In an interview with the Albuquerque Journal, Virgin Galactic president and CEO George Whitesides said that the legislation would not affect Virgin’s plans to operate from Spaceport America in southern New Mexico. However, he said, passage of the bill could encourage other companies to locate operations there. One of those, he said, is Sierra Nevada Corporation, which is developing the Dream Chaser spaceplane and is one of four companies with funded Commercial Crew Development agreements with NASA. “Whitesides said that Nevada-based Sierra Nevada Corp., which has a $100 million federal contract to develop a prototype spacecraft, would consider locating at the spaceport if the bill passes,” the article states.

A fiscal impact report for the bill confirms this. “Two separate potential tenants at Spaceport America, Sierra Nevada Corporation and Rocket Crafters, Inc, have both recently indicated an unwillingness to move to New Mexico and operate from Spaceport America, absent this legislation,” it states. (Rocket Crafters is a relatively new and little-known company that has proposed developing a suborbital spaceplane.)

What would Sierra Nevada do at Spaceport America? Its Dream Chaser vehicle is designed to launch atop expendable rockets like the Atlas 5 that don’t operate from Spaceport America. However, the spaceport’s runway could serve as a landing site, although landing at a site other than the Kennedy Space Center could introduce some operational inefficiencies since they’ll have to ferry the vehicle back to Cape Canaveral. Spaceport America could also serve as a test site for captive carry and glide tests of the Dream Chaser; in such a scenario, though, it’s not clear it would need the enhanced liability legislation since it will not be carrying spaceflight participants.

(a) This solicitation is for the Commercial Crew Program’s acquisition to facilitate the development of a U.S. commercial crew space transportation capability with the goal of achieving safe, reliable and cost effective access to and from low earth orbit (LEO) including the International Space Station (ISS). The acquisition will be conducted as a two-phased procurement using a competitive down-selection technique between phases. In this technique, two or more contractors will be selected for Phase 1. It is expected that the single contractor for Phase 2 will be chosen from among these contractors after a competitive down-selection.

“Phase 1″ refers to the Integrated Design Phase, the next CCDev round, while Phase 2 refers to the follow-on “Development, Test, Evaluation and Certification” phase, which covers the actual construction and testing of a commercial crewed spacecraft. The passage above appears to indicate that NASA will select only one company for Phase 2, contrary to past claims that the agency planned to support the development of multiple providers. Does this represent a change in plans?

Probably not. One thing to keep in mind is a passage later in that same section: “Notwithstanding paragraph (a), the competition in Phase 2 may result in the award of multiple contracts if budget allows.” That indicates that the agency remains open to providing multiple awards in the following CCDev phase. In addition, when talking to Florida Today reporter James Dean yesterday for an article he wrote about CCDev, he shared with me a clarification he received from NASA on that issue. It turns out that the clause in question is a standard one in FAR-based contracts, and that the Commercial Crew Program was “investigating getting a waiver or deviation from this standard clause language for the final RFP.”

So, while NASA seems committed to continuing to support multiple providers throughout the CCDev program, funding permitting, this case is a reminder that the shift from Space Act Agreements to FAR-based contracts could create some issues that both NASA and industry need to be aware of.

On Friday, NASA held a follow-up forum on its plans for the “Integrated Design Phase” of CCDev, organized on only a few days notice and apparently to a modest in-person audience at the Kennedy Space Center (with a larger audience presumably watching via webcast). At the forum NASA officials confirmed that, even after getting considerable feedback from industry on the use of SAAs versus FAR-based contracts, it was still pressing ahead with its original plans to use a SAA/FAR hybrid for the upcoming CCDev competition.

“Why did we end up going to a contract when many of our partners in industry would prefer a Space Act Agreement?” asked Brent Jett, deputy manager of the Commercial Crew Program at NASA. He explained than one purpose of the CCDev program was to certify commercially-developed vehicles to fly NASA astronauts to the ISS. He said that the focus of the upcoming Integrated Design Phase was to have a mature “end-to-end” crew transportation system at the critical design review (CDR) level, as well as a plan on how to certify that system to meet NASA’s requirements in later development phases. “When you look at that objective, it’s clear to me that the purpose of the Integrated Design Phase is directly for the benefit of the US government and NASA,” he said. “When you talk to procurement and legal experts, they will tell you that since that is the purpose of this phase, that we cannot use a Space Act Agreement.”

That analysis hinges on exactly when NASA or other government agencies can use so-called “Other Transaction Authority” (OTA), which in NASA’s case is a Space Act Agreement. OTA gives government agencies the flexibility to use alternative, streamlined agreements with the private sector, but to avoid their being used to get around conventional procurement regulations, there are limitations on when such agreements can be entered into. At a Women In Aerospace presentation this summer not directly related to CCDev, an official from NASA’s Office of General Counsel described when SAAs can be used. The presentation noted that a contract is required when the purpose of the activity is to acquire goods or services for the direct benefit or use by the government. NASA’s argument—one that is not likely shared by many in industry—is that the Integrated Design phase will be primarily for the benefit of NASA, hence some form of contract, rather than an SAA, much be used. (As for previous CCDev phases, NASA argues it has been primarily helping industry accelerate their technologies for commercial crew systems that serve multiple customers, and thus is not primarily for the benefit of the government.)

Jett, as well as Phil McAlister of NASA Headquarters, emphasized that the contract that they’re proposing would retain many of the desirable elements of an SAA. The contract, while FAR-based, will include milestone-based payments, and allow companies to propose their own detailed statements of work for this phase of the effort. Companies will be exempt from Cost Accounting Standards (and the bureaucratic overhead associated with them) in this contract phase. There will also be a “balanced approach” to intellectual property, without going into greater detail, Jett said.

NASA is planning to release a draft RFP for the next CCDev phase next week, with a requirements workshop and industry day planned for October 4 and 5, respectively, at the Kennedy Space Center. The final RFP is due out by the end of the year.

NASA is not the only one who has been scrutinizing the use of SAAs for the CCDev program. In the report accompanying its fiscal year 2012 commerce, Justice, and Science appropriations bill, the Senate Appropriations Committee was critical of NASA’s use of such agreements for CCDev. While giving NASA $500 million for CCDev in 2012, one of the strings it attached was language limiting the use of SAAs in future CCDev rounds. “The Committee believes that the current practice by NASA has gone beyond what is cited under NASA’s own policy directive” for using SAAs, the report states. “Such misuse of these authorities undermines the oversight of NASA in the procurement process and threatens crew safety. For future rounds of commercial crew competitions and acquisitions, NASA shall limit the use of funded Space Act Agreements as stated in the directive in order to preserve critical NASA oversight of Federal funds provided for spacecraft and launch vehicle development.”

The question now facing companies currently involved or interested in CCDev is whether this shift from a pure SAA to a FAR-based contract with some elements of an SAA—but also likely with some greater overhead—is worth the promise of federal funding to develop crew transportation systems.

Brent Jett, deputy manager of the Commercial Crew Program at NASA, told attendees during one panel session of the conference that he was aware of the concerns industry has raised since he and program manager Ed Mango outlined their proposed approach last week. “I know there’s a lot of angst in the community about the direction of the Commercial Crew Program,” he said. “There’s a group of people out there who strongly feel that Space Act Agreements is the only way to do it, the only way a program can be successful. There’s another group of people out there—not in this room, but within the government, within NASA—who strongly feel that to ensure crew safety, a cost-plus contract is the only way to it. So it’s almost like the debate in Washington over the debt ceiling.”

Companies have made clear their concerns about shifting from the SAA structure of previous CCDev rounds to this hybrid approach, which would incorporate many more elements of Federal Acquisition Regulations (FARs). But beyond general worries about an increase in paperwork associated with the FAR, what are the specific problems with NASA’s proposed approach?

Mark Sirangelo, head of Sierra Nevada Corporation’s space systems division, said he didn’t absolutely reject NASA’s approach request. “From our company’s perspective, we don’t really have a concern, one way or another,” he said. However, the hybrid approach NASA is proposing could have some sticking point, he said, such as how to account in a FAR-based contract for the coinvestment companies are supposed to make in their systems, as well as how to account for the cost and schedule impacts of any changes imposed by NASA. “It’s not that these are things that can’t be overcome, but it’s an unusual set of circumstances, and I think that’s why many people are looking at one more round of Space Act Agreements leading to a FAR contract.”

Garrett Reisman, the former astronaut who is managing SpaceX’s CCDev-2 work, said his company wanted to stick to the fixed-price milestone-based approach used in CCDev and COTS. A FAR-based approach would require SpaceX to hire “a whole bunch more accountants” to deal with the overhead imposed by the FAR, he said. “In addition, it’s a big corporate culture change,” he said, noting that SpaceX engineers don’t fill out timecards. “It’s all an overhead burden we don’t currently have.”

How to handle the contract for the next round of CCDev might be overshadowed by a bigger concern: how much funding, if any, that will be available for it in the next round of the program. The House version of the FY12 appropriations bill that funds NASA would give CCDev $312 million, the same as for FY11 but well below the administration’s request of $850 million.

“What we really need is money, and support from Congress and the executive branch,” Jett said. Support from the executive branch is there, but Congress, given what it’s proposed so far in FY12, is lagging. He noted the CCDev budget is about one tenth the budget of the Space Launch System (SLS) and Multi-Purpose Crew Vehicle (MPCV), which combined would get just over $3 billion in FY12 in the House bill.

“I can tell you that if that number holds for the next year, it’s going to be very challenging for us to maintain multiple partners, to maintain the type of progress we’ve made, and meet a goal to fly folks in the mid part of the decade,” Jett said. “At some point we’re going to have to spend more than a couple hundred million dollars a year.”

Company officials agreed with that concern. “The bigger issue [than contracting mechanisms] is making sure we have the proper funding for this program and making sure all of us make our milestones and go forward,” Sirangelo said.

“These are the things that keep me up at night,” Reisman said. “Worrying about how we can possibly succeed with the budgets cut way down.”

The first and second rounds of CCDev, as well as the earlier Commercial Orbital Transportation Services (COTS) cargo program, have been run as Space Act Agreements (SAA), a form of contracting known in bureaucratic lingo as other transactional authority (OTA). SAAs do not have the same contracting overhead as a traditional contract, be it fixed-price or cost-plus. The COTS and CCDev SAAs have been milestone-based, meaning that NASA provides payments to participating companies based on the progress they make—which also means that NASA doesn’t pay up if companies don’t achieve their stated milestones, and can cancel those agreements if necessary, as happened with Rocketplane Kistler in the original COTS round.

At a commercial crew forum held by NASA at the Kennedy Space Center yesterday, CCDev program officials talked about their plans for the next phase of the program, which would come next year. The “Integrated Design” phase would last two years and bring participating companies up through the critical design review on their systems, the last step before starting actual construction. This two-year phase would be followed by a Development, Test, Evaluation, and Certification (DTEC) phase, which would also include the initial flights to the International Space Station.

NASA’s original intent, according to Brent Jett, a former astronaut serving as deputy program manager for NASA’s commercial crew program, was to use an SAA again for the Integrated Design phase. “As the team dug a little bit further into the Space Act Agreement, we did find several key limitations,” he said. The biggest one, he said, is that NASA cannot mandate requirements under an SAA, including for crew safety, but only provide them as a reference for industry. “Even if industry chose to design to those requirements, NASA is not allowed to tie any of the milestones in an SAA to compliance with those requirements,” he said. “That means NASA cannot accept the verification of those requirements and certify the system the way we need to for commercial crew under a Space Act Agreement.”

Jett noted that, under COTS, NASA was able to exploit something of a loophole in those rules, which allow the agency to levy safety requirements when a NASA facility—the ISS—was involved. NASA could do the same for CCDev, but only for operations at the ISS. “We would not be able to levy any requirements concerning ascent, entry” or any other portions of the flight not directly dealing with approaching and docking with the ISS.

NASA’s proposed approach for the next CCDev round, according to commercial crew program manager Ed Mango, “combines the best elements of an SAA with the features of a contract that wil allow NASA to approve the tailoring of requirements and the certification of a vehicle.” This “non-traditional contract” would continue to use milestone-based payments and also exempt companies from the cost accounting standards of the Federal Acquisition Regulations (FAR). “We believe that we are much closer to an SAA in our approach than we are to a traditional contract,” he said.

Representatives of industry present at the forum strongly objected to this proposed approach, though, largely out of concerns that, even with the cost accounting exception, adhering to the FAR would be very expensive. “Instead of taking an American flag to the station, we should have taken the FAR to the station and left it up there,” said Mike Gold of Bigelow Aerospace, referring to an American flag flown on the first shuttle mission that was left behind by the last shuttle crew, to be retrieved by the first commercial crew vehicle to visit the station. “You can’t take a traditional approach and expect anything but the traditional results, which has been broken budgets and not fielding any flight hardware.”

Others challenged the NASA conclusion that an SAA could not be used for commercial crew. Bobby Block of SpaceX noted that his company had an option on its COTS award—not exercised by NASA—to develop a crew capability as part of an SAA. Brett Alexander, former president of the Commercial Spaceflight Federation, said NASA should provide more documentation to support its conclusion that an SAA would not work for CCDev, given that past analyses, by both NASA’s Inspector General and the Government Accountability Office, have concluded that SAAs are suitable for this. “[NASA's Office of the] General Counsel has not divulged what its legal reasoning is,” he said, “and I think they need to do that—not a couple charts, not things that you brief, but a legal brief that says, ‘here’s why,’ so that we can have that discussion.”

Mango and Jett said they were open to suggestions and feedback from industry on their proposed strategy for the next CCDev round. At the same time, NASA released yesterday a “Sources Sought Synopsis”, required under the FAR as the first step in the next phase of the CCDev program if they proceed under their proposed contract strategy. “I don’t want people to think that we’re locked in to this idea of a contract,” he said, but “we need to work in parallel so that we can continue to move forward.”

Even without that issue, Bruce Dickinson isn’t interested in flying on Virgin Galactic. The 52-year-old British lead singer of Iron Maiden, who is a licensed commercial pilot and Star Trek fan, would seem to be in the ideal demographic for space tourism, but he tells QMI Media he’s not interested right now because of price and safety issues. “I think I’d want to take a long hard look at those little suborbital things before I got on one,” he said. “And for the amount of money it costs, well, I could think of a lot of things you could do that would be a lot more fun, and last a lot longer.”

Those who do want to, and are able to, fly on Virgin Galactic may be able to enjoy a little bit of a shortcut to Spaceport America. The New Mexico Spaceport Authority approved Friday a proposal to pave a road on the southern approach to the spaceport. The road, from the Upham exit on I-25, will shorten the travel time for people coming to the spaceport from Las Cruces from one hour and 40 minutes down to one hour as they will no longer have to take the current northern approach through Truth and Consequences. The money for paving the road comes from “unexpected savings” on other aspects of the project because of a “good bid climate”, freeing up the $11.5 million needed for the paving.

That decision, as well as the FAA’s award of a commercial space transportation “center of excellence” to New Mexico State University, get the seal of approval of the Las Cruces Sun-News in an editorial Sunday. With a greater emphasis on commercial spaceflight emerging in national space policy, “NMSU and Spaceport America are poised to lead the way in a burgeoning new industry with limitless potential.”

In Virginia, new governor Bob McDonnell expressed his support for funding for MARS in a speech to state legislators Monday. “Governor Kaine committed to invest $1.3 million in the Virginia Spaceport,” McDonnell said, referring to his predecessor, Tim Kaine. “We can make Wallops Island the top commercial Spaceport in America, and I ask you to keep that money in place so that we can aggressively recruit aerospace companies and promote space tourism initiatives.”

A day later, New Mexico governor Bill Richardson, a staunch advocate of Spaceport America, mentioned the spaceport in his speech. “I’m pleased to report that Spaceport America is ahead of schedule and under budget,” he said in his “State of the State” address. “For those who doubt if the Spaceport will bring in business, you should know that Virgin Galactic has over forty two million dollars deposited for more than three hundred reservations.”

Richardson also called on legislators to “pass legislation allowing participants to assume the risks of spaceflight.” That’s a reference to the “Space Flight Informed Consent Act”, legislation introduced into the state Senate this year that would indemnify vehicle operators from claims of liability provided that spaceflight participants sign a waiver (with the exception of cases of “gross negligence”). Richardson noted the legislation is needed for New Mexico to stay competitive with Virginia, which was the first state to pass indemnification legislation, in 2007, as well as Florida and Texas, which also passed related bills since then.