Main Engine Cut Off - T+205: Phil McAlister, Director of Commercial Spaceflight at NASA

Episode Date: December 16, 2021

Phil McAlister, Director of Commercial Spaceflight at NASA, joins me to talk about the history of and lessons learned from the Commercial Cargo and Crew programs, what things went well and not so well in those programs, the difficulty of changing NASA’s approach to human spaceflight, how to deal with varying levels of Congressional funding and buy-in, and how all of that feeds into the new Commercial LEO Destinations program.This episode of Main Engine Cut Off is brought to you by 39 executive producers—Simon, Lauren, Kris, Pat, Matt, Jorge, Ryan, Donald, Lee, Chris, Warren, Bob, Russell, Moritz, Joel, Jan, David, Joonas, Robb, Tim Dodd (the Everyday Astronaut!), Frank, Julian and Lars from Agile Space, Tommy, Matt, The Astrogators at SEE, Chris, Aegis Trade Law, Fred, Hemant, Dawn Aerospace, and seven anonymous—and 716 other supporters.TopicsPhilip McAlister, HEO Director of Commercial Spaceflight Division | NASANASA Releases COTS Final Report | NASAInternational Space Station Commercial Resupply Launch | NASACommercial Crew Program | NASALow-Earth Orbit Economy | NASANASA Selects Companies to Develop Commercial Destinations in Space | NASANASA Developing a Plan to Fly Personnel on Suborbital Spacecraft | NASAHappy Hour - Off-NominalOff-Nominal Happy Hour - Dec 16, 2021 - YouTubeMain Engine Cut Off on Twitter: “If you haven’t yet caught Happy Hour, you should check it out! I shared some big news: Next week is my last week at my full-time job! I’m going independent so I can do more MECO, more @offnom, and hopefully some new projects too! Thank you all so much for being part of this. ❤️”The ShowLike the show? Support the show!Email your thoughts, comments, and questions to [e-mail] @WeHaveMECOListen to MECO HeadlinesJoin the Off-Nominal DiscordSubscribe on Apple Podcasts, Overcast, Pocket Casts, Spotify, Google Play, Stitcher, TuneIn or elsewhereSubscribe to the Main Engine Cut Off NewsletterBuy shirts and Rocket Socks from the Main Engine Cut Off ShopMusic by Max JustusArtwork photo by NASA

Hello and welcome to Main Engine Cutoff. I'm Anthony Colangelo. And today on the show we've got an amazing guest with us. We have Phil McAllister, who is the Director of Commercial Spaceflight at NASA. That title might sound kind of obscure, but what it means is basically any program that has commercial in the title is something that Phil has worked on, is working on, in many cases is running, has run. So it has a ton of context on not only the history,

but the current day of all the commercialization efforts that NASA is undergoing from cargo to crew, and now commercial space stations. Let me break the fourth wall and tell you that I'm recording this intro actually after the conversation that I just had with Phil. And I'm doing that because I just want to say this is maybe the best episode of this podcast that there's ever been. This is an incredible conversation with Phil, who's incredibly genuine and has some really honest takes that are atypical that you hear from somebody still working on the inside at NASA. And it's not in a bad way, just in a totally honest way about lessons learned from history and how they apply that to the programs that are coming up. So this

is exactly the kind of stuff I wanted to get into with Phil. And I have to say thank you to Stan out there who hooked this up. Stan knew Phil for a while and thought he might be a good guest for the show. So if you have ideas like that as well, I'm always open to hearing from you. Email me anthony at mainenginecutoff.com. I feel like I'll mention that because Stan really came through here with just the perfect kind of guest for MECO. So without further ado, let's talk to Phil. All right, we're here with Phil McAllister, the director of commercial space MECO. So without further ado, let's talk to Phil. All right, we're here with Phil McAllister, the Director of Commercial Spaceflight at NASA. It's a pleasure to have you on. I've definitely heard you a lot on telecons recently, so it's good to talk to you in

real life-ish at this point. Thanks, Anthony. Glad to be here. I thought it would be cool to start with some historical perspective on commercial cargo and crew. You've been involved for many years now in all of those programs. So one common thing that we hear a lot in recent years when we're looking at new programs is how the contracting method of NASA and commercial companies has changed in the era of commercial cargo, commercial crew, fixed price contracts, that whole sort of thing. And it's kind of the only thing that we hear in like, oh, this is what we learned from these programs is fixed price contracts. So I would love to hear from you if there's lessons learned that are coming into these newer programs from those programs that we don't hear about outside. That's something that you're taking between these newer programs.

we don't hear about outside? That's something that you're taking between these newer programs. Yeah, that's a great question. And I'm frequently kind of confused why it seems to be that everybody focuses on what we call the acquisition strategy. That's what we call the contracting mechanism or how we're going to procure these things. And early on in commercial crude, that really was the flashpoint. I never really understood that because that was one part of our strategy. It's a very, very important part. And I do believe it is the part that has had the most legs, meaning it's transcended commercial crew and it has now sort of gone out into all of our human exploration activities, more so than any of the other strategies. However, it was just one part of the strategy for commercial crew. It was a critical part, and I'll talk to you a little

bit about that, but it was just one part of the strategy. So that is, it's a great question, and it's something that I will spend a little bit of time on. For commercial cargo, I would say almost all of our human exploration contracting was based on cost plus contracts. I'm sure your audience is familiar with that. The contractor gets reimbursed for their cost plus a little bit of profit. So there's really no incentive to be cost effective. There's a lot of incentive to reduce risk. And so in general, not always, but in general, we've seen that kind of mechanism sort of take a little bit longer and certainly lead to sometimes increasing costs because the incentives all are geared toward that. And that's one of the things we changed with commercial cargo. We used what was called space act agreements. These were milestone based pay for performance milestones. So you would hit a certain milestone. You'd have entrance and exit criteria. And we say, okay, that represents a certain amount of progress. So we'll pay you for that progress on a pre-negotiated basis. So it could have absolutely no connection to costs. It could be, this is sort of a value-based milestone, super

productive in terms of the incentives. It incentivizes the contractor or your partner to perform and not necessarily to just increase costs. So that was a key part of the strategy. Another key part was allowing the partner, the companies, to own the intellectual property and the design. All of our previous human spaceflight exploration hardware had been owned and operated by the government. To have the companies own these systems incentivize them to find other customers. And other customers couldn't be other U.S. government agencies because there's only one of those. There's NASA. So in order to find other customers, it's usually going to have to be a business customer or a personal customer in the case of space tourism. The only

way you're going to sell those things is if they're cost effective. So there's a huge incentive for the partner to make their resulting hardware cost effective. Another key part of the strategy. The other part of the strategy, since they own the design, we couldn't dictate what that design was. We had to establish very relatively high level requirements for commercial crew. You may have heard me say this before. We had between 10 and 12,000 requirements for the shuttle with commercial crew 300. So two orders of magnitude less. And our role was to not dictate the design solution that was completely up to the contractors. But we would, at the end of the day, just say whether that design met our requirements.

A huge change, whereas previously NASA would make all the decisions, own the hardware, dictate the design. In this case, we deliberately transferred that responsibility to the private sector, allowed them to make these trades very, very quickly. And by only having these top level requirements, the level of trade space that they had was greatly expanded. And when you had that kind of trade space, the companies can then optimize their design for all kinds of things like cost effectiveness that they hadn't been able to do before. kinds of things like cost effectiveness that they hadn't been able to do before. And so all those things were part of the cargo, commercial cargo strategy, and all those things we then adopted for commercial crew. The other big thing with commercial crew, and then I'll get off this, I'm giving you

a long winded answer. No, this is like the perfect start to this because you've already said like eight things that I have my list to dig into. So that's great. Great. The other big thing, and this is sort of an inside baseball term that we use at NASA is insight versus oversight. Insight means our ability to understand the nature and functioning of the system, just understanding how it operates. That's insight. Oversight is where you tell the contractor what to do contractually. And deliberately what we wanted to do in commercial crew and cargo was sort of flip that. We wanted a ton of insight, but very, very little oversight.

telling the contractor, do this, do this. No, we don't want you to do that. Do this other thing. And we deliberately wanted to sort of focus our oversight on just those 300 requirements and then spend a lot more time on insight, understanding the system, how it operated, and allowing, again, the contractor, the freedom and the trade space to make the decisions about the design that optimized its performance and its cost effectiveness. So I think those are kind of the key features. And the one other part I will say, it only makes sense to adopt all of those features when you are trying to create a commercial capability. And in order for there to be a commercial capability, there has to be non-government customers. So it makes a ton of sense right now, I think, for low Earth orbit spacecraft, cargo crew destinations, for those to be more commercially owned and operated. We are

focusing on Moon and Mars where there's not, I'm sorry, yeah, Moon and Mars where there's not as clear an economic potential there. In LEO, even though we don't have a killer app for microgravity research, there is clearly interest in the private sector for commercial activity in low Earth orbit. It's time for us to transition that to the private sector, allow NASA to focus our attention where there may not be that economic incentive. So when you have all those things, you're not pushing the state of the art technologically. You have the possibility for other customers and the private sector is interested financially and technically capable of doing the job. Then I think the strategy makes sense. Doesn't make sense for everything. We'll still have our traditional acquisition strategies for certain things. But for those systems where you

have this kind of environment, it makes a ton of sense. Now I'm struggling on which one of these to dig into first, but the other customers, let's start there. We are now starting to see, you know, Inspiration4 is certainly a great example of SpaceX selling Dragon flights to other agencies or organizations or individuals in this case. But it's not a huge market there. the most economically profitable, revenue-generating, prolific launch company that the world sees anywhere right now. Arguably historically, but certainly now, SpaceX is the crowning champions of the launch industry at the moment. They didn't sell any Cargo Dragon flights to anyone else.

Orbital Sciences, ATK, Northrop Grumman didn't sell any Cygnus flights to anyone. But there was this massive, you know, launch industry that had a gigantic shakeup from the existence of SpaceX selling those boosters and those flights to other individuals. Was that, I guess, from, you know, the founding days of commercial cargo, did you envision that the other customers would be buying the actual spacecraft? Or did you think that a side effect might be this launch company running with commercial launch in the way that SpaceX did? Yeah, so there was a variety of people that were involved.

And so I think there was a variety of objectives associated with cargo. We certainly did hope and envision that somebody other than NASA would buy cargo transportation services. That has not come to play, just like you said. Nobody other than NASA has bought Cygnus and Dragons to transport cargo to low Earth orbit. However, we definitely thought there was a potential for changing the paradigm for launch vehicles. So we, I don't know if we explicitly highlighted launch vehicle cost effectiveness, but it was part of the strategy. And we did want new launch vehicles as part of COTS. And the Falcon delivered on that interest uh, interest, uh, you know, multiple times. Yeah. I hope NASA launch services sending nice fruit basket every holiday season to, uh, to the

commercial cargo office. Right. Right. Um, and like you said, that has disrupted the entire, uh, the entire launch industry, the global, uh, launch industry. So, so exceeded my expectations. And I had pretty high expectations back then, even mine. So, but the cargo part, I would agree was somewhat of a disappointment. However, in looking back on it now, that was only one leg of the stool for commercial Leo. You needed human transportation and you needed destinations before this was all going to really come to bear. It was really just one piece. So cargo, you had to start first, right? Mike Griffin, who started the COTS program, would frequently say, you got to walk before

you can run. And so cargo was probably likely to be the first thing. And I think the fact that we haven't seen commercial purchases of a full cargo mission, it kind of makes sense because you need that entire ecosystem destination. You need the destinations, you need the cargo transportation and the crew transportation. And then that entire industry becomes driven by commercial and business and personal needs as opposed to the government needs. So we may have been a little bit, maybe naive is the word, or maybe optimistic that somebody would just buy cargo.

Where are you going to go? What are you going to do with the cargo? I mean, SpaceX was offering Dragon Lab, right? If somebody wanted to take advantage of that. So it wasn't like NASA was singularly focused on that being a thing. SpaceX certainly had their mind to it to some extent. So yes, but you're right that, you know, the, the, the use cases for cargo only, it's like, okay, cool. I sent my cheese wheel up in this case of SpaceX, but, um, and, you know, certainly from the constraints that NASA was dealing with in terms of funding all these programs, uh, I don't know, you know, other people might disagree on which order you chose to go from cargo to crew to

destinations, but we would have, I don't know, I, a other people might disagree on which order you chose to go from cargo to crew to destinations, but we would have, I don't know, a different version of me in a parallel universe would be complaining about the order of operations if you did it another way, I guess. So maybe that's all unfair to some extent. Unfair, unfair, maybe it doesn't matter, but I will tell you that COTS was only enabled when it started. Mike Griffin called it a backup. He was like, this is a gamble. I'll take a shot on these commercial guys. They've been complaining for years. Let's see if they can deliver. There was no way back in 2005 that anybody at that time was going to transition responsibility for human space transportation to the private sector. Nobody, I could tell you, and even that was a couple of years after Columbia even,

that notion was not going to be challenged for a backup capability just for cargo. Yeah, let's give it a shot. And then over time, as things evolved, COTS and our commercial cargo became from a backup, and then it became sort of mixed use, and then it was our primary means to get cargo to the ISS. It sort of transitioned over time. And also, the other thing that changed was our confidence in this model increased with the delivery and performance of SpaceX and orbital sciences on crew. I think that gave the policymakers here in DC the confidence to say, hey, maybe we can extend this model to humans and human space transportation. That would have never been the first step in terms of this transition. I think if we hadn't had the confidence that COTS gave us, it would have been a very, very, it was already difficult, oh my gosh, to do crew in the first

place and to convince people that we could make this transition for human space transportation would have been much harder if we hadn't had the sort of confidence building from cargo. Yeah, that makes a lot of sense. The other thing I'm wondering about, we're into the second phase of commercial cargo at this point. Dream Chasers coming online as part of that in the next couple of years. We're into, you know, three flights into the operations of commercial crew. Are there things that you look back on that you would say, knowing what we know now, if we were doing this again, or if I could, you know, talk to 2005 version of myself, I would tell them X, Y, or Z. Are there things that you see that you wish were tweaked a little differently in the early days? Or do you

feel like, you know, your approach to let's just try this thing and be scrappy and figure it out as we go, like that was the right approach? Yeah, I've had that question a couple times, and I've kind of punted on it. But now I think there's enough time that I'll give you two that I think were important. I had a lot of goals for Commercial Crew. You know, I was really sort of swinging for the fences. But over time, I did have to compromise on various things. did have to compromise on various things because I was asking NASA's human spaceflight community, our stakeholders, to take a huge leap of faith. I had been through cargo. I could see so clearly how we could apply this model to crew. I had this vision. I knew it could work, but other people didn't have the benefit of that experience. And I was asking them to take a very, very big leap in terms of what they were comfortable doing. So over time, I did definitely compromise a couple things as we executed commercial crew cargo.

I think it happened pretty much like we thought. But with crew, the two things that I wish we would have done a little bit differently, I would have liked to have stayed in the Space Act Agreement phase a little bit longer with crew. It allows the companies to sort of get their designs a little bit more mature so that when NASA comes in and with all of our human spaceflight experience and we say, that design may be not optimal for this, it has to be a really, really important thing for us to dictate a change to their design after it's so mature, right? I think that's a good thing, right? So only those things that are really, really important to us will we be able to institute a change. The little things, if we had been involved really early on, like change this to that or change, because then it's

real easy, right? It's just paper. But once you've got these designs a little bit more mature, it's a little bit harder. And there's a little bit better balance on the tension behind changing things like to sort of absolutely reduce the risk versus keeping things cost effective, right? So I'm not saying it's bad for NASA to be involved early on, it can be quite beneficial, but you don't want us necessarily dictating those design solutions because it goes against the strategy that I talked about earlier and all the benefits associated with that. So I was much more in favor of extending the Space Act Agreement period longer than we did. In retrospect, I feel like we did pretty good because there were people that wanted us to immediately go to a cost plus contract for one contractor in the early, you know, like 2012,

right after CCDev2, they were like, go to, you know, actually after CCDev1, they wanted us to go to a cost plus contract, which was completely incompatible with our strategy. So the fact that we were able to go three-ish more years under Space Act agreements was probably a good outcome. I would have liked to have gone a couple more years and gotten those designs a little bit more mature. In retrospect, it was probably about right, but that was one of the things that I fought hard for and kind of had to compromise on. The other one is... You also have the benefit of now and here we sit in 2021 being totally right about going down to a single contractor like unfortunately

we're in a situation where you're like yeah i mean it's kind of the the bad case but this is how it worked out and this is this is why we wanted it you know we had those days with cargo with both antares and falcon 9 having issues at different points in their lifespan. So, you know, you've had these events that you can point to and feel good about yourself, I'm sure, even when they are an unfortunate scenario for the companies involved. That's a great point, Anthony. We had a lot of pressure not only to go to cross-plus contracting but go to one contractor. I was very confused by that. I mean, competition has such obvious benefits to the government.

But again, it was such a change. We had never done that really before. We always put all our eggs in one basket and made sure all, you know, just put the full weight. Make it a good basket. Exactly. And that's what drives up the cost, right? You only get one shot. It's got to be perfect. It's got to be great. And so that's part of the reason why it drives up the cost, right? But to me, competition, I've seen the benefits of that since I was in the private sector for 20 years before I joined NASA. I've seen the benefits to that so many times.

And that was a key, key part of our strategy. I probably should have said that in the beginning. So yeah, being able to look back on that now has definitely been gratifying, let's put it that way. The second thing was the way we purchased commercial crew. We had a lot of debates about that. I don't know if you were around during those debates, but it centered around this sort of rental car versus taxi cab model. Do you want to take, do you want to buy the entire spacecraft or do you just want to buy a seat? And I was very much in the favor

of just buy a seat. That's all. We're really just wanting the transportation up and down. And that allows the companies to sort of mix and match, right? And be able to manifest that mission with private astronauts as well as NASA astronauts, whatever's most efficient. We have our requirements. We went for, if you want to build a six person capsule, that's great. You can do that and mix and match however you want. I thought that would be the most effective way and argued strongly for that kind of concept. way and argued strongly for that kind of concept. We ended up not doing that. We ended up buying the full spacecraft so we get the full capacity. And only if there's excess capacity do we allow SpaceX and hopefully Boeing soon to sell that excess capacity to others. We're almost never going to have excess capacity. We're going to want all four of those seats. It turned out the companies

wanted to build eight-person capsules originally, and then we said we wanted four. And over time, they kind of focused on just the NASA requirements. I kind of wish they had built a six person capsule, but it was, you know, this is our first shot. Exactly. Exactly. Right. And so, so that's kind of one thing. Maybe that will be in the next round of commercial crew. I don't know. There has been advantages to the government to buying that full capacity. I will not deny that. And we're going to have that debate when we talk about what we're going to do after this first round of commercial crew contracting. And maybe it'll turn out that buying the full capacity still makes sense. But that was one thing I thought maybe we could do a little bit differently, again,

with the eye of giving the commercial provider trade space and flexibility to optimize their business case. That's a really interesting and honest take on that situation that I really appreciate hearing. It is interesting to put into context, we've seen Axiom booking a couple flights to the ISS, and they haven't announced the other two seats on their second flight to the ISS yet. I have a couple of suspicions, but it does leave open a question of like, in the future, if they have, you know, one of their own astronauts and two customers, and they've got an extra seat, is that something that NASA is in a position to take advantage of

if Axiom comes back to you and says, hey, we're only able to book three of these four seats? Or is that going to be a lot of jumping through hoops to get approved to actually buy that fourth seat if it was available? No, we've envisioned that kind of thing. We call it a mixed crew where we would have maybe one NASA person or two NASA people on there. The way we would procure it would actually be the same as what we would do one of our ISS missions. Once a NASA person goes on there, we have to certify it, right? So we would send that spacecraft through the full insight and oversight process. We would follow that along. We would eventually certify that spacecraft to take a NASA person. We are doing none of that for the private, the Axiom private

astronaut mission. And we did none of that for the Inspiration4 mission. That was entirely regulated by the FAA. And NASA is not a regulatory agency, nor do we want to be one. We're an exploration agency. But when you put a NASA person on it, we have to certify it and it has to go through that process. So we could certainly do that. It would just sort of flip the way that spacecraft would be launched. And we would bring sort of the full weight of oversight insight to that. But we could certainly do it. Within the TCAP contracts, we can purchase one, two, three, or four seats and for any duration. Now, we've only used it for the full six-month durations and the four-seat configuration, but the contracts are flexible enough to buy any number of seats for any duration. So we could do that if we wanted to.

for any duration. So we could do that if we wanted to. We're drifting closer to the commercial LEO destinations and some topics that I've, you know, I kind of found a few things that I am interested to learn from as we enter this new era of a new version of this commercial program. Sitting in the Beltway, I have to bring up Congress at some point. And looking back to the early days of the commercial crew and cargo programs, there was years that the programs were underfunded from Congress and that you were operating on limited budget. It's from somebody outside of that, it's unclear to me exactly what kind of effects that had within the program, maybe some of the milestone planning that you went under in those years. Because eventually, the funding did get up to that level. You got

significant amount of buy-in from Congress on these programs. Certainly, as you mentioned, as you proved out cargo, that argument got a little easier. But that doesn't change what happened in the early years of these programs. And I'm just wondering now if you can look back and talk about how it is to manage those funding levels over years, what things had to change in the process of operating these programs as that kind of stuff happened. It's a very flexible mechanism. We can slip the milestones if we need to. We can split milestones. And you don't have to pay sort of what's called equitable adjustments, which you normally have to pay in a cost plus contract or maybe even a fixed price contract, depending on how it's written. Would that be like if you don't have enough in the budget to pay them that one year, you have to make it up in the future or something like that? Or you just slip the milestone to a future year and you get another years of appropriation. So that's – with cargo, we didn't have that much trouble. It was very, very low money.

Our focus and Congress's focus and everybody's focus was on Constellation at that time. And kind of – COTS kind of flew under the radar screen, thankfully. When I look back, it was kind of nice because we did not fly under the radar screen. Thankfully, when I look back, it was kind of nice because we did not fly under the radar screen when it came to crew. We were front and center, man. So when it came to crew, we did have a flexible contracting mechanism. So when we weren't funded fully in those early years, we were able to deal with it contractually by, I would say, mostly by paring down our aspirations. The way we did it for CCDev2 and for ICAP, if people know those acronyms, sorry, if you don't, those are the two successive phases. We did CCDev1, then 2,

then ICAP. Those were all Space act agreements. Um, what we did was we said, okay, here's your base set of milestones. But if we, and that was usually based on a more, uh, uh, constrained budget environment, but if we got the full budget environment, I was like, Hey, then we could actually add milestones. So let's put optional milestones into those agreements. So both those contracting or those agreement rounds had base milestones and optional milestones, which we exercised, I think, for both of them. So that was a strategy that we employed to sort of deal with this situation that we had early on.

And I would say the only real effect it had was sort of slowing down our aspirations, right? I mean, we had a goal of 2015 for Kuru when we first started it in 2010. I slipped to 2017 primarily because of the budget cuts. And then after that, it was primarily technical issues that we ran into that sort of stretched it out because by that time we were getting full funding. So, you know, and looking back, it was very, very frustrating for me at the time, again, because I saw this vision, I really wanted to get out at the time. But, you know, now that I'm older, wiser, hopefully wiser, I'm definitely older. A couple of flights. A couple of flights under my belt. Yeah. I was like, you know, again, we were asking Congress

to take a very, very big leap of faith in how we have been doing this. And frankly, just a lot of them were not comfortable with that. So it took time, which I think is okay. We're always frustrated in the space industry. We want things to happen sooner than they happen. And these things take time. And this was a huge change. When I think back on everything that we've been able to change with crew in terms of human spaceflight, it's been amazing. I mean, what was just shocking before is now commonplace, right? Reusability, shocking in 2010, 2011. Now it's commonplace.

You don't see a new launch vehicle proposed that doesn't have some element of reusability. That's happened in a decade. That's pretty fast. That's pretty fast. So I think in retrospect, I might have been a little less patient, a little harder in my judgment about the detractors from commercial crew. And now looking back on it, it seems like that wasn't so outrageous and just needed some time and we needed to perform right. We needed these companies to hit their milestones, hit their tests, show some progress and capability. And I think incrementally we were able to get more people comfortable. And obviously we got full funding. I think it was 2014, 2015, we were getting full funding by then.

So looking ahead to commercial LEO destinations, you're in a similar environment funding-wise, commercial leo destinations you're you're in a similar environment funding wise and maybe not similar enough in uh the like motivations behind the funding levels that we're seeing make their way through congress it's different in that you know i think we can look back and say there was um resistance to this new model in you know five ten years ago the the fight that's happening now to get funding for commercial leo destinations is i don't know where it's sourced i won't try to put words into people's mouths but it just seems like you know the iss has a lot of momentum and and that's kind of the way things are there's a lot of people that like the iss existing i think you know the the space nerds out here like us are like yeah

but you've got to have a little bit longer of a horizon and and know that the future is changing at some point so you you want to see you, the work that's undergoing now to actually get full funding, but that seems like that's going to be an uphill battle. So are there, are you using a similar milestone and optional milestone idea here with these commercial LEO destination contracts? Do you foresee that, you know, taking those lessons that you learned from the underfunding days of cargo and crew and applying that in the same way here? Or is there a different strategy you can entail? Yeah, so there's two parts of that question. One kind of why have we not received full funding to

date? And then how are we going to deal with that in the future? I'll give you my personal opinion on the unfunding to date part was the commercial LEO development program. I think it was first introduced in the budget about three years ago. And I think we didn't have a great strategy at that time. I think, and I can't speak for NASA. While I work for NASA, only the administrator. Yeah, right. I'm kind of down in the weeds. but I'll just give you my opinion.

I feel like our strategy in those first couple years was not very compelling. Honestly, I think NASA was kind of conflicted. We hadn't really been, we weren't really all in on the retirement of the space station by 2024 for a variety of reasons. I just don't think we had a consensus within NASA. And I think that translated into a strategy that was not really compelling or clear to our stakeholders. So honestly, I think Congress accurately interpreted that as, hey, NASA may not really be ready because I don't understand how this strategy is going to work. I didn't really understand how it was going to work.

I wasn't responsible for the program back then. There were a lot of others. They were working hard. And they came out with the strategy that they came out with. But I will say it just wasn't compelling. And so I don't blame Congress for making NASA say, hey, you got to do better. We're not really convinced here. So I got responsibility for the Commercial Leo Development Program about a year, maybe

a year and a half ago. And we revamped our strategy in concert with the ISS program so that we weren't disconnected. We're like, hey, if we've got to do this, we've got to do it together, right? Quite literally, in the case of Maxine. Quite literally, actually, yes. And it wasn't just me, you know, it was it was sort of the time and things were changing. And, and there was a, it was more of a recognition that there was going to be an end of life for ISS. Clearly, it was getting older. So I think it was a combination of events. And we revamped our strategy over the last year,

we had new leadership that really challenged me to make sure and my team to make sure that the strategy was cogent, made sense, made sense with ISS and that they were on board. And then we rolled that strategy out over this last year. And so I'm hopeful that Congress and our stakeholders in the administration have found that strategy to be better, more compelling, and I'm a little bit more optimistic that we will see better funding levels in the future. We originally thought we were going to go with a set of base and optional milestones for destinations, but we kind of went away with that. It really makes sense for, hey, we've got four years. We want to spend the next four years, about 2025, from now to about 2025, doing

the design maturation associated with these Space Act agreements. So I was like, give us your best set of milestones for this four-year period. And that's what we put under the agreement. We do not have optional milestones for these destinations. If for some reason we needed to extend the Space Act agreement phase, we could do another round, another competitive round, a lot of options. But I'm very comfortable with the destinations that we've got, the milestones that we've got, and the amount of progress that these guys are proposing they're going to make. Very comfortable. Now, the interesting part, and maybe this goes back to the unexpected commercial success of Falcon 9, these companies are putting a lot of their own money into these because they have the idea on different ideas on how they will take these to market, what markets they'll find. Blue Origin, Sierra Space had a whole rollout where they talked about that strategy behind Orbital Reef.

NanoRacks, we just had them on the show talking about Starlab and some of the strategy behind Orbital Reef. Nanoracks, I've actually, we just had them on the show talking about Starlab and some of the strategy behind that. So when you're in those environments where they have these other goals and NASA is just a customer, do you have a significant amount of insight into why these companies are putting that amount of money into these platforms as well? To tie back to what we talked about already. Did you know that SpaceX was looking at the launch market as aggressively as they were? And that was a major reason as to why they were even interested in commercial cargo.

Do you care about that sort of ulterior motive to, to put it in, I guess a negative light, but is that a significant driver to, to, for the NASA side to partner with certain companies that have aggressive plans of their own? Because in some ways that could help smooth the unpredictable funding curves if someone is sufficiently motivated to get their thing to market. Is that something that goes into your calculation? would say primarily it's the deal, right? What are you bringing to the table in terms of your financing, in terms of your technical capability and your concept and your ability to meet our requirements? What's the deal you guys are proposing? It does help to understand what is

motivating their desire to make a particular deal. I don't think that's necessarily the driver. There's all kinds of motivations in companies as to why they do certain things. And it has proved helpful to sort of know what those are, but you just need to know that the company is committed. Are they committed to this? And that commitment shows up in their proposals in terms of their cost share, in terms of how they're going to do it, in terms of the resources, personnel resources, the leadership that they put in. You look at all of that and propose and say, hey, this is the best deal. I'll give you a great example. Orbital Sciences, when they came in with their cargo system, what I believe and what they told me at the time was they wanted this medium

class launch vehicle, which was the Antares. Now, it was the Taurus II, I think is what they called it originally. Yeah, good memory, Anthony. And now it's the Antares. It was sort of a medium class launch vehicle that was very well integrated with their Starbus geoconstellation or geocommunication satellite. That was a relatively medium sized geoconstellation or, sorry or geocommunication satellite. That was a relatively medium-sized geoconstellation or, sorry, geocommunication satellite. And so it didn't have a really good fit for launch vehicle. You had to have a dual launch, maybe, you know, with Ariane 5 with a major primary customer and they're a secondary. Didn't have a very optimal launch vehicle for that

spacecraft. Orbital Sciences looked at this and says, hey, I can do the whole package, right? I can do the launch vehicle that is exactly sort of performance-wise tied to this, I think they called it the Starlab satellite bus, and you got a nice fit there. So strategically for the company that made a whole lot of sense, right? Uh, in addition to having this launch vehicle that may launch other things, um, and be able to do this cargo transportation thing. So I think that was a strong motivator on the part of orbital sciences. You can ask them, but that's what I was told at

the time. And it did make a lot of sense to me. Uh, it, very well performance wise, it was a good fit for that kind of that kind of payload. So that was a good, you know, and Elon had all you know, he had grand motivations for what he wanted to do was with SpaceX and Falcon nine was sort of what well, the Falcon one was the first step, but the Falcon 9 was sort of a major step forward in that direction. And, of course, he's got a long-term vision. He's never hiding anything. He's never hiding anything, right? And the Falcon 9 fit ours too, right?

A reusable spacecraft or launch vehicle that was going to be very cost-effective that fit the Dragon very well and also fit this geo-communication satellite market very well as well. So, and then we've got these destinations. Each company, I think, has a slightly different take on the market. And I think that's great. We'll get the next three or four years to let them fight it out and see how the markets emerge. I'm super excited. I just can't tell you how excited I am to be able to make these awards and have U.S.

industry now focusing on destinations. Like I said, that's a third leg in the stool. And I think when we bring this all together, you're going to find a self-reinforcing and self-sustaining marketplace with these three capabilities. And then NASA really hopefully will be able to get out of this game. Hopefully we won't have to certify spacecraft in the future. And that will just be an FAA regulated thing. We can just buy a ticket. That is my long-term vision. I was not shy about that in 2011.

And people are like, that's crazy, Phil. I think it's within reach of certainly then maybe the next generation of spacecraft where NASA personnel just buys a ticket. It is regulated by some other government agency and other people are on that flight, maybe stop off at this CLD. Maybe it stops off at another one or does something else. I mean, just the future is just, it's within grasp. It's going to take longer than we all want, right?

Anthony, we're all talking, oh, we want this tomorrow, right? It's going to take longer than we all want, but it is certainly envisionable, if that's a word. You know, you can see it really happening. It's not such a stretch to say, we're going to see these flights much more frequently. Like you say, we haven't seen the crew market really take off, but we just certified SpaceX like a year and a half ago, right? It was not that long. Actually, it was just, yeah, it's like about a year and a half ago.

So, and we've already seen, you know, Inspiration4. We've seen these private astronaut missions. In fact, these two Soyuz missions, the one where they had the movie star and the director, and then the current one that's up there now with the two Japanese citizens, those would not have happened if we had not had commercial crew. We'd be buying all the Soyuz capacity, right? They weren't selling Soyuz commercially. Now that we've got a certified US system and we're sending our astronauts up, Russians have a little bit more capacity. And so now they're selling Soyuz seats. That was enabled by commercial crew, in my opinion. So future, you know, I don't want to be sounding, again, overly optimistic, but I really feel like the future is bright uh for commercial human space flight yeah you're you're getting on something that like i've stopped being

annoyed at schedule slips or you know delays because it that's inevitable but what i focus instead on is the momentum and you're right like you know oh spacex only flown what 18 people to space in the last you know year and a half like why isn't it more than that and it's like okay you know call your jets they just flew 18 people to space since the last year and a half. Why isn't it more than that? It's like, okay, call your jets. They just flew 18 people to space during a pandemic. Everything's going to be alright. We're heading in the right direction here. Now, on the commercial LEO front, you have these two branching programs, really. You have the free flyers that we're talking about, mainly what we were just talking about, but Axiom's building out

a module and a couple of modules that are going to actually be attached to ISS for the next couple of years. I'm curious to talk about the differences between those programs, because they do seem like, you know, similar motivation, but different end goals, really. The free flyers are very analogous to what is happening on station today. It's the obvious extension for NASA talking about we want to commercialize LEO. It's like, okay, so commercial space stations. That makes a lot of sense. Right.

Extending at the ISS is less clear because there's a bunch of facilities on ISS that NASA already uses and is going to continue to use. And what Axiom builds out may or may not be super helpful to what nasa astronauts who are like doing their job um need to do up there so how do you see the the um i forget the all the the acronyms that you used on this that one was c diff which is a medical term as my wife's a physician it totally ruins that acronym for me yeah we almost didn't go with it for that reason yeah it's a whole different thing but um theiom is C-D-I-S-S. The Commercial Destinations ISS, that's Axiom.

Commercial Destinations Free Flyer are the three that we just awarded. So how do you see the Axiom side of this? Clearly, in the long term, they talked about having a free flyer station based on what they put at ISS. But what do you see that NASA is there to gain commercially with allowing Axiom to build out a whole extension to ISS? Yeah, so I would sort of alter a little bit what you said. The end goal is actually the same. If you think about it, it doesn't really help us post-ISS to have something attached to the ISS, right? So the whole strategy for the Axiom concept was, so sort of, again, walk before you run. Let's attach something to the ISS. It's a

little bit easier. You can feed off some of the ISS utilities, power, thermal, data, and then sort of build up your experience base and do some things that we don't allow you to do in the ISS. There's lots of rules in what you can do in the ISS. But if you have your own module that you own, your freedom to do and sort of test out certain markets is a little bit less constrained than what you can actually do in the USOS, the operating system of the United States ISS portion. So that was part of Axiom's strategy, right? And so that's a little bit easier. You can attach to the ISS. We did it with Beam. And then you can add certain modules, do it very incrementally. That's also a potential advantage. And then eventually, you're going to have to be a free flyer. So at the end of the day, that's why we did CDISS.

And we did the axiom concept was for the eventual detachment and to operate as a free flyer. We thought this was, it's sort of a dual path to get to that free flyer capability. We're like, Hey, we probably could open up a port and have that port available for this Leo commercialization thing. You know, we ask ISS to do a lot of things, science, research, crew accommodations, a ton of stuff. I mean, ISS is an amazing, amazing platform. We're like, okay, let's add to the job of the ISS to help us with this LEO economy. Let's carve out one of these ports, and if somebody wants to make it available, they can. I'm sorry, if somebody wants to use it to build out an eventual free fire, they can. Obviously, another strategy is just go direct to orbit, right?

That way you don't have to mess with all the ISS safety requirements. There's pros and cons of doing each, and we thought we would enable both, right? There had been some work done prior to the COMLEO program on adding modules to the ISS. So we were a little bit further along, and that's why we were able to release that RFP. And then we got relatively drastic budget cuts.

The first year, I think we got $40 million when we asked for $150 million. The second year, we only got $15 million. Third year, $17 million. We just were not going to be able to fund the free flyers in that kind of environment. So we went on this sort of strategy revamp, communications with our stakeholders, and also redoing how we were going to do the free flyer acquisition all at once. And that gave us a little bit more confidence. Let's go ahead and make these awards. Let's do them through the Space Act Agreement.

If we don't get the full funding, we can adjust the milestones. And so it all sort of came together. So the eventual thing is the same. The pros and cons for Axiom, it allows a little bit earlier revenue generating opportunities, right? With the free flyers, you don't get much revenue at all until you deploy. They're going to be able to do it incrementally. They are going to have to deal with the ISS safety requirements and be able to operate as an independent free flyer. So there's pros and cons of each. And again, the benefits of competition, let's let them fight it out. We'll see where it goes. And hopefully we'll be able to contract with more than one destination in our next phase. That's my strong hope. When we have just one, it will be just as tenuous as it is

with the ISS today, as great as that is, and as great as the team is in operating that safely, one unexpected contingency, we could lose our continuous access to space that we've had for 20 plus years. Like you said, we've seen the benefits of that. I very much hope that we can have that when we go to services. But we'll have to see.'m curious, your department is focused on the capability here. If you're in your wildest success case, you've got Axiom flying in a couple of years as a free flyer, you've got two funded destinations that are coming out of the free flyer contract, you've got three space stations

that you've just bootstrapped in low Earth orbit. Whose job at NASA is it to figure out what to do with all that capability on orbit is that something that you're similarly concerned about or is it like yeah i built you something great uh nasa astronaut office please take over how does that interaction work within nasa um like well with crew uh my office developed the capability and now we're operating it. So that stayed with me. With cargo, I was part of the leadership group that developed it. And then after we got done, we handed over operations to the ISS program. So the ISS actually manages the CRS contracts, the cargo transportation contracts. So both models, we've employed both models. Both models could work. It's not one way

or the other. It's kind of incremental. So right now, it's my job and the commercial LEO development program at JSC. Program office, we've established that last year. Got a program manager, Angela Hart, excellent person to lead that effort. And it will be our job collectively to determine what our requirements are for the post-ISS timeframe. That is what will go into the contract. And we need to have the capability to continue to do our research and meet our requirements in low-earth orbit. So it's a little bit of back and forth, right? It's not one, you do one thing and then you turn it over to the users.

We have to understand what the user requirements are and what the use case is, sort of what the demand is. And then hopefully develop a capability that can meet that demand with some excess capability, you know, that they can sell to other customers. And then we will operate it. And I suspect if we keep the current crew model, it will be my job or my predecessors or my, you know, whoever takes over my job eventually and Angela's job to procure the services necessary to do and meet those requirements for a variety of users at NASA. Right. There's a whole bunch of users of the ISS currently. The crew office uses it for training. The biological and physical sciences group uses it for all the research that they do. CASIS, the Center for the Advancement of Science and Space,

uses it for all the various things that they do. We partner with international non-US government agencies for their research, right? And the ISS does all that. We want to keep doing all that stuff in the CLD paradigm. We're trying to figure out exactly how to make all that transition happen and make sure that we keep those partnerships strong with us, the U.S. government. That's a very important thing for our leadership status in space. We want to maintain those partnerships that we've developed under ISS and translate them into the CLD era. So all those things are on the plate. And that's kind of how I think that would play out. I hope that answered your question. Yeah, absolutely. And the international thing is something I wanted to bring up as well. If, you know, ESA, JAXA, some of these other agencies that work on the ISS today, if they had interest in chipping in to help develop this commercial LEO market, is that something that NASA is open to with them supporting these programs directly? Or do you think that's more up to these companies to go ahead and strike up a conversation with

ESA, for example, directly? If Blue Origin or Northrop Grumman or NanoRacks wants to approach them and say, hey, we're building this thing out with NASA. We'd love to work with you on this as well. What is the arrangement there that would be best? I don't know which one would be best. And since I don't know, I think all of those are on the table, right? We're not going to dictate to ESA how they're going to interface with their CLDs. I think we are going to enable partnerships with NASA. If they want to go through and partner with NASA for the utilization of these CLDs, you can do that. I envision, this is not a policy, I'm not stating NASA policy.

Another field take, a second field take. Right, exactly. Thanks. I would envision them also being able to contract directly to a contract with the CLD providers if they wanted to do that. I would like all those options to be open to sovereign clients as the companies like to call them. I don't feel like it's necessarily NASA's job to dictate one or the other. I'm a big believer in laissez-faire when it comes to this. Let the sort of market dictate how it's going to go. and laissez-faire when it comes to this, let the sort of market dictate how it's going to go. But I could see a scenario where some non-U.S. government agency only wanting to partner with NASA. They don't want to necessarily write a check to a U.S. company to do this. They'd rather spend

some money within their own country's aerospace industry and do some sort of partnership with NASA. And in that case, I would like to enable that, right? Because that increases the whole demand pie. If you said, no, we're not going to allow that, some countries that may wanted to do some microgravity research wouldn't do it, right? But if you did want to just go direct, I think that should be fine too. That's my personal take. We should allow all these sorts of things. And I think that's the best answer for the overall demand piece. I think it just makes the pie bigger in terms of what the market capability is. And obviously these CLD providers, they want as big a market as they can possibly find. All right.

All the things are on my list, but I have a question totally out of left field, actually out of the left side of your background that I'm looking at here. I've been staring at this new Shepard model that is on the desk behind you, and it makes me curious about suborbital crew. I don't know if this is even in your department. It is. No, it is. I would love to hear the status of that, if that's something that is still actively being worked. We're seeing a lot of suborbital flights these days, so I figured per that model, I would throw it in this conversation as well, if you have something to share on that.

Not a lot. I would say we're sort of in the planning stages on how we are going to utilize this capability. We're not quite sure what the demand is within NASA. We're starting that conversation as well. We're not exactly sure how we are going to do the safety assessment. Again, if we're going to put NASA people and say, hey, this is part of your job, we have to ensure to some extent that it's safe. Now, these are FAA regulated flights. They're

flying today safely. So that's a very different paradigm, right, than we've ever done before. We've usually established the requirements ahead of time, verified and validated those requirements are done, and then utilized it. Well, now these spacecraft, they're built. We can't come in and say, no, we want you to change this because we're going to be a relatively small user. We can't be dictating a lot of design changes.

So we've got to figure out a way that NASA can convince ourselves that these spacecraft are safe. They look very good, but we don't have a lot of insight and knowledge into their design and operations capabilities. So we're starting to have that conversation with them. We need to come up with a really good plan for how we're going to both satisfy that this is safe enough for our NASA astronauts, but also not so onerous that the companies are willing to partner with us as well. There's no playbook for this, Anthony. We've got to come up with it from scratch.

And so it's going to take a little bit of time to figure out that sweet spot. I really do not want to be coming in with a whole bunch of, you know, imposing requirements. I'll give you a great example that I really want us to try and avoid. You know, we had our own aircraft to do these parabolic flights for many, many years. It was a Vomit Comet. It started as a KC-135, and then it was a C-9 aircraft. And then Zero-G Corporation came in, FAA-certified aircraft that could do these parabolic flights. And it's like, hey, you don't need to maintain your own aircraft, NASA, just buy services from us. That was also kind of a fight, actually. But we got over that. And now we were procuring services from zero G. One of the use cases for that was to do these combustion experiments that needed to exhaust from the aircraft some of the resulting particulates

from the experiment. So obviously you needed an exhaust port and we had that, but Zero-G didn't have that. So we're like, hey, this is a requirement. We need you to cut a hole in this fuselage and recertify it through the FAA. And Zero-G did that. Turned out we didn't use it that much. And so I don't know if Zero-G ever made their money back on doing all that, that they needed all those hoops that they needed to jump through in order to really satisfy NASA's customer. We've got to be really careful, right, to not do that because it makes Zero-G, it potentially made Zero-G less competitive

and hurt their business case. We want to help their business case, right? So we have to be very, very careful about, is this really a requirement? Can we do it some other way? Cause it's going to have a big impact on the provider. Well, if you can't, then maybe you go ahead and do it. You're going to have to pay because you know, you're the only one that needs this particular thing.

So you kind of got to work it out. You got to, uh, it takes a, that, maybe some people are thinking we should be farther along with subsea. That's what we call it, suborbital crew. But it's complicated. It's hard. We got to figure it out, got to figure out what the demand is. I think that's all going to take many months, maybe even a year or two, until we're actually buying flights. I'm not sure. We don't have a timeline right now. I'm not making any kind of announcement. But that's where that is right now. I mean, honestly, even if a NASA astronaut never sets foot in one of these vehicles, it sounds like an excellent exercise, because this is like the ultimate version of what you've

been working for all these years of taking advantage of commercial capability. If NASA gets out of this purely the reps trying to figure out how to make that work so that when there are systems in the future, you're more prepared to take advantage of it, that seems like a win enough in my books. That's exactly right, right? I'm hoping there's more spaceflight capabilities that we can just buy services from. Don't have to be involved at all in the development. That's exactly what happened with these suborbital things. We didn't give them any money. We gave them a little bit of technical expertise. There was some interaction with us in some of these companies for certain things, but for the most part, they did it

themselves. And so now I think it's incumbent on us to figure out how to play with them instead of the other way around. That's a very different paradigm. For NASA, you know, we used to be in the driver's seats for, you know, 40, 50 years of human spaceflight. So that's where that is. Well, that's a perfect place to end it. Thank you so much, Phil. This was honestly probably my favorite conversation I've had on the podcast yet. We've gotten a lot of interesting areas. I loved the honesty on your takes historically.

So that was awesome. Thank you so much for chatting with us. It was my pleasure. Hopefully I won't get in trouble. I think I'm okay. But you know, you're free to use anything I said if I was. So thank you for that compliment. I appreciate it.

Thanks again to Phil for coming on the show and to Stan for making the connection that made this possible. As I told you up front, that was an incredible conversation that got to places that I didn't quite expect, but I totally hoped we would get to. And just all that context really helps put some of the things that we're seeing now and into the near future in perspective at least for me i hope it did for you as well so if you like this kind of thing i need to say thank you to everyone who makes it possible over at managing cutoff.com slash support there are 755 of you supporting the show every single month and that includes 39 executive producers thanks to simon lauren ch Chris, Pat, Matt, George, Ryan, Donald,

Lee, Chris, Warren, Bob, Russell, Moritz, Joel, Jan, David, Eunice, Rob, Tim Dodd, the Everett Astronaut, Frank, Julian and Lars from Agile Space, Tommy, Matt, the Astrogators at SCE, Chris, Aegis Trade Law, Fred, Haymonth, Dawn Aerospace, and seven anonymous executive producers. Thank you all so much for making this episode of the show possible and as i mentioned on the last show and i will be doing a full-length show on in uh maybe next week sometime uh this week is the last week that i'm working at my full-time gig i'm going independent starting friday uh and that's in an effort to do more of this to do more of off nominal the other show that i do with jake robbins uh if you're listening to this podcast on the day that it comes out on December 16th, this evening, 4 p.m. Eastern, I'll be doing Off Nominal Happy Hour over on YouTube with Jake, and I'll be talking all about this decision.

You'll hear a lot more of it on the main feed next week, but I just want to say thank you, because all of you out there supporting gives me this launching pad to make this jump, go independent, and do more of this that you like and that I like to do so I'm really excited for where this is going to go very very thankful for all of you supporting it that's making that possible could not do it without you so this is a good time to hop on board if you've uh not checked out what I've got going over at mainenginecutoff.com support I thank you all so much and uh until next time that's all I've got for you if you have any questions or thoughts hit me time, that's all I've got for you. If you

have any questions or thoughts, hit me up on email anthony at managingcutoff.com or on Twitter at wehavemiko. And until next time, I'll talk to you soon. Bye.