Annual Privatization Report 2013

Space Privatization Update

Subsection of Annual Privatization Report 2013: Federal Government Privatization

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Space Privatization Update

By Adam Summers

The year 2012 was a banner year for the private space industry. Since the National Aeronautics and Space Administration (NASA) launched the final space shuttle missions and retired the shuttle fleet during the summer of 2011, a new era of space travel and exploration has begun, one that will be more dependent on the private sector.

Crew and Cargo

NASA will be replacing the shuttle fleet with privately designed and built spacecraft. To that end, the government is subsidizing private spacecraft development through the Commercial Crew Development program. In April 2011, NASA awarded $269.3 million to four private space companies—including Space Exploration Technologies Corp., commonly known as SpaceX and headed by PayPal and Tesla co-founder Elon Musk; Blue Origin LLC, which is owned by founder Jeff Bezos; Boeing Co.; and Sierra Nevada Corp.—to develop capabilities to transport cargo and a crew of up to seven astronauts to and from the International Space Station (ISS). Twenty-two companies competed for the grants.

The first mission by a private company to dock a space vehicle with the ISS highlighted the year. In May 2012, SpaceX launched its unmanned Dragon capsule atop its Falcon 9 rocket and successfully docked the craft with the ISS in a demonstration mission. In October 2012, the vehicle made its first cargo run to the ISS, carrying a payload of approximately 1,000 pounds of supplies and scientific experiments and then returning roughly three weeks later with 2,000 pounds of gear. The October mission marked the first of 12 such cargo runs SpaceX will make under a $1.6 billion contract with NASA. In early March 2013, SpaceX launched its second ISS cargo mission, carrying nearly 1,300 pounds of tools and supplies for research experiments. There was a technical glitch shortly after the Dragon capsule separated from the rocket’s second stage, as three of the capsule’s four thruster pods were not operating, but the problem was resolved with hours and Dragon proceeded to reach the ISS without further incident. As of this writing, the capsule is still docked at the ISS. After a three-week stay at the ISS, the capsule returned to Earth with roughly 2,700 pounds of gear, including space station hardware, research results and education experiments.

Orbital Sciences is looking to join the private ISS cargo mission club in the near future, and has garnered a $1.9 billion NASA contract to fly eight cargo missions between 2013 and 2015 using its Cygnus spacecraft and Antares launch vehicle. The company conducted a “hot fire” test of the first stage propulsion system in late February 2013, and expects to launch a test flight in March or April. If all goes as planned, a demonstration cargo mission to the ISS will likely take place in May or June.

Private sector advances are also being made toward manned missions to the ISS. NASA will be selecting companies for certification contracts, which offer $10 million in seed money to develop their technologies, and will start accepting bids for its commercial crew contract later in the year. The contract will be awarded in early 2014, with manned missions expected within the following few years. SpaceX is currently redesigning its Dragon capsule to accommodate a seven-person crew, and will be testing the “Dragon 2” throughout 2013. Other chief contenders include Boeing’s Commercial Space Transportation 100 (CST-100) spacecraft, to be launched atop Atlas 5 rockets built by United Launch Alliance, a joint venture between Boeing and Lockheed Martin, and Sierra Nevada’s Dream Chaser space plane, which is also designed to be launched on an Atlas 5 rocket.1

SpaceX, Orbital Sciences and other private space companies promise to offer significant cost savings over NASA and the space shuttle program, as well as the cost of hitching a ride on Russian spacecraft, which the U.S. space program has been relying upon in the interim to get supplies and crew to and from the ISS while private-sector technologies are still being developed and perfected. Space shuttle missions cost about $1.5 billion per mission, but SpaceX claims it can reduce the launch price to between $50 million and $100 million, depending upon the rocket used.2 Trips aboard the Russian Soyuz spacecraft are cheaper than the former U.S. space shuttles, at approximately $62 million a seat, but are still pricey compared to the $20 million per seat offered by SpaceX’s design.3 SpaceX is trying to increase its cost advantage further still by developing a reusable orbital booster system, in which both of the rocket’s stages would return to the launch site and land vertically on landing gear after delivering a spacecraft to orbit. This would dramatically lower the cost of spaceflight since each Falcon 9 rocket costs $50 million or $60 million to build but the fuel and oxygen needed for a launch only costs about $200,000.4

The U.S. government is looking to the private sector to improve the Space Station itself as well. In December 2012, Bigelow Aerospace signed a $17.8 million contract with NASA to build an inflatable space habitat that would be attached to the ISS. The Bigelow Expanded Aerospace Module (BEAM) may be used for additional storage space, and will be transported to the ISS by SpaceX or Orbital Sciences.5


In addition to cargo and manned spaceflight, the private sector has continued to develop a flourishing satellite launch industry. There are currently several hundred operational satellites (and thousands of unused ones) in orbit around Earth. They provide communications, navigation, weather, observation and research information. Over the next five years, about 80 planned commercial satellite launches are scheduled.6 The military has, for many years, tapped United Launch Alliance to launch its satellites. And in December 2012 the U.S. Air Force signed two deals with SpaceX for satellite launches in the next couple of years. The company will receive $97 million to launch NASA’s Deep Space Climate Observatory (DSCOVR) solar telescope and space weather monitor in late 2014 and $165 million to launch the military’s Space Test Program-2 space vehicles—the Constellation Observing System for Meteorology, Ionosphere, and Climate-2 (COSMIC-2) climate monitor and the Demonstration and Science Experiments (DSX), which will conduct radiation research for the Department of Defense—in mid-2015.

In addition to launching entire satellites, government agencies are increasingly looking to take advantage of cost savings and more quickly take advantage of new technologies and potential new research discoveries by hitching a ride on private satellites. In the latter case, under such “hosted payload” agreements, a government agency might contract with a private company to add an instrument to a commercial satellite, saving the time and expense of building and launching its own satellite. Agencies such as NASA and the Department of Defense are interested in taking advantage of such public-private partnerships. “We see hosted payloads as a huge opportunity,” said Lt. Gen. Ellen M. Pawlikowski, commander of the Space and Missile Systems Center at Air Force Space Command. “We really see that commercial satellites will play a key role. It’s not a question of whether they will, it’s just how they will.”7

The growing number of operating satellites and inoperable ones that have become space junk has opened the door to a new niche satellite market. Companies such as ViviSat and MacDonald, Dettwiler and Associates Ltd. (MDA) are developing spacecraft capable of repairing and refueling satellites already in orbit. ViviSat is building two craft, which it calls “Mission Extension Vehicles,” and hopes to expand to a fleet of 10 or more vehicles over time. “There is demand for new solutions that can deal with the majority of satellites that can go to end of life with all their subsystems working,” said ViviSat chief operating officer Bryan McGuirk. “It is, in essence, a wasted opportunity for those operators to have to send them to deep space. Added McGuirk, “There are a substantial number of satellites out there coming to retirement that would be candidates. There is a long-lasting opportunity for us to solve problems in the market.”8

Mining Space Resources

Still other private companies see opportunities for mining natural resources in space. Planetary Resources and Deep Space Industries seek to mine some of the 9,500 asteroids that have been found in orbits that pass near Earth for materials such as metals and gases. As a Reuters article explains,

"About 1,000 small asteroids relatively close to Earth are discovered every year. Most, if not all, are believed to contain water and gases, such as methane, which can be turned into fuel, as well as metals, such as nickel, which can be used in three-dimensional printers to manufacture components," David Gump, chief executive of Deep Space Industries, said.9

Deep Space Industries seeks to use the materials collected to create fuel and solar cells in space. It expects to launch an exploratory mission to survey an asteroid in 2015, and hopes to have commercial quantities of propellant available for sale by 2019 or 2020.

Others see the moon as ripe for exploration and extraction. To advance these efforts, the Google Lunar X Prize is offering $30 million in prizes to privately funded teams able to “safely land a robot on the surface of the Moon, have that robot travel 500 meters [1,640 feet] over the lunar surface, and send video, images, and data back to the Earth” by the end of 2015.10 Twenty-five teams are currently competing for the prize. In addition to the $20 million grand prize, there is a $5 million prize for second place, and the remainder is offered as bonus prizes for meeting certain goals such as travelling more than 500 meters (1,640 feet) across the lunar surface, landing near previous government mission landing or crash sites, and detecting water.

Finding water is a major goal for both government space agencies such as NASA and private companies such as X Prize competitor Astrobotic Technology Inc. In addition to its nutritional benefits for astronauts, water could be broken down to hydrogen and oxygen in order to provide air to breathe or fuel for spacecraft. Astrobotic signed a contract with NASA in April 2012 to help develop space resource mining technologies. The company seeks to land a rover on the moon in October 2015 and find water.11

Space Tourism

For some, the sheer journey, views and experience of space and weightlessness are the goal. The company that appears closest to satisfying these desires is entrepreneur and billionaire Richard Branson’s Virgin Galactic. While the company has signed a $4.5 million deal with NASA for up to three chartered flights to suborbital space to conduct scientific experiments, it was established primarily to offer space tourism to consumers. The company reports that “several hundred people from around the globe” have already reserved their seats, at a cost starting at $200,000 a ticket, for the chance to experience weightlessness and a view from space.12 Between October 2010 and December 2012, Virgin Galactic’s SpaceShipTwo has logged 23 glide flights. It is expected to perform at least two more glide flights before its first rocket-powered test flight, which is expected to take place sometime during 2013. When fully operational, SpaceShipTwo will be attached to a carrier aircraft, WhiteKnightTwo, and launched from the air.

Another company competing for the suborbital space tourism market is XCOR Aerospace. XCOR plans to test its prototype Lynx I craft throughout 2013. The Lynx I is not designed to break the 62-mile border between the Earth’s atmosphere and space, but after 2013 XCOR will begin manufacturing the Lynx Mark II, which will fly into suborbital space.13

There are even lower-tech alternatives to getting a view of the Blue Planet. Spanish company zero2infinity is testing a helium balloon with a pressurized passenger pod, nicknamed a “bloon,” capable of rising to a height of 22 miles (118,000 feet) during a four-hour journey. While this distance is only a little over one-third of the way to the official edge of space, it would still be high enough for passengers to see “the curvature of the Earth, the black starry sky in daylight, and the thin blue layer of the atmosphere that protects us from the Cosmos.”14 Flights can carry four passengers, will last about four hours, and cost €110,000 ($149,000). Commercial flights are expected to begin in 2014 or 2015.

For those who want to travel deeper into space, a team of former NASA executives has formed Golden Spike Co. to offer people travel to the moon and back. The price tag is certainly not cheap, however, at $1.5 billion for a two-person crew, and some space experts have questioned the financial viability of the venture. Potential customers include governmental space agencies, corporations and wealthy individuals. The company plans to keep costs relatively low by using rockets and capsules that are either already in use or are currently being developed. It will need to create specially designed spacesuits and a lunar lander. In January 2013, Golden Spike announced that it had contracted with Northrup Grumman for the design of the lander. Missions could launch as soon as the end of the decade.

Colonizing Mars?

Some visionaries want to go even farther than the moon. SpaceX’s Elon Musk has generated headlines by talking of his long-term goal to create a human colony on Mars and eventually transport tens of thousands of people each year to the Red Planet.15 According to Musk, key technological improvements—such as developing completely reusable rockets, which he estimates is five to six years away, and the ability to produce methane fuel from natural resources on Mars—are necessary to bring costs down and make such missions feasible.16

And Musk is not the only one talking about colonizing Mars. Netherlands-based nonprofit Mars One was formed with a goal of establishing a colony of four people on Mars, with hopefully many more to follow. The venture seeks to cover the estimated one-way, $6 billion cost by creating a global reality television show depicting the selection of the initial astronauts and the crew’s first years on Mars and selling corporate sponsorships and the broadcasting rights to the series. After pre-screening the astronaut candidates, viewers would even be able to help select the crew. The novel financing plan took shape after Mars One co-founders Bas Lansdorp and Arno Wielders saw the revenues that were generated by the Olympic Games. According to Lansdorp,

[The idea] was triggered when I saw the revenue figures of the International Olympic Committee. When my co-founder Arno Wielders and I saw these numbers, we contacted Paul Römer, a well-known Dutch media expert, and discussed the media value of putting humans on Mars. After that we talked to many different experts in the field, all of whom are convinced the media value is far greater than the cost associated with our mission to Mars.17

If all goes as planned, Mars One intends to land its first astronauts on Mars in 2023.


The growth of the private space industry has been dramatic in recent years, and it seems that more exciting developments are on the horizon. As with any start-up technology industry, markets and technologies are developing rapidly, and often in unpredictable ways. While private-sector space ventures were once considered unthinkable, they are now becoming the norm. Whether in transportation, research, exploration, resource mining, tourism or even the colonization of celestial bodies, the private sector is set to play an increasing role in mankind’s efforts to expand its presence and knowledge beyond Earth’s atmosphere.

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1 Rob Coppinger, “Private Space Travel to Make Giant Leaps in 2013,”, January 1, 2013, (retrieved February 4, 2013).

2 Jessica Berman, “US Space Program Goes Commercial,”, April 27, 2011, (retrieved February 5, 2013).

3 “SpaceX Completes Key Milestone to Fly Astronauts to International Space Station,”, October 20, 2011, (retrieved February 5, 2013).

4 John Antczak, “SpaceX to attempt fully reusable orbital booster,” Associated Press, September 30, 2011, (retrieved February 5, 2013).

5 Dan Leone, “NASA Deal May Put Inflatable Private Module on Space Station,”, January 9, 2013, (retrieved February 5, 2013).

6 Clara Moskowitz, “Miltary & NASA Look to Partner with Commercial Satellite Industry,”, December 27, 2012, (retrieved (February 5, 2013).

7 Ibid.

8 Clara Moskowitz, “New Satellite Will Be Space Mechanic, Gas Station,”, November 16, 2012, (retrieved February 5, 2013).

9 Irene Klotz, “Into deep space: Second U.S. firm takes aim at mining asteroids,” Reuters, January 23, 2013, (retrieved February 5, 2013).

10 “Prize Details,”, undated, (retrieved February 5, 2013).

11 “Private Moon Race May Spark Lunar ‘Water Rush,’”, November 20, 2012, (retrieved February 5, 2013).

12 Overview – Space Tickets,”, undated, (retrieved February 5, 2013).

13 Coppinger, “Private Space Travel to Make Giant Leaps in 2013.”

14 FAQ – Flight Experience,” zero2infinity Web site, undated, (retrieved February 5, 2013).

15 Colin Lecher, “How Does SpaceX Plan to Move Thousands of Humans to Mars?” Popular Science (, November 28, 2012, (retrieved February 5, 2013). See also Carl Franzen, “What We Know About Elon Musk’s Proposed Mars Colony,” TPM Idea Lab, November 27, 2012, (retrieved February 5, 2013), and Chris Anderson, “Elon Musk’s Mission to Mars,” Wired, November 2012, (retrieved February 5, 2013).

16 Ibid.

17 Mike Wall, “Colonizing Mars: Q&A with Mars One Chief Bas Lansdorp,”, January 23, 2013, (retrieved February 5, 2013).

Adam Summers is Senior Policy Analyst