Capitalism Goes to Mars. David Livingston, Bob Zimmerman



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Capitalism Goes to Mars. David Livingston, Bob Zimmerman

5. Expand Competition

The striking competition in the private launch market, spurred by SpaceX’s innovation and lower costs, illuminates a path for invigorating the aerospace industry, both for the private sector and the government.

SpaceX entered the aerospace market with one goal: lower the price so that it could compete aggressively for market share. That effort has succeeded. In response, the older, already established companies have become more competitive, or have indicated by non-action that they will fall by the wayside. The result is a revitalized launch industry. A tertiary effect has been the creation of additional new launch companies, able to gain investment capital and enter the market, thus completing the economic cycle and increasing the competition and further lowering prices.

NASA encouraged this process with its second round of commercial cargo contracts, awarding contracts to three companies – SpaceX, Orbital ATK, and Sierra Nevada – but left itself the freedom to decide later how many cargo launches from each company the agency would buy. If any company has problems or delays, NASA simply will send its business to the other two. The result: a heightened sense of competition, encouraging faster schedules and lower costs.

Recommendation: Expand competition. Assuming the government accepts the above recommendations, it then should award the work to multiple companies in order to increase competition as well as provide redundancy to the government. The history of those cargo contracts showed that it can actually cost the government less to award contracts for the same service to more than one company, as long as those contracts are streamlined, fixed-price, and leave the design to the private company….”

Mar 17, 12:00 AM
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