the
1983-1994 baseline time period resulting in a capability of 24
flights per years in 1988 and beyond (total of 233 flights).
Six of the 24 flights per year are commercial and foreign. A
loss of half of these flights to ELVs (an average of three
flights per year from 1986-1994) was selected as a
representative example.
Future Shuttle pricing policy is uncertain. An "out of pocket"
pricing policy, to be used in the 1986-1988 time period, is
representative. This pricing policy does not recover full
Shuttle operating cost, but Shuttle price is more competitive
with Ariane charges and it is probably more consistent with the
STS mission model assumptions.
With this as its basis, the Working Group concluded that there would be an
increase in total USG costs over the 12-year period of $460 million (in 1975
dollars) or 4.2 percent, representin an average increase of about $38 million
per year (in 1975 dollars).
7. The conclusion of the Working Group was that, using any of the NASA
pricing bases, the potential increase in total cost of operations to the USG
for the Shuttle program as a result of the loss of commercial nd foreign
flights does not justify discouraging ELV commercialization.
8. We agree with the overall conclusion of the Working Group, but you
should note the following:
For the example chosen by the Working Group, the increase in
cost to the USG might be more appropriately measured over the
1986-1994 time frame since there are no lost commercial and
foreign flights prior to that time. Over this reduced time
period, the previously cited increase in cost of $460 million
corresponds to an increase of 5.5 percent and the average
annual increase is $51 million per year. While the change in
the total cost to the USG may n t be si nific nt the o t t
ffected.
/For the examp e c osen y e or aOf,
cost per flight increases from $40 million to $49 million, an
increase of about 22 percent.*
Costs are given in 1975 dollars.
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^ The analysis explicitly addressed only the loss of commercial
and foreign flights because national space policy states that
the Shuttle is the primary USG launch system and this has been
interpreted as the only launch system. If the loss of
government flights can also be anticipated (e.g., NOAA might
request approval to use ELVs), there would be a further
increase in the USG cost per flight.
? When the SIG(Space) debated the fifth orbiter issue in December
1982, the Working Group pointed out that anticipated growth in
space flight activity (and provision for contingencies and
routine maintenance) implied a need for a fifth orbiter by FY
1988. OMB, you will recall, agrued that the mission model was
overstated. IF the NASA mission model is correct, loss of
Shuttle flights to ELVs will relieve pressure for procurement
of a fifth orbiter, a major USG cost saving. If OMB is correct
and the mission model is overstated, loss of Shuttle flights to
ELVs will have a greater impact.
This issue is part of a broader issue: What future mix of
Shuttle and unmanned launch systems is needed to provide USG
and other users routine low-cost access to space for both
current and greatly increased payload weights? In this
context, it does not appear to be reasonable to abandon the USG
investment in mature and efficient ELV systems that are in many
cases lower in cost than both the Shuttle and Ariane. The
direction the USG should take in this broader area is not clear
at this time. ELV commercialization ap ears to be a reasonable
first step in a longer-range process.
9. Most of the NSDD is concerned with defining the proper approach for
facilitating the commercialization process. With the exception of the change
recommended by the NRO (see Tab 4 and the memo we have drafted for your
signature), we have no changes to recommend. The NRO's compromise language
avoids the appearance of government favoritism hile leaving latitude for
streamlined action if that should be needed.
10. The appropriate USG point of contact was a contentious issue within
the Working Group. We understand that NASA, OMB and DoD may propose that NASA
replace State as the near-term point of contact. We prefer State secause, in
this matter, they are likely to be more disinterested than NASA.
11. I requested comments on the subject NSDD from the DNRO and the
Executive Director CIA. The NRO's comment luded (see Tab D). CIA is
in general agreement with the draft NSDD.
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12. We expect SIG(Space) member agencies to concur with the NSDD except
for the items noted in paragraphs 9 and 10 above and an issue to be raised by
OMB relative to Shuttle pricing for commercial and foreign flights. OMB would
like the Shuttle price for these flights to be set higher so that the Shuttle
is not a viable competitor to commercial ELVs. We support the current wording
of paragraph III of the draft NSDD because it provides flexibility to price
the Shuttle com etitively if that is determined to be in the best interests of
the USG.
13. Recomm ndation: Your signature on the attached memorandum to Judge
Clark.
Attachment:
Proposed Memo to Judge Clark for DDCI signature
Tabs:
1. Memo for Members, SIG(Space) dtd 22 April 1983
2. NSDD and Implementing rillinac
3. Memo to Mr. McFarlane
Subject: Interagency Space Launch Policy working
Group Report dtd April 1983
4. Draft Memo to D/ICS from BGEN Cromer
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SUBJECT: NSDD on Commercialization of Expendable Launch Vehicles
Distribution: BYE 2933-83
Copy #1-DOCI
#2-EXDIR/CIA
#3-Executive Registry
#4-D/ICS
#5-DD/ICS
#6-D/PBS
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#8-C/SIGINT
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#13-ICS Registry
DCl/ICS/PPS
--04/28/83)
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Director
Intelligence Community Staff
Washington, D.C. 20505
MEMORANDUM FOR: The Honorable William P. Clark
Assistant to the President for
National Security Affairs
DCl/ICS 83-4356
2 May 1983
SUBJECT: NSDD on Commercialization of Expandable Launch Vehicles
(ELVs)
1. As requested, we have reviewed the draft MSDD on commercial ELVs. We
fully concur with the basic goals of US space launch policy as stated in this
draft policy statement, and recommend that the USG proceed with
commercialization of ELVs as quickly as possible. With one exception, as
further noted below, we agree with the content and icy direction of the
draft NSDD and the Implementing Guidelines.
2. Our exception concerns the NSC Staff change on Page 2 of the draft
NSDD concerning encouragement of competition among various systems and
equitable treatment of all commercial operations. While we do not disagree
with either concept, the sentence is ambiguous in terms of intent and the
legal obligations it places on USG actions related to commercial ELV
operations. We have devised alternative wording (see Attachment). The
changed sentences now emphasize free-market competition versus implied
competitive bidding and add broad qualifications concerning any government
obligation to conduct a competitive bid process for the sale or lease of
equipment or facilities. The language and framework we are suggestin for USG
actions is drawn from existing administration policy in NSDD-50.
3. It is important to minimize unfavorable Congressional and Press
reaction to the proposed Presidential ELV commercialization initiative. The
proposed SIG(Space) Working Group on Commercial Launches could be tasked to
coordinate lanning for agency interaction with the Congress and Press on this
Issue.
4. Because of the importance of these issues and those that I understand
will be raised by other agencies, I recommend that you consider adding this
subject to the agenda of the 3 May 1983 IG(Space) meeting.
Attachment:
Alternate Wording
Elo se :-,Page
Acting Director
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STAT
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Attachment
Alternate Wording
Page 2, Paragraph 2: Change as follows:
The U.S. Goverment will encourage free market competition among various
systems and concepts within the U.S. private sector. Consistent with the U.S.
economic, foreign policy and national security interests, the USG will provide
equitable treatment in the sale or lease of equipment and facilities for all
commercial launch operators.
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SUBJECT: NSDD on Commercialization of Expendable Launch Vehicles (ELVs)
Distribution: DCl/ICS 83-4356
Orig-Addressee
1-NSC Staff, Gil Rye
1-D/ICS
1-DD/ICS
1-D/PPS
1-PPS Subject
1-PPS Chrono
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THE WHITE HOUSE
WA: ?-!!NSTON
April 22, 1983
MEMORANDUM FOR MEMBERS, SENIOR INTERAGENCY GROUP FOR SPACE
SUBJECT: NSDD on Commercialization of Expendable
Launch Vehicles (ELVs)
A draft National Security Decision Directive and Implementing
Guidelines on Commercialization of ELVs is attached for your
comment prior to signature by the President. The complete
report of the SIG(Space) Space Launch Policy Working Group
is also provided at Attachment 2.
In the process of commenting, your attention is particularly
directed to two changes made to the NSDD drafted by the
Working Group. First, in the Implementation Section of the
draft NSDD, we have added wording to clarify the responsibilities
of the interim working group and specify a date when the group
will present its recommendations to the IG(Space). Second, we
have added the following sentence to the Policy Section: "The
U.S. Government will encourage competition among various systems
and concepts within the U.S. private sector by providing equitable
treatment for all commercial launch operators.- This sentence was
added to clarify the intent of the U.S. Government to encourage
maximum use of the competitive process.
Please provide your comments by April 29, 1983. Questions
on this subject may be referred to Gil Rye of the NSC Staff
at 395-5022.
The President conveys his appreciation to those who participated
in drafting the excellent report provided by the SIG(Space)
Space Launch Policy Working Group.
William P. Clark
Attachments
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Members: EDWIN L. HARPER
ASSISTANT TO THE PRESIDENT FOR POLICY DEVELOPMENT
WILLIAM SCHNEIDER
UNDER SECRETARY FOR SECURITY ASSISTANCE,
AND TECHNOLOGY
DEPARTMENT OF STATE
PAUL THAYER
DEPUTY SECRETARY OF DEFENSE
DEPARTMENT OF DEFENSE
GUY W. FISKE
DEPUTY SECRETARY OF COMMERCE
DEPARTMENT OF COMMERCE
JOSEPH R. WRIGHT
DEPUTY DIRECTOR
OFFICE OF MANAGEMENT AND BUDGET
JOHN N. McMAHON
DEPUTY DIRECTOR
CENTRAL INTELLIGENCE AGENCY
LT GENERAL PAUL GORMAN
ASSISTANT TO THE CHAIRMAN
JOINT CHIEFS OF STAFF
LOUIS V. NOSENZO
ACTING ASSISTANT DIRECTOR FOR STRATEGIC PROGRAMS
ARMS CONTROL AND DISARMAMENT AGENCY
RONALD B. FRANKUM
DEPUTY DIRECTOR
OFFICE OF SCIENCE AND TECHNOLOGY POLICY
JAMES M. BEGGS
ADMINISTRATOR
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
Other: CRAIG FULLER
ASSISTANT TO THE PRESIDENT FOR CABINET AFFAIRS
G. PHILIP HUGHES
SPECIAL ASSISTANT FOR NATIONAL SECURITY AFFAIRS
OFFICE OF THE VICE PRESIDENT
J. LYNN HELMS
ADMINISTRATOR
FEDERAL AVIATION ADMINISTRATION
DEPARTMENT OF TRANSPORTATION
MARK S. FOWLER
CHAIRMAN
FEDERAL COMMUNICATIONS COMMISSION
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tic um wa
THE wHiTE HOUSE
WASHINGTON
NATIONAL SECURITY DECISION
DIRECTIVE NUMBER
DRAFT
COMERCIALIZATION OF EXPENDABLE LAUNCH VEHICLES ?
?
I. INTRODUCTION
The United States Government encourages domestic commercial
exploitation of space capabilities, technology, and services
for U.S. national benefit. The basic goals of U.S. space launch
policy are to (a) ensure a flexible and robust U.S. launch
posture to maintain space transportation leadership; (b) optimize
the management and operation of the STS program so as to achieve
routine, cost-effective access to space; (c) exploit the unique
attributes of the STS to enhance the capabilities of the U.S.
space program; and (d) encourage the U.S. private sector develop-
ment of commercial launch operations.
II. POLICY FOR COMMERCIALIZATION OF EXPENDABLE LAUNCH VEHICLES
The U.S. Government fully endorses and will facilitate the
commercialization of Expendable Launch Vehicles (ELVs).
The U.S. Government will license, supervise, and/or regu-
late U.S. commercial ELV operations only to the extent required
to meet its national and international obligations and to
ensure public safety. Commercial ELV operators must comply
with applicable international, national and local laws and
regulations including security, safety, and environmental
requirements.
The U.S. Government encourages the use of its national
ranges for U.S. commercial ELV operations. Commercial launch
operations conducted from a U.S. Government national range
will, at a minimum, be subject to existing U.S. Government
range regulations and requirements. Consistent with its needs
and requirements, the U.S. Government will identify and make
available facilities, equipment, tooling, and services that are
required to support the production and operation of U.S. commer-
cial ELVs.
The U.S. Government will have priority use of U.S. Government
facilities and support services to meet national security and
critical mission requirements. The U.S. Government will make
all reasonable efforts to minimize impacts on commercial opera-
tions.
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The U.S. Government will not directly subsidize the commer-
cialization of ELVs but will price the use of its facilities,
equipment, and services consistent with the goal of encouraging
viable commercial ELV launch activities.
The U.S. Government will encourage competition among
various systems and concepts within the U.S. private sector by
providing equitable treatment for all commercial launch operators.
The U.S. Government will review and approve any proposed
commercial launch facility and range as well as subsequent
operations conducted therefrom. Near-term demonstration or
test., flights of commercial launch vehicles conducted from other
than a U.S. Government national range will be reviewed on a
case-by-case basis using existing licensing authority and
procedures.
III. RELATIONSHIP OF STS AND COMMERCIAL ELVS
Notwithstanding the U.S. Government policy to encourage
and facilitate private sector ELV entry into the space launch
market, the U.S. Government will continue to make the Space
Shuttle available to all authorized users -- domestic and foreign,
commercial and governmental. The U.S. Government will consider
the effects that STS pricing for commercial and foreign flights
will have on commercial launch operations. However, the price
for a commercial or foreign flight on the STS must be determined
based on the best strategy to satisfy the economic, foreign
policy, and national security interests of the United States.-
IV. IMPLEMENTATION
The Department of State, for the near term, will be the
point of contact within the U.S. Government for coordinating the
U.S. Government response to private sector contact/questions on
commercial ELV activities.
An interim SIG(Space) Working Group on Commercial Launches
will be formed and chaired by the Department of State. The
Working Group will be composed of members representing the
SIG(Space) agencies and observers as well as other affected
agencies as required. Additional membership, at a minimum, will
include the Federal Aviation Administration and the Federal
Communications Commission. This group will formulate recommen-
dations concerning (1) a permanent lead agency for commercial ELV
activities and (2) streamlined procedures for both the near and
long term to implement the licensing, supervision, and/or regu-
lations applicable to routine commercial launch operations from
commercial ranges. The Working Group will report its results to
the IG(Space) not later than June 30, 1983.
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IMPLEMENTING GUIDELINES FOR COMMERCIALIZATION
OF EXPENDABLE LAUNCH VEHICLES FROM U.S. GOVERNMENT NATIONAL RANGES
A. Required U.S. Government Actions
NASA and DOD, for those functions over which they respectively
have cognizance, will:
1. identify data, documentation, processes, procedures,
tooling, ground support equipment and facilities that
are available for commercial use;
2. identify the support services and facilities necessary
for commercial launches from the U.S. Government
national ranges;
3. identify the joint-use tooling, ground support equip-
ment and facilities that the U.S. Government can make
available for commercial launch operations;
4. determine the transition means, schedules, and con-
ditions for making available appropriate U.S. Govern-
ment equipment, facilities and properties;
5. to the extent practical, provide, on a reasonable
reimbursable basis, technical advice and assistance in
operations;
6. negotiate and contract for, on a reasonable reimbursable
basis, their portion of the U.S. Government services,
facilities and equipment requested by the private
sector for commercial launch operations.
7. as required, conduct environmental analyses necessary
to ensure compliance with the National Environmental
Policy Act.
B. Government Pricing Guidelines:
The price for the use of U.S. Government facilities, equip-
ment, and services, will be based on the following principles:
1. price services based on those additional costs incurred
by the U.S. Government;
2. the U.S. Government should not seek to recover ELV
design and development costs or investments associated
with launch facilities to which the U.S. Government
retains title.
3. standard tooling, equipment and residual ELV hardware
on hand at the completion of the U.S. Government's
program should be priced at a fair market value or
U.S. Government cost.
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C. Commercial ELV Operator Requirements
The commercial ELV operator shall:
1. maintain all facilities and equipment leased from the
U.S. Government to a level of readiness and repair
specified by the U.S. Government;
2. provide adequate insurance to cover the loss of or
damage to U.S. Government owned systems, equipment,
facilities used by the private sector ELV operators;
3. indemnify and hold harmless the U.S. Government against
liabilities for damage to both domestic and foreign
persons and property;
4. abide by all required U.S. Government safety criteria
and not hold the U.S. Government liable for damage
incurred by the operator resulting from U.S. Government
flight safety actions.
5. agree not to hold the U.S. Government liable for losses
resulting from scheduling delays related to joint-use
facilities and support services.
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,
MEMORANDUM FOR: Mr. Robert C. McFarlane
Deputy Assistant to the President
for National Security Affairs
SUBJECT:
Colonel Gil Rye
Space Launch Policy Working Group
Report on Commercialization of
Expandable Launch Vehicles
1. Attached is the Working Group's report and recommended
National Security Decision Directive. The report has
been structured to provide background and support for
the positions adopted in the proposed policy.
2. We suggest that both be distributed to the SIG(Space)
member agencies, as well as other affected agencies
as you see fit, for formal review and comment. We
have incorporated informal comments from all SIG(Space)
agencies and the FAA.
3. Please advise us if we can assist you further during
the coordination process.
^
. G T. E./Kaultsby
DoD, Co-Chair
A Co-Chairman
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nteragoncy Space Launch Palley
Working Group Report
Apri11983
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dm.
SPACE LAUNCH POLICY WORKING GROUP
REPORT ON
COMMERCIALIZATION OF U.S. EXPENDABLE LAUNCH VEHICLES
April 13, 1983
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CONTENTS
INTRODUCTION
I. CONCLUSIONS
II. RECOMMENDED NATIONAL SECURITY
DECISION DIRECTIVE.
III. FACTORS AFFECTING USG DECISION ON
ELV COMMERCIALIZATION
A. POLICY BACKGROUND
B. DOMESTIC AND FOREIGN ELV SURVEY
C. ECONOMIC IMPACTS OF COMMERCIAL ELVs
ON THE STS
D. STS AND ELV COMPARISONS
E. SUMMARY
IV. APPROACH TO COMMERCIALIZATION
A. INTERNATIONAL LAW
B. NATIONAL CONCERNS
C. USG SERVICES AND FACILITIES
D. LAWS AND PROCEDURES APPLIED
TO THE CONESTOGA LAUNCH
E. SUMMARY
APPENDIX A -- Working Group Membership
APPENDIX B
IMP 1???
Economic Analysis
of STS Commercial and
Foreign Payload Losses
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. .
. Interagency Space Launch Policy-liorking Group Report on
Commercialization of U.S. Expendable Launch Vehicles
Introduction
The National Space Policy encourages the expansion
of United States private sector investment and involve-
ment in civil space activities. It also identifies
the Space Transportation System (STS) as the primary
space launch system for U.S. Government (USG) missions.
Based on the projected capabilities of the STS, the
USG has begun to phase out its procurement and operation
of the Expendable Launch Vehicle (ELV) systems.
The U.S. private sector has expressed interest in
continuing the production and operation of these ELVs
as commercial ventures. Prospective commercial ELV
producers/operators are seeking policy guidance in
this area from the USG. The need for a prompt response
from the USG has been driven by two principal factors:
(a) the interested corporations must decide whether
to continue ELV production before the USG orders are
completed and (b) the competition for the Intelsat
VI class of communication satellites. The Intelsat
selection of one or more launch vehicle systems will
be made in the June 1983 time frame. For these reasons,
timely government action is required to provide the
information the private sector needs to make business
decisions.
The Space Launch Policy Working Group (Appendix A)
was chartered by the Interagency Group (Space) to
recommend what the US National Space Launch Policy
should be with regard to (a) the increasing foreign space
launch capabilities and competition, (b) US commercial
launch systems and operations, and (c) maintenance
and development.of a capability to satisfy USG current
and projected requirements.
During the course of the study, the Working Group met
with many of the companies that have expressed interest
in commercial ELV operations. Their commercialization
plans, business concerns, production status, assessments
of the potential market, and the potential benefits to the
USG and the nation were all factors in the study. The
Working Group also reviewed the results of a NASA study
on ELV commercialization. The impact of commercial
ELV operations on the USG Shuttle operations was also
specifically examined.
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This report is organized into four major sections.
Section I presents the Working Group's principal con-
clusions. Section II contains the proposed National
Security Decision Directive. Section III examines
the factors pertinent to the USG decision on
commercialization of existing U.S. ELVs. Finally,
Section IV explores the issues that were addressed
in developing a strategy to facilitate the commercial-
ization of ELVs.
The Appendices contain supporting information.
Appendix A lists the Space Launch Policy Working Group
members. Appendix B provides the detailed analysis
and data that supports the conclusions regarding the
impacts on the USG Shuttle program resulting from the
loss of commercial and foreign payloads.
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I. CONCLUSIONS
1. A US commercial ELV capability would benefit both
the USG and the private sector and is consistent
with the goals and objectives of the US National
Space Policy.
2. The benefits of commercial ELV operations would
? offset the potential increases in total cost to
the USG of the STS program which could result
from the loss of commercial and foreign payloads.
3.. Consistent with its needs and requirements, the USG
should encourage and facilitate the commercialization
of US ELVs. The USG should not subsidize the
commercialization of ELVs.
4. International and national legal obligations and
concerns (including those relating to public
safety) require the USG to authorize, supervize
and/or regulate US private sector space operations.
5. The USG should review and approve any proposed
commercial launch facility and range as well as
subsequent operations conducted therefrom.
6. Near-term demonstration or test flights of commercial
launch vehicles will require USG review on a case-
by-case basis; existing licensing authority and
procedures appear to be adequate for this purpose,
but should be streamlined.
7. An interagency Working Group should be established
to develop and coordinate a process for the long-tern
licensing, supervision and/or regulation of possible
routine commercial launch operations from non-national
ranges.
8. The most effective means for the USG to ensure safe
commercial ELV operations and compliance with US
treaty obligations is to encourage the use of existing
USG launch ranges. Consistent with these obligations,
all commercial ELV operations conducted from a USG
national range should be, at a minimum, subject to
existing USG range regulations and requirements.
9. USG facilities, equipment, and services should be
made available for commercial use where practical
and priced in a manner that, consistent with USG
needs and requirements, will facilitate and encourage
commercial operations. The USG should not seek to
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recover ELV design and development costs, or invest-
ments associated with launch facilities to which
the USG retains title.
10. Any commercial launch vehicle operator should be
required to provide adequate insurance to cover the
loss of or damage to USG property used to support
commercial operations. Additionally, the commercial
operators should idemnify and hold harmless the USG
against liabilities for damage to both domestic and
foreign persons and property.
11. The USG should continue to make the STS available
to all authorized users -- domestic and foreign,
commercial and governmental. The USG must consider
the effects that STS pricing for commercial and
foreign flights could have on commercial launch
operations. However, the price for commercial and
foreign flights on the STS must be determined based
on the best strategy to satisfy the economic, foreign
policy, and national security interests of the
United States.
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II. RECOMMENDED NATIONAL SECURITY DECISION DIRECTIVE
National Security Decision
Directive Number
Commercialization of Expendable Launch Vehicles
I. INTRODUCTION
The United States Government encourages domestic
commercial exploitation of space capabilities, technology,
and services for US National benefit. The basic goals
of US space launch policy are to (a) ensure a flexible
and robust US launch posture to maintain space transpor-
tation leadership; (b) optimize the management and operation
of the STS program so as to achieve routine, cost-effective
access to space; (c) exploit the unique attributes
of the STS to enhance the capabilities of the US space
program; (d) encourage the US private sector development
of commercial launch operations.
II. POLICY FOR COMMERCIALIZATION OF EXPENDABLE LAUNCH VEHICLES
The USG fully endorses and will facilitate the
commercialization of Expendable Launch Vehicles (ELV).
The USG will license, supervise, and/or regulate
US commercial ELV operations only to the extent required
to meet its national and international obligations
and to ensure public safety. Commercial ELV operators
must comply with applicable international, national and
local laws and regulations including security, safety,
and environmental requirements.
The USG encourages the use of its National Ranges
for US commercial ELV operations. Commercial launch
operations conducted from a USG national range will,
at a minimum, be subject to existing USG range regula-
tions and requirements. Consistent with its needs and
requirements, the USG will identify and make available
facilities, equipment, tooling, and services that
are required to support the production and operation
of US commercial ELVs.
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The USG will have priority use of USG facilities
and support services to meet national security and
critical mission requirements. The USG will make
all reasonable efforts to minimize impacts of on commercial
operations.
The USG will not directly subsidize the commercial-
ization of ELVs but will price the use of its facilities,
equipment, and services consistent with the goal of
encouraging viable commercial ELV launch activities.
The USG will review and approve any proposed commercial
launch facility and range as well as subsequent operations
conducted therefrom. 'Near term demonstration or test
flights of commercial launch vehicles conducted from other
than a USG national range will be reviewed on a case-by-
case basis using existing licensing authority and procedures.
III. IMPLEMENTATION
The Department of State, for the near term, will
be the point of contact within the USG for coordinating
the USG response to private sector contact/questions on
commercial ELV activities.
The Department of State will chair an interim interagency
group composed of members representing the SIG(Space) 7
agencies and observers as well as other affected agencies
as required. Additional membership, at a minimum, will
include the FAA and the FCC. This group will be used to
streamline the procedures used in the interim to implement
existing licensing authorities and to develop and coordinate
the requirements and process for the licensing, supervision,
and/or regulations applicable to routine commercial launch
operations from commercial ranges.
IV. RELATIONSHIP OF STS AND COMMERCIAL ELVS
Notwithstanding the USG policy to encourage and
facilitate private sector ELV entry into the space
launch market, the USG will continue to make the Space
Shuttle available to all authorized users -- domestic
and foreign, commercial and governmental. The USG will
consider the effects that STS pricing for commercial and
foreign flights will have on commercial launch operations.
However, the price for a commercial or foreign flight on
the STS must be determined based on the best strategy to
satisfy the economic, foreign policy, and national security
interests of the United States.
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IMPLEMENTING GUIDELINES FOR COMMERCIALIZATION
OF EXPENDABLE LAUNCH VEHICLES FROM USG NATIONAL RANGES
A. Required USG Actions
NASA and DoD, for those functions over which they respect-
ively have cognizance, will:
1. identify data, documentation, processes, proce-
dures, tooling, ground support equipment and
facilities that are available for commercial use;
2. identify the support services and facilities
necessary for commercial launches from the USG
national ranges;
3. identify the joint-use tooling, ground support
equipment and facilities that the USG can
make available for commercial launch operations;
4. determine the transition means, schedules, and
conditions for making available appropriate USG
equipment, facilities and properties;
5. to the extent practical, provide, on a reasonable
reimbursable basis, technical advice and assistance
in operations;
6. negotiate and contract for, on a reasonable reim-
bursable basis, their portion of the USG services,
facilities and equipment requested by the private
sector for commercial launch operations.
7. as required conduct environmental analyses necessary
to ensure compliance with the National Environmental
Policy Act.
B. Government Pricing Guidelines:
The price for the use of USG facilities, equipment, and
services, will be based on the following principles:
1. price services based on those additional costs
incurred by the USG;
2. the USG should not seek to recover ELV design and
development costs or investments associated with
launch facilities to which the USG retains title.
3. standard tooling, equipment and residual ELV hard.-
ware on hand at the completion of the USG's program
should be priced at a fair market value or USG cost.
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C. Commercial ELV Operator Requirements
The commercial ELV operator shall:
1. maintain all facilities and equipment leased from
the USG to a level of readiness and repair specified
by the USG;
2. provide adequate insurance to cover the loss of or
damage to USG owned systems, equipment, facilities
used by the private sector ELV operators;
3. indemnify and hold harmless the USG against liabilities
for damage to both domestic and foreign persons and
property;
4. abide by all required USG safety criteria and not
hold the USG liable for damage incurred by the
operator resulting from USG flight safety actions.
5. agree not to hold the USG liable for losses resulting
from scheduling delays related to joint-use facilities
and support services.
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III. FACTORS AFFECTING THE USG DECISION ON COMMERCIALIZATION
The development of a USG rationale for endorsing commercial-
ization of ELVs requires a complete examination of the advantages
and disadvantages to the USG of commercial ELV operations. Con-
sideration must also be given to the existing national policies
which establish a framework for any new policy recommendations.
This section addresses these topics in more detail, including
the U.S. private sector's perspective where appropriate. An
economic analysis of the potential impacts of commercial ELVs
on STS program costs is also summarized.
A. Policy Background
The USG has examined the issue of commercialization of space
and space-related activities on several occasions within the
last three years. The results of these government efforts are
documented in National Space Policy (National Security Decision
Directive, NSDD-42), Space Assistance and Cooperation Policy
(NSDD-50), and Shuttle Orbiter Production Capability (NSDD-80).
These policies concentrate on the general concept of government
encouragement of private sector space activity, not on particular
proposals to commercialize a specific system or capability. They
establish the boundary conditions for this study of commercial
ELVs. The following paragraphs provide excerpts of the policy
documents as they apply to the commercialization of ELVs:
1. National Space Policy, (NSDD-42)
a. An objective of the national space program is to "...expand
United States private sector investment and involvement in
civil space and space-related activities."
b. The United States encourages domestic commercial exploitation
of space capabilities, technology, and systems for national
economic benefit. These activities must be consistent with
national security concerns, treaties, and international
agreements.
c. The United States Government will provide a climate con-
ducive to expanded private sector investment and involvement
in civil space activities, with due regard to public safety
and national security. Private sector space activities will
be authorized and supervised or regulated by the government
to the extent required by treaty and national security.
d. The United States Space Transportation System (STS) is the
primary space launch system for both national security and civil
government missions. STS capabilities and capacities shall
be developed to meet appropriate national needs and shall be
available to authorized users--domestic and foreign,
commercial and governmental.
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. ,
e. The first priority of the STS program is to make the system
fully operational and cost-effective in providing routine
access to space.
f. The United States is fully committed to maintaining world
leadership in space transportation with an STS capacity
sufficient to meet appropriate national needs.
g. Expendable launch vehicle operations shall be continued by
the United States Government until the capabilities of the
, STS are sufficient to meet its needs and obligations. Unique
national security considerations may dictate developing
special-purpose launch capabilities.
2. Space Assistance and Cooperation Policy, (NSDD-50)
Pertinent economic objectives established by NSDD-50 are:
a. To maximize economic benefit by:
(1) enhancement of the competitive position of the US
aerospace industry;
(2) ensuring a reasonable return on the American
investment in space technology; and
(3) promoting positive effects on domestic employment
and our balance of payments.
b. Increased export and trade, through foreign purchases of
goods and services, and through increased utilization of
space and space technology.
c. To seek opportunities to enhance our
position in space technology.
d. To enhance the cost-effectiveness of
increased and more effective use.
overall competitive
space systems through
3. Shuttle Orbiter Production Capability, (NSDD-80)
"It is my (President Reagan's) intent that the full potential
of the shuttle concept as originally envisioned is achieved
and commercialization of space becomes a reality."
4. Summary.
These policy statements consistently reflect several
points:
a. the intent to expand and encourage private sector activity
with due regard to national security,
b. the need to authorize, supervise or regulate private sector
space activities,
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b. the intent to realize the full potential of the STS concept
d. the intent to use the STS as the primary space launch system
for USG payloads,
e. the desire to obtain maximum economic benefit from space
programs and seek enhancement of US competitive position.
With these policies as background, the central question is whether
the commercialization of U.S. ELVs contribute significantly to
achieving these objectives.
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?
B. Domestic and Foreign ELV Survey
As part of its study on commercialization of ELVs,
the IG (Space) Working Group solicited the views of
aerospace companies considering commercial manufacturing
or operation of new or existing U.S. ELVs. The working
group received formal presentations on commercial Titan
from representatives of Martin Marietta, Aerojet, and
United Technologies, and on commercial Atlas from
representatives of General Dynamics' Convair Division.
"Written inputs were provided by Space Services Incorported
of America (SSI) and Transpace Carriers, Inc. on the
commercialization of the Delta. In all instances, no
specific private sector cost data was provided because
of its commercial sensitivity and the uncertainty of
pricing for U.S. Government facilities and services.
Each contractor also provided a specific list of benefits
to the USG of commercial ELVs. The contractors' consensus
was that commercialization of ELVs would (1) enhance
national security by providing a Shuttle backup; (2)
provide a domestic ELV backup to the STS and an alterna-
tive to foreign ELVs for commercial users, thereby
reducing the loss of commercial payloads to foreign
competitors; and (3) retain high technology industrial
jobs.
1. TITAN III
The Titan contractors' market assessment projects
payload demand in excess of a four orbiter STS capability.
Expectations are for 2 to 4 commercial Titan launches
per year. beginning in 1986 with a minimum of 2 flights
per year required to financially break even. In addition,
the outcome of the current Intelsat VI competition for
launch of 5 communications satellites in 1986-87 is
considered important to the early success of a commercial
Titan program. The contractors view the continued
availability of a U.S. expendable launch vehicle as a
needed alternative to the Ariane launch system. The
contractors have identified a program goal to provide a
common payload interface for both Shuttle and commercial
Titan; this could enhance Titan's flexibility as a
backup to the Shuttle and, consequently its position in
the commercial market. Under their assumptions that
the U.S. Government would not seek to recover sunk
costs, would lease existing launch facilities and
production equipment at a nominal fee, and would provide
U.S. Government launch range services at a fair incremental
price, the contractors feel that commercial Titan can
compete effectively with Ariane on a price and assured
availability basis.
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2. ATLAS
General Dynamics, the manufacturer of the Atlas
launch vehicle, provided the most detailed world market
demand projection. Their forecast shows market demand
beyond the launch capability of the four orbiter STS
fleet. In addition, their assessment of the world com-
munications satellite market for 1986-1995 indicates
that the current Atlas performance capability already
addresses nearly 75 percent of this market. With the
-"planned General Dynamics' development of the Atlas In/
Centaur, they believe they can compete beginning in
1987 for approximately .75 percent of this market.
Their discussions with 26 users/satellite manufac-
turers indicated general agreement with their outlook,
and many declared a definite interest in using Atlas if
availability is assured and the price is close to Ariane
and the Shuttle. General Dynamics anticipates 2 or more
flights per year, with a financial break even point of
approximately 2 flights per year. As in the case of a
commercial Titan, selection as the contractor for launch
of the Intelsat VI series satellites would provide a
strong impetus for the commercial Atlas program.
3. DELTA
NASA has received letters from SSI and Transpace
Carriers expressing interest in commercializing the
Delta. SSI projects 4 flights annually after transition
to commercial Delta operations and believes the Delta is
a viable backup to the STS and a strong competitor for
potential Ariane payloads. Transpace Carriers, Inc.
has proposed to take over Delta operations in October
1983 and would launch the remaining USG and commercial
missions now scheduled plus any new customers.
4. ARIANE
The primary foreign competition to the Shuttle and
U.S. ELVs is the European Space Agency's Ariane. Ariane
represents a series of ELVs which are being marketed by
Arianespace, a commercial entity established to provide
Ariane launch services to customers. To date, the
Ariane has completed five launches resulting in three
successes and two failures. Arianespace has firm contracts
with twelve customers including 3 U.S. firms -- GTE,
Weststrn Union, and Southern Pacific. Ariane is primarily
being marketed as a vehicle for placing satellites into
geosynchronous orbit. While the reliability of the Ariane
system is still unproven, Arianespace has been successful
in marketing the vehicle as the only long term alternative
to the Shuttle. Ariane has established a goal of at least
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d 25 percent share of the commercial space launch market.
The Ariane launch schedule as of March 1, 1983 shows
a rapid buildup from 3 flights in 1983 to 9-10 flights
annually in 1985-66. To achieve its goal of capturing
25 percent of the world market, Arianespace has aggres-
sively priced their launch services. The already favorable
Ariane prices are further complemented by favorable
financing arrangements. While the Shuttle requires
progress payments begining 33 months in advance with
.total payment due prior to launch, Ariane requires only
20 percent pre-payment with the remaining 80 percent
payable after launch with favorable financing by French
and German banks. NASA has estimated the value of this
financing to be approximately $4.0M for a Delta class
payload.
5. Other Foreign Competition
The Indian SLV-3 and the Japanese N-I/N-II/H-1 space
launch vehicles are also capable of providing commercial
launch services. The Japanese presently launch only
their own satellites with their launch vehicles. They
are bound by agreement to obtain U.S. government approval
before launching satellites for third parties using
launch vehicles developed with U.S. assistance.
The Soviets also have the capability to provide
commercial launch services; they could enter the commer-
cial market for either political or economic reasons.
These countries are not now actively promoting their
launch vehicles as worldwide commercial competitors,
but the potential exists if it appears attractive.
6. CONCLUSIONS
Each potential U.S. commercial ELV operator expressed
confidence that they would capture 2 to 4 launches
annually. The Working Group felt that it was unlikely
that there would be 2 to 4 commercial launches available
per year for each of the U.S. ELV operators in the
1986-88 time frame, unless the market expands. This
would be resolved by open competition and would not
require USG resolution.
The Working Group identified significant benefits
to the USG that could result from the commercializa-
tion of ELVs. National security could be enhanced by
having an alternative launch capability for selected
national security missions in the event of a generic
problem that could ground the entire STS fleet or during
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potential international situations where the risk of
losing an orbiter and crew could jeopardize launching
satellites on demand. There would also be national
economic benefits resulting from domestic commercial
exploitation and operation of USG developed ELV capabil-
ities, technologies, and systems. These occur in the
form of: (a) tax revenues and reimbursements derived
from the provision of launch services; (b) assumption
by the private sector of overhead for ELV production
and launch operations previously borne by the USG; (c)
.a positive impact on the U.S. balance of payments to
the extent that losses of launches to foreign competitors
are reduced; (d) complement to the Shuttle program to
meet the demand of many commercial users to have a U.S.
backup to the Shuttle to preclude impacts caused by
schedule perturbations; (e) an alternative for hazardous
payloads or payloads that are technically or economically
not feasible to use with a manned system; (f) an enhanced
base of domestic technical production facilities and
associated manpower.
Additionally, by approving the commercialization of
existing ELVs, the USG could avoid some, if not all,
close-out costs associated with the termination of the
present USG ELV contracts. Commercial launch operations
could stimulate the U.S. economy and contribute to a more
effective and flexible U.S. space launch capability.
This would directly contribute to maintaining U.S.
leadership in space.
The only disadvantage of ELV commercialization that
was identified was the potential economic effects com-
mercialization could have on the STS program. These
economic effects are summarized in the next section.
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C. Economic Effects of Commercial ELVs on the STS
One of the primary considerations associated
with a USG decision to encourage and permit the
private sector to commercialize ELVs is the potential
impact on the total cost to the USG for STS operations.
If the loss of commercial and foreign users from
the STS to commercial ELVs poses a significant
handicap to achieving cost-effective STS operations,
then the option to encourage commercialization
_becomes less attractive to the USG.
The Interagency Working Group conducted an economic
analysis of the impacts on the change in total Shuttle
operating cost to the USG of incremental losses of
Commercial and Foreign (C&F) flights from the Shuttle
mission model. A more complete documentation of the
analysis and the model used is provided in Appendix B.
The following assumptions were used to construct an
economic model to allow a sensitivity analysis to
be performed:
NIP =IP
=IP
current USG planning will result in a capability
for 24 STS flights per year; this fixed base
capability will be retained regardless of
increases or decreases in commercial
or foreign demand.
the average variable cost per flight is
essentially equivalent to the additive cost
per flight proposed as one of the NASA
pricing options and remains essentially constant
over the range of 18 to 24 flights per year.
the projected NASA budget figures represent the
total cost to the USG of STS operations; no
costs for Vandenberg Air Force Base (VAFB)
Shuttle operations were included in the
NASA budget even though the mission mooel
includes flights from VAFB.
NASA's most recent STS mission model of 233 flights (171
USG missions and 62 commercial and foreign) over the 12-year
period from 1983 to 1994 was used as a baseline for the
analysis. Additionally, the three NASA pricing bases
described in Figure 1 and referred to as Additive Cost,
Out-of-Pocket Cost, and Average Total Cost were used to
portray the impact of losing commercial and foreign
flights from the mission model.
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FIGURE 1
SPACE SHUTTLE COST COMPARISON FOR THREE PRICING BASES
COST ELEMENTS
(COST
ADDITIVE COST
3 YEAR AVERAGE
(FT 19R6-19811)
IN 75 DOLLARS)
PRICING RASES
AVERAGE TOTAL COST
12 YEAR AVERAGE
(FY 1983-1988)
oUT-0E-POCKET COST
1 YEAR AVERAGE
(FY 1986-1988)
comsumiumrs
COSTS ABOVE THOSE
AGGREGATE COSTS
AGGREGATE COSTS
REQUIRED FOR GoV'T
AVERAGED OVER
AVERAGED OVER 12
FLIGHTS, AVERAGED
3 YEARS
YEARS
OVER 3 YEARS
LAUNCH
COSTS ABOVE THOSE
COSTS ABOVE THOSE
AGREGATE COSTS
OPERATIONS
REnUIRED FOR GoV'T
REOUIRED FOR GOV'T
AVERAGED OVER
FLIGHTS, AVERAGED
FLIGHTS, AVERAGED
12 YEARS
OVER 3 YEARS
OVER 3 YEARS
FLIGHT
COSTS ABOVE THOSE
COSTS ABOVE THOSE
AGGREGATE COSTS
OPERATION
REMIRED FOR nov'T
REQUIRED FOR GOV'T
AVERAGED OVER
FLIGHTS, AVERAGED
nVER 3 YEARS
FLIGHTS, AVERAGED
OVER 3 YEARS
12 YEARS
ESTIMATE FOR
24 MAXIMUM
FLIGHTS/YEAR
MODEL (233 FLIGHTS
FROM FY 114113 TO
FY 19,44)
S23M
311M
$57.2M
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For the period encompassing 1983 to 1985, NASA will charge
commercial and foreign users $1814 (755)*, and this figure was
used to calculate revenue over this period.
In the 1986 to 1988 time frame, NASA is proposing to charoe
commercial and foreign users $38M (75$), and this value was
used to calculate revenue over this period. Prices for
1989-1994 are scenario dependent and are discussed in the
subsequent analysis.
A parametric analysis which used each of the NASA pricing
options was performed. The analysis assumed an annual loss
of an average of 1, 2, 3, 4, 5, and finally all 52 commercial
and foreign flights ovet'the 1986 to 1994 period. No commercial
or foreign flights were assumed to be lost to commercial ELVs
from 1983 through 1985 since the first U.S. commercial ELV is not
projected until 1986.
Since the number and distribution of Shuttle payloads that
may be lost to commercial ELVs is scenario dependent, the case
of losing half (an average of 3 flights per year) of the
commercial and foreign flights was selected as a representative
example to illustrate the results obtained from the analysis.
The first result noted is that the loss of commercial and
foreign flights in any scenario which uses additive cost pricing
has no effect on total cost of operations to the USG since
the revenue produced only equals the additional costs incUrred.
No contribution to the USG Shuttle fixed cost base is made
under this pricing option, and the total cost of operations to
the USG remains constant.
If the price for commercial and foreign flights is based on
the 1986-88 Out-of-Pocket costs, an average loss of 3 flights
a year (between 1986-94) results in a total increase in USG
costs over the 12-year period of $46014 (75$) or 4.2%.
This represents an increase of about $3814 (758) per year.
Finally, if Average Total Cost is charged and an average
of 3 commercial or foreign flights a year (between 1986-94)
are lost, the total increase in USG costs over the 12 years
is $537M (75$). This is a 5.1% increase in overall costs and
equates to an increase of about $4614 (758) per year.
* To convert FY 1975 dollars to FY 1983 dollars multiply
by 1.97
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. .
In terms of the overall ability of the Shuttle
to compete with ELVs, the Average Total Cost price is
least competitive and increases the probability of
losing commercial and foreign missions to both U.S
commercial and foreign ELVs. The Out-of-Pocket
price creates a more competitive price, and it is
reasonable to assume the loss of commercial and
foreign flights would be limited. While beyond the
scope of this study, consideration must be given in.
the long run to the nature and extent of Shuttle
pricing competition with U.S. commercial and foreign
launch operations.
There are several additional factors that must be
considered to fully identify the effects on the STS
program of ELV commercialization. These factors
include the impact of commercial and foreign flights
on the useful life of the orbiter and the costs
associated with potential major orbiter inspection
and repair. Each orbiter has a structural design
life of 100 missions. If the price of a commercial
and foreign flight does not recover a sum above
average total cost, government costs increase because
a finite resource is being expended. This resource
will eventually have to be replaced at some cost.
During the Working Group evaluation of the need for
a fifth orbiter, it was estimated that major periodic
inspection and repair could be required after
approximately every 25 missions. Potential reductions
in commercial and foreign flights postpone both the
cost of the orbiter repair and replacement.
From this and other cases documented in Appendix B, the
following conclusions can be drawn:
? Additive cost pricing offers no economic advantage to
the USG, regardless of reductions in average cost
per flight.
? The Average Total Cost per flight is not a relevant
measure of cost to the USG unless the price for
Shuttle flights is based on full cost recovery
including both replacement and operating costs.
? Both Out-of-Pocket and Average Total Cost pricing
bases produce revenues that exceed the additive
cost for each commercial and foreign flight and
therefore would serve to reduce the total cost
of Shuttle operations to the USG.
1_
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? Out-of-Pocket pricing does not represent major
cost recovery to offset the cost to the USG for
Shuttle operations (maximum USG cost offset is
approximately 8 percent). Its advantage is that
it allows the Shuttle to compete favorably with
Ariane.
? Average Total Cost recovery would decrease total
USG costs,(maximum USG cost offset is approximately
11 percent) but would make the Shuttle less
competitive with ELVs.
The conclusion of the Working Group was that, using
any of the NASA pricing bases, the potential increase
in total cost of operations to the USG for the Shuttle
program as a result of the loss of commercial and foreign
flights does not justify discouraging ELV commercialization.
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D. STS and ELV Comparisons
Based on the information provided by the prospective
commercial operators, they believe commercial ELVs appear
to be cost competitive with the STS at $38M (FY 75$) per
flight. It should be recognized that this only compares
their relative prices for a fixed level of effectiveness
-- specifically, the boost mission -- since this is the
only mission that ELVs can perform. The STS, on the
other hand, was designed and developed to perform a
much more sophisticated range of missions--manned
experimentation and interaction, recovery and repair of
satellites, space-based construction, etc. The USG is
committed to the STS; and as a result, it is necessary
to discontinue the expense of concurrent production
and operations of both the STS and the ELVs.
With the proposals to commercialize ELVs, the USG is
presented with an option that could allow continued, cost-effective
ELV operations without the financial burden of maintaining the
contractor's overhead, sustaining manpower, and production base.
This burden, along with the fixed operations costs and facility
maintenance costs, would be borne by the commercial ELV operators.
This effectively preserves the U.S. ELV launch capability at
little or no cost to the USG.
As a result, the USG could concentrate on optimizing the
STS for its own requirements while enjoying a more robust and
flexible national space launch capability. The entry of U.S.
private industry into this field could ensure aggressive marketing
and increase the benefit to the U.S. economy.
The Shuttle is currently the only U.S. launch vehicle
capable of supporting the continuation of our manned space
program. The Shuttle provides the USG with a flexible
manned platform from which to develop new techniques and
experience.
These activities are necessary if we are to attempt new
missions such as construction or a variety of potential
space-based services such as refueling satellites or extensive
on-orbit repair capabilities. Most importantly, it provides
the opportunity to expand our knowledge of the use and
function of man-in-space.
Finally, the ability of the Shuttle to support internationally
manned missions offers the U.S. a unique political advantage.
With the exception of the Soviet Union, no other nation can offer
countries the opportunity to participate in manned space flight.
The cooperative exploitation of space for peaceful purposes
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is an advantage that is difficult to measure in economic
terms but is certainly valuable in our international relations.
These unique Shuttle capabilities should be considered
when comparing the relative effectiveness of the Shuttle and
ELVs; the full effects of the strengths and weaknesses of
of the STS and ELVs should be a key part of any comparisons.
The Working Group believes that the potential impacts on
overall STS costs resulting from the loss of commercial and
foreign payloads to ELVs could be more than offset by the
benefits of commercial ELVs.
E. Summary
?
The Working Group concluded that commercialization
of US ELVs is totally in consonance with existing national
policies and offers a net benefit to the nation. The
effects of commercial ELVs on the cost of the STS were
believed to be offset by the benefits offered by
commercial ELV operations.
The working Group unanimously concluded that the
commercialization of ELVs is in the national interest
and should be endorsed by the USG.
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IV. APPROACH TO COMMERCIALIZATION
In order to determine the proper approach to facilitat-
ing the commercialization of ELVs, a number of policy
issues were examined. These included the international
and domestic laws which govern space activities and
the use of USG services and facilities by commercial
operators. The legal background as well as the major
issues, are presented in the following parts of this
section.
A. International Law.
Among many other obligations, existing multilateral
space conventions impose on the United States five primary
obligations that are relevant to commercializing ELV's.
Specifically, the USG must (1) authorize and supervise
private space activity, (2) ensure compliance with
international legal principles governing uses of outer
space, (3) provide notice to certain States, (4) assume
liability for certain damage caused by these activities,
and (5) arbitrate unresolved claims for damage to foreign
entities.
1. Authorization and Supervision. Article VI of the...
1967 Outer Space Treaty (Treaty on Principles Governing the
Activities of States in the Exploration and Use of Outer Space,
including the Moon and other Celestial bodies) imposes a general
"obligation to authorize and supervise" the activities of
private launches:
"The activities of nongovernmental entities in
outer space, including the moon and the other
celestial bodies, shall require authorization
and continuing supervision by the appropriate
State Party to the Treaty."
This obligation does not, however, require the US to adopt
an elaborate regulatory framework. The USG is required to
perform some continuing supervision to ensure compliance
with the treaty obligations described below. Further, under
Article VIII of the Outer Space Treaty, the USG must retain
"jurisdiction and control" over space objects while in
outer space or on a celestial body.
2. Compliance with International Principles Governing
the Use of Outer Space. Article VI of the Outer Space
Treaty requires that States bear "international responsibility"
for assuring that "national activities carried on by govern-
mental agencies or nongovernmental entities" are "carried
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out in conformity with the provisions set forth in the
present Treaty." Accordingly, the USG is obligated to
assure that private space activities comply with the
provisions of the Treaty.
3. Notice to Certain States. Article IX of the Outer
Space Treaty requires a government to consult with other
states if they have reason to believe that private space
launch vehicle operators will unoertake activity that "would
'Cause potentially harmful interference with activities of
other States' parties in the peaceful exploration and use
of outer space." Similarly, under Article 4 of the US-USSR
agreement on Measures tO.Reduce the Risks of Outbreak of
Nuclear War, the US must notify the USSR of "any planned
missile launches if such launches will extend beyond its
national territory in the direction of the (USSR)"
In addition, the USG must register space objects
launched into orbit or beyond with the United Nations in
accordance with the 1976 Convention on Registration of
Objects Launched into Outer Space.
4. International Liability. Both the Outer Space Treaty
and the Liability Convention establish US liability to con-
tracting parties, their corporations and nationals, for damage
caused by space launches from US territory. While the Outer
Space Treaty sets no standards of liability; the Liability
Convention specifies absolute liability for damage on the
earth or to aircraft in flight and liability on the basis of
negligence for damage to other space objects.
5. Claims. The Liability Convention prescribes that
damage claims shall be presented to the launching State
through diplomatic channels, the United Nations, national
courts, or a special Claims Commission.
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B. National Concerns
In addition to the responsibilities imposed by international
law the USG has other obligations and requirements which can be
grouped according to the following broad categories --national
security, technology transfer and public safety.
No unique national security. concerns were identified
with the proposed commercialization options. However,
those potential commercialization options that included
launches from platforms in international waters or launches
from foreign territories generated some indirect concerns.
These centered basically on physical security. Specifically,
the USG loses effective control over the ELV and its launch
support equipment once it is beyond US territorial boundaries.
The potential of hijacking or capture on the open seas of
an ELV with its launch support systems poses a concern rela-
tive to terrorism or third world aggression. The same concern
exists for launches from foreign soil; under these circumstances
the USG would have limited control to prevent the conversion
of a peaceful space launch system to an offensive ballistic
missile system. Any capability to launch U.S. commercial ELVs
from outside U.S. territory was considered to be potentially
disadvantageous to the interests of the USG.
Adequate procedures are thought to exist to allow USG
control over proposed launches from outside U.S. territory.
Specifically, an export license would be required before
the ELV and its support systems could be taken outside the
U.S. This provides positive USG control and would permit
a careful review of any such requests on a case-by-case basis.
Technology transfer issues related to potential ELV
commercialization center on similar concerns. Space launch
systems have the inherent ability to serve as ballistic
missiles. The mq must ensure not only that no such systems
physically fall into the wrong hands but that the technology
to independently acquire such systems is carefully controlled.
The commercialization of ELVs will potentially expose
many more foreign customers directly to US ELV production and
operations technology. The national policy on Space Launch
Assistance (NSDD-50) provides the methods to handle these
technology related issues. Therefore, existing procedures
were again judged to be adequate to permit the USG to prevent
the loss of critical technologies that might be associated with
commercial ELV operations.
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. .
The USG's public safety concerns relate primarily to
the licensing, supervision, and regulation of the inherently
hazardous activities associated with ELV operations. The
hazards may be divided into two general categories--ground
safety and flight safety. Commercialization of ELVs can be
grouped into operations conducted from USG national ranges
or from newly created, commercial launch sites.
The operation of either existing or new ELVs from the
national ranges represents the most straightforward case.
The USG could provide assurrance of public safety by
controlling the hazardous ground operations ano flight
safety for commercial operations according to the same
criteria and methods now used for its own operations.
Commercial operators would not have to provioe the sub-
stantial capital investment required to establish, equip,
and operate a range to government standards. The USG could
provide these services on a reasonable, reimbursable basis.
This would also make maximum use of the facilities, equipment,
and services already in place on the existing national ranges
which have been demonstrateo to be safe.
The USG shoulo encourage commercial operators to use
the national ranges principally because it offers the USG
the best and most efficient means of fulfilling its national
and international legal commitments and public safety
concerns.
Vhile it is possible for the USG to fulfill these
commitments for operations from a private range, the
minimum acceptable standards that a commercial operator
woulo have to meet are not presently oetined. one test
launch in this category has already been approveo, i.e.,
the Conestoga test flight from Matagorda Island. The ad
hoc requirements established as a result of this specific
case are discussed more fully in Section D.
The definition of USG requirements for commercial
operations from private launch ranges was considered beyono
the scope of this study. It is recommended that the procedures,
regulations, standards, etc for USG approval of a commercially
operated space launch range be separately studieo ana oefineo
in an interagency forum. Neither the USG or the private sector
can intelligently consider this option until these criteria
are clearly defined and documented.
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: ?
C. USG Services and Facilities in Support of Commercial
ELV Operations.
For the commercialization of ELV's to be successful
and practical from USG national ranges, the USG will
have to provide selected support services, equipment,
and facilities.
Since the existing ELVs were developed for the use of
the USG, portions of the facilitiesetooling, assembly fixtures,
and test equipment are owned by the government. The USG would
have to identify those items that are no longer of direct use
to the USG as well as those items that could be used for other
purposes. These items encompass design, processing, procedures,
data, and software; test And transportation equipment; production
fixtures, jigs, and tooling; facilities to manufacture, assemble,
test, modify, control, maintain and launch the vehicle; and
ancillary facilities to support servicing of the vehicle and
preparation of payloads.
Since the USG no longer intends to maintain the production
and operational base required for continued ELV operations, it
could elect to scrap, surplus, or redistribute the equipment
associated with this effort. The commercialization proposals
described by the present ELV contractors depend upon the
USG making a large percentage of this equipment available for
their use in continuing commercial production. In effect, these
contractors would assume the financial burden of maintaining the
sustaining production base as well as the operations and maint-
enance of the launch facilities that the USG has carried up
until now. In return, the contractor would require the
continued use of USG equipment and facilities on an economical
basis. To make such an arrangement, a number of exemptions
or changes in existing user reimbursement and property
disposal policies may be required.
If this can be effectively accomplished, the US could
maintain an ELV option as a back-up to the STS at little
or no sustaining cost to the USG. The USG could exercise
this option by maintaining or developing spacecraft that
are dual compatible, as the commercial industries are
doing, and purchasing commercial launch services as
required. The USG could conceiveably negotiate a favorable
ELV back-up option as consideration for the continued
economical use by commercial ELV operators of USG equipment
and facilities.
The ELV facilities on the national ranges will no longer
be required after the USG discontinues ELV operations in the
mid-to-late 80's. Facilities that are used solely for ELVs,
such as launch complexes could be leased, consigned, or
licensed to the commercial operator with appropriate
consideration given to the benefits derived by both the USG
and the private concern.
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Those facilities that would be used by the USG, even
after the discontinuation of USG ELV operations, could
be shared under lease with commercial ELV operators.
For such joint-use facilities, the USG should control
the integrated scheduling of both the USG and commercial
activities and retain priority right-of-use to support
national security or critical mission requirements (e.g.,
planetary windows). The USG should make every reasonable
effort to minimize impact of USG operations on the commercial
operators in joint-use facilities.
The USG should also make available, on an additive reim-
bursement basis, all range support services necessary
to conduct launch operations from the national ranges.
All ELV commercial operators using the national ranges
should be required to comply with the existing ground and
flight safety standards; their launches would be constrained
by the same flight safety requirements as USG launches.
As a condition of using the national ranges and USG
facilities, the commercial ELV operators would have to
agree to be bound by the USG's ground and flight safety
requirements and agree that the USG would destroy their
vehicles in flight if they violated range safety criteria.
The commercial operators would have to agree to not hold
the USG liable for schedule delays resulting from conflicts
in joint-use facilities or support services; the USG
would not be liable for the commercial operators loss
if it became necessary for the USG to destroy the
vehicle for range safety reasons.
The USG should require each commercial operator to
obtain adequate insurance to replace any USG property
that might be damaged as well as third party liability
insurance without the right of subrogration against
the USG. The commercial operators should maintain all
USG property in accordance with the contractual agree-
ments negotiated for the specific facilities.
NASA and DoD should individually identify those
facilities, equipment, etc., that could be made available
for commercial ELV production and operations. Each
agency should negotiate the specific reimbursements for
its respective facilities, equipment, and services since
their statutory authority, regulations, accounting systems,
and procedures may vary.
However, the following general principals should be
followed by both agencies. The USG should not attempt to
recover the costs associated with the design and development
of ELVs that were required to meet national needs. The USG's
interests are best served if an ELV capability can be maintained
at no direct cost to the USG. Consequently, launch facilities
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and equipment leased or otherwise made available to commercial
operators should be priced in a manner that encourages viable
commercial operations and serves the best interest of the USG.
Standard tooling and equipment, ELV hardware, long-lead materials,
components, or assemblies on-hand at the completion of the USG's
programs should be priced at fair market value or USG cost.
The benefits that the USG could receive from the
commercialization of ELVs should be considered in the
determination of prices. These benefits include the USG's
recovery of costs of residual flight hardware, avoidance of
program close-out costs and the disposal of excess property,
maintenance of high technology critical aerospace production
facilities and skills, an effective competition with foreign
space launch systems, and maintenance of a limited, potential
USG emergency/back-up access to space.
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D. Laws and Procedures Applied to the Conestoga Launch
With the initial request for the approval of a private
space launch by the USG, the Department of State chaired
an ad hoc interagency group to determine the proper require-
ments and procedures. The conclusions are documented in a
DoS report entitled Private Space Activity. This report
concluded that "existing laws and regulations are adequate
for the USG to control private launches from US territory
or export of satellites and launch vehicles generally from
-the US for launch abroad. In light of the infancy of the
private space launch industry, the creation of new legislative
and regulatory framework and supporting bureaucracy is not
justified."
The principal features of the ad hoc process established
to handle commercial launch operations are summarized as
follows.
1. Launch Vehicles
Under the existing process a commercial ELV operator is
currently required to obtain three primary approvals for a
launch: (a) an Arms Export Control license from the State
Department; (b) an experimental radio license from the FCC;
and (c) an exemption or clearance from the FAA for use of non-
trolled airspace.
a. Arms Export Control License. The Arms Export
Control Act and its implementing regulations on the
International Traffic in Arms (ITAR) presently furnish
the primary mechanism for controlling launches ano any
attendant transfer of technology. The State Department
administers these procedures.
Under the Act, the State Department designates defense
articles, services, and technical data that constitute
the Munitions List. No item on the Munitions List may
be exported or imported unless the State Department
issues a license that authorizes its export. Violators
are subject to criminal sanctions. Rockets, launch
vehicles, payloads, specifically designed associated
equipment, and related technical data are all on the
Munitions List. The State Department deems launches to
be "exports" since that term means "the sending or taking
taking out of the United States in any manner, any
article, equipment or technical data on the Munitions
List." The State Department has authority to deny,
revoke, suspend or amend licenses tf it believes
such action would not further world peace, foreign
policy, or national security; or because it believes
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the applicant has violated the Act or the International
Traffic in Arms Regulations (ITAR). License decisions
may be appealed to a Hearing Commissioner of the State
Department and to an Appeals Board of the Commerce
Department. The ITAR provides a mechanism for consider-
ing the range of concerns that indirectly affect foreign
policy, including vehicle safety and liability coverage.
To avoid vehicle hazards that could have foreign policy
consequences, the State Department consults NASA, the
FAA, and DoD on vehicle safety. To facilitate this
process, license applicants may be required to provide
"all pertinent documentary information regarding the
proposed transaction." Similarly, in order to assure
some compensation to foreign governments, the State
Department may secure compensation commitments in the
form of insurance and/or indemnification.
b. Federal Communications Commission (FCC) license.
Under the Communications Act of 1934, as amended, and its
implementing regulations, the FCC allocates and issues licenses
for the radio frequencies necessary for commercial space launch
operators to monitor telemetry, track, ano destroy errant vehicles.
The FCC has not designated frequencies for commercial space
operations. Commercial ELV operators may obtain an experimental
radio license which permits the liscensee to share assigned
frequencies.
c. Federal Aviation Administration (FAA) clearance. Unber
the Federal Aviation Act of 1958, the FAA regulates navigable
airspace and has promulgated special air traffic rules for
unmanned rockets.
Initially, the unmanned rocket rules require 24-48 hours
notice to the appropriate Air Traffic Control (ATC) facility.
Second, unless the FAA waives application of the rule, certain
operations are prohibited including operations (a) that create
a collision hazard, (b) in controlled airspace, (c) under
specified conditions of limited visibility, and (d) within
150 feet of any person or property not associated with the
operations.
2. Payloads. Payloads on the Munitions List are also
subject to ITAR licensing procedures. These include all
orbiting payloads.
3. USG Liability. USG liability is two-fold. First, under
the Federal Tort Claims Act, and the Foreign Claims Act,
the US maybe liable, to national and foreign entities
respectively, for damage caused by negligence in Federal
participation in space launches. Second, under international
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law and treaties the US is liable to foreign governments,
companies, and persons for damage caused by space launches
from US territory.
While the process used to provide the initial approval
can unquestionably be streamlined and used in the interim,
a more efficient long-range regulatory plan should be
developed to meet the anticipated nature and frequency
of routine commercial ELV operations. These ad hoc require-
ments should be reviewed in light of the more complex and
extensive ELV commercialization proposals.
The Department of State should be designatec the lead
agency for coordinating all U.S. commercial ELV requests
within the USG. The Department of State is well suited to
coordinate the political approval for commercial launches
which involve issues such as international agreements, national
security concerns, and technology transfer issues. The
operational concerns and supervision would be best handled
by the cognizant technical agencies, such as DoD, NASA,
FAA, and FCC.
32
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E. Summary
1. The USG should proceed with the details necessary to
facilitate viable US commercial ELV operations.
2. The Department of State should be designated as the
lead agency to coordinate commercial ELV requests
within the USG; the technical and operational
expertise of the other government agencies (DOD,
NASA, FAA, FCC, etc) should be used.
.3. Existing procedures are adequate for the near term
to handle occasional test launches by the private
sector. USG requirements and procedures to license,
supervise and/or regulate US commercial ELV operations
from commercial ranges should be developed before
the advent of routine commercial ELV operations.
This should include the definition of USG criteria
and requirements for approving commercial launch
sites and ranges.
4. DoS should chair an interagency team to define a more
effective process to support routine, commercial ELV
operations from commercial ranges.
5. The USG should encourage the use of its national ranges
for existing and new commercial ELV. This represents _
the most effective means of fulfilling its domestic and
international obligations.
6. The USG should conduct required environmental analyses
necessary to ensure compliance with the National
Environmental Policy Act.
33
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? ?
APPENDIX A
SPACE LAUNCH POLICY WORKING GROUP STUDY ON
COMMERCIALIZATION OF EXPENDABLE LAUNCH VEHICLES
WORKING GROUP MEMBERS
Charles Gunn (Co-Chairman)
National Aeronautics and
Space Administration
.mr mpailloalm
Barton Borrasca
Office of Management
and Budget
James Chamberlin
Arms Control and Disarmament
Agency
James Harshbarger
Organization of the
Joint Chiefs of Staff
John McCarthy
Office of Science and
Technology Policy
Joy Yanagida
Department of State
34
Thomas Maultsby (Co-Chairman)
Department of Defense
41M, ?BM.
Donald Miller
Department of Commerce
Jimmey Morrell
Office of Science and
Technology Policy
George Ojalehto
Department of State
STAT
Centra n e igence Agency
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25X1
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APPENDIX B
PARAMETRIC ANALYSIS OF THE ECONOMIC EFFECTS ON THE
STS PROGRAM OF LOSING COMMERCIAL AND FOREIGN MISSIONS
The input data for this analysis was provided
by NASA. TABLE 1 summarizes, by year, the number of
US goverment (USG), commercial and foreign and total
STS flights over the 12 year analysis period. The
average total cost per flight and the average variable
cost per flight are shown by year. The price charged
to commercial and foreign users over the 1983-85 period
is also shown as well as the proposed price during
the 1986-88 period. This data is based on a 233 flight
mission model over the twelve years.
TABLE 2 shows annual and twelve year total cost,
total fixed cost (and the percentage of total cost),
and total variable cost (and the percentage of total
cost).
TABLE 3 summarizes the baseline mission model costs
for two pricing options. The "out-of-pocket" option
assumes S18M per flight during the 1983-85 period, and
$38M (the 1986-86 out-of-pocket estimate) for the
period from 1986-94. The average total cost option
uses S18M for 1983-85, SUM for 1986-88, and then
assumes full cost recovery (average total cost) during
1989-94. Since the additive cost price option has no
effect on the total cost to the USG, it is not tabulated
in this appendix.
Total cost is used to describe actual costs required
to fly a given number of missions; total cost to the
USG is the cost to the US Treasury after the receipt
of the commercial and foreign revenues. For this analysis,
total cost to the USG is assumed to be equal to the NASA
budget estimates; no VAFB operations costs have been
included.
The twelve year sum of the total cost to the USG
under the two pricing options is used as the baseline
for the parametric analysis.
TABLES 4 and 5 summarize the results of the parametric
analysis. Since commercial ELVs would not be available
before 1986, no commercial and foreign flights were
considered lost over the 1983-85 period. From 1966
to 1994, six scenarios were analyzed assuming an annual
loss of an average of 1,2,3,4,5 ad finally all 52
commercial and foreign flights. In these tables, the
first number in each year (TC) represents the total
annual cost; total cost was calculated by taking the
baseline value from TABLE 3 and subtracting the number
of flights lost times the average variable cost per
35
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flight for that year (taken from TABLE 1). The second
value (R) is the commercial and foreign revenue which
was calculated by multiplying the number of remaining
commercial and foreign flights times the appropriate
price per flight. The total cost to the USG (TC USG)
is simply the difference between the total cost and
the revenue received.
TABLE 6 summarizes the total costs to the USG
based on the out-of-pocket pricing scenario. Each
of the parametric cases is summed and the baseline
cost subtracted from each to identify the increase
in the total costs to ,the USG over the twelve
year period. These increases are shown at the bottom
of the table along with the percentage increase each
represents over the baseline costs. TABLE 7 shows
the same data for the average total cost pricing
scenario.
36
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. .
Table 1
BASELINE MISSION MODEL DATA
(M75$)
USG CiF TOTAL
YEAR FLIGHTS. FLIGHTS FLIGHTS
83
64
85
66
87
88
89
90
91
92
93
94
3
7
7
12
16
18
18
18
18
18
18
18
TOTAL 171
2
3
5
5
6
6
6
6
6
6
6
62
5
10
12
17
21
24
24
24
24
24
24
24
233
AVERAGE
TOTAL COST
PER FLIGHT
155.0
96.0
80.2
62.4
56.2
50.0
49.4
48.7
48.2
47.8
46.4
46.0
SOURCE: NASA
AVERAGE C&F
VARIABLE COST PRICE
PER FLIGHT PER FLIGHT
35.0
31.0
28.0
24.7
23.0
21.8
21.3
20.4
19.6
18.9
18.4
17.9
18.0
18.0
18.0
38.0
38.0
38.0
*SCENARIO DEPENDENT:
(1) $38M, Out-of-Pocket pricing option.
(2) Average Total Cost per flight, full cost recovery
pricing options
37
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Table 2
CALCULATED FROM THE BASELINE DATA FOR EACH YEAR:
(M75$)
Total Costs = number of flights times Average Total Cost per flight
Total Variable Costs = number of flights times Average Variable Cost per fligh
Total Fixed Costs = Total Costs minus Total Variable Costs
Total
Total Fixed Percentage of
Year Costs Cost Total Costs
Total
Variable
Cost
Percentage of
Total Costs
83 775 600
77%
175
23%
84 960 650
68%
310
32%
85 962 626
62%
336
38%
86 1061 641
60%
420
40%
87 1180 697
59%
483
41%
88 1200 677
56%
523
44%
69 1186 675
57%
511
43%
90 1169 679
58%
490
42%
91 1157 687
59%
470
41%2'
92 1147 693
60%
454
40%
93 1114 672
60%
442
40%
94 1104 674
61%
430
39%
TOTAL 13015 7971
61%
5044
39%
Over 12 Years:
Average Total Cost/Flight
=
13015
=
55.86M
233
Average Variable Cost/Flight
=
5044
=
21.65M
233
38
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Table 3
BASELINE MISS/ON MODEL
(M75$)
"OPC"
Total C&F
Year Costs Price/Flt
83 775
84 960
85 962
86 1061
87 1180
gg 1200
6138
89 1186
90 1169
91 1157
92 1147
93 1114
94 1104
6877
TOTAL 13015
Total Total
Cost
Revenue to USG
18 36
18 54
18 90
38
38
38
Out-of-
Pocket
38
38
38
38
38
38
190
190
228
739
906
872
871
990
972
788 5350
228
228
228
228
228
228
958
941
929
919
886
876
1368 5509
2156 10859
39
"ATC"
C&F
Price/Flt
18
18
18
38
38
38
ATC
Total Total
C&F Cost
Revenue to USG
36
54
90
190
190
228
739
906
872
871
990
972
788 5350
49.2 295
48.7 292
48.2 289
47.8 ? 287
46.4 278
46.0 276
1717
891
877
868
860
836
828
5160
2505 10510
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Table 4
PARAMETRIC ANALYSIS BASED ON OPC (35M)
(M75$)
Year
71/Yr
-2/Yr
-3/Yr
-4/Yr
-5/Yr
-ALL
86-
TC = 1035
1009
983
957
931
931
is 152
113
76
38
0
0
TCUSG 883
896
907
919
931
931
67
TC = 1157
1134
1111
1088
1065
1065
= 152
113
76
38
0
0
TCUSG 10"
1021
1035
1050
1065
1065
88
TC = 1178
1156
1134
1112
1090
1068
-.190
152
114
76
38
0
=
TCUSG 988
1004
1020
1036
1052
1068
89
TC = 1160
1139
1118
1097
1076
1055
190
152
114
76
38
0
90
TC 970USG
TC = 1149
987
1129
1004
1109
1021
1089
1038
1069
1055
1049
190
152
114
76
38
TCUSG 959
977
995
inn
1031
1049
91
TC = 1137
1117
1097
1077
1057
1037
190
152
114
76
38
0
92
TC 947USG
TC = 1128
965
1109
983
1090
1001
1071
1019
1052
1037
1033
a 190
152
114
76
38
0
TCUSG 938
957
976
995
1014
1033
93
TC = 1096
1078
1060
1042
1024
1006
190
152
114
76
38
0
TCUSG 906
926
946
966
986
1066
94
TC = 1086
1068
1050
1032
1014
996
190
152
114
76
38
0
TCUSG 896
916
936
956
976
996
40
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I ? .
Table 5
PARAMETRIC ANALYSIS BASED ON ATC FROM 89-94
(M75$)
Year -1/Yr -2/Yr -3/Yr -4/Yr -5/Yr -ALL
86 TC Is 1035 1009 983 957
38 931 931 ) Revenue
- 0
R m 152 113 76 0 ) based on
TCUSG
883 896 907 919 931 931 ) 38M/flt
sm
87 TC is 1157 1134 11111065 ) for all
Is
R 152 113 76 1088 1065
38 0 0 ) CE.F.
)
TCUSG 11 1005 1021 1035 1050 1065 1065 figures
68 TC im 1178 1156 1134 1112 11108 106: ))
R 190 152 114 76
TCUSG st 988 1004 1020 1036 1052 1068 )
1g :
89 TC Is 1165 1143 1122 1101 10 105
R lc 247 198 148 99
TC--G
US a 918 945 974 1002 1031 1058
106479 1047
R m 244 195 146 108977
90 TC : 1149 1128 1108
0
TCUSG990 101B 1047
im 905 933 962
91 TC .1137 1118 1098 1079 10:: 103:
R im
241 193 145 96
TCUSG1011 1039
m 896 925 953 983
92 TC 1128 1109 1071 10:: 1034(4)
im 1090
96
R m 239 191 143
TCUSG1005 1034
is 889 918 947 975
R ge 232 186 139 1040 1042126 1004
93
93 TC . 1096 1077 1059
0
1015 997
99 ;
m 864 891 920 947 976 1004
103922 10
94 TC it 1086 1068 1050
R : 230 184 138
TCUSG 969 997
B 856 884 912 940
41
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6.?
Table 6
SUMMARY OF PARAMETRIC VARIATIONS ON TOTAL COST TO THE USG
(M75$)
Based on Out-of-Pocket Pricing (38M)
Year Baseline -1/Yr -2/Yr -3/Yr -4/Yr -5/Yr -ALL
83 739
84 906
65 872
86 871
87 990
88 972
89
90
91
92
93
94
958
941
929
919
686
876
739 739
906 906
872 672
739 739 739
906 906 906
872 872 872
883 896 907 919
1005 1021 1035 1050
988 1004 1020 1036
970 987
959 977
947 965
938 957
906 926
896 916
1004 1021
995 1013
983 1001
976 995
946 966
936 956
931
1065
1052
739 )No flights
906 )lost over
872 )this period.
931
1065
1068
1038 1055
1031 1049
1019 1037
1014 1033
986 1006
976 996
TOTAL 10859 11009 11116 11319 11474 11629 11757
Increase
to USG 0
% Increase 0
150 307 460 615
1.4% 2.8%
770 698
4.2% 5.7% 7.1% 8.3%
42
.=
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-
Table 7
SUMMARY OF PARAMETRIC VARIATIONS ON TOTAL COST TO USG
(M75$)
Based on Average Total Cost for 1989-94
Year Baseline 71/Yr 72/Yr 73/Yr 74/Yr -5/Yr
83
84
85
739
906
872
86 871
87 990
88 972
739 739 739 739 739
906 906 906 906 906
872 872 872 672 872
883 896 907 919 931
1005 1021 1035 1050 1065
988 1004 1020 1036 1052
89 891 918 945 974
90 877 905 933 962
91 868 896 925 953
92 860 889 918 947
93 836 864 891 920
94 828 856 884 912
-ALL
739 ) No flights
906 ) lost over
872 ) this period
931 ) Based on
1065 ) price of
1068 ) 38M/flight .
1002 1031 1058
990 1018 1047
983 1011 1039
975 1005 1034
947 976 1004
940 969 997
TOTAL 10510 10721 10934 11147 11359 11575 11760
Increase
to USG 0 111
% Increase 0 1.1%
324 537 749 965 1150
3.1%
5.1%
43
7.1% 9.2% 10.9%
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r
MANOLS v.
Ti< SECRET TALENT-KEYHOLE
CONTROL SYSTIM
(S) NATIONAL RECONNAISSANCE OFFICE
WASH I N GT ON O.0
:::u Zr. FCT. T:11; INTELLIGENCE coldiumy STkFF
5UWECT: NSDD on Commercialization of Expendable Launch Vehicles (ELVe)
lu requested, we have reviewd the draft NSDD on Commercial ELVa. With one
exception, we agree with its content and the overall policy direction. The
exception concerns the NSC Staff change on page 2 of the draft NSDD concerning
encouragement of competition among various systems and equitable treatment of
aLl commercial operations. While we do not disagree with either concept, we
have been told by the NSC Staff that the actual intent is to provide for a
competitive bid process for government owned equipment, tooling and facilities
related to ELVs. This process could be detrimental to the commercialization
effort and potentially eliminate the benefits to the USG. Further, the
sentence is extremely ambiguous in terms of intent and more importantlyTthe
legal .-bligations it places on USG actions related to commercial ELV
Operations.
We hz.ve worked with the General Counsel and the NSC Staff to devise alternate
doming (Atch I). The changed sentences now emphasize free-market competition
versus implied competitive bidding and adds broad qualifications concerning
any government obligation to conduct a competitive bid process for the sale or
lease of equipment or facilities. The Language and framework we are suggest-
ing for USO actions is drawn from existing administration policy in NSDD-50,
Space Launch Assistance. This approach has been coordinated with the DOD, DOS
and OSTP. Recommend you provide these comments to the NSC Staff. We also
suggest that the draft NSDD be made a subject of discussion at the currently
scheduled May 3, 1983 IG (Space) meeting.
ilLtach..nent
Alternate Wording
L 'Lot
DONALD L. CROMER
Brigadier General, USAF
Director
S:CTIT
OONINOLNO
OF Corms
PAGE:A=r-011 PALMS
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e-
r
HANDLE VA
TALENT-KEYHOLE
CONTADL SYSTEM
Pa--;e 2. Pgrazraph 2: Change az follows:
The L:.S. Government will encourage competition among various systems and
concepts within the free market U.S. private sector. Consistent with the
economic, roreign policy and national security interests, the USG will provide
txcat:..4nt Cor commero;.al launch operations for the sale or lease
cf equipment and foolliticz.
?
C }iL
11,LET-KEYECLE
'
P
?
CONTAOLNO
COPY OF COPIES
PAGE 3 OF PAGEs
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