This document provides the Exploration Systems Mission Directorate (ESMD) with a set of best practices, ideas, and concepts which all ESMD programs, projects, and activities should be cognizant of and work toward with respect to encouraging commercial space capabilities.
At the level of NASA Headquarters (HQ), ESMD is responsible for all exploration-related activities across the agency. Programs and projects within ESMD must develop and execute tasks and activities that support NASA's exploration mission goals.
The ESMD Commercial Development Policy (ECDP) is a comprehensive set of goals, approaches, strategic elements, and evaluation criteria for program and project tasks and activities in fulfillment of the NASA Strategic Plan Goal 5, "Encourage the pursuit of appropriate partnerships with the emerging commercial space sector".
Authorization for encouraging the development of commercial space capabilities is stated in various statutes and statements of policy such as:
· Section 203 of the 1958 National Aeronautics and Space Act states that NASA “...in order to carry out the purpose of this Act, shall... seek and encourage, to the maximum extent possible, the fullest commercial use of space; and... encourage and provide for Federal Government use of commercially provided space services and hardware, consistent with the requirements of the Federal Government.”
· More recently, the Commercial Space Act of 1998 stated that “a priority goal of constructing the International Space Station is the economic development of Earth orbital space.” The law further states that “competitive markets... should therefore govern the economic development of Earth orbital space.”
· In his “Vision for Space Exploration” policy, President Bush charged NASA to “promote international and commercial participation in exploration to further U.S. scientific, security, and economic interests.”
· The NASA Authorization Act of 2005 states that “In carrying out the programs of the Administration, the Administrator shall … work closely with the private sector, including by … encouraging the work of entrepreneurs who are seeking to develop new means to send satellites, crew, or cargo to outer space.”
· The Director of the White House’s Office of Science and Technology Policy, Dr. John Marburger, made the following remarks during the Keynote address at the 44th Robert H. Goddard Memorial Symposium on 15 March 2006: “As I see it, questions about the vision boil down to whether we want to incorporate the Solar System in our economic sphere, or not. Our national policy, declared by President Bush and endorsed by Congress last December in the NASA authorization act, affirms that, ‘The fundamental goal of this vision is to advance U.S. scientific, security, and economic interests through a robust space exploration program. ’”
· At a speech given during the X PRIZE Executive Summit on 19 October 2006, NASA Administrator, Dr. Michael Griffin, stated “...as we go forward with the Vision for Space Exploration, it emphatically is our duty to encourage and leverage nascent commercial space capabilities.”
· The 2006 NASA Strategic Plan, in which Strategic Goal 5 states that NASA is responsible to “Encourage the pursuit of appropriate partnerships with the emerging commercial space sector.”
The ECDP applies to the evaluation and execution of (funded and unfunded) tasks and activities for all ESMD programs and projects. The ECDP should be addressed by all proposals for ESMD programs and projects tasks and activities. (It is noted that the ECDP will not necessarily be relevant to all proposed tasks and activities within ESMD, but the ECDP can be addressed nonetheless.)
Certain NASA functions as determined by the Agency or national policy will be necessarily exempt from the ECDP.
The 2006 NASA Strategic Plan (link active as of 17 September 2007): www.nasa.gov/pdf/142302main_2006_NASA_Strategic_Plan.pdf
Upon approval, the ECDP will be implemented directorate-wide as an evaluation criterion for any relevant program, project, or activity requests for funding or concurrence. Funding or activity requests should address how ECDP goals are met through implementation of policy elements and will be rated using ECDP evaluation criteria.
Many funding or activity requests will not address the ECDP directly and will require some level of facilitation coordinated with the appropriate ESMD program managers. This facilitation shall be addressed at, if not before, the acquisition or procurement strategy meetings. Not all programs, projects, or tasks will result in addressing the ECDP goals, but all should consider them. The facilitation can be a designee within the Program or Project, or it can be designated by ESMD management at HQ. The facilitation implementation can be modified on an as-needed basis and should be done in a reasonable way.
The objective of the ECDP is to encourage the development of commercial space capability industries that can accomplish NASA exploration mission goals at a lower cost and cost risk to NASA through “fixed price” acquisition of commercial goods and services.
The ECDP goals are:
· To encourage the development of commercial space capabilities and markets.
· To encourage “Buy Commercial” instead of “Government Provided” decisions.
· To encourage commercial representation and opportunities in NASA’s exploration architectures.
The approaches through which the ECDP goals will be achieved include the following:
· Through a coordinated set of policy elements that encourage the private-sector to develop, demonstrate, provide, and support commercial space capabilities.
· Execution of the policy elements in fair, open, and non-intrusive ways that allow the private-sector to retain intellectual property (IP) rights and market share.
· Rely on the direction of the emerging space business community to identify which commercial sectors are viable, and those should be candidates for NASA encouragement. Conversely, NASA should not let high-priority exploration mission goals determine which market sectors should be encouraged, because those sectors may not be commercially viable.
The ECDP targets three specific "barriers of entry" that start-up space businesses encounter. These are:
· Investor funding in commercial space companies. ESMD can address this barrier in several ways. For example, ESMD could make direct investments in a company with Funded Space Act Agreements (FSAAs). Direct investment may send encouraging messages to the investment community (e.g., NASA takes the entrepreneurial space community seriously, NASA wants to encourage the development of real goods and services within the new space economy marketplace, or NASA is one of many possible customers in the new space economy marketplace). ESMD can also offer prizes that require a demonstration of the capability under commercial consideration.
· Production of commercial space goods and services. General activities that ESMD can take to address this barrier include providing access to NASA assets, when appropriate, in a fair and open manner and at a cost that minimizes the burden on the asset recipient, and introducing prize awards for specific capability demonstrations.
· Demand for commercial space goods and services. General activities that ESMD can take to address this barrier include entering into funded agreements that provide positive incentives to the company to attract a customer base that is separate from NASA or another U.S. government entity, providing pricing schedules (but not promises to purchase) or structures to utilize commercial capabilities for specific goods or services offered at a future date, and encouraging the interoperability of design standards and service procedures among multiple users that can increase the base of potential users or customers.
Specific policy elements have been devised to address one or more of the barriers of entry listed above, and they include:
· Multi-phased programs. An example of this is the use of prizes that lead to FSAAs that lead to standard acquisition of commercial space capabilities. Specifically, the utilization of FSAAs carries many programmatic risks in addition to the obvious technical and cost risks. To mitigate some of these risks, a prize program (first phase) could be conducted prior to the competition for FSAAs (second phase). After successful completion of the FSAAs, a series of FAR 12 contracts (third phase) could be issued for the procurement of commercial items (as developed in the second phase).
· Being a reliable customer. The government has certain perceived rights that increase the barriers to the entrepreneur of raising investment support (e.g., the right of termination of a contract for convenience, and eminent domain over intellectual property). Although those clauses cannot be removed from any contract or agreement with NASA, ESMD could attempt to conduct business with its contractual partners within private sector business norms.
· “Encourage Commercial Space” evaluation criteria. Implementing evaluation criteria that assess how the goals of the ECDP are addressed can encourage proposers, as well as the government, to think of new opportunities for the use of commercial space capabilities. For example, solicitations for Small Business Innovative Research (SBIR) funding could include a requirement that proposers describe how they will use or encourage the use or development of commercial space capabilities in the work they perform using government funding.
· Parallel government-commercial efforts. In situations where there is an on-going government hardware development effort, it may be possible to conduct a commercial effort at the same time (coincidently). The government program plan could have the appropriate decision-point milestones to evaluate the contributions or progress of the commercial activities and modify the government activity plan accordingly. An example of this type of tactic could be to conduct a commercial hardware design and development activity at the same time, and with the same set of requirements, as the government. Design reviews of all the participating organizations could encourage and reward commercial innovations and time savings as compared to the government results.
· Community presence, involvement, dialogue, and support. NASA can send subtle signals of support and confidence to emerging commercial sectors through their presence and active participation at conferences, workshops, and other types of meetings that target these sectors. These signals of support encourage private investment in new and emerging commercial space capability sectors. Some examples of how NASA, through its involvement, can promote topics or causes of interest to the entrepreneurial space community include leading or contributing to workshops or panels discussing topics, and attendance and participation at conferences, summits, meetings, or other professional gatherings.
· ESMD use of commercial space capabilities. ESMD could make a special effort to utilize commercial space capabilities that come to market, whether stimulated through governmental efforts or not, by approaching these vendors with an open mind and willingness to utilize the capabilities that will be undoubtedly different from what they’ve normally used. For example, Instead of NASA requiring a new commercial capability meet their traditional requirements, they could try out the new product (whether a good or service) to see how it can be used, without modification, to achieve most of the scientific, engineering, or operational goals. Encouraging commercial space capabilities may involve getting only 90% of what could have been achieved using traditional, government-provided facilities, but over time, the commercial space capabilities might be able to adapt and evolve to the point where the NASA researchers will get more than they could previously and at lower cost.
Proposed program and project tasks and activities will be evaluated according to the following ECDP criteria:
· Fulfilling Needs and Meeting Goals. Any activity that is proposed must sufficiently fulfill a significant NASA need (e.g., meeting a non-critical goal of the Global Exploration Strategy). This criterion is critical to the viability of any proposed activity.
· Favorable Evaluation of Supply/Demand Analysis. In addition to meeting a NASA need or goal, it is very important that it be shown that the activity under consideration is also meeting a real business goal as well. This can be determined through a current market assessment of demonstrated and predicted supply and demand, in both the private and government sectors. This analysis should be able to identify the existence of a near-term, customer base that may include NASA and other entities within the U.S. Government, but does not rely upon them solely for the success of their business model.
· Favorable Evaluation of Cost-Benefit Analysis. The cost and benefit of any activity, both to NASA as well as to a collaborating entity, needs to be assessed. Ideally, the comparison of cost and benefit would be an objective exercise, and an attractive activity would have benefits greater than the costs. Typically, however, both benefits and costs contain qualitative as well as quantitative components, thereby making the comparison difficult and subjective (e.g., can the cost to NASA for allowing the use of its insignia for a specific purpose be accurately measured?).
· Promotes Leveraged Collaborations. The entire thrust of the ECDP is based on leveraging collaborations between NASA and the private sector, so the more a proposed activity can promote this aspect of the policy, the more favorable rating it should receive.
· Possibility of Open and Fair Implementation. Constraining the activities proposed to implement the ECDP are the laws and regulations governing NASA procurement. It is unclear what NASA's role could be to initiate changes when certain laws or regulations are identified that seem to unnecessarily impede the goals of the ECDP, but understanding them, and how they affect the emerging commercial space markets, is a critical step to strategically working with them.