SUBCOMMITTEE ON SPACE SCIENCE AND APPLICATIONS HEARING ON COMMERCIALIZATION OF EXPENDABLE LAUNCH VEHICLES ROOM 2325 RHOB; 1:30 P.M. - 4:00 P.M. WITNESS LIST

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP92B00181R001701610006-9
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 34
• Document Creation Date: December 27, 2016
• Document Release Date: February 24, 2012
• Sequence Number: 6
• Publication Date: May 17, 1983
• Content Type: MISC

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COMMITTEE ON SCIENCE AND TECHNOLOGY
U.S. HOUSE OF REPRESENTATIVES
WASHINGTON, D.C. 205 1 5
SUBCOMMITTEE ON SPACE SCIENCE AND APPLICATIONS
Hearing on
Commercialization of Space Launch Systems
Room 2325 RHOB; 1:30 p.m. - 4:00 p.m.
May 17, 1983
WITNESS LIST
Hon. Daniel K. Akaka
U.S. House of Representatives
1007 LHOB
Washington, D.C. 20515
Lt. General J.A. Abrahamson
Associate Administrator for the
Office of Space Flight
National Aeronautics and Space
Administration (NASA)
Washington, D.C. 20546
Mr. Herbert A. Reynolds
Deputy Director for Intelligence
and Space Policy
Department of Defense
The Pentagon, Room D239
Washington, D.C. 20301
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STATEMENT
OF
THE HONORABLE DANIEL K. AKAKA
COMMITTEE ON SCIENCE AND TECHNOLOGY
SUBCOMMITTEE ON SPACE SCIENCE AND APPLICATIONS
U.S. HOUSE OF REPRESENTATIVES
"THE COMMERCIALIZATION OF SPACE LAUNCH SYSTEMS"
MAY 17, 1983
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Mr. Chairman and Members of the Subcommittee: I want
to take this opportunity to thank you for asking me to share
my views on the issue of commercialization of space launch
systems with you. As I'm sure you know, I have some very
definite opinions on that subject--opinions which I am
delighted to share today.
The importance of this issue to the long-term future of
our nation's space effort cannot be overstated. The
decisions we make today will surely determine the shape of
the future. If we fail to make those decisions in good
faith,--with-the courage and foresight required to guarantee
success, we have only ourselves to blame. If we fail to
confront these challenges head-on, we can and should be held
responsible for a future decline in our nation's space
enterprise.
It is crystal clear that, with the development of an
operational space transportation system, we have entered
into a new era of space enterprise--one which is'filled with
many dreams. We are now thinking about projects none of us
could have imagined 25 years ago. This new era of space
enterprise demands new technologies, new attitudes and new
ways of managing our resources if we are to achieve the
goals of our emerging vision of our future in space.
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Honorable Daniel K. Akaka
May 1 7 , 1983
We cannot continue to try to shape the future using
only the tools of the past. We cannot allow our drive and
our ability for creating a new world in space to be crippled
by our desire to cling to the ways of the past. If we are
to profit from the glorious, intoxicating success of our
space program, we must take risks. And, when you come right
down to it, taking risk for the sake of our future in space
is really what this hearing is all about.
There can be no doubt that a national policy decision
to commercialize space launch systems is an action which
carries with it a certain amount of risk. At the heart of
this issue are risks which apply to both the public and the
private sectors of our economy.
In the case of the commercialization of expendable
launch vehicles (ELVs), the risks for the government are not
obvious. Since a policy decision to phase out the use and
production of the ELVs by 1986 was made, it stands to reason
that the government would have nothing to lose by simply
turning.the ELV segment over to the private sector.
Although this conclusion is a reasonable one, it neglects an
important consideration: if the ELVs are turned over to the
private sector for the purposes of complementing launch
services provided by the shuttle, and if the government then
relies on these services to supplement shuttle capability,
what happens to the government launch operations if, at some
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Honorable Daniel K. Akaka
May 17, 1983
point in the future, the private sector cannot deliver
backup launch services when needed? Who will take on the
responsibility for continuing research and development in
the expendable field? Can national security interests
continue to be protected if launch systems are
commercialized? Should the federal government be willing to
take the risk of being responsible, under the terms of the
Outer Space Treaty, for possible damages to a third party
stemming from a failed commercial launch? And, finally,
there is the important question of the extent to which
commercialization of the expendables will take potential
payloads away from the government-developed shuttle.
These are risks not to be taken lightly.
For the private sector, many of the risks involved in
commercializing ELVs are fairly straightforward.
First and foremost is the question of whether or not
there is a real market for commercial expendable launch
services. In the industry estimates vary. It is impossible
to know if the availability of commercial launch services-
will generate future demands for their use.
A second critical risk is the question of shuttle
pricing policy and whether or not the government will, once
committed to the commercialization of ELVs, carry out its
decision to commercialize in good faith. For example, there
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Honorable Daniel K. Akaka
May 17, 1983
is nothing to guarantee that the government won't raise the
cost to the private sector of running expendable operations
while at the same time further subsidizing and thus lowering
the cost of flying on the shuttle. This strategy would
obviously force any commercial ELV operation right out of
the market place into the arms of serious financial loss.
Commercial operators of ELVs may also run the risk of having
the government commandeer some of its scheduled launches
capriciously, in the name of urgent national need. Any such
preemptive action on the part of the government would
certainly disrupt private sector operations in terms of both
scheduling and revenues.
It is clear that, in the case of the commercialization
of expendable launch vehicles, risk cuts both ways.
The question is: Are these risks worth taking?
The answer is very simple. Just look at the results of
failing to take these risks.
Every member of this Subcommittee has before him a
brochure which, in the space community, is unsurpassed in
its elegance, style and approach. The brochure you have
before you lists the advantages of using Arianespace for
launches. I urge you to take the time to read this document
carefully . . . read it and then tell me, if you owned a
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Honorable Daniel K. Akaka
May 17, 1983
satellite and were looking for launch services, whether or
not you could resist booking on Arianespace. My instincts
tell me that resistance would be difficult.
One of the many strengths of the marketing strategy
used by Arianespace is its ability to point out the current
weaknesses in the operations of our shuttle system. In
January of 1982, the President of Arianespace sent a letter
to the Colombian Ministry of Communications in an effort to
secure a commitment to launch on Ariane. I ask that the
full text of this communique be inserted in the record, and
will take this opportunity to highlight the arguments used
by Ariane:
--that "SATCOL" (the satellite in question) is not
included in NASA's program, and therefore would
have to yield priority to other satellites.
--that DOD enjoys absolute priority and at any
moment can override any other satellite.
--that an "incident" on the shuttle could immo-
bilize the entire fleet and delay a launch for
months.
--that the NASA estimates for turn-around time
have always been optimistic and delays are likely.
--that the preparation of the interface for a
satellite is a long and difficult task and can
take four entire months prior to launch.
--that a price increase is certain to occur--
maybe as much as 50 percent.
--and finally, that "It can be proven that there
isn't a single user of a new space system that
has placed its confidence to launch all satellites
on Shuttle."
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Honorable Daniel K. Akaka
May 17, 1983
These are issues which can, in part, be successfully
addressed by pointing to a reliable backup capability for
the space shuttle.
The fact is that the European space community, through
ESA and Arianespace, is rapidly demonstrating that it will
be able to provide commercial launch services to the world
community on a regular basis. While there are those who
might claim that Arianespace launch capabilities need not be
taken seriously due to the failure of two out of its five
launches, these failures probably represent simple
perturbations common to any new venture.
In September of 1982--only eight months ago--a top
level NASA study concluded that the U.S. could lose a
maximum of 94 launches to the European Ariane launch vehicle
in the 1983-1994 period at an estimated cost of $3 billion.
The study further pointed out that in addition to*the loss
of $3 billion in launch charges, it was also probable that
as a result the U.S. would be less likely to win contracts
for development of these communications satellites to.be
launched on Ariane. This loss to the total economy could
amount to as much as $9.92 billion over a 12-year period.
Our policies and procedures for the exploration, use
and development of space were formulated for the most part
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Honorable Daniel K. Akaka
May 17, 1983
25 years ago with the passage of the act creating NASA. At
that time, the U.S. Government had a corner on 100 percent
of the free world market for launch services.
Today, we are no longer the only nation with a
capability of providing launch services: Japan, China, India
and the European Space Agency are all at various stages of
developing and perfecting their launch capabilities. The
Soviet Union, which of course has been launching longer than
we have, is now offering launch services on a commercial
basis. The fact is that the world marketplace for launch
services has become competitive. If we, as a nation, are to
respond to this challenge, we must change our way of
thinking about the role of the government and the private
sector in space. We must be able to forge a true
partnership between public and private interests in space.
And, we must not fail to create a climate conducive to
private sector investment in space.
The Senior Interagency Group (SIG) has been examining
the question of commercialization of launch services for the
past few months and made their recommendations this weekend.
While I am certainly pleased with the SIG recommenda-
tion to proceed with the commercialization of ELVs, I an
aware that a mechanism must be found to properly implement
this policy. The major problem with policy directives
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Honorable Daniel K. Akaka
May 17, 1983
is that they are, in general, useless, unless they are
accompanied by a concrete plan for implementation.
If we are to commercialize space launch systems
successfully, then we must put in place the operational
mechanisms which create, by force, the necessary climate in
which the private sector will be allowed to succeed. This
principle applies to both the commercialization of existing
ELVs and vehicles which are the result of new technologies
and new methods of launch, as well as to the shuttle itself.
In fact, this principle applies to every area and activity
in which private sector participation is desirable.
First, the federal government must offer a way for the
private sector to see its way clear to making a profit in
space. By definition, this means determining the worth of
government assets and services at market value or even at
cost. It is not reasonable to expect the private sector to
foot the bill for sunk R & D costs. Where leasing of
facilities and services are concerned, the federal
government should keep its prices fair and reasonable . .
meaning not prohibitively expensive.
Second, the federal government must make a commitment,
both in policy and practice, to make life as easy as
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Honorable Daniel K. Akaka
May 17, 1983
possible for the entry of the private sector into space and
space launch services. This means that unnecessary and
excessive red tape must be eliminated. Regulations must be
altered to be uniform, clear and simple, and the entire
regulatory process for launch clearance and payload approval
must be streamlined.
Within the federal government, an agency must be chosen
to act as the lead agency in matters regarding regulation of
private companies seeking launch clearances. A single point
of contact must be established in order to avoid costly and
time-consuming duplication of paperwork and redundant
regulation. Each federal agency with statutory
responsibilities must further have its role clearly defined.
This role should be one of minimal interference; in fact,
the decision on whether to grant or deny launch approval
should be limited to consideration of the following issues:
public safety, national security, insurance coverage,
indemnification and the balancing of competing interests of
airspace users.
The regulatory process itself must be streamlined.
Launch sites and specific classes of vehicles can and should
be issued permits and clearances on a one-time basis for a
sequence of routine launches. Approval of launch sites,
vehicles and operations should be granted, or denied, in a
timely fashion; which is why I suggest that mandatory time
limits for processing applications be set. Now is also
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Honorable Daniel K. Akaka
May 17, 1983
the time to start making decisions on insurance levels to be
required, range safety procedures and means of
indemnification.
The fact is, until these issues are confronted squarely
by the federal government, we have no hope at all of being
able to create a climate in which the private sector can
successfully enter the space launch business.
I introduced H.R. 1011, the Space Commerce Act, as a
logical first step in confronting these issues. The fact is
that in August of 1981, when Space Services, Inc. sought
clearances to obtain permission for a test suborbital
launch, the federal government had no policies or clear-cut
procedures for granting these clearances. SSI was forced to
obtain regulatory permissions, clearances and approval from
five different agencies or bodies: The Federal Aviation
Administration, the Department of State, the Federal
Communications Commission, NASA and the North American
Aerospace Defense Command. Furthermore, the company had to
register with the Bureau of Alcohol, Tobacco, and Firearms
as well as with the Internal Revenue Service. As a result
of this lack of a streamlined procedure, it took this
particular company over six months and a quarter of a
million dollars to receive clearance to launch a test
flight.
This kind of unnecessary red tape entails costly delays
and might discourage private sector investment in the space
launch business.
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Honorable Daniel K. Akaka
May 17, 1983
H.R. 1011 recommends the Department of Commerce as the
lead agency. As peculiar as this recommendation may seem to
some, it is based both on common sense and the elimination
of all other possibilities.
It is not appropriate for the Department of Defense to
assume the lead agency role. Regulation of the private
sector is not one of the DOD mandates and I'm sure the DOD
has better things to do than certify launch sites, vehicles,
and promulgate regulations.
The Federal Communications Commission does play a
significant role in issuing licenses for the use of
necessary communications frequencies. The FCC's role is
very specific and its expertise in other space areas is
limited; this Commission has neither statutory authority
outside the communications field nor necessary technical
expertise to operate as the lead agency.
The Federal Aviation Administration, while at first
glance a likely candidate, has as its primary responsibility
air safety. Furthermore, the FAA would have no jurisdiction
over launches taking place from installations controlled by
the Department of Defense or those outside the continental
U.S. The FAA has no procedures for clearing rocket
launches, and even at the FAA, technical expertise in the
field of space launches is limited.
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Honorable Daniel K. Akaka
May 1 7 , 1983
Of all the agencies, the one most likely to make sure
that a proper business and regulatory climate is never
created for private sector activities is the Department of
State. Furthermore, State has neither a regulatory charter
nor the technical capability to assume a lead agency role in
regulating commercial space launches. Some have even
questioned to what extent the Arms Export Control Act should
be applied to the launch of sounding rockets and suborbital
flights.
Although the State Department does have a significant
role to play with regard to adherence to international
treaties and agreements, to designate State as the lead
agency and initial point of contact is tantamount to saying
that we really don't want to encourage private sector
involvement in space launch systems. Many currently make
the claim that the State Department cannot handle the policy
responsibilities it already has for setting space policy.
Witness the continuing controversy over the State
Department's role in coordinating U.S. policy for
international telecommunications. The State Department has
been heavily criticized for its inability to set forth clear
U.S. policy in international telecommunications issues and
avenues are being explored to relieve State of this
responsibility. I am and will continue to be categorically
opposed to any move to assign either lead agency
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Honorable Daniel K. Akaka
May 17, 1983
responsibility or initial point of contact responsibility to
the Department of State.
As a third party agency, the Department of Commerce is
an obvious choice for both an initial point of contact and a
lead agency function which could be merged in the long-term.
Commerce also has the advantage of having a regulatory
charter which permits this activity. Lead agency
designation does not mean that the designated agency could
abrogate the basic responsibilities of the other agencies
involved in regulating specific areas of private launches.
Lead agency designation simply means that the agency would
take the lead on the process of granting permission to
launch, would coordinate the issuing of permits and would
guarantee and oversee a streamlining of the entire process.
As such, the Department of Commerce would be responsible for
checking with all the other agencies and getting their
specific clearances in their areas of expertise.. Another
point in Commerce's favor is that when we talk about space
launching services, we are talking about business .
about commerce and about trade. We are talking about the
birth of a new industry in this country. As such, from a
philosophic and policy point of view, this industry belongs
under the Department of Commerce.
The major issue to be addressed is the fact that the
Department of Commerce has no expertise in the area of space
launch services. This is not the obstacle it might appear
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Honorable Daniel K. Akaka
May 17, 1983
to be, for as far as developing policy and procedures for
private sector launches is concerned, no other agency has
any more expertise in the regulation of private sector
launches, for this industry is a brand new one.
Knowing well that creating a set of policies and
procedures for developing and regulating this new industry
will be very long and complicated task, I suggest that a
working group be established among the cognizant agencies to
coordinate the development and implementation of these
policies. For the interim, I also believe that NASA should
be the-initial point of contact, until a mechanism can be
developed to put a streamlined regulatory process in place.
I have always made the argument, and will continue to
make it, that a Bureau of Commercial Space Activities should
be created at the Department of Commerce. Those who oppose
this proposal cite the fact that Commerce has no technical
expertise, that we live in times of serious budgetary
constraint and that we cannot afford the extra funding this
move would entail. These arguments are irrelevant. The
fact is that we know where the experts are: they are at
NASA, at State, at DOD, at FCC, and at FAA. All we have to
do is to assemble under one roof the selected personnel from
each of the appropriate agencies. This can be done through
a simple legislative authorization and through reprogramm-
ing of positions. As a Member of the House of Representa-
tives, and as a Member of the House Appropriations
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Honorable Daniel K. Akaka
May 17, 1983
Committee, I lend my full support to such a reorganization.
Thus, a Bureau of Commercial Space Activities could be
created at very little additional expense. The Bureau of
Commercial Space Activities, housed in the Department of
Commerce, would then be superbly qualified to act as an
initial point of contact and a lead agency. If, in the
future, commercial activity escalates to the point where it
becomes a significant and leading industry for the United
States, the Bureau of Commercial Space Activities could then
be spun off and accorded full agency status as the
Commercial Space Agency. Although this may be as far away
as 20 or 30 years from now, we must make it part of our
vision of the future, for we have many planning and policy
issues to settle. We must lay the foundation for the
future.
The bulk of my testimony today has been devoted to the
commercialization of expendable launch vehicles. As far as
commercialization of the shuttle is concerned, I think it is
inevitable.
The questions are: Is now the right time? Is the
shuttle truly operational? Are the glitches truly out of
the system? Are we ready to turn the operation of the
system over to the private sector? These questions need
answers. For my part, I simply don't know. What is clear,
however, is that NASA is an R & D agency by design and by
statute. In the long-term, commercial operations do
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Honorable Daniel K. Akaka
May 17, 1983
not belong in NASA unless we redefine the mission of the
agency. The private sector undoubtedly has a great deal to
contribute to the shuttle marketing operation in the
meantime. Such proposals deserve serious consideration by
this Administration and Congress.
We have a great deal of money invested in our shuttle
programs. According to NASA, the total costs for research,
development, test and evaluation of the shuttle were $10.1
billion, in real year dollars. This is a sizeable
investment and one which we cannot afford to throw away.
Shuttle pricing policy now in effect was initially conceived
to achieve full operational cost recovery over the 12-year
total life-cycle of the shuttle system.
From an economic perspective, this approach is not
unreasonable--particularly from the standpoint of increasing
demand for launch services. Having said that one must also
recognize that to the extent that the government subsidizes
shuttle operation, it may serve to inhibit commercial
development of alternative space transportation systems.
These conflicting policy requirements must be balanced in
whatever shuttle pricing policy is set for future launches.
This issue certainly merits further serious considera-
tion by this Committee.
What is clear is that recovery of total government R &
D costs in this program is economically inefficient and thus
absurd. This conclusion can and should be applied to the
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Honorable Daniel K. Akaka
May 17, 1983
broad issue of the commercialization of space launch
systems.
Government R & D in this program, as in all programs,
benefits a wide variety of users and it is unreasonable to
require only the direct users to bear the full cost of the
research.
Mr. Chairman, one point I feel I really must raise is
the effect that the Office of Management and Budget is
having in the creation of de facto national space policy by
its arbitrary and often inconsistent fiscal directives to
NASA. OMB, by clearly failing to consider the implications
of its actions, had adopted the worst of all possible
approaches to maintaining U.S. pre-eminence in space
transportation. By refusing to accept or promote the
commercialization of the shuttle in any time-frame, OMB has
forced NASA to adopt a commercial role and yet OMB-has
dictated that NASA not develop the market demand for the
shuttle to such an extent that a fifth orbiter would be
required. Thus, OMB is forcing NASA to play an unnatural
role and insisting that the agency play it poorly. This can
only benefit foreign competitors to the U.S. space shuttle.
OMB's pessimism regarding the future market for shuttle
launches is unwarranted, but, by virtue of OMB's
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Honorable Daniel K. Akaka
May 17, 1983
power in policy matters, may become a self-fulfilling
prophecy.
Mr. Chairman, I commend this Committee for its vigorous
examination of issues relating to space commercialization.
I can only hope that your effort will insure that in the
future a strong and coherent space policy will guide the
action of our nation in space and that it will not be guided
by the myopic directives of fiscal bureaucrats.
Mr. Chairman, in this rather lengthy testimony I have
tried to highlight what I believe are the policy issues
before-this"Committee. I have tried to identify the risks
inherent to the commercialization of launch services for
both the public and private sectors, and I have tried to
point out what I believe are the consequences of failing to
take these risks. I firmly believe that we have no choice
but to engage in risk. Our future in space depends on our
will to take a leadership role in commercial space activity.
As far as H.R. 1011 is concerned, I continue to believe that
this isa piece of legislation whose passage is important to
the future of our nation's space effort.
While the terms of H.R. 1011 may need to be amended as
a result of information unveiled in these hearings, I firmly
believe that it is the responsibility of Congress, not the
Administration, to set the terms of policy and procedures
governing private sector space launches.
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Honorable Daniel K. Akaka
May 17, 1983
If we fail to enact legislation, and if the Administration
sets policies and procedures by fiat or by executive order,
who is to say that the next Administration won't have a
change of heart and discourage commercialization of launch
systems? Who can guarantee that Administration policy will
not serve to discourage, rather than encourage
commercialization, in order to protect what it views as the
interests of the shuttle? And finally, I ask you: given the
Administration's obvious lack of judgment of the issue of
commercialization of our remote sensing capabilities, who
can tell me that this Administration shows good judgment in
the area of commercial space activities?
It is for these reasons that I believe that Congress
must act on this issue. I, therefore, support passage of
legislation which clearly sets forth policy on the
commercialization of space launch systems.
Mr. Chairman, this concludes my formal testimony. For
the record, I have submitted formal documentation on all the
clearances, permits and permissions required for a private
sector launch. I have also included responses from the FCC,
FAA and NASA regarding their respective roles in granting
launch permissions, as well as a copy of the letter sent
from the President of Arianespace to the Columbian Ministry.
I ask that these documents be included in the record of this
hearing.
Thank you very much.
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National Aeronautics and
Space Administration
Hold for Release Until
Presented by Witness
May 17, 1983
Subcommittee on Space Science
and Applications
Committee on Science and Technology
House of Representatives
Statement by:
Lieutenant General
James A. Abrahamson
Associate Administrator for
Space Flight
98th Congress
Flighh'i
25th Anniversary
1958-1983
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STATEMENT OF
LIEUTENANT GENERAL JAMES A. ABRAHAMSON
ASSOCIATE ADMINISTRATOR
FOR SPACE FLIGHT
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
BEFORE THE
Subcommittee for Space Science and Applications
Committee on Science and Technology
House of Representatives
Mr. Chairman and Members of the Subcommittee:
Mr. Chairman, I am pleased to appear before this
subcommittee to participate in your Hearings on the important
subject of commercial activities in space. As you know, the
Office of Space Flight has had significant involvement in the
evolution of commercial activities in space ranging from
providing launching services for communications satellites to
private sector investment in the development of upper stages such
as the--Payload Assist Module (PAM-D) used to place the spacecraft
on STS-5 in geosynchronous orbit and other aspects of launching
systems such as the development of the 3914 configuration of the
Delta vehicle.
We believe that we are truly at the beginning of a new phase
in our national space efforts, the exploitation of space. In
this exploitation there is a vital role for the private sector.
I firmly believe that the full promise and the potential benefit
of.space activities can only be realized as we harness the engine
of commercial enterprise, in partnership with our government
efforts. In a proper and mutually rewarding relationship, this
partnership will assure continued U.S. leadership in space.
Therefore, I fully support the national goal of expanding U.S.
private sector investment and involvement in civil'space and
space-related activities, as announced in the National Space
Policy on July 4, 1982. NASA has made an excellent start in this
expansion through joint endeavor agreements, technical exchange _
agreement's, and our industrial guest investigator process. These
approaches hold great promise in developing the appropriate
cooperative relationship, I mentioned, between the Government and
the private sector. As an example, a few weeks ago, the Office
of Space Flight entered into a cooperative agreement with the
Orbital Systems Corporation for the development of a Transfer
Orbit System (TOS) to be utilized as an upper stage with the
Space Transportation System (STS). This cooperative agreement,
patterned after its predecessor, the PAM-D agreement with
McDonnell Douglas, establishes the ground rules for the private
sector development and marketing of an upper stage for use with
the Space Shuttle which will accommodate payloads larger than the
PAM but smaller than those which might require the Centaur stage.
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The Office of Space Flight is involved in many other
discussions with prospective private sector proposers on efforts
directly associated with the STS. Orbital Systems Ltd. of
Lanham, Maryland has proposed the environmental monitoring system
for the Shuttle payload bay. This system is to function in a
manner similar to the flight recorder on commercial aircraft.
The Fairchild Corporation has proposed a Shuttle-tended, mobile,
unmanned space platform which is supported by ground based
systems and services. The platform will be available for lease
and can be utilized for scientific instruments, materials
processing or remote sensors. Mr. Chairman, I believe that
proposals such as these and the McDonnell Douglas/Johnson and
Johnson continuous flow electrophoresis experiments are of prime
importance because they augment and/or exploit the unique
opportunities provided to us by the Space Shuttle. I feel,
therefore, that the Space Shuttle is a key to the development of
new products or services and other national benefits that can be
derived from increased commercial activity in space. Along with
prospective operators of commercial ELV's, these endeavors
represent true commercialization in the sense that they each
create new commercial products or services and to varying degrees
add new dimensions to our store of space technology. In adding
this new-dimen.sion to our space capability, some people and
institutions involved are tackling significant development risks
as well as market risks. Therefore, in these instances it is
appropriate and consistent with NASA's technology mandate to
provide the assistance and encouragement that our joint endeavor
and other agreements provide. By the same token, their success
adds to the capability of the STS, while avoiding the requirement
for federal funding. So long as we can proceed in this approach
equitably and properly, this is the powerful mutual reinforcement
of government and private efforts that I feel can assure U.S.
space leadership. As I indicated, these Shuttle-related
proposals are consistent with the commitment and investment made
in the STS over the last decade.
Regarding the STS itself, we have not received any private
sector proposals which involve its day-to-day operation. Several
internal reviews have been conducted on this possibility. The
most recent reviews were a part of the overall effort which
resulted in the National Space Policy. These reviews concluded
that it is premature to consider such an alternative until the
STS has reached a sufficient state of maturity to allow the
system to be considered self-sustaining. Each of these reviews
independently reached the conclusion that it is premature to
consider the transfer of operation of the STS to the private
sector, but that such a transfer in the future should not be
precluded. We are insuring that our programmatic actions are in
keeping with this principle.
As you know, we have received from the Space Transportation
Company a "proposal" to fund a fifth orbiter. I use the word
"proposal" because it has often been described as such; however,
the original submission did not meet the criteria normally used
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by NASA when it uses the term proposal. We conducted a series of
discussions with the representatives of the Space Transportation
Company with a view toward gaining a better understanding of the
concept proposed.. As a result of those discussions, NASA has
outlined a series of concerns and issues for consideration for
such a proposal.
As you might imagine, the issues are involved with the
exercise of priority for security and other government time-
critical launches, exclusive of any agreement; pricing and its
relationship to appropriate return on investment, as well as
proper cost reimbursement to the Government; the impact on our
Space Shuttle customers; and, of course, our prime
consideration -- safe and effective operation of the STS.
Our present status is that we have recently received from
the Space Transportation Company a set of "Proposed Principles
for Incorporation in a Definitive Agreement of the SpaceTran
Procurement of an Orbiter." We are reviewing this set of
principles and intend to continue our discussions if there
appears to be a mutually satisfactory conclusion in sight.
We have also received several proposals associated with
private-sector-entities assuming the marketing function for the
STS. We have delayed the completion of the evaluation of these
proposals until we have established an Agency position on the
best method for accomplishing this marketing function. We expect
this within the next month or so, and then we will proceed with a
more formal evaluation process.
Regarding proposals which have been received by the
Government which involve the establishment of new launch systems
from new launch sites, NASA has served as an advisor to the
Federal Aviation Administration, the Federal Conmunications
Commission, and the Department of State on the technical
characteristics of these proposals.as each of these agencies
exercises its respective regulatory role. NASA may also provide
technical advice to the proposer upon request and as agreed to by
NASA. In addition, NASA participated in an interagency effort,
led by the Department of State, to review the existing regulatory
and licensing process as it applied to the license reque.st of
Space Services Incorporated for the launch of their CONESTOGA I
launch vehicle from Matagorda Island in September of last year.
Although at the time the consensus of the interagency group was
that the existing licensing procedures were adequate, it is
readily apparent within this same interagency group that there
are areas in this Government approval process that could be
streamlined. I believe the involved agencies are prepared to
undertake the streamlining process under the auspices of a Senior
Interagency Group Working Corrrnittee. NASA will continue to
support the effort and to encourage it.
We have begun the phase-out of the Delta vehicle by taking
action to stop production of vehicles beyond our known
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requirements. The DOD has recently announced that it is stopping
the production of the Titan vehicle. These actions have been
taken in accordance with a longstanding plan to transition from
the operation of expendable launch vehicles to the STS. As a
result of a number of requests from industrial organizations,
venture capital firms and others, NASA is studying the question
of transfer of these systems to private operators. Shortly after
the NASA study began, a Senior Interagency Group (SIG) Space
Working Group also began to look into this question.
I fully support the recently announced policy concerning the
private sector operation of the Expendable Launch Vehicles
currently operated by the Government. There is a reasonable
question about the potential impact of such an action on the
Space Shuttle. Although I am naturally concerned about the
competition, the policy establishes a clear operating framework
with respect to the STS and the commercially operated Expendable
Launch Vehicles. In particular, it confirms that the pricing
policy for the Shuttle will be maintained. This is a fundamental
anchor point in that it provides confidence for our Shuttle
customers, and a firm business planning base for potential
Expendable Launch Vehicle privatization endeavors. Therefore, I
am confident that the STS, with all its past investment and
promise--for-the future, can go forward, and that private launch
vehicle ventures can also flourish where they can best fill a
market need or complement the Shuttle.
Mr. Beggs, in his earlier testimony to this subcommittee on
May 3, 1983 stated: "We must, however, proceed with caution as
we enter this relatively new arena. Although I wholeheartedly
believe that the time has come to encourage and support expansion
of conmercial involvement in space activities, it is imperative
that we develop sound guidelines by which this expansion takes
place." I fully support the thrust of Mr. Beggs' statement and
will enthusiastically support the Agency's efforts to establish
those guidelines and, at the same time, insure that every
reasonable approach proposed by the private sector.is provided
adequate consideration and opportunity.
Mr. Chairman, we intend to continue our efforts to increase
the involvement of the U.S. private sector in civil space
activities with a view for the national economic benefit and to
fully exploit the capabilities of the STS. I will be pleased to
respond to your questions.
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STATEMENT OF
HERBERT A. REYNOLDS, DEPUTY DIRECTOR, INTELLIGENCE AND SPACE POLICY
DEPUTY UNDER SECRETARY OF DEFENSE (POLICY)
BEFORE THE
SUBCOMMITTEE ON SPACE SCIENCE AND APPLICATIONS
COMMITTEE ON SCIENCE AND TECHNOLOGY
HOUSE OF REPRESENTATIVES
MAY 17, 1983
Mr. Chairman, I am pleased to have this opportunity to present the Defense
Department views on space commercialization issues and specifically on the
commercialization of expendable launch vehicles -- or ELVs. I am accompanied
today by Major Thomas Maultsby, from my office, who was co-chairman of the
interagency working group which studied the cornercial ELV issue, and by Lt
Col James Jacoby from Headquarters, Air Force.
If you-'have no objections, I intend to have both Col Jacoby and
Major Maultsby respond directly to your questions should I feel that they
can provide a more complete response.
During the past 18 months the Department of Defense and all other
departments and agencies concerned with our nation's space programs have been
involved in a series of space policy studies. Three of the most-important
documents resulting from these efforts are the National Space Policy, the
Department of Defense Space Policy, and the policy on the Commercialization
of Expendable Launch Vehicles which was signed by the President on 16 May.
The National and Defense Space Policies provide guidance for the conduct
of the United States space program and related activities. The National
policy recognized the importance of private sector involvement in U.S. space
activities. Included in the listing of basic goals of the U.S. space program
are a mandate to ". . . maintain U.S. space leadership --- obtain economic
and scientific benefit through the exploitation of space --- and -- expand
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the U.S. private sector involvement in civil space and space related activities."
Also contained in the National Space Policy are the statements:
"The U.S. Government encourages domestic commercial exploitation of
space capabilities, technology, and systems for national economic benefit."
"The U.S. Government will provide a climate conducive to expanded
private sector investment and involvement in civil space activities ---."
The DoD approach to the proposed commercialization of expendable launch
vehicles was, at all times, guided by the objectives and principles I have
just outlined.
Earlier this year, the President directed the Senior-Interagency Group
(Space) to review the issue of the commericalization of Expendable Launch
Vehicles. An Interagency Working Group, including representatives from DoD,
JCS, NASA, State, Commerce, OMB, DCI, ACDA, and OSTP, was formed to conduct
this study. A thorough review of the issues, benefits, and implications,
both foreign and domestic, related to commercial ELVs was conducted. Based
on the group's analysis, it was concluded that such an effort would be con-
sistent with national policy and would yield considerable economic benefit
to the U.S.
This decision recognizes that commercial ELV operations could potentially
reduce the Shuttle mission model. The interagency evaluations, however,
led to the conclusion that the potential impact on STS operating costs was
not sufficient to warrant discouraging the proposed ELV commercialization
by the US private sector.
It was the group's unanimous conclusion that the U.S. Government should
fully endorse and facilitate the commercialization of ELVs. It was further
.
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agreed that the U.S. Government should not subsidize this activity but should
structure the agreements for use of its facilities, equipment, and services
consistent with the goal of encouraging viable commercial ELV launch activities.
The President's Commercial ELV policy reaffirms the existing U.S. Government
commitment to the Shuttle and the intent to make it available to all users
-- domestic and foreign, commercial and governmental -- subject to U.S.
Govenment needs and priorities.
The National Space Policy restated the U.S. commitment to the Shuttle
as the primary launch system for both national security and civil government
missions. We are fully committed to the Shuttle and our program to transition
all DoD payloads to the Shuttle is well underway. Within a few years essentially
all national security payloads will be Shuttle optimized and very few will
remain compatable with ELVs. Based on this transition, steps have already
been taken to discontinue future procurement of TITAN launch vehicles by the
DoD.
Within the DoD, we believe that the Shuttle will prove adequate for
routine launch activities. We view the commercialization of ELV's as a
potential means to maintain an expendable launch vehicle production and
launch capability at little or no cost to the DoD that could contribute to
the goal of achieving a more robust capability to place payloads in orbit.
While the immediate value of this capability to DoD is limited by the number
of satellite programs compatible with the launch vehicles being marketed, it
would at least provide a base from which an effective backup to the Shuttle
could be established if needed.
Another area where the commercialization of US ELVs benefits the DoD is
related to technology transfer. If U.S. commercial ELVs are not available
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and the satellite market expands beyond the capabilities of the STS and
Ariane, a market for additional ELVs will be created. This market could be
serviced in ways detrimental to our security. We must always remain aware
of the fact that space launch systems have inherent military applications.
In addition to the direct benefits which will accrue to the DoD
should a vigorous commercial launch capability be developed by the U.S.
private sector, we believe that there are other benefits which provide strong
incentives to support such an effort. These include enhancing the economy,
creating jobs, expanding the tax base of the U.S. and a number of states,
and improving our international balance of payments.
Commercial ELV production and operations would maintain this segment of
our high-technology industrial base and provide jobs for thousands of workers.
Each launch conducted by a U.S. produced ELV rather than the Ariane has been
estimated to bring nearly $100M of new business into the U.S. and thereby
improve our international balance of payments.
Other commercial space ventures have already been started in conjunc-
tion with the Space Shuttle. These include private-sector development of
upper stages compatible with both the Shuttle and ELVs, and development of a
satellite which leases services to individual payloads on request. The
U.S. Government has already received significant benefits from past activities,
such as selling launch services to commercial communications satellite. operators,
and from the communications satellite industry which has provided major economic
benefits to the United States.
In our view commercial ELV production and provision of launch services
is an obvious and logical extension of this industrial activity. Further, a
viable, high technology space launch industry could spawn numerous spinoffs
.
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and supporting activities and provide.part of the base for U.S. dominance of
what will undoubtedly become an even larger commercial space activity with
favorable economic benefits to the people of the United States.
Although we would exercise it only in an emergency, the DoD has priority
use of the Shuttle. Any payload could be "bumped" to make way for a national
security payload. Commercial satellite manufacturers are concerned over the
issue of priorities and other Shuttle scheduling problems, and are expressing
their concern by requiring that their payloads be dual compatible - that is
the payload could be launched by an ELV or the Shuttle. Without U.S. commer-
cial ELVs, dual compatibility will mean the Shuttle and the Ariane. If a sig-
nificant portion of this market for commercial satellite Taunch services is
lost to foreign competition, the direct and indirect costs to the U.S. economy
could be as high as 10 billion dollars over the next 12 years.
As the government discontinues the procurement of ELVs, existing pro-
duction and launch facilities will become available. These residual facilities
and equipment will have little value to the U.S. Government but considerable
value to a U.S. commercial ELV industry. The sale or lease of these items
would reduce agency budgets for production close down and disposal of assets.
These assets include major launch vehicle components, spare parts, and a
substantial inventory of unique production equipment.
A considerable portion of our deliberations and subsequent interagency
coordination activities were devoted to developing general pricing guidelines.
It was concluded that any consideration for the use of U.S. Government
facilities, equipment, and services, should be based on the following general
principles:
- Cost recovery for services should be based on those additional
costs incurred by the U.S. Government;
.
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- The U.S. Government will not seek to recover ELV design and develop-
ment costs or investments associated with facilities to which the
U.S. Government retains title;
- Tooling, equipment and residual ELV hardware costs will be priced
on a basis that is in the best overall interest of the U.S. Government.
The President's Policy on the commercialization of ELVs directs the
formation of an interagency working group, co-chaired by the Department of
State and NASA, to:
- streamline the procedures used to implement existing licensing authority;
- develop and coordinate the requirements and process for the licensing,
supervision, and/or regulation applicable to commercial launch opera-
tions from commercial ranges, and
- recommend the appropriate lead agency within the U.S. Government to
be responsible for commercial launch activities.
Until a final selection of the lead agency is made, the Department of
State will serve as the U.S. Government focal point for all inquiries and
requests relative to commercial ELV activities. Until the final require-
ments are defined the government will continue to use the State Department's
existing licencing authority for the regulation and authorization of commercial
launches. Matters of flight safety and other technical issues will remain
the responsibility of NASA, Defense, the FAA and the FCC.
In summary, we support the President's Policy on the Commercialization
of Expendable Launch Vehicles by the U.S. private sector. The existence of
such a capability will provide the basis for a more robust space launch
capability and could support future developments to satisfy unique national
security requirements. National security could also be enhanced by having
.
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a backup launch capability for selected national security missions in the
event of a generic problem that could ground the STS fleet. There could
also be national economic benefits resulting from domestic commercial exploi-
tation and operation of U.S. Government developed ELV capabilities, technolo-
gies, and systems. These occur in the form of: tax revenues and reimbursements
derived from the provision of launch services; a positive impact on the U.S.
balance of payments to offset losses of launches to foreign competitors;
complement the Shuttle program to meet the demand of many commercial users
to have a U.S. backup to the Shuttle; an alternative for hazardous or other
special payloads that are technically or economically not feasible to use
with a manned system; and an enhanced base of domestic technical production
facilities.-a.nd.associated manpower.
Additionally, by approving the commercialization of existing ELVs, the
U.S. Government could avoid some, if not all, close-out costs associated
with the termination of the present U.S. Government ELV contracts. Commercial
launch operations could stimulate the U.S. economy and contribute to a more
effective and flexible U.S. space launch capability which would contribute
to maintaining U.S. leadership in space.
We are committed to the Shuttle as the primary means for achieving
access to space and do not believe that commercialization of ELVs will seriously
affect the'viability of the Shuttle program.
We believe that the U.S. Government must support and encourage the
U.S. private sector to compete for the multi-billion dollar satellite payload
and launch services market -- or risk losing a portion of it to foreign
competitors.
The U.S. private sector has indicated willingness to enter the commercial
0-
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launch services market on their own capital, without government subsidy.
All they have requested is an opportunity to compete. Their experience,
expertise, and the excellence of their product, should allow them to win a
major share of the market that otherwise could be captured by the Ariane.
We are firmly convinced that the commercialization of ELVs is in the best
interests of the United States and recommend you support this activity.
Thank you. I welcome your questions.
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