Carried Away

SpaceX Competing For Air Force Business

This morning, Space News has a good, detailed article about SpaceX's aggressive moves to compete in the EELV-class Air Force space launcher business.  Among other things, it reviews the SpaceX GAO bid protest against the EELV bid process, about which I posted before.  I was looking at SpaceX's actions through a straw, when in fact SpaceX is in a flurry of activity otherwise.  Protests, lawsuits, and appeals aplenty.

Rockets are Durable Goods

About a year-and-a-half ago, I opined about the natural trajectory of costs for launch vehicles.  In short, I stated that productivity in the private sector economy increases at a rate of a little less than 2.5% each year and that launch services exposed to competition would tend to reap these productivity gains in like manner to the rest of the private sector.  In the meantime, I have come to a slightly different conclusion that has a profound impact on my thinking about space launch costs.  I have come to view rockets as durable goods, which means that launch services exposed to competition will tend to reap productivity gains in like manner to other production of durable goods (inasmuch as the service costs are tied to the manufacturing costs).

What does this mean and why is the change profound?  As stated, the private sector experiences productivity gains at a rate of a little less than 2.5% per annum, but durable goods manufacturers (a subset of the private sector) have been experiencing productivity gains of about 4.5% per annum.  Compounded over time, the difference is massive.  At a rate of 2.5% productivity growth, it takes 28 years to halve the real costs of manufacturing.  At a rate of 4.5% productivity growth, it takes 16 years to halve the real costs of manufacturing.

I think this difference is more than mathematical sophistry.  Elon Musk, CEO/CTO of SpaceX, has stated that aerospace contracters -- which have not been exposed to proper competition -- are slow, expensive, and low quality.  Meanwhile, durable goods contractors outside of the aerospace field have been hammered by competition for decades and are at a fighting trim.  They are providing fast, cheap, and high quality parts in order to survive.  Insofar as we are able to expose our launch industry to the competition in the durable goods manufacturing sector, I think we can expect very substantial and continuing reductions in launch costs in short order, without any technological breakthroughs in propulsion.

Economy Grows 3.8% Q-to-Q

According to the BEA's preliminary calculations, the economy grew at a 3.8% real rate in the July - September quarter compared to the April - June quarter.  There is a possibility of a significant revision due to hurricane Katrina.

This is budget season in Washington, so it is important to follow the nominal growth rate as well -- i.e., the growth rate including inflation.  So long as the federal government increases spending at a rate less than the nominal growth rate, the deficit as a percentage of the economy will decline.  The nominal growth rate last quarter was especially high -- 6.84% -- since inflation was high -- 3.06%.

I have been alarmed at the propensity of this Republican congress to increase spending and President Bush to go along with it.  Let's hope that this year the increase in spending is much more modest.  Otherwise, we'll have to throw this group of Republicans out of power next year.

SpaceX EELV Complaint

SpaceRef has the SpaceX Summons and Complaint in its lawsuit against Boeing and Lockheed-Martin.  One of the nice things about federal court is that most documents will be public and available electronically soon after filing.  Fresh-from-the-oven fun. :-)  One thing to keep in mind during this legal process is that complaints are first drafts and are amended and extended liberally.

The Complaint is run-of-the-mill, except that it seems very much like a political document written for public consumption -- not much legalese here.  The Complaint argues as if the Air Force has done nothing wrong.  Even Lockheed Martin is portrayed as the victim of Boeing's predatory behavior.

The political and legal ace card that SpaceX has in this suit is that Boeing was caught stealing bid plan documents from Lockheed-Martin on the EELV program several years ago.  Two Boeing employees pled guilty in the affair and Boeing has been in the Air Force's dog house for quite a while since.  Lockheed-Martin has an active lawsuit against Boeing on the subject and all of Boeing's dirty laundry is public from the proceedings and can be used in the SpaceX suit.  SpaceX plays this card very prominently in the Complaint and we should expect them to wield it at every available turn.

The underlying theme here is that the stench would go away for the Air Force, Lockheed-Martin, SpaceX and others, if Boeing were removed from the EELV business.

SpaceX Lawsuit Article

The Decatur [Alabama] Daily News has a good and lengthy article about the proposed Boeing/Lockheed-Martin government launch monopoly.  In pertinent part, Boeing makes the argument that SpaceX cannot compete in government EELV-class payloads until it launches successfully, even though it has already successfully competed for a classified EELV-class contract.

Boeing corporate spokesman Dan Beck said Friday the lawsuit was meritless.

"SpaceX? They've yet to even launch one of these rockets," Beck said.

The joint venture, United Launch Alliance [ULA], would combine production of Boeing's Delta rocket series and Lockheed's Atlas series at the Decatur plant.

"It's going to take some time to test and validate (competitive SpaceX systems). In the meantime," Beck said, "the Air Force, NASA and National Reconnaissance Office need to be able to launch their payloads."

This argument has its weaknesses.  For one, Boeing is implying that the government gave the classified contract to SpaceX inappropriately because SpaceX's systems haven't been validated through successful launches.  Also, SpaceX will have validated its system through a launch in several weeks (or not, as the fates dictate), giving SpaceX perhaps more credibility to compete than it deserves once that happens.  Lastly, this argument can be proven absurd, in that Lockheed-Martin and Boeing EELV hardware and services were purchased and paid for by the government before many systems were validated.

An interesting possibility is that a faction in the Air Force and associated intelligence community is using SpaceX as a fingerprint-free way to scuttle the formation of the Boeing/Lockheed-Martin launch monopoly.  SpaceX could be cheap and convenient, since the classified launch contract is a mere $27 million and is payable only on the supposed completion of services in 2007.  Who knows, that faction might even be running the show...

First proposed by the Air Force, the ULA has hit several setbacks. According to the Wall Street Journal, citing anonymous sources, a change in Air Force leadership resulted in closer scrutiny of the project.

I wonder if this faction has much political backing.  The launch business is a cesspool of parochial interests trumping good policy.  By way of illustration, the article states that the congressman for Huntsville, Alabama, Bud Cramer (D), was part of the negotiations of forming the government launch monopoly.  I don't blame Cramer for playing the game, because he was just playing by the rules, perverse as they are.

There are all sorts of wrinkles to this story.  For instance, it may be less in Lockheed-Martin's interest than in Boeing's that the government launch monopoly is formed.  If the Air Force decided to no longer fund one of the two EELV rocket families, Boeing's Delta IV likely would be the one left out in the cold.

Given this complex situation, Elon Musk is being aggressive, which likely will cover for any small mistakes that he makes.

SpaceX Sues BLoMart

After SpaceX had its bid protests against government contracts to the newly forming EELV monopoly Boeing-Lockheed-Martin (BLoMart) dismissed by the GAO, I was waiting for Elon Musk's next move.  We didn't have to wait for long, as SpaceX has sued BLoMart under anti-trust laws to stop the merger.

This is a complicated maneuver, since the Federal Trade Commission has not yet ruled whether the merger can be consummated between Boeing and Lockheed-Martin's EELV businesses.  It is good to see SpaceX stick up for itself and the rest of us by suing to stop the merger, especially since Musk seems savvy enough to hire good attorneys.  However, I wonder if this will take Musk's eye off the ball of executing on launching rockets.  Also, I don't envy Musk as he empties his wallet to the legal profession.

Update:  There is one more complication that I have thought up.  SpaceX may be delaying maiden launch of the Falcon I until the FTC rules on BLoMart's proposed merger.  If the launch fails before the FTC rules, then BLoMart might well argue "see, we told you that these guys are pretenders, not real competitors!"

Mucho respect to SpaceX for navigating this mine field.

Google's Cash Registers Ringing

Heard from CEO Schmidt on the financial analysts' telephone conference, after Google announced profit for the third quarter of $380 million, a 600% increase over a year ago...

The space that we are in [ads] is a very, very, very big space that could offer these kinds of results... I mean opportunities... for years to come.

You could almost hear the cash registers ringing over at the Googleplex. :-)

Profoundly Disappointed

I'm sitting here this afternoon, still stunned by USC's victory over Notre Dame yesterday evening.  I am profoundly disappointed -- not in the players on the Notre Dame team, but rather that championship-level play from the Irish was not enough to beat USC in the end.  It was the best football game that I've seen in a decade.

There is only one winning team in a football game and there are no moral victories.  However, if you never have the chance to lose a big game, you will never win any big games either.  Nothing ventured, nothing gained or lost.  It seems as if Notre Dame has been systematically avoiding those big games for several years and has been unable to bring itself to "put the chips down," as Notre Dame greats had done in the past.  If there is any silver lining in this loss, it is that the Notre Dame football team is back to playing in big football games and risking heartbreak.

Infrastructure Costs

Mom writes and mentions that she talked with an old family friend DW.  DW has moved from Ohio to the D.C. area and has been commuting for a while from the Virginia suburbs into Washington, D.C.  Whereas his commute into the city used to take about an hour each way, now it takes 2.5 hours each way.  DW suggests that Metro be extended to the outer suburbs.  Mom asks what I think about this idea.  In short, I think it's a swell idea.  I'm a big proponent of good infrastructure spending.  However, DW and his neighbors should pay for the extension, not me and my neighbors in the city, and not the federal income taxpayers in rural Ohio.  DW might get sticker shock when presented with his tax bill.

Subway track for the type that Metro uses (heavy rail) costs between $175 million and $225 million per mile to lay, depending on whether the track is above ground or is underground.  Further, above-ground stations cost about $110 million apiece and underground stations cost probably double that.  In the suburbs, you would want one of those every 2 or 3 miles.  Once the extension has been built, the community has to pay for extra trains and operation costs.  These costs are substantial.  Hey, it's the Cadillac of subway systems -- you should not expect less.

As you approach a high population density, these costs become manageable, and in any event the Metro increases real estate values substantially.  But it sounds like DW is in the outer suburbs, where there may not be enough people among which to spread these enormous costs.  Perhaps a cheaper option might appeal to DW.  Virginia could extend the Virginia Rail Express commuter rail system.  VRE started operations in 1992.  At first, VRE only attracted about 1,000 riders a day -- much less than had been anticipated.  However, it slowly built over time to about 15,000 riders a day nowadays and is considered to be very successful.  Like MARC -- the better-established Maryland suburbs equivalent that serves about 30,000 riders a day -- VRE stops at Washington Union Station, which is convenient to any part of downtown D.C. through the Metro.

Of course, there's always the option of encouraging his government to require that his car be able to drive for him, drastically reducing the time to get into the city. :-)

Why Our Cars Should Drive Themselves

The DARPA Grand Challenge was won yesterday by Stanford (University) Racing Team.  Congratulations to Stanford University!  The Grand Challenge is a $2 million prize given to the autonomous vehicle that completes the 132-mile obstacle course the fastest.  The vehicle must complete the course without human intervention.  Stanford Racing Team's vehicle (the blue mini-SUV on the left) completed the course in a little under 7 hours, meaning that the average speed was roughly 19 miles an hour.  It looks like 4 other teams will complete the course within the allotted 10 hours:  Carnegie Mellon University's Red Team Too and Red Team, Gray Insurance's Gray Team (from Metairie, Louisiana), and Oshkosh Truck's Terramax.  It seems like a little discussion is in order about vehicles driving themselves.

(As an aside, I'm guessing that my brother-in-law Mike makes the axles for Oshkosh Trucks.  I believe that he works for ArvinMeritor, which is a co-sponsor of the TerraMax vehicle.  I'm not positive of this, as the factories have changed ultimate ownership a lot recently.)

Every year, over 40,000 Americans die from auto accidents and about 3 million are injured -- some very seriously.  This means that over a typical American's 80-year lifespan, at least 3.2 million people will die from auto accidents and 240 million will be injured.  In short, autos impose a huge cost on society by deaths and accidents.  Doing the Reaper's math, if an American's life is worth a half million dollars, then the cost each year to American society due to auto deaths alone is $20 billion.

Autos are great machines, but human nature's quirks are problematic when driving.  Washingtonians spend about 35 minutes in the car each way commuting to work.  As an old Gaithersburg to downtown D.C. driver, I guess that about half of that time is sitting in traffic on the freeway -- six lanes into the city, one big parking lot.  This is all because our human brains insufficiently optimize driving in heavy traffic from one point to another.  In addition to the fuel that is burned for no good reason, the lack of traffic flow costs about 35 minutes a day (35 each way x 2 ways / 2 for half time wasted).  If the marginal value of this 35 minutes in leisure time wasted is $10 an hour, then I guess the cost for sitting in traffic is about $5.1 billion a year in the Washington area alone (35 minutes wasted a day / 60 minutes in an hour x $10 an hour x 4 million commuters x 220 workdays in a year).  We could also say that the 35 minutes in driving time that is not wasted by sitting in traffic could be better spent reading the newspaper or drinking your morning coffee, but let's leave those costs aside for now.

Cars driving themselves could drastically reduce both of these problems caused by human foibles, so the question is begged of why we don't invest lots of money in making it so, as soon as possible.  Even spending tens of billions of dollars each year on developing the technology is well worth the expenditure, as demonstrated by simple math.  As the Grand Challenge shows, the technology to make it so is not exotic.  Rather, the technology is off-the-shelf and inexpensive.  In only a couple of years, and on a budget of small number millions rather than big number billions, these teams have integrated the technology to go 19 miles an hour on an obstacle course.

This seems like a no-brainer investment to me.  What do you think?