Opinion: How The U.S. Can Win The Space Race
The U.S. is in yet another space race, but there is no guarantee it will win again. The new race comes at a challenging time as other countries set ambitious goals and achieve new firsts. NASA budgets cannot support a space race on top of its other mission priorities, such as aeronautics and science. Yet the industry’s technical capabilities have never been stronger.
To win this space race, the U.S. and its partners will need to produce and fly hardware more rapidly and at a much lower cost. Achieving that goal is possible, but not with the current course and pace. Plus, the prospect of even tighter budgets threatens the viability of some programs. The good news is that the space industry and NASA have a window of opportunity to develop a more effective way of collaborating that will help maintain the lead in space. That starts with agreeing on shared, well-defined goals that offer benefits for all, and systematically tackling the root causes—as opposed to symptoms—of high costs and cycle times.
It is a turning point for both NASA and the space industry. If they can forge a new way of working together, it will help the U.S. strengthen its civil space muscles and fuel new achievements. If the effort falls short, the U.S. risks lagging behind its competitors in the coming decades.
The Debt Ceiling Deal
The passage of the U.S. debt ceiling deal in June and the likelihood of continued pressure on civil space budgets perversely create an impetus to evolve government-industry collaboration in space.
The Fiscal Responsibility Act (FRA) implies a roughly 10% cut to NASA budgets over the coming two years, trimming $2-3 billion from the original requests of $27.2 billion and $27.7 billion for fiscal 2024 and 2025, respectively (see Potential NASA Budget Cuts chart below). NASA may face additional cuts in real purchasing power once the dust settles on the fiscal 2024 budget negotiations, especially after inflation.
It is still unclear how the final budget will affect specific programs (see Presidential NASA Budget Request chart below). Science may bear the brunt of the cuts. Alternately, reductions could target the most costly programs such as Artemis, especially with increased focus on cost transparency.
But debating which programs will suffer the largest cuts overlooks the most important issue. The U.S. can maintain its lead in space only if the government and industry collaborate more closely and define an approach that is win-win for all interested parties. That means agreeing on the cost and speed required for each part of civil space architecture and identifying the potential for cycle time and cost reduction for each major program. This approach should also specify benefits for entities that are able to decrease cost and cycle time. The U.S. has done this successfully with complex programs in the past. For example, in the mid-2000s, the Virginia-class submarine program lowered per-ship cost by hundreds of millions of dollars and compressed cycle time in exchange for accelerated unit procurement.
Critically, most of the factors that affect cost and cycle time in civil space programs cannot be addressed by industry alone. For some programs, up to 80% of potential cost reductions require NASA and industry to collaborate. Examples include NASA allowing additional supplier certification and companies identifying an alternate source of supply, or NASA and industry agreeing on a single testing protocol. In our experience, for some programs industry partners can address only about 20% of potential cost reduction independently.
Implications for Industry, NASA and the Government
Competing successfully in this space race will require NASA and contractors to review their approach program by program and be open to changes. Getting started is the biggest challenge, particularly absent a common framing of goals and issues. The following guidelines can help stakeholders devise a new, more collaborative way of working together:
• Align on a “right-to-left” goal and a win-win approach. Historically, the civil space sector has often planned using a “left-to-right” approach that starts with the capabilities we have today and advances incrementally from there. In the new space race, it will be vital for NASA and industry to understand and share a common “right-to-left” goal that boldly defines where we need to be tomorrow—and works backward to determine how to get there. When do we need to be on the Moon, with what elements, and at what volume and cost? In parallel, NASA and industry should agree on the discrete benefits for each party. For example, if industry needs to reduce unit cost, can NASA increase the number of units procured? That would benefit the NASA mission by flying more hardware more frequently at a lower cost per unit, and it would help industry by increasing unit backlog, amortizing costs across higher volumes, accelerating the learning curve and stabilizing the supply chain and talent needs. Once defined, all parties can work toward a common goal and shared benefits.
• Establish cost and cycle-time baselines and a common language. The complexity and scale of space programs often make it challenging even to align on the starting point of a program’s full cost and cycle time. Creating a detailed and agreed-upon baseline from which improvements can be measured is a necessary step. This enables all parties to be on the same page and to utilize a common terminology and structure.
• Identify the root causes and responsible entities. Separate the symptom from what is creating the problem. For example, what is the underlying cause of the poor quality of parts provided by a supplier? Is it insufficiently specified engineering requirements, inadequate inspection upon receipt or the inability of industry to secure a new source of supply? Identifying root causes is critical to creating the right improvement initiatives. It is equally important to establish which entity has the authority to make decisions that would alleviate a root cause. Can industry make supplier changes on its own to mitigate a lead-time issue, or does the customer—i.e., the government—need to approve changes?
• Develop alternative sets of initiatives. Having two or three portfolios of initiatives to boost performance, from incremental to full-potential, helps partners envision what is possible. It also focuses the debate on how ambitious goals should be and what it will take to achieve them. Each initiative should be quantified and the benefit tied to a baseline. And each should detail what needs to change to reduce cost and cycle time, who needs to be part of the change and what specific actions must be taken to create that change. In some cases, it may be helpful to include the specific contract clauses that need to be adjusted.
• Streamline governance. One of the imperatives to winning the space race will be streamlining the operating model that governs large civil space programs. The multiple industry functions and government stakeholders involved are often not fully aligned on a “right-to-left” approach—setting a future goal and working backward to define how to achieve it. Some parties may also have conflicting decision rights or insufficient accountability. Partners will have the best chance of succeeding if they streamline decision rights and incentivize leaders to work toward shared goals. To enable rapid traceable process, leaders can learn from past major defense program improvement efforts, in which each civil space program requiring significant change sets up a steering committee of one senior executive each from NASA and major industry partners.
The global competition for milestone achievements in space is transforming the industry landscape as well as the national rankings of preeminence in space technology. By forging a new and more collaborative way of reducing program cost and cycle time, NASA and its partners can once again lead. If the U.S. fails to adapt its approach, it risks lagging behind its competitors for years to come.
Erich Fischer, Blaine Pellicore and Matthieu Vigneron are partners in Bain & Co.’s Advanced Manufacturing and Services practice.
The views expressed are not necessarily those of Aviation Week.