Dear Chairman Rockefeller, Chairman Gordon, Senator Hutchison and Senator Hall:
Section 11 19 of the National Aeronautics and Space Administration (NASA) Authorization Act of 2008 directed the Director of the Office of Science and Technology Policy (OSTP) to "submit to Congress a report setting forth the assessment of the Director as to the capacity of the United States industrial base for development and production of engines to meet United States Government and commercial requirements for space launch vehicles." In support of this effort, the Office of Science and Technology Policy (OSTP) tasked the Science and Technology Policy Institute (STPI)-a Federally funded research and development center that is operated by the Institute for Defense Analyses and provides analytic support to OSTP-to provide an assessment of the U.S. space launch propulsion industrial base in terms of the factors identified in Section 11 19 of H.R. 6063. The information and findings provided below are based upon the results of STPI's assessment, supplemented by other data and analyses available to OSTP.
The following assessment is based on extensive interviews with both industry participants and government stakeholders. Specifically, this report incorporates information and insights provided by representatives of nine companies, including all of the domestic propulsion and launch vehicle companies cited in the report plus additional firms in the entrepreneurial sector of the space launch industry. Further input was received from government launch customers and program managers throughout the Department of Defense and National Aeronautics and Space Administration (NASA), as well as from their supporting analysis consultants, studies, and service providers. Insight also was gleaned from numerous prior assessments of the space launch vehicle and propulsion industrial base.
The space launch industry regularly evaluates new concepts and potential markets, including proposed next generation launch vehicles and systems aimed at potential use in the 2020s and beyond, as well as new markets that include space tourism. In addition to activities supported by the U.S. Government and its traditional industrial base, the U.S. space launch industry boasts an energetic entrepreneurial sector that actively experiments with new vehicle and propulsion concepts. It would be beyond the scope of this assessment to consider all such ideas and concepts. Accordingly, the current assessment focuses on:
Existing markets and requirements. Evolving market sectors such as space tourism appear to offer real business possibilities for a number of players and hold the promise of dramatically changing the space launch industry over time. Nonetheless, these markets remain unproven at this point, and there are no active launch capabilities yet available to serve such segments and demonstrate their potential. As such, these potential markets (and corresponding propulsion requirements) are not addressed in this analysis, which instead focuses on more fully established areas of demand.
Existing propulsion capabilities and actively funded development programs with defined requirements. A number of emerging U.S. propulsion providers are exploring new fuels and potential engine or motor designs. Although such development efforts could lead to significant new propulsion capabilities in the future, these concepts are still largely undemonstrated and the development timelines uncertain. Because these programs do not appear to represent near-term options for supporting known U.S. Government and commercial requirements for space launch vehicles, this assessment emphasizes existing capabilities and development programs that are both actively funded and expected to provide capabilities to meet identified requirements.
Over the five plus decades since the beginning of space launch activities, the U.S. and the world have become increasingly reliant on space across a broad range of government and commercial activities. Critical government space missions include defense and national security needs, science and technology, weather forecasting, and positioning, navigation and timing services. Likewise, companies make extensive use of space in support of voice and data communications, remote sensing and observation, and positioning, navigation, and timing applications. Retaining reliable access to space is crucial to enabling (and acquiring the benefit of) these space applications and activities, and space launch propulsion systems in turn are critical elements of the space launch vehicles that enable such access.
At present, the U.S. space launch propulsion industrial base provides a diverse range of technological capabilities and more than adequate production capacity to meet most currently identified U.S. Government and commercial requirements for space launch vehicles.'
Furthermore, there are no articulated, established space launch requirements that are beyond the current development expertise of the U.S. space launch propulsion industrial base. Nonetheless, this U.S. industrial sector is under significant stress, due largely to low demand.
Despite the importance of space to government and commercial activities, the U.S. space launch industry has seen a decline in launch rates over the past decade. While this is driven in part by the exceptional reliability of satellites and the limited need for new capabilities or services, the continued rise of foreign launch service providers has also played a significant role. On the commercial side, domestic launch service providers currently carry few commercial satellites - the majority of the world's commercial launches take place on foreign systems, primarily due to lower service prices for those systems. From 2004-2008, the U.S.-manufactured vehicle share represented roughly 17% of the commercial launch market, compared with 42% for Russia, 21% for Europe, and 18% for the multinational company Sea Launch according to the FAA 2008 Year in Review report. This is down from a roughly 20% market share in the early 2000s. Moreover, future demand for commercial launch activity over the coming decade appears flat, indicating that U.S. launch providers will not be able to count on growth in global market demand to increase their commercial launch opportunities. Notwithstanding these competitive pressures, the Space Exploration Technologies Corporation (SpaceX), an emerging launch services provider, has begun to attract commercial and government customers for its family of vehicles, and successfully launched a Falcon 1 rocket carrying the RazakSAT Earth Observation satellite on July 13, 2009.
While U.S. Government launch rates have not fallen as far, government launch rates since 2000 are also substantially lower than during the 1990s. From 1995 through 2000, the U.S. Government averaged 22.6 launches per year (including both civil and military launches). Since 2001, however, the U.S. Government has averaged only 15 launches per year, and roughly comparable launch rates are projected to continue through the middle of the next decade.
In addition to such trends, key business and policy decisions have further reduced the demand for U.S. propulsion capabilities. Specifically, as we will discuss below, a substantial fraction of U.S. propulsion demand is currently met by foreign suppliers. So while demand for U.S. launch vehicles is low, demand for the production of U.S. propulsion systems is even more constrained.
Given this situation, most U.S. propulsion providers seem to have little business incentive for investing in new capabilities and technologies. Indeed, the limited volume makes it difficult for some providers even to maintain current capabilities as component and material suppliers shut down production lines and facilities and direct their attention to more promising markets - or even shut down completely. In addition, declining volumes make it very difficult for propulsion providers to hire new staff - and the uncertainty regarding long-term job prospects likely makes
the industry less appealing to entry level workforce. A potential result of such factors is a declining workforce in which key staff are increasingly eligible to retire, taking their experience base with them. This situation could in turn reduce the ability of propulsion providers to create next generation propulsion systems even if there were sufficient demand.
It should be noted, however, that there are some emerging bright spots. In particular, the U.S. is seeing the rise of a few new entrepreneurial launch services providers. With business models that emphasize reliability and cost savings rather than new technology, these providers generally are not targeting fundamental advancements in the state of propulsion technology. Nevertheless, these firms bring a new level of excitement and energy to the industry with the hope of new launch and associated propulsion systems at lower cost and, as a result, the potential for growing the market. This allows them to attract a new cohort of entry level scientists and engineers and provide hands-on experience with building and testing new engines and motors. But while promising, these entrepreneurial space launch and propulsion capabilities are still generally in the developmental stages or are otherwise not yet fully proven.