COORDINATION OF REPORT ON ELV COMMERCIALIZATION

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP92B00181R001701610011-3
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 68
• Document Creation Date: December 27, 2016
• Document Release Date: February 27, 2012
• Sequence Number: 11
• Publication Date: March 31, 1983
• Content Type: MEMO

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POLICY
OFFICE OF THE UNDER SECRETARY OF DEFENSE
IAA.S?lING7ON. D 0 2030:
31 March 1983
MEMORANDUM FOR THE SPACE LAUNCH POLICY WORKING GROUP MEMBERS
SUBJECT: Coordination of report on ELV Commercialization
Attached is the coordination draft of the Working Group's report on
the commercialization of Expendable Launch Vehicles (ELVs) and the proposed
National Security Decision Directive. Please provide your agencies' fornal
comments to ne by noon on 7 April.
A working group meeting will be held in Room 5026 (OSTP) of the New
Executive Office Building at 0930 on 8 April to review agency comments
for incorporation into the fin-al
The final report will he submitted to the Interagency Group (Space)
by 12 April for their consideration.
Maj T./F. maults
Co-Chairman
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COORDI NATION DRAFT
SPACE LAUNCH POLICY WORKING GROUP
DRAFT REPORT ON
COMMERCIALIZATION OF U.S. EXPENDABLE LAUNCH VEHICLES
March 31, 1983
COORDINATION DRAFT
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CONTENTS
PAGE
INTRODUCTION
I. FINDINGS AND RECOMMENDATIONS
II. DRAFT NATIONAL SECURITY DECISION DIRECTIVE. 6
III. FACTORS AFFECTING USG DECISION ON
ELV COMMERCIALIZATION
A. POLICY BACKGROUND 1/
B. DOMESTIC AND FOREIGN ELV SURVEY /5
C. ECONOMIC IMPACTS OF COMMERCIAL ELVs
ON THE STS I
D. STS AND ELV COMPARISONS 7
E. CONCLUSIONS 30
IV. APPROACH TO COMMERCIALIZATION 3/
A. INTERNATIONAL LAW 3/
B. NATIONAL CONCERNS 34'
C. USG SERVICES AND FACILITIES 38
D. DOMESTIC LAW Lia
6. CONCLUSIONS LI 7
APPENDIX A -- Economic Analysis
of STS Commercial and
Foreign Payload Losses
APPENDIX B -- International Law
APPENDIX C -- Working Group Membership 6
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Interagency Space Launch Policy Working Group Report on
Commercialization of U.S. Expendable Lauanch Vehicles
Introduction
The National Space Policy encourages the expansion
of United States private sector investment and involvement
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 as 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
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government action is required to provide the information
the private sector needs to make business decisions.
The Space Launch Policy Working Group, (see Appendix
C) was chartered by the Interagency Group (Space) to
determine what the US National Space Launch Policy
should be with regard to (a) the increasing foreign space
launch capabilities an competition, 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.
This report is organized into four major sections.
Section I presents the Working Group's principle findings
and recommendations. Section II contains the proposed
National Security Decision Directive. Section III
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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 provides the detailed analysis and data that supports
the conclusions regarding the impacts on the USG Shuttle
program of the loss of commercial and foreign payloads.
Appendix B contains additional details on International
Law and domestic licensing processes. Appendix C lists
the Space Launch Policy Working Group members.
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I. FINDINGS AND RECOMMENDATIONS
This section presents the Working Group's principal
findings and recommendations
Findings
? A US commercial ELV capability would benefit
both the USG and the private sector and is
consistent with the goals and objectives
of the U.S. National Space Policy
,
? The potential increases in total cost to the
USG of the STS program as a result of the loss
of commercial and foreign payloads were considered
minimal and were believed to be offset by the
benefits of commercial ELV operations.
? International legal obligations and domestic
concerns, including those relating to public
safety, require the USG to authorize, supervise
and/or regulate U.S. private sector space
operations.
? No new legislation for the regulation of private
sector space operations is required at this time.
? The use of existing licensing procedures, if
streamlined, is adequate for the interim;
however, as commercial launch operations develop
and proliferate a revised process will be
needed.
? The most effective means for the USG to ensure
safe commercial ELV operations and compliance
1T1I .t_reaty obli.ptions_is to encourage the
use of existing USG launch ranges.
Recommendations
? The USG should encourage and facilitate the
commercialization of US ELVs.
? Commercial ELV operators should be encouraged
to use USG launch ranges.
Iill A?t10
14A4'
? The USG should continue to make the STS available
for all types of payloads in all markets to
the extent that it serves the best interests
of the USG.
Lj
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? The Department of State should be designated
as the USG lead agency for the coordination
of all commercial ELV requests. They should
chair an interagency group to coordinate and
define the process for the licensing, supervision
and/or regulation of commercial ELV operations,
to include specific government agency responsi-
bilities.
? The USG should not subsidize the commercial-
ization of ELVs. USG facilities and services
should be made available for commercial use where
practical and priced in a manner that will
facilitate and encourage commercial operations.
The USG should not seek to recover ELV design
and development costs, or investments associated
with launch facilities.
? The USG should retain priority use of facilities
that are jointly shared with the private sector.
Commercial operators must provide adequate
insurance to reimburse the USG should they
damage es t or facilities
? The USG houl review and approve any proposed
commercia aunch facility and range and as
a minimum oversee the operation of the flight
safety/command destruct system.
? The USG should require commercial operators to
obtain sufficient insurance to cover potential
damage to third party persons and property.
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II', DRAFT NATIONAL SECURITY DECISION DIRECTIVE
National Security Decision
Directive Number
Commercialization of Expendable Launch Vehicles
I. INTRODUCTION
The USG 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) optimize the management, operation,
and support of the STS program so as to achieve routine
economical access to space; (b) exploit the unique
attributes of the STS to enhance the capabilities
of the US space program; (c) ensure a flexible and
robust US launch posture to maintain space transporta-
tion leadership; (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
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US commercial ELV operations to the extent required to
meet its national and international obligations and to
ensure public safety.
The USG encourages the use of its National Ranges
for US commercial ELV operations. 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.
The USG will have priority use of joint-use USG
facilities and support services to meet national security
needs and critical launch windows. The USG will make
all reasonable efforts to minimize impacts on commercial
operations.
US commercial launch operations conducted from
non-USG launch facilities must be certified by the
USG. The USG will take measures necessary to ensure
flight safety for all launch operations from USG and
US commercial launch sites.
The USG will price the use of its facilities,
equipment, and services consistent with the goal of
encouraging viable commercial ELV launch activities.
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III. IMPLEMENTATION
The Department of State will be the USG focal
point for all private sector contact/questions on
commercial ELV activities.
The Department of State will establish and chair
an interagency group to coordinate and define the
process for licensing, supervision and/or regulation of
commercial ELV operations, to included specific government
agency responsibilities. Existing agency capabilities
and expertise will be used to the maximum extent possible.
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 encourage
the use of the Space Shuttle and all of its unique
capabilities by all potential users.
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IMPLEMENTING GUIDELINES FOR COMMERCIALIZATION
OF EXPENDABLE LAUNCH VEHICLES
A. Required Actions
NASA and DOD, for those functions over which they respect-
ively have cognizance, shall:
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 and schedules
for making available appropriate USG equipment,
facilities and properties;
5. as requested, provide technical advice and assis-
tance 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.
B. Government Pricing Guidelines:
The price for USG facilities, equipment, and services,
will be based on the following principals:
1. services should be priced 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.
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.
C. Commercial ELV Operator Requirements
1. maintain all facilities and equipment leased from
the USG to a level of readiness and repair specified
by the USG;
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2
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. provide adequate insurance to cover the USG
liabilties for damage to both domestic and foreign
persons and property;
4. abide by range safety criteria and not hold the
USG liable for damage incurred by the operator
resulting from USG safety actions (e.g. command
destruct);
5. agree not to hold the USG liable for losses
resulting from scheduling delays related to
joint-use facilities and range support services;
6. comply with applicable international, national,
state, and .ocal laws and regulations including
security, safety, and environmental requirements.
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III. FACTORS AFFECTING THE USG DECISION ON COMMERCIALIZATION
The development of a USG rationale for endorsing commercialization
of ELVs requires a complete examination of the advantages and disadvantages
to the USG of commercial ELV operations. Consideration should also
be given to the existing national policies which establish a tramework
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."
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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 acitivties 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.
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.
9. 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.
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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 overall competitive
position in space technology.
d. To enhance the cost-effectiveness of space systems through
increased and more effective use.
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 acheived
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,
c. the intent to realize full potential of the STS concept
and to use the STS as the primary space launch system for
USG payloads,
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d. the desire to obtain maximum economic benefit from space
programs and seek enhancement of US competitivie 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 qperation 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 Ttanspace Carriers, Inc. on the commercialization of the
Delta. In all instances, no specific private sector cost data was provided
because of its camrercial 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. Their general
consensus was that canmercialization of ELVs (1) would enhance national
security by providing a Shuttle backup; (2) provide a domestic ELV backup to
the STS and an alternative to foreign ELVs for carmercial users, thereby
reducing the loss of commercial payloads to foreign competitors; and (3) retain
high technology industrial jobs.
1. TITAN
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
is-
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outcome of the current Intelsat VT 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 FrenCh-daminated Ariane launch system. The
contractors have identified a program goal to provide a common payload
interface for both Shuttle and commercial Titan; this would offer great
flexibility as a backup to the Shuttle, and could enhance its position in
the ccmmercial market. Under the assumptions that the U.S. Governnent will
not seek to recover sunk costs, would lease existing launch facilities and
production equipment at a nominal fee, and 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.
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 communications satellite
market for 1986-1995 indicates that the current Atlas capability already
addresses nearly 75 percent of this market. With the planned General
Dynamics' development of the Atlas IIB/Centaur, they can compete beginning
in 1987 for approximately 85 percent of this market. Their discussions
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with 26 users/satellite manufactures 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. APJANE
The primary foreign competition to the U.S. Space Shuttle and 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, Nestern Union, and Southern Pacific.
Ariane is primarily being marketed as a vehicle for placing satellites
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into geosynchroncus 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 U.S. Space Shuttle. Ariane has
established a goal of at least a 25 percent share of the world 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 1985-86.
To achieve its goal of capturing 25 percent of the world market, Ariane
has aggressively priced their launch services. The already famprable
Ariane prices are further camplemented 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 can 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 ccmmercial launch
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services; they could enter the cannercial market for either political or
economic reasons.
These countries are not now actively prcmoting their launch vehicles
as worldwide ccmrrercial competitors, but the potential exists if it
appears attractive.
6. CONCLUSIONS
All potential U.S. cannercial ELV operators expressed confidence
that they would capture 2 to 4 launches annually. The Working Grcup
felt that it was unlikely that there would be 2 to 4 cannercial
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 ccantErcialization of ELVs. National security
could be enhanced by having an alternative launch capability for selected,
critical national security missions in the event of a generic problem
that could ground the entire STS fleet or during potential international
situations where the risk of losing an orbiter and crew could jeopardize
launching satellites on demand. There would also be national economic
benef its resulting frcrn domestic cannercial exploitation and operation of
USG develcped ELV capabilities, technologies, and systems. These occur
in the fonn of: (a) tax revenues derived from the provision of launch
services; (b) assumption by the private sector of overhead for ELV
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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 ccmnercial users to 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 manrate to satisfy Shuttle
safety requirements.
Additionally, by approving the ccmmercialization of existing ELVs,
the USG could avoid some, if not all, close-out costs associated with
the termination of the present USG ELV contracts. Cammercial launch
operations could stimulate the U.S. econamy and contribute to a more
effective and flexible U.S. space launch capability. This would directly
contribute to maintaining U.S. leadership in space transportation.
The only disadvantage of ELV cammercialization that was identified
was the potential economic effects commercialization could have on the
STS program. These econonic effects are summarized in the next section.
9.4)
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C. Economic Effects of Commercial ELVs on the STS
One of the primary considerations associated with a
United States Government (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 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 cost
to the USG of incremental losses of Commercial and
Foreign (C&F) flights from the shuttle mission
model. A complete documentation of the analysis
and the model used is provided in Appendix A.
The following assumptions were used to construct an
economic model to allow a static sensitivity analysis
to be performed:
current USG planning will result in a capability
for 24 flights per year; this capability
will be retained regardless of increases or
decreases in commercial or foreign demand.
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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 unchanged over the range of 18 to 24
flights per year.
the projected NASA budget figures represent the
total cost of STS operations; no costs for
Vandenberg operations were included in the NASA
budget number even though the mission model
includes flights from Vandenberg.
NASA's most recent STS mission model of 233 flights (191 USG
missions and 62 commercial and foreign) over the 12-year period
from 19R3 to 1994 was used as a baseline for the analysis.
Additionally, the three NASA pricing options described in
Table 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.
For the period encompassing 1983 to 1985, NASA will charge
commercial and foreign users S18M (75S), and this figure was
used to calculate revenue over this period.
AD.
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In the 1986 to 1988 timeframe, NASA is proposing to charge
commercial and foreign users $38M (75S), and this value was
used to calculate revenue over this period.
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 over the 1986 to 1994 period. No commercial
or foreign flights were assumed to be lost from 1983 through
1985 since the first commercial ELV is not projected until
1986.
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 based on 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 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 users is based on
the 1986-88 Out-of-Pocket costs, an average loss of 3 flights
,Q3
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a year (between 1986-94) results in a total increase
in USG costs over the 12-year period of $460M (75$)
or 4.2%. This represents an increase of about
$38M (75$) 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 $46M (75S) per year.
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. 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 STS pricing
competition with U.S. commercial 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
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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. Costs for orbiter
depreciation and for major inspections are not included in
the fixed cost base used in the analysis, as accurate figures
on these costs were not available. However, these costs
would have to be, considered when examining the long-term
impact on total cost to the USG of non-government shuttle flights.
In the first case, each orbiter has a design life of 100
missions. If the price of a commercial and foreign
flight does not recover a sum above
government costs increase because a
being expended. This resource will
average total cost,
finite resource is
eventually have to
be
replaced at some cost. Second, 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 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 A, the
following conclusions can be drawn:
0 Additive cost pricing offers no economic advantage to
the USG, regardless of reductions in average cost
per flight.
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O The Average Total Cost per flight figure is not a
relevant measure of cost to the USG unless the price
for shuttle flights is based on full cost recovery.
O Both Out-of-Pocket and Average Total Cost pricing
options would produce revenues that exceed the
additive cost for e;ach commercial and foreign flight
and therefore would serve to reduce the total cost
of operations to the USG.
O Out-of-Pocket pricing does not represent major
cost recovery to offset the cost to the USG for
shuttle operations. Its advantage is that it allows
the shuttle to compete favorably with Ariane.
Average Total Cost recovery would decrease total
USG costs, but would make the shuttle less competitive
with ELVs.
The conclusion of the Working Group was that, regardless of
the NASA pricing strategy, 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, ELVs appear to be cost competitive
with the STS at $38M per flight. It should be recognized
that this only compares their relative costs 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. Had the volume of traffic pro-
jected for the STS materialized, perhaps the STS would have
even proven cheaper for all missions. But, as the traffic
model was reduced, the financial advantages of using the STS for
simple boost missions decreased. By the time this occurred, the
USG was committed to the STS and it was necessary to discontinue
the expense of continued, 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.
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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 STS is currently the only U.S. spacecraft 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 STS 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 explora-
tion. The cooperative exploitation of space for peaceful
purposes is an advantage that is difficult to measure in economic
terms but is certainly valuable in our international relations.
These unique STS capabilities should be considered when
comparing the relative effectiveness of the STS and ELVs; the
full effects of he strengths and weaknesses of the STS ano
ELVs should be a key part of any comparisons. The Working Group
as
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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.
aci
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E. Conclusion
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 costs
of the STS program were considered minimal and 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 best 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 facilitating
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.
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 the principles governing uses of outer space,
(3) provide notice to certain States, (4) assume absolute
liability for damage caused by these activities, and (5) arbi-
trate 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:
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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 fra;nework. The USG is required to
perform some supervision to ensure compliance with the treaty
obligations described below.
2. Compliance with 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 governmental agencies or nongovernmental
entities" are "carried out in conformity with the provisions
set forth in the present Treaty."
Most of the provisions of the Outer Space Treaty impose
obligations on States, not their nationals. The USG would require
private space launch vehicle operators to comply with the
principle enunciated in Article IV, to undertake only peaceful
purposes and to refrain from stationing weapons of mass destruction
in space.
3. Notice to certain states. Article IV 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 undertake acivity that "would cause potentially
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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 missle launches if such launches will extend
beyond its national territory in the direction of the (USSR)"
In addition, the USG must register space objects
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. The Outer Space
Treaty sets no standard of liability; the liability Convention
specifies that liability is absolute.
5. Arbitration of claims. The Liability Convention
prescribes that damage claims shall be adjudicated by an ad hoc
arbitral tribunal, the Claims Commission. The tribunal's
determinations are recommendatory unless parties to a dispute
agree to make them binding.
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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:
1) national security
2) technology transfer
3) 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 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 commercial ELVs
from outside U.S. territory was considered to be potentially
disadvantageous to the interests of the USG.
Adequate procedures were thought to exist to allow USG
control over proposed launches from outside U.S. territory.
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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
missles. The USG 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.
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.
3 5
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The operation of either existing or new ELVs from the
national ranges represents the most straightforward case.
The USG could provide ample assurrance of public safety by
controlling the hazardous ground operations and flight
safety for commercial operations according to the same
criteria now used for its own operations. Commercial
operators would not have to provide the substantial capital
investment required to establish, equip, and operate a range
to government standards. The USG could provide these
services on a reasonable, reimburseable basis. This would
also make maximum use of the facilities, equipment, and
services already in place on the existing national ranges.
The USG should encourage commercial opeators 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.
While it is possible for the USG to fulfill these
commitments for operations from a private range, the
minimum acceptable standards that a commercial operator
would have to meet are not presently defined. One test
launch in this category has already been approved, 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.
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The acceptability of commercial operations from private
launch ranges was considered beyond the scope of this study.
We recommend that the USG's requirements for the establish-
ment and approval of a commercially operated space launch
range be separately studied and defined in an interagency forum.
Neither the USG or the private sector can intelligently con-
sider 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 most successful
and practical, the USG would have to provide selected support
services, equipment, and facilities.
Since the existing ELVs were developed for the use of
the USG, portions of the facilities,tooling, assembly fixtures,
and test equipment are ownd 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 would require that the
USG make 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 maintenance
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.
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This would 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 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.
Those facilities that would be used by the USG even atter
the discontinuation of USG ELV operations, could be shared with
commercial ELV operators. For such joint-use facilities, the USG
should control the integrated scheduling of both the USG and
commercial activites and retain priority right-of-use to support
critical national security or limited launch opportunity
missions (e.g., planetary windows). The USG should make every
reasonable effort to minimize impact on the commercial operators
in joint-use facilities.
The USG should also make available, on an equitable reimburse-
ment basis, all range support services necessary to conduct launch
3q
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operations from the national ranges. All ELV operators using
the national ranges should be required to comply with the basic
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 wonld have to agree
to be bound by the USG's ground and flight safety requirements
and understand that the USG would destroy their vehicles if
they violated flight safety criteria. The contractors would
have to agree to not hold the USG liable for schedule delays
resulting from conflicts in joint-use facilities or range
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.
The commercial operators should maintain all USG property in
accordance with the contractual agreements negotiated for the
specific facilities.
NASA and Dot) should individually identify those facilities,
equipments, 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 regulations, accounting systems, and
procedures may vary.
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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 little or no cost to the USG. Consequently, launch facilities
and equipment leased or otherwise made available to commercial
operators should be priced in a manner that encourages viable
commercial operations and serves the hest 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 he 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 skills, an
expanded cost base at the National Ranges, and maintenance of
a USG emergency/back-up access to space.
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D. Domestic Laws Pertinent to Commercial ELV Operations
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 trom US territory
or export of satellites and launch vehicles generally trom
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 estahlishe(1
to handle comriercial launch operations can be summarized
as follows.
1. Launch Vehicles
Under the current 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 con-
trolled airspace.
a. Arms Export Control License. The Arms Export
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Control Act and its implementing regulations on the
International Traffic in Arms (ITAR) presently furnish
the primary mechanism for controlling launches and 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 or import.
Violators are subject to criminal sanctions. Pockets,
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 takincj
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 if it believes
such action would not further world peace, foreign policy,
or national security; or because it believes 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 considering the range of
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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 infor-
mation 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, and 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. Under
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
qg
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operations are prohibited including operations that (a) 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, the US is liable to national and
foreign entities for damage caused by negligence in Federal
participation in space launches; e.g., in abort-destruct
execution. Second, the US is absolutely liable--liable without
fault--to foreign governments, companies, and persons for personnel
and property damage caused by space launches from US territory.
While the process used to provide the initial approval
can unquestionably he 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 designated 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
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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.
116
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E. Conclusions
1. The USG should proceed with the details necessary to
support viable 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 to the maximum
extent practical.
3. DoS should chair an interagency study to define a more
effective process to support routine, commercial ELV
operations.
4. Existing procedures are adequate in the interim to
handle occasional test launches by the private sector.
More should be developed before the advent of routine
commercial ELV operations.
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. An interagency study should be conducted to define the
USG criteria and requirements for approving commercial
launch sites and ranges.
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APPENDIX A
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 $18M per flight during the 1983-85 period, and
$38M (the 1986-88 out-of-pocket estimate) for the
period from 1986-94. The average total cost option
uses $18M for 1983-85, $38M for 1986-88, and then
assumes full cost recovery (average total cost) during
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1989-94.
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.
The twelve year sum of the total costs 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 1986
to 1994, six scenarios were analyzed assuming an annual
loss of an average of 1,2,3,4,5 and 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
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)
q
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?
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 e'och 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
secnario.
5-0
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TABLE 1
BASELINE MISSION MODEL DATA
( M 75$)
YEAR
USG
FLIGHTS
C&F
FLIGHTS
TOTAL
FLIGHTS
AVERAGE
TOTAL COST
SOURCE:
NASA
AVE RAGE
VARIABLE COST
C & F
PRICE
83
3
?
5
155.0
35.0
18.0
84
7
3
10
96.0
31.0
18.0
85
7
5
12
80.2
28.0
18.0
86
12
5
17
62.4
24.7
38.0
87
16
5
21
56.2
23.0
38.0
88
18
6
24
50.0
21.8
38.0
89
18
6
24
49.4
21.3
N/A
90
18
6
24
48.7
20.4
N/A
91
18
6
24
48.2
19.6
N/A
92
18
6
24
47.8
18.9
N/A
93
18
6
24
46.4
18.4
N/A
94
18
6
24
46.0
17.9
N/A
TOTAL
171
62
233
Si
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Table 2
CALCULATED FROM THE BASELINE DATA FOR EACH YEAR:
Total Costs = number of flights times Average Total Cost per flight
Variable Costs = number of flights times Average Variable Cost per flight
Fixed Costs = Total Costs minus Variable Costs
Total Fixed Percentage of
Year Costs Cost Total Costs
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%
89 1186 675
57%
511
43%
90 1169 679
58%
490
42%
91 1157 687
59%
470
41%
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
SA
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Table 3
BASELINE MISSION MODEL
Year
Total
Costs
"OPC"
"ATC"
C&F
Price/Flt
Total
C&F
Revenue
Total
Cost
to USG
C&F
Price/Flt
Total
C&F
Revenue
Total
Cost
to USG
83
775
18
36
739
18
36
739
84
960
18
54
906
18
54
906
85
962
18
90
872
18
90
872
86
1061
38
190
871
38
190
871
87
1180
38
190
990
38
190
990
88
1200
38
228
972
38
228
972
Out-of-
ATC
Pocket
89
1186
38
228
953
49.2
295
891
90
1169
38
228
941
48.7
292
877
91
1157
38
228
929
48.2
289
868
92
1147
38
228
919
47.8
297
860
93
1114
38
228
886
46.4
278
836
94
1104
38
228
876
46.0
276
828
TOTAL
13015
10859
10610
53
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Table 4
Year
PARAMETRIC ANALYSIS BASED ON OPC
(38M)
-ALL
-1/Yr
-2/Yr
-3/Yr
-4/Yr
-5/Yr
86
TC
= 1035
1009
983
957
931
931
R
= 152
113
76
38
0
0
TCUSG
883
896
907
919
931
931
87
TC
= 1157
1134
1111
1088
1065
1065
R
= 152
113
76
38
0
0
TCus
= 1005
1021
1035
1050
1065
1065
88
TC1090
= 1178
1156
1134
1112
1068
R = 190
152
114
76
38
0
TCusG = 988
1004
1020
1036
1052
1068
89
TO
= 1160
1139
1118
1097
1076
1055
R
= 190
152
114
76
38
0
TCUSG
= 970
987
1004
1021
1038
1055
90
TC
= 1149
1129
1109
1089
1069
1049
R
= 190
152
114
76
38
0
TCUSG
= 959
977
995
1013
1031
1049
91
TC
= 1137
1117
1097
1077
1057
1037
R
= 190
152
114
76
38
0
TCUSG
= 947
965
983
1001
1019
1037
92
TC
= 1128
1109
1090
1071
1052
1033
R
= 190
152
114
76
38
0
TCUSG
= 938
957
976
995
1014
1033
93
TO
= 1096
1078
1060
1042
1024
1006
R
= 190
152
114
76
38
0
TCUSG
= 906
926
946
966
986
1066
94
TC
= 1086
1068
1050
1032
1014
996
R
= 190
152
114
76
38
0
TCUSG
= 896
916
936
956
976
996
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Table 5
Year
PARAMETRIC ANALYSIS BASED ON ATC FROM
89-94
-ALL
-1/Yr
-2/Yr
-3/Yr
-4/Yr
-5/Yr
86
TC
=
1035
1009
983
957
931
931
)
Revenue
R
=
152
113
76
38
0
0
)
based on
TCUSG
'
883
896
907
919
931
931
)
38M/flt
87
TC
=
1157
1134
1111
1088
1065
1065
)
for all
R
=
152
113
76
38
0
0
)
C&F
TCUSG
'
1005
1021
1035
1050
1065
1065
)
figures
88
TC
=
1178
1156
1134
1112
1190
1068
)
R
=
190
152
114
76
38
0
)
TCUSG
'
988
1004
1020
1036
1052
1068
)
89
TC
=
1165
1143
1122
1101
1080
1058
R
=
247
198
148
99
49
0
TCUSG
'
918
945
974
1002
1031
1058
90
TC
=
1149
]128
1108
1087
1067
1047
R
=
244
195
146
97
49
0
TCUSG
'
905
933
962
990
1018
1047
91
TC
=
1137
1118
1098
1079
1059
1039
R
=
241
193
145
96
48
0
TCUSG
=
896
925
953
983
1011
1039
92
TC
=
1128
1109
1090
1071
1053
1034
R
=
239
191
143
96
48
0
TCUSG
=
889
918
947
975
1005
1034
93
TC
=
1096
1077
1059
1040
1022
1004
R
=
232
186
139
93
46
0
TCUSG
=
864
891
920
947
976
1004
94
TC
=
1086
1068
1050
1032
1015
997
R
=
230
184
138
92
46
0
TCUSG
=
856
884
912
940
969
997
55
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Table 6
SUMMARY OF PARAMETRIC VARIATIONS ON TOTAL COST TO THE USG
Year
Baseline
Based on Out-of-Pocket Pricing
-1/Yr -2/Yr ;73/Yr -4/Yr
(88M)
-5/Yr
-ALL
83
739
739
739
739
739
739
739
)No flights
84
906
906
906
906
906
906
906
)lost over
85
872
872
872
872
872
872
872
)this period.
86
871
883
896
907
919
931
931
87
990
1005
1021
1035
1050
1065
1065
88
972
988
1004
1020
1036
1052
1068
89
958
970
987
1004
1021
1038
1055
90
941
959
977
995
1013
1031
1049
91
929
947
965
983
1001
1019
1037
92
919
938
957
976
995
1014
1033
93
886
906
926
946
966
986
1006
94
876896
916
936
956
976
996
TOTAL
10859
11009
11116
11319
11474
11629
11757
Increase
to USG
0
150
307
460
615
770
898
% Increase 0
1.4%
2.8%
4.2%
5.7%
7.1%
8.3%
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Table 7
SUMMARY OF PARAMETRIC VARIATIONS ON TOTAL COST TO USG
Year
Baseline
Based on Average Total
-1/Yr -2/Yr -3/Yr
Cost for
-4/Yr
1989-94
-5/Yr
-ALL
83
739
739
739
739
739
739
739 )
No flights
84
906
906
906
906
906
906
906 )
lost over
85
872
872
872
872
872
872
872 )
this period
86
871
883
896
907
919
931
931 )
Based on
87
990
1005
1021
1035
1050
1065
1065 )
price of
88
972
988
1004
1020
1036
1052
1069 )
38M/flight
89
891
918
945
974
1002
1031
1058
90
877
905
933
962
990
1018
1047
91
868
896
925
953
983
1011
1039
92
860
889
918
947
975
1005
1034
93
836
864
891
920
947
976
1004
94
828
856
884
912
940
969
997
TOTAL
10610
10721
10934
11147
11359
11575
11760
Increase
to USG
0
111
324
537
749
965
1150
% Increase 0
1.0%
3.1%
5.1%
7.1%
9.1%
10.8%
57
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? APPENDIX B
INTERNATIONAL LAW
Under the multilateral space conventions, the United States
has four primary obligations that would relate to commercial
ELV's. Generally, we must (1) authorize and supervise private
space activity, (2) ensure their compliance with the principles
governing uses of outer space, (3) notify foreign governments
of launches and potential hazards, (4) assume absolute
liability for damage caused by these activities, and (5)
arbitrate claims for damage to foreign entities.
The conventions to which the United States is party
include the Treaty on Principles Governing the Activities of
States in the Exploration and Use of Outer Space, including the
Moon and other Celestial Bodies, entered into force for the
United States October 10, 1967 (18 UST 2410, TIAS 6347)
("Outer Space Treaty"); Convention on the International
Liability for Damage Caused by Space Objects, entered into
force for the United States October 9, 1973 (24 UST 2389, TIAS
7762) ("Outer Space Liability Convention"); Convention on
Registration of Objects Launched into Outer Space, entered
into force for the United States September 15, 1976 (28 UST
695, TIAS 8480).
1. Authorization and supervision. Article VII provides in
part:
"The activities of non-governmental 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."
The scope of this obligation is imprecise. It does not in
itself require the U.S. to "regulate" activities; rather it
impels the U.S. to take some affirmative action to ensure that
private launches will, for ?the duration of their activities,
comply with international law. We could have substantial
debate over which international law, as defined by treaty
obligations, apply not only to states sas states, but also to
its private citizens.
Article VI of the Outer Space Treaty specifies that at
least certain obligations of that Treaty apply to private
activities:
54?
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'States Parties to the Treaty shall bear international
responsibility for national activities in outer space,
including the moon and other celestial bodies, whether
such activities are carried on by governmental
agencies or non-governmental entities, and for
assuring that national activities are carried outin
conformity with the provisions set forth in the
present Treaty.'
(emphasis added).
2. Compliance with international law. We could construe
the "peaceful activities' provisions to apply to private
launches. Article III of the Outer Space Treaty contains a
general injunction against non-peaceful space activity:
'States Parties to the Treaty shall carry on
activities in the exploration and use of outer space,
including the moon and other celestial bodies, in
accordance with international law, including the
Charter of the United Nations, in the interest of
maintaining international peace and security and
promoting international cooperation and understanding.'
Article IV specifically bans the stationing of weapons:
"States Parties to the Treaty undertake not to
place in orbit around the Earth any objects carrying
nuclear weapons or any other kinds of weapons of mass
destruction, install such weapons on celestial bodies,
or station such weapons in outer space in any other
manner."
Similarly, Article IX's terms on environmental hazards may
be construed to apply to nationals, especially since it
requires Parties to "adopt appropriate measures" to secure its
objectives:
"State Parties to the Treaty shall pursue studies of
outer space, including te moon and other celestial
bodies, and conduct exploration of them so as to avoid
their harmful contamination and also adverse changes
in the environment resulting from the introduction of
extraterrestrial matter, and, where necessary, shall
adopt appropriate measures for this purpose."
.5-ct
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Other treaties also impose obligations that could restrict
private space activities, for example, the Convention on the
Prohibition of Military or any Other Hostile Use of
Environmental Modification Techniques, with Annex, entered into
force for the United States January 17, 1980 (31 UST 333, TIAS
9614). Under Article I of this Convention, we must not 'engage
in military or any hostile use of environmental modification
techniques having widespread, long-lasting or severe effects as
the means of destruction, damage or injury to any other State
Party.' Article II defines 'environmental modification
techniques' as 'any technique for changing -- through the
deliberate manipulation of natural processes -- the dynamics,
composition or structure . . . of outer space.' Article IV
requires parties to enact laws necessary to prohibit Convention
violations.
Some space activities could be proscribed by Article V of
the 1959 Antarctic Treaty (12 UST 794, TIAS 4780), that 'Any
nuclear explosion in Antarctica and the disposal there of radio
active waste material shall be prohibited." The treaty applies
in the area south of 600 latitude (Article VI), and, Article X
affirms that its principles shall apply to private parties.
3. Notification to foreign governments. If the U.S. has
reason to believe that our private launchers will undertake
activity that could harm the space activity of other states, it
must consult with those states before the launch. Article IX
of the Outer Space Treaty provides in part:
'If a State Party to the Treaty has reason to believe that
an activity or experiment planned by it or its nationals in
outer space, including the moon and other celestial bodies,
would cause potentially harmful interference with
activities of other States Parties in the peaceful
exploration and use of outer space, including the moon and
othe celstial bodies, it shall undertake appropriate
international consultations before proceeding with any such
activity or experiment. "
In addition, under Article 4 of the US-USSR Agreement on
measures to Reduce the risk of Outbreak of Nuclear War, entered
into force September 30, 1971 (22 UST 1590, TIAS 7186), the
U.S. must notify the USSR of "any planned missile launches if
such launches will extend beyond its national territory in the
direction of the [USSR]."
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Finally, the U.S. must comply with registration
requirements under Articles II and III of the Registration
Convention.
4. International liability. Both the Outer Space Treaty
and the Liability Convention establish US liability to other
contracting parties and their natural or juridical persons, for
personal and property damage caused by launches from U.S.
territory or launches that the U.S. has "procured". The Outer
Space Treaty sets no standard of liability; the Outer Space
Convention specifies that liability is absolute.
Article VII of the Outer Space Treaty provides:
'Each State Party to the Treaty that launches or
procures the launching of an object into outer space,
including the moon and other celestial bodies, and
each State Party from whose territory or facility an
object is launched, is internationally liable for
damage to another State Party to the treaty or to its
natural or juridical persons by such object or its
component parts on the Earth, in air space or in outer
space, including the moon and other celestial bodies.'
Article II of the Liability Convention specifies that
liability is absolute:
"A launching State shall be absolutely liable to
pay damage caused by its space object on the surface
of the Earth or to aircraft in flight."
5. Arbitration of claims. The Liability Convention
further prescribes that damage claims shall be adjudicated by
an ad hoc arbitral tribunal, the Claims Commission. The
tribunal's determinations are recommendatory unless parties to
a dispute agree to make them binding.
CURRENT PROCESS
A commercial launcher now must obtain three primary
approvals: (a) an Arms Export Control license from the State
Department for boosters and payloads; (b) a radio license from
the FCC; and (c) an exemption or clearance from the FAA for use
of controlled airspace.
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In addition, a commercial launcher provides documentation
to NORAD for tracking purposes.
1. Arms Export Control License. The Arms Export Control
Act, as amended, 22 USC 2751 et seq., and its implementing
regulations on the International Traffic in Arms, 22 C.P.R.
121.01 ("ITAR') are the mechanisms through which the US
controls export of munitions and attendant technology. The
Act and its regulations are administered by the State
Department's Office of Munitions Control, which issues the
Munitions List and grants export licenses for items on the
list.
Section 38 (a)(1) of the Act, 22 USC 2777 (a)(1),
authorizes the President to designate defense articles and
services that constitute the Munitions List, and to regulate
the import and export of items on the list. Section 38 (b)(2)
establishes the licensing requirement: "[N]o defense articles
or defense services designated by the President under
subsection (a)(1) may be exported or imported without a license
for such export or import, issued in accordance with this Act
and regulations issued under this Act. . . . The regulations
define 'export' to mean 'the sending or taking out of the
United States in any manner, any article, equipment or
technical data on the Munitions List." 22 CPR 121.19.
Category IV of the Munitions List covers boosters, launch
vehicles, and all specificially designed associated equipment.
Technical data related to this equipment are also on the list.
22 CPR 125.03 - 125.05.
Payloads come under Category VIII: "Spacecraft including
named and unmanned, active and passive satellites."
Range equipment is also covered: Category VII covers gun
and missile tracking and guidance systems, military infrared,
image intensifier and other night sighting and night viewing
equipment; range, position and height finders and spotting
instruments; inertial and other weapons or space vehicle
guidance and control systems; spacecraft guidance, control and
stablilization systems.
Under the 22 CFR 123.05, the Department has broad authority
for license denial, revocation, suspension or amendment. The
Department may take such action if it believes that the action
would further world peace, foreign policy, or national
security; or because the Department believes the applicant has
violated the Act, the ITAR; or the transaction or applicant has
been "debarred" or specifically proscribed.
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?
License decisions may be appealed at the administrative
level, to a Hearing Commission of the State Department, and for
Appeals Board of the Commerce Department under procedures set
forth in 22 CFR Part 128. An aggrieved applicant would have
difficulty obtaining further review of license decisions under
the Administrative Procedure Act, 5 USC 500 et seq.
The ITAR provides some mechanism for considering the range
of concerns that affect foreign policy, 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 under 22 CFR 121.01
and 121.04, to provide "all pertinent documentary information
regarding the proposed transaction." Similarly, in order to
assure some compensation to foreign governments, and to provide
further incentives for vehicles safety, the State Department
may secure compensation commitments in the form of insurance
and/or indemnification.
2. Federal Communications Commission ('FCC") license.
Under the Communications Act of 1934, as amended, 47 USC
section 151 et seq., and its implementing regulations 47 CFR
Pts 0-99, the FCC allocates frequencies and issues licenses for
the radio frequencies necessary for launchers to monitor
telemetry, track, and abort or destruct.
The FCC allocates frequencies in 47 CFR Pt. 2. It has not
designated frequencies for uses associated with space
operations; such a designation would require a rulemaking and
would be greatly contested. Administrative procedures would be
required for issuing permanent licenses of those frequencies. A
Space operations, including STS, therefore have been
licensed under the provisions of 47 CFR Pt 5 for experimental
licenses. Experimental licensees may share any FCC designated
frequency, provided 'What the need for the specific
frequncy(s) requested is fully justified by the applicant."
47 CFR 5.203. Because frequencies for experimental licensees
are shared and need not be reallocated, the licensing process
can be expeditious. These licenses are generally issued for a
period of about two years.
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Experimental services licenses for "research" may be
conferred for purposes which include: "experiments under
contractual agreement with the United States Government, or for
export purposes"; "communications essential to research
projects"; and "technical demonstrations of equipment or
techniques." 47 CFR 5.202. The FCC has construed these
purposes broadly, and its practice has been to use these
provisions to license government space operations, including
STS.
3. Federal Aviation Administration (FAA) clearance. The
Federal Aviation Act of 1958, as amended, 49 USC 1301 et seq.,
furnish the basis for economic and air safety regulation by the
Civil Aeronautics Hoard and the FAA. The FAA regulates
navigable airspace under 49 USC 1348, and implementing
regulations 14 CFR 71-77.
The FAA 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. 14 CFR 101.25. Second, unless waived
by the FAA under 14 CFR 101.3, certain operations are
prohibited, including operations that (a) create a collision
hazard, (b) in controlled airspace, (c) under specified
conditions of limited visibility and (d) within 1500 feet of
any person or property not associated with the operations. 14
CFR 101.23.
Other portions of the Act have not yet been deemed to cover
spacecraft; and it would be difficult to assert that congress
intended other regulatory portions of the act to apply to
ELV's. However, the definitions of the Act are broad, 11. an
aircraft is "any contrivance known or hereafter invented,
used, or designed for navigation or flight in the air' 49 USC
1301 (5).
CLI
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APPENDIX C
SPACE LAUNCH POLICY WORKING GROUP STUDY ON
COMMERCIALIZATION OF EXPENDABLE LAUNCH VEHICLES
WORKING GROUP MEMBERS
Charles Gunn (Co-Chairman)
National Aeronautics and
Space Administration
Bart Borasca
Office of Management
and Budget
James Chamberlain
Arms Control and Disarmament
Agency
James Harshbarger
Office of the Joint
Chiefs of Staff
John McCarthy
Office of Science and
Technology Policy
Joy Yanagida
Department of State
65-
Thomas Maultsby (Co-Chairman)
Department of Defense
Donald Miller
Department of Commerce
Jimmy Morrell
Office of Science and
Technology Policy
George Ojalehto
Department of State
STAT
Central Intelligence Agency
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