SpaceX Secures Second Manned Spaceflight Mission

Destination: International Space Station. But who will win the gold medal for getting there first? Image source: NASA.

Two years ago, NASA tapped Boeing (NYSE: BA) and SpaceX to run Commercial Crew Transportation Capability (CCtCap) missions for it, ferrying U.S. astronauts from Earth to the International Space Station and back.

According to the agency, this switch from NASA-operated (or Roscosmos)taxi service to the ISS will save U.S. taxpayers tens of millions of dollars annually. This is because, ever since the Space Shuttle was retired in 2011, we've been paying Russia to send our astronauts to the ISS -- at a price that now stands at $82 million per seat. In contrast, once up and running, the CCtCap service promises to drop that cost down below $60 million.

The terms

According to the terms of the contracts, each contractor will be required to:

  • Conduct "at least one crewed flight test per company with at least one NASA astronaut aboard to verify the fully integrated rocket and spacecraft system can launch, maneuver in orbit, and dock to the space station."
  • Prove that all systems aboard its respective spacecraft "perform as expected."
  • "Once each company's test program has been completed successfully and its system achieves NASA certification, each contractor will conduct at least two, and as many as six, crewed missions to the space station."

But while both companies won contracts, it was pretty clear which firm NASA favored.

All contractors are equal, but some more than others

Last year in May and December, NASA awarded Boeing orders for the first two CCtCap missions it is guaranteed under its contract. In contrast, SpaceX got only one order last year in November. It had to wait until July of this year to receive its second, bringing it up to even with Boeing in orders secured. With that award, NASA fulfilled its minimum obligation to place two orders with each contractor. (Note that these will be separate from and subsequent to each company's initial flight test).

Now, mind you, none of these four orders have dates attached to them. NASA has not yet decided precisely when they will go up, saying only that "orders... are made two to three years prior to actual mission dates in order to provide time for each company to manufacture and assemble the launch vehicle and spacecraft." That implies that the first private, manned mission to ISS may take place as early as May 2017 or as late as May 2018 (if awarded to Boeing).

Nor is it certain which of the two companies will win the honor of making the first private, manned mission into space. It might be Boeing or it might be SpaceX. But given the timing of the awards so far, it looks like NASA is leaning toward Boeing.

And some contractors are less equal

That's curious because, to date, it actually looks like SpaceX is doing a better job on the CCtCap contract -- and cheaper, too.

Earlier this summer, Boeing announced that delays in its program will prevent it from conducting its initial manned flight test (again, this is prior to its two actual delivery missions) until Feb. 2018 at the earliest. That makes it impossible for Boeing to launch its first delivery mission by the optimistic May 2017 date. It leaves an awfully small window to squeeze through if NASA is hoping for Boeing to send a full complement of four astronauts plus 220 pounds of cargo in May 2018 of that year.

One more delay and Boeing could miss its window entirely.

In contrast, SpaceX, which has also suffered delays, still says it will be ready to conduct its flight test by Aug. 2017. If SpaceX hits that target, it would leave ample time for the company to conduct its first delivery mission by Nov. 2018 (three years post-order), or even Nov. 2017 (two years). Indeed, it's not out of the realm of possibility that, if NASA was hoping to launch in both Nov. and Dec. 2017, SpaceX could fulfill both those launches.

Less equal and more expensive

All of that is even more curious in light of the dollar amounts involved in these contracts. While both Boeing and SpaceX were given identical missions to conduct with similar spacecraft, the fees the companies will receive couldn't be more different. For the same work, NASA has promised to pay Boeing $4.2 billion, but SpaceX only $2.6 billion.

That decision is going to start looking pretty strange if Aug. 2017 rolls around, and SpaceX has its spaceship up and ready for launch, while Boeing is still fiddling around under the hood of its more expensive spacecraft. If that's how things look a year from now, there's going to be a lot of pressure on NASA to go ahead and give SpaceX the honor of conducting the world's first private, manned spaceflight to ISS (and the money from that contract as well).

So what's the upshot here for investors? Ultimately, both Boeing and SpaceX are making progress, and both will probably, eventually launch. But SpaceX does appear to be making more progress and at a more affordable cost. In the long run, this is not looking like good news for Boeing's space business.

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