The new era of American aerospace 

The 20th century was an unqualified success for American aerospace. While the legacy of the Apollo program defines the era, the procurement system under which it operated was highly inefficient and prohibitively expensive.

Unfortunately, that process persisted for decades under the National Aeronautics and Space Administration (NASA), where contracts were dominated by a handful of entrenched firms, enabled by institutional biases and preferences. The end result was inflated prices, delays, and a lack of innovation.  

This period is best embodied by the Space Shuttle, envisioned as a cheap platform that would provide regular access to space — perhaps as frequently as once per week – with each flight costing as little as $20 million.  The reality turned out to be decidedly less cost-effective.  Upon its retirement in July 2011, the Space Shuttle had flown 134 missions, averaging $1.6 billion per launch, with total costs rising to $209 billion. 

Luckily, after some false starts and barriers to entry, NASA has fundamentally shifted its strategy to embrace new, innovative companies. For example, to replace the Space Shuttle, the agency turned to the private sector with the Commercial Orbital Transportation (COTS) program. With small investments, COTS not only established two new viable launch vehicles and cargo vessels capable of resupplying the International Space Station (ISS), but also helped facilitate the current aerospace boom. Thanks in part to COTS, a new guard of firms have begun outcompeting predecessors on price and reliability, winning national security launch contracts and ferrying astronauts to the ISS. 

Innovative designs that include reusable components have drastically cut launch costs. SpaceX charges $55 million per astronaut for a ride to the ISS compared to $90 billion per seat paid to Boeing. While payloads sizes differ, other firms such as Relativity Space and Rocket Lab will further slash prices. SpaceX anticipates that the cost of launching Starship, a fully reusable super heavy vehicle, may end up below $2 million. 

This new era of affordability made possible by increased competition has led to the development of a host of novel business ventures. Privatized space stations represent perhaps the most exciting possibility. As the ISS nears the end of its service, a private sector model is being developed under which NASA becomes a paid user on space stations instead of owning and operating the platform. This approach might save NASA up to $1.5 billion annually, freeing the agency to focus on its core mission, deep space exploration.

NASA has already awarded several contracts to aerospace firms to develop private stations. Streamlined efficiency in the private sector and cheaper components mean that new stations could cost approximately one-hundredth of the amount needed to build the ISS. Potentially lucrative new markets exist, including hosting astronauts and tourists and conducting research under microgravity conditions. 

NASA could achieve additional savings by reconsidering the role of the Space Launch System (SLS) in Artemis, the agency’s flagship mission to explore the Moon and Mars. Billions over budget and years delayed, the lack of progress in the SLS jeopardizes the entire Artemis mission. It might have been canceled along with the rest of the George W. Bush-era Constellation program if not for the efforts of four high-profile senators who saved the rocket. One of them, former Sen. Bill Nelson (D-Fla.), now serves as NASA administrator. But like other unwieldy and costly procurement programs, the wide disbursement of jobs across the country helps ensure continued congressional backing. According to NASA, the SLS supports around 25,000 jobs in 43 states, generating an impact of $4.7 billion.

The remarkable progress of domestic aerospace firms has led some to suggest that the SLS might be replaced, possibly with Starship or a similar platform. NASA must keep its options open rather than adhering to what might be an outdated concept.

The reliance on legacy contractors to build systems that NASA owns and operates is a notion that should be retired. Private firms under contract with the federal government have formed the new backbone of space commercialization and exploration. Thanks to recent innovations, the next decade will see more cost-effective access to space and far greater potential for exploration.

Competition in all areas of aerospace contracting represents a rare procurement triumph for the federal government. Through COTS and similar programs, NASA paved the way for the current breakaway success. The private-sector model has proven its worth, and should be relied upon not just at NASA, but across all federal agencies, when pursuing future ventures. 

Sean Kennedy is director of research for Citizens Against Government Waste.