Mile High City Looks Down Into Constellation Trough

Model of NASA's Orion spacecraft

As the debate over whether to cancel NASA’s Constellation program heats up, the view from Denver — home to Orion prime contractor Lockheed Martin — is downbeat. Local officials are fearful over the prospects of a rather large hit on the economy, uncertain over what might replace the Constellation work, and angry with what they view as an insufficient effort by higher-level officials to save the program. The Denver Post reports:

“This is a highly visible program with enormous impact, and it’s not getting the kind of support other states are getting,” said Preston Gibson, president of the Jefferson Economic Council, which recently commissioned a study on Orion’s economic impact.

The JEC-backed study shows the Orion project has $301.3 million in annual direct and indirect economic impacts in the metro Denver area.

The impact includes a $236 million annual payroll for 837 full-time and 1,597 part-time Lockheed Martin Space Systems workers — with an average salary of $109,044 — and 2,961 workers for about two dozen subcontractors.

“These are the highly paid people who buy the $500,000 to $1 million houses. They’re the ones who are the consumers. They’re the ones that go and shop,” said Don Marostica, director of Colorado’s Office of Economic Development and International Trade.

The cutbacks will also hit Orion’s subcontractors hard. ISYS Technologies CEO Teresa Porter told the Post that up to 30 of her 135 employees stand to lose their jobs providing engineering support to Lockheed Martin.  “They’re afraid,” Porter said. “There are not a lot of alternatives for them in Colorado.”

It is likely that Lockheed Martin and its subcontractors will get a piece of whatever replaces Constellation, thus limiting job losses. However, with Congress still debating Obama’s plan, NASA remains months away from canceling the effort, much less deciding what is to be done next. So, uncertainty and fear rule for now; that will be followed by confusion and dislocation if the Administration succeeds in dismantling the Constellation program.

As Porter worries about layoffs, others in Colorado see opportunity in NASA’s new approach:

Heather Bulk figures her company, Special Aerospace Services, wins no matter what happens with NASA’s budget.

But the Boulder firm, which helps small companies develop their aerospace businesses, does better under an approach that favors commercialization.

“The industry is finally heading in a direction that can actually ‘do something’ again, something interesting and valuable,” said Bulk, SAS’s chief executive.

Her co-founder and husband, Tim, who manages SAS’s technical team, sees the budget shift as “an interesting transformative situation for NASA and for us. I see it as an incredible opportunity . . . and a huge benefit for Colorado,” he said.

Some of those benefits are already beginning to flow into the state. In February, NASA announced grants to United Launch Alliance of Centennial and Sierra Nevada of Louisville to begin work on projects that could replace the canceled Ares rocket and Orion capsule. ULA — which is a joint venture of Lockheed Martin and Boeing — received $6.7 million to develop an emergency detection systems designed to spot trouble on the Atlas V and Delta IV, two expendable boosters the company sells. This system is essential to human rate the rockets for crew flights.

Sierra Nevada Corporation's Dream Chaser space shuttle.

Sierra Nevada received $20 million to continue work on its Dream Chaser, a small space shuttle based on a space station emergency lifeboat that NASA canceled due to ISS cost overruns. The shuttle would be launched into orbit aboard ULA’s Atlas V.

Although the NASA grants are relatively small, they are a down payment on a proposed $6 billion dollar program to develop alternatives to the Ares I rocket and Orion capsule.The fact that Colorado companies could benefit from the new strategy might help to explain the response by the state’s political leaders, which has been relatively muted compared with those from Florida, Texas and Alabama.

ULA is in a prime position to capture some of that work. The company, which is a 50-50 joint venture of Boeing and Lockheed Martin, employs about 1,700 people in the Denver area and 4,200 nationwide. It has major production facilities in Decatur, Alabama and Harlingen, Texas. So, any expansion of ULA’s operations could help to offset job losses in these states caused by the Constellation cancellation.

The competition includes: SpaceX, a California-based company offering its Falcon 9 rocket and Dragon vehicle; Orbital Sciences Corporation of Virginia, which is developing the Taurus II booster and Cygnus spacecraft; and a Boeing-Bigelow Aerospace partnership, which is building a capsule that could be launched on ULA’s Atlas V and other expendable rockets.

Officials at ULA say they support NASA’s commercial approach. However, they are a bit cautious about it, fearing that the human spaceflight market won’t be large enough to justify the required investment. Space News reports:

“Not surprisingly, we are a little reluctant to commit,” Andrew Aldrin, director of business development for Denver-based United Launch Alliance (ULA), said during a March 30 event here sponsored by the Marshall Institute. “But this wasn’t always the case. Just remember, it was about 10 years ago that we invested billions in EELV (Evolved Expendable Launch Vehicle) systems for a [satellite launch] market that frankly looked much more solid than the [human spaceflight] market we are looking at today.”

The Atlas 5 and Delta 4 rockets ULA operates primarily for the Pentagon and NASA were developed by Lockheed Martin and Boeing, respectively, under separate EELV cost-sharing deals with the U.S. Air Force. The companies invested heavily in their competing vehicles in anticipation of a robust market for launching commercial telecommunications satellites that failed to materialize, setting the stage for the 2005 formation of ULA — a Boeing-Lockheed joint venture that today depends on hundreds of millions of dollars in Air Force sustainment funding to keep its doors open.

Aldrin said the decisions NASA makes in the coming months will determine whether the agency’s new human spaceflight strategy succeeds or fails.

“I think we can make commercial crew work, I think we can do it in such a way that we build a robust industrial base, and I think we can do it saving the taxpayers a lot of money. But it’s a program that’s got a lot of risk, and a lot of that risk is really embodied in how you define commercial and what the actual details are of an acquisition strategy,” Aldrin said. “Let me be clear, this is a great program, but we are certainly capable, as we’ve demonstrated in the past, of screwing this up.”

NASA is favoring an acquisition strategy similar to that used for the COTS program, in which NASA provided subsidies to SpaceX and Orbital Sciences Corporation to develop commercial cargo systems to supply the International Space Station. Both companies contributed their own money to the effort. NASA also awarded contracts to the two firms for cargo services to the station.

Ken Bowersox, SpaceX vice president for astronaut safety and mission assurance, says that his company favors this approach in its effort to develop crew versions of its Faclon 9 rocket and Dragon freighter.

“The model I believe makes sense is to start with a Space Act Agreement-type arrangement where the company contributes some funding and the government contributes partial funding and sets the high-level requirements,” Bowersox said during the Marshall Institute event. “You have a small team from the government that’s overseeing the development effort and then as that development effort sort of reaches a critical mass then you let a bigger contract.”

However, Aldrin says the strategy is risky on several levels. In addition to uncertainties about the size of the market, there is NASA’s unfortunate tendency to cancel programs before they fly (including Constellation).

This in fact looks a lot like the contract structure those of us in the launch business dealt with in the early EELV program. And it’s only seven years ago that we came … close to exiting the business. What you have to wonder is whether companies in the commercial space business are going to retain the same commitment. Because the truth is, Boeing and Lockheed stuck this out at least in part because they had another $20 billion or so in business with the Pentagon. … I think the risk of exit here is a serious one.”

He also expressed concerns about whether fixed-cost contracts could end up compromising safety.

Aldrin said if industry is asked to develop a commercial crew system under a fixed-price contract, prudent companies will build in big reserves to guard against losing money on the deal, while others might underbid the job in hopes of securing the win. “Here you have an interesting situation — competitive environment and fixed-price development contract. Trust me on this, the management reserve in these bids is going to overwhelm the differences in cost efficiencies or design efficiencies,” he said. “So you will end up with the lowest-cost provider, or the choice based in large part on which company decided to risk more. And I’m not sure that’s the way we want to choose the next provider of human spaceflight systems.”

Aldrin believes there are ways of structuring the effort to reasonably apportion risk between NASA and its contractors. Much will depend upon how NASA structures its human rating requirements. The space agency expects to have an initial draft of the standards available for review no later than June.

In the meantime, uncertainty and fear will reign in Colorado until NASA better defines its plans and Congress decides whether to approve them.