Main Engine Cut Off - T+152: SpaceX’s Dragon XL Wins Gateway Logistics Services Contract

Starting point is 00:00:00 Hello and welcome to Main Engine Cutoff. I am Anthony Colangelo and I want to talk today about the Gateway Logistics Services contract that was awarded to SpaceX last week. This is for NASA's and, I guess, international partners' eventually gateway program. This is the idea to build a small space station in lunar orbit that would help build out some infrastructure around the moon and essentially serve as a kind of staging ground for crewed and even maybe uncrewed missions down to the lunar surface. It's this entire idea to kind of aggregate resources around the moon. And we've heard bits and pieces over the years.

Starting point is 00:00:51 It's had a little bit of a tumultuous past. So to update on the status of Gateway a little bit, let's unpack where things are at today. I think the biggest thing to note right now is that Gateway and the lunar landing that NASA is working towards for 2024 have been detached from each other. So originally, the Gateway is going to be used for that 2024 landing, and now it's been taken out of the critical path in recent days, which has been maybe some of, you know, it's kind of like the tip of the iceberg showing that there's this little bit of an argument going on within NASA about the role of the Gateway. But really, the Gateway itself hasn't changed all that much,

Starting point is 00:01:30 even amongst this, you know, the acceleration of these landing plans from 2028 to 2024. So previously, Gateway was this slower build out that would eventually lead to a human landing on the moon in 2028. Last year, just last March, Mike Pence and the National Space Council and the NASA administration at the time rolled out this idea to accelerate things to a 2024 landing on the moon. And since then, through a series of SLS delays, political logjams, there's not a ton of movement on that front. They haven't awarded the lander contracts yet. They haven't even really decided on a specific landing architecture yet, which speaks to more of the log jam about the landing itself. So the 2024 deadline is all but impossible at this point. It never was looking super realistic, right? The best hope was that that would accelerate timelines overall to maybe lead to a landing in 2026 or something like that. But as stuff like the Gateway has been thrown out of the critical path, and as I think as we'll see with the Lander Awards, stuff has been thrown out of the critical path for that as well, to shoot for this 2024 landing, it's just kind of coming apart at the seams, really.

Starting point is 00:02:44 to shoot for this 2024 landing, it's just kind of coming apart at the seams, really. And at a certain point, when you've taken so much out of the program to hit the 2024 deadline, that there's not much left, it just looks really weird overall. So for Gateway, though, there's not a ton that has changed there. It is now not, you know, it's not part of that landing effort for 2024, but it is still part of the plans overall for a longer timeline. And certainly for international partners like Canada and specifically JAXA has interest in this as well. ESA has interest in putting a module as well. Russia certainly does. The fact that there's all of that kind of momentum towards building something like this, I think, says good things for Gateway overall, even if within NASA there is disagreement on the specific role of Gateway. Now, there are a couple of pieces of Gateway that are already in motion. Previously, we heard Maxar

Starting point is 00:03:34 was contracted to build the power and propulsion element, which is essentially a commercial satellite bus with an electric propulsion system provided by, I think that's the Aerojet system providing power and propulsion to the base of Gateway, which is that power and propulsion element that everything else would be docked to. I don't think the contract has been announced yet, and I'm not sure in the specific timeline, but Northrop Grumman has been working with NASA to figure out how to supply them with the habitation and logistics module, which is based on Cygnus, essentially. So they would be expanding that and having that serve as the base habitation module. As I said, Europe has this idea to build a module as part of the

Starting point is 00:04:18 Gateway, but that's not officially been decided yet. But there are a couple of these pieces in place, specifically power and propulsion, soon the habitation module. And now they have awarded the first provider of the Gateway Logistics Services, which was announced back in, let me see here, October of 2018. This program was announced, and this is essentially commercial cargo, but out to the Gateway. So at the time of the announcement, this is what was in that press release from NASA. NASA is interested in a logistics module capable of carrying pressurized and unpressurized cargo. The agency anticipates needing at least three cargo delivery missions, with the first mission potentially delivering a robotic arm provided by an international partner,

Starting point is 00:05:00 Canada, to the Gateway in 2024. So that's kind of showing the idea that this would be a much lower flight rate program for NASA than something like commercial cargo that flies multiple times per year. So back in the show that I did about Gateway Logistics Services a year and a half ago, that was something I harped on a lot is that these kind of low flight rate missions are something that lends their hand to the more old spacey companies that kind of build to contract. And instead of companies like SpaceX or even Blue Origin or others that have their own missions that they're on, and they try to find ways to have their services that they're building out for their own missions serve customers like NASA. So SpaceX had an interest in developing a launch vehicle and developing some spacecraft,

Starting point is 00:05:53 and that could help NASA in the commercial cargo and crew program. So that made sense for them to go all in on. So when I read this outline here from NASA back in October of 2018, the low flight rate to me sounded something like, you know, it wouldn't really make sense for SpaceX to get involved. So when I heard that officially, as of last week, SpaceX has been selected as the first gateway logistics services provider, I was kind of shocked. So let me give you the outline on that, and then I'll get into why I was shocked about this announcement. But I did come around to it over the last week or so, which I'll get into in a second.

Starting point is 00:06:31 So for SpaceX, they are going to get a guaranteed two missions per this logistics services contract, assuming Gateway flies, assuming Gateway exists, they would fly these missions. NASA did not specify the terms that they have for those two missions for SpaceX. All they said in here was that the maximum total value of the Gateway logistics contracts is $7 billion across all contracts, all providers, if there are other providers selected at any point. But that SpaceX as a provider is going to be guaranteed at least two missions here. These missions, when they're flown, would last for about 6 to 12 months. The cargo spacecraft would stay at Gateway for 6 to 12 months at a time. It would then be disposed of, not back to Earth, but there was requirements within the original documents that showed what was acceptable for disposal.

Starting point is 00:07:18 So SpaceX will have to comply with that stuff, but they're not coming all the way back to Earth, which certainly has implications for the, you know, the Dragon XL vehicle that SpaceX bid here. We see one visualization of Dragon XL that looks a little bit like Cygnus in that it's just a cylindrical module, a couple of solar panels on there, docking port, you know, attitude control, all that kind of stuff. Not a ton of details have been sketched out on it yet, but we just kind of have an idea that this is a pretty beefy vehicle. And it certainly is, because these Gateway Logistics Services require something like 5 to 6 tons to lunar orbit, which is significantly higher than even Dragon or Cygnus flies to the ISS today. Much more akin to something like the ATV that JAXA flies up to the ISS every now and then.

Starting point is 00:08:07 Now, before getting into the SpaceX specifics here, I mentioned that the contracts here for NASA have a $7 billion maximum value over the lifespan. So, it's kind of weird to me that it wasn't announced exactly what they're buying from SpaceX here in terms of cost. They did specify that two mission minimum. And for other government agencies that are doing these kind of contracts, this is an indefinite quantity, indefinite delivery contract. Did I get those in the right order? Other way around. Indefinite delivery, indefinite quantity. That means that they don't have to lock in on specific terms at this announcement. So they do this competition up front, they can select providers, and then dole out missions as needed

Starting point is 00:08:50 into the future. But when you specify a minimum for these kind of contracts, you typically have to award the value of those minimum contracts or those minimum missions at the time of award. That's the way that works for some parts of the Department of Defense, if not the entire Department of Defense. So it might work similar to NASA, in which case this award here could come with, you know, hundreds of millions of dollars to SpaceX, depending on how much their mission cost is for something like Dragon XL.

Starting point is 00:09:21 And when you consider the fact that this is a new vehicle to be developed, plus that it is a very long duration mission, plus that it has a lot of these NASA requirements multiplied by the fact that it's happening out at the moon, these are expensive missions. And that's something that I want to talk about is how SpaceX is bidding for missions from NASA these days. But this could be and likely was hundreds of millions of dollars being awarded to SpaceX, if not something up into the billion range for these development and actually operational missions that will be flown if Gateway does come to fruition at some point within the next 15 years, which I believe was the sunset of this batch of contracts for NASA. So that was a big overview. I want to talk about SpaceX's

Starting point is 00:10:07 motivation for being part of this kind of thing in a second. But before we do that, I want to say a huge thank you to everyone who is supporting Main Engine Cutoff over at mainenginecutoff.com slash support. There are 390 of you there supporting the show every single month, and I could not do it without your support. This episode of Main Engine Cutoff was produced by 38 executive producers. Brandon, Matthew, Chris, Pat, Matt, George, Brad, Ryan, Nadim, Peter, Donald, Lee, Chris, Warren, Bob, Russell, John, Moritz, Joel, Jan, Grant, Mike, David, Mintz, Eunice, Rob, Tim Dodd, The Everyday Astronaut, Frank, Julian and Lars from Agile Space, Tommy, Adam, and six anonymous executive producers. Thank you all so much for your support. And if you want to help join that crew, get some extra content in your life,

Starting point is 00:10:48 head over to mainenginecutoff.com support. So I said up front that I was shocked to see that SpaceX won this contract. Not shocked that NASA believes in their technical prowess and was interested in the services they provide, but shocked that the low flight rate mission profile of these gateway logistics services is something that SpaceX would be interested in overall, considering the fact that we have heard time and time again that now that Dragon has, you know, got its missions cut out for it, it's doing cargo and crew to the ISS, it'll be doing crew flights to the Axiom space station. Eventually, they announced that deal with Axiom that we talked about on the show a couple of shows back. But Dragon is, for all

Starting point is 00:11:30 intents and purposes, done development, and they're into operations of it. They're still going to produce a couple of modules. They're still going to be flying them, but they're not actively developing Dragon for either cargo or crew at that point. And Elon Musk had made clear in the past that that being the case, Starship is going to be getting all the focus from SpaceX in terms of spacecraft development. So this kind of rolls back on that and says, well, we're actually developing a new version of Dragon.

Starting point is 00:11:57 So the fact that they needed to develop this new version of Dragon, plus the low flight rate not being particularly interesting to SpaceX's long-term strategy and stuff that they're interested in overall, it was weird to me that they would go for this kind of thing. So I thought through their motivations the last couple of days, and I've come around to it in a couple of different aspects. So here's a loosely sorted list of reasons that SpaceX would want to be part of Gateway Logistics Services. First up, I think they do have a genuine interest in being NASA's prime contractor in as many

Starting point is 00:12:32 ways as possible. It helps them really establish themselves as they are established today as a premier space company, and it helps really cement them as someone to be looked to if you want to do anything in space. really cement them as someone to be looked to if you want to do anything in space. SpaceX, you know, they want that to be top of the list in terms of people that you think about. So any opportunity for them to become a prime contractor for NASA, I think they are genuinely interested in that from kind of day one at SpaceX. Of course, the income from being a prime contractor for NASA doesn't hurt. SpaceX is a very money-intensive company right now.

Starting point is 00:13:08 They're actively flying all of these spacecraft. They are actively developing a satellite internet constellation that costs billions of dollars right now to develop, roll out, and run before they even get to any of the revenue-generating time period. before they even get to any of the revenue generating time period. They're also developing Starship, as we've talked about here at length, down in Boca Chica and other places in the country as well. So they're not stopping any of these projects as they develop yet a new version of Dragon. So they are incredibly resource intensive in terms of the kind of money they need to take in to keep all of this stuff running at this point. And certainly over the course of their commercial cargo and crew work with NASA, we've noticed that

Starting point is 00:13:51 they have been coming to grips with how much it costs them to be a part of these programs, and have been adjusting their bids corresponding to that. So originally, commercial cargo, they were an extremely low bidder on that program, And even through that, they developed Falcon 9 and Dragon spacecraft itself. And then they went on to win the Commercial Crew contract. Now, in that one, Boeing and SpaceX were the two providers selected. In terms of funding, Boeing bid $4.2 billion and SpaceX bid $2.6 billion. That was for development of their spacecraft, and then six operational missions to the ISS, which are about to start within the next couple

Starting point is 00:14:32 of months here. So when you look at that disparity, you know, $4.2 versus $2.6 billion for the same services, and we're seeing how each of those are playing out with Boeing having a ton of issues, SpaceX having some, but not nearly the amount that Boeing is having overall. Obviously, SpaceX wishes that they bid more on that contract. And even Gwen Shotwell said so much. This was in an Ars Technica article from a while back, where Gwen Shotwell said, knowing I could have bid more after the fact, I sure wish I would have bid more for these commercial crew missions because, you know, $2.6 billion, $4.2 billion, even in the case of Boeing, those look downright cheap for the services NASA's getting out of these two providers, especially when you compare that to the exploration side of NASA that is just

Starting point is 00:15:22 oozing money from all ends, right? The SLS and Orion budget line items are just as big as some of those figures for commercial crew, and in some cases, even bigger than those full, you know, the full development to six operational mission life cycle costs of SpaceX's commercial crew grid is lower than some of the yearly budget items for SLS Orion. crew grid is lower than some of the yearly budget items for SLS Orion. So when you compare these things, they all sound like a lot because it's billions of dollars, but when you compare them, it just looks incongruous in certain ways. So when we think back to commercial cargo, they had originally a CRS-1 contract with SpaceX and NASA. And then when those were up, which we just saw with CRS20,

Starting point is 00:16:06 there's a little bit of naming conflict here between the rounds of contracting for commercial resupply services and the actual flights. SpaceX just flew their 20th, which was the last flight on their first contract for commercial cargo. They bid the second one and won that. But notably, their cargo cost went up by 50% in the second round of contracting. That was on a per kilogram basis. And in the GAO report that was about that price increase, this line was in there. They, meaning SpaceX, also indicated that their CRS-2 pricing reflected a better understanding of the costs involved at their several years of experience with cargo resupply missions. So even in that,

Starting point is 00:16:45 SpaceX is kind of admitting, yeah, you know, we underbid in the past, and we realized that it costs a lot more to fly these missions, and our competitors are charging a lot more, so we should charge a lot more as well. Not to soak NASA, but, you know, these are contracting programs that come with a ton of requirements and a ton of process, and obviously a ton of delays and things that keep getting tacked on, but that fixed price isn't moving. So you're losing money every time there's a delay, which is good incentives for companies to have. But in the case of SpaceX, they know they can bid a little bit more because of who they're competing against. And that's totally fine because it still gets NASA the

Starting point is 00:17:22 best deal possible. So when you consider their history there from cargo to crew to cargo two, and then consider what they probably bid for these gateway logistics services, this is a lot of money. And they are now ready to bid an appropriate level of funding for these kind of missions. And now they know all of what they need to know about working with NASA on the ISS program. Then they get their mindset into the exploration program, which as I said, oozes money. And I'm sure these figures are much higher than that for even a much lower flight rate vehicle. So all that said, SpaceX certainly wants to be NASA's prime. But if now they're ready to

Starting point is 00:18:03 bid what others in the industry would think is the appropriate amount of money for these kinds of missions, and this is something that becomes a big revenue source for SpaceX, bigger than it already is for them, for their chunk of missions that are NASA, this could be a really lucrative couple of flights that SpaceX could pull off. Now, thinking beyond that, in terms of, okay, they've got the money side, they've developed Dragon XL, now what could they do with Dragon XL that would play into the rest of their plans? When you think about the mission profile for Dragon XL, flying out to the moon, navigating in cislunar space, docking in lunar

Starting point is 00:18:42 orbit with Gateway, that's a ton of deep spaceflight experience that would be really beneficial for SpaceX to develop. Even if the hardware is not common between Dragon XL and Starship, which is their long-term plan for deep spaceflight, this is really useful experience for them to get, and they can build up all these operations, which are reusable among Starship and Dragon XL, even if the hardware is not common. In the same way that, you know, commercial satellites in a low Earth orbit, or geostationary orbit, or planetary orbiters, or even Mars rovers, none of them really share a lot of hardware, but operationally, between each class of that, they can share experiences. So somebody driving Opportunity shares a lot of hardware, but operationally between each class of that, they can share experiences. So somebody driving Opportunity shares a lot of operational knowledge with somebody driving

Starting point is 00:19:30 Curiosity. They don't have a lot of hardware in common, but they can share operational experience and really work out that operational stuff. And that's what SpaceX could do with flights to cislunar space with Dragon XL. Beyond that, SpaceX could see a market for Dragon XL in Earth orbit. As I said up front, they've got a contract for Axiom crewed flights. I'm sure Axiom's cargo desires would fit within what Dragon 2 could carry, which is a significant amount less mass than Dragon XL could. But maybe there is room for a once-a-year kind of massive cargo run to outfit something like Axiom Space Station. Maybe even it's something that ISS would be interested in in the future. They obviously have a lot of different ways to get cargo up to the

Starting point is 00:20:17 ISS right now. They're going to have three cargo providers pretty soon in SpaceX, Northrop Grumman, and Sierra Nevada. But maybe there is something unique that Dragon XL brings that would be room for a once-off ISS cargo run in the same way that JAXA flies ATV up to the ISS. One other consideration with Dragon is that Dragon 2's port can only fit smaller items through. You know, the new Dragon 2 vehicle doesn't have the big berthing port. It has a docking port, which allows Dragon 2 to go up and dock autonomously with the space station. But it means they can't fit large cargo bags through the door.

Starting point is 00:20:55 They can't even fit spacesuits through the port of Dragon 2 anymore. So maybe this large cargo hauler kind of class of vehicles would be useful for the ISS, would be useful for Axiom, and SpaceX sees this as something that they could offer for a significant value to commercial space stations or government space stations in low Earth orbit. And lastly, on the lunar focus side of things, there could be some commonality here between Dragon XL and whatever SpaceX bid for the Artemis lander that, you know, NASA's been contracting for for a little while now. They haven't announced anything. But there could be some commonality here in terms of propulsion or guidance and navigation. Or even Dragon XL could serve as the kind of tug element

Starting point is 00:21:41 that NASA was originally looking for. They were originally talking about a three-stage lander that would have a descent, an ascent, and a tug stage in order to get from the Gateway down to the lunar surface. Dragon XL could be that tug as well, depending on what kind of architecture SpaceX is interested in. Or maybe this is some sort of stage commonality between Dragon XL and one of those components of the SpaceX lander, because apparently they did not bid Starship for the Gateway lander services. They bid something a little different. And this could be the basis for all of that Cislunar-type stuff that SpaceX might bid in the future.

Starting point is 00:22:21 So there's enough reasons there that you can kind of cobble together a good enough reasoning from SpaceX to be part of this program. And I've kind of come around on it a little bit in terms of originally I was a little bit bummed because I think SpaceX has, and not just them, I shouldn't pin just them down to this, but SpaceX and others out there have this knack for doing this kind of mental gymnastics where they say, okay, well, we have this much stuff already built. We have this kind of hardware. We have this kind of operational experience. We could take that, extend it a little bit, and offer this new service without reworking a whole bunch of stuff. And time and time again,

Starting point is 00:22:59 through commercial cargo and crew and whatever else they're getting involved in, it turns out that it's just another thing to be developed. And it turns into a pretty big redevelopment cycle. And I don't think that it's ever really worked out that they were able to just simply extend something they already have to achieve a much loftier goal overall. So that's kind of the thing that was bumming me out originally was that in the same way that I think, you know, nation states are easily sucked into, well, we should build a space station, and then they get stuck at a space station for 20 years, which I think a lot of the ISS partners have done,

Starting point is 00:23:35 and I think China is on the road there now. I think commercial companies fall into the trap of, this isn't a significant redevelopment, it's an extension of what we already do. And then they get sucked into this multi-year design and development cycle that eats a lot of time and resources that, for SpaceX's case, could be better spent on Starship or some other mission overall. But after thinking through a lot of these ideas here, I do think there's a significant value for SpaceX to be the DragonXL Gateway Logistics Service Provider, and I'm interested to see what they do with it overall,

Starting point is 00:24:07 if and when Gateway does in fact fly. But that's a story for another day. For now, that is all I've got for you. Thank you all so much for listening. If you've got any questions, email me anthony at mainenginecutoff.com or on Twitter at wehavemiko. Thanks for listening.

Starting point is 00:24:20 I'll talk to you next time.

Main Engine Cut Off - T+152: SpaceX’s Dragon XL Wins Gateway Logistics Services Contract

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