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Doug Messier, Tuesday, 1-29-13 January 30, 2013

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Doug Messier, Tuesday, 1-29-13

http://archived.thespaceshow.com/shows/1939-BWB-2013-01-29.mp3

Guest:  Doug Messier.  Topics:  Spaceport America and Virgin Galactic informed consent, liability, & contract issues per www.parabolicarc.com & much more.  Please direct all comments and questions regarding Space Show programs/guest(s) to the Space Show blog, https://thespaceshow.wordpress.com. Comments and questions should be relevant to the specific Space Show program. Written Transcripts of Space Show programs are a violation of our copyright and are not permitted without prior written consent, even if for your own use. We do not permit the commercial use of Space Show programs or any part thereof, nor do we permit editing, YouTube clips, or clips placed on other private channels & websites. Space Show programs can be quoted, but the quote must be cited or referenced using the proper citation format. Contact The Space Show for further information.  We welcomed Doug Messier back to the program to discuss his reporting on Spaceport America and Virgin informed consent issues and possible contract issues.  We also talked to him about his management of Parabolic Arc, his possible expansion of the blog and even accepting guest contributors.  Check out his reporting and stories at www.parabolicarc.com. Our first subject was on Spaceport America and Virgin starting with Doug’s most recent post about possible Virgin rent payment disputes followed by the informed consent issues which may now have been resolved through negotiations with Virgin, the NM legislature, and NM trial attorneys.  We took listener calls and emails and as it turned out, the spaceport and Virgin story was controversial with listeners all over the board on these issues ranging from Charles who believes the spaceport and the industry are way ahead of their time to others who believe success will definitely prevail for the spaceport, Virgin and the industry.  Another issue discussed in the first segment was the hybrid rocket engine, possible Virgin problems with it, and related items. Doug shared his information with us on the subject and provided us with a brief history & overview on the hybrid engine.  We talked about powered test flights and the difficulty in doing these ventures given they always seem to be about two years away from operations.

     In the second segment, Doug told us about activities at the Mojave Air and Space Port including the construction for Stratolaunch.  Somehow we ended up again discussing hybrid engines and informed consent.  Doug was asked about Virgin and XCOR differences and he spoke as much as he could about the Lynx but said he was under NDA with XCOR as he is working on an XCOR book.  He seemed to favor the XCOR approach.  We talked about his future plans for Parabolic Arc. He is thinking of broadening it to other areas and accepting guest contributions.  I asked him about his visits to see the ATK five segment SRB tests and his thoughts on solids, ATK, etc.  He had much to say about it and SLS.  He continued talking about Mojave, I asked him if he had ever seen the Orbital L1011 and he told us about his tour of it and hearing Bill Weaver speak about his SR-71 breakup and survival.  A listener asked him about Interorbital out of Mojave, we talked about Dream Chaser, and more.

     If you have comments/questions for Doug, post them on The Space Show blog. You can email him through me at drspace@thespaceshow.com.

Comments»

1. Dwayne D - January 30, 2013

Good show. David said a couple of times that the New Mexico politicians don’t want the spaceport to become a white elephant. But I think that part of the problem is that it is already a white elephant. It’s not finished, they’re still spending money on it, and they’re not getting revenue. And with revenue flights by VG nowhere in sight, they run the risk of just sitting on that expenditure for years, waiting that VG will eventually start flying. Their effort to charge rent from VG is probably an attempt to at least get _something_ back.

One thing that Doug didn’t explicitly address, probably because it’s not really knowable, is why the NM govt. has changed its tune. Is it primarily because there are new people in the government? Or could it be that people are getting increasingly antsy about the delays?

My rather rhetorical question concerns the space enthusiast community. Many of the loudest proponents of “New Space” tend to be libertarian-leaning. And yet they seem to be silent on the degree to which government–and by extension, taxpayers–are footing the bill for these New Space companies. As David pointed out, New Mexico is a poor state. They spent a lot of money to build this spaceport, which is essentially an expenditure that favors a company (and if you look at it a certain way, a company that looks a lot like a billionaire’s part-time hobby). Similarly, XCor is moving operations to Texas because they got a big tax break.

Nobody is pure, but how can one reconcile being in favor of limited government and the fact that governments are engaging in crony capitalism, taking money from citizens to give it to supposedly private companies?

Douglas Messier - January 31, 2013

Hi Dwayne:

New Mexico’s effort to get rent is a result of the project reaching the base building completion milestone in mid-November. That milestone triggered several provisions in the lease:

1. Punch list of things still to be completed
2. Sixty day countdown to the date on which rent fees are due
3. The posting of a $2 million performance guarantee (prior to first rent payment)
4. Date of Beneficial Occupancy (when Virgin actually takes possession) which can be earlier than 120 days after base building completion. So, mid-March at the earliest.

Virgin Galactic is saying that it does not owe user fees now, which would be $50,000/month ($600,000/year). It feels like it is entitled to wait to pay those fees until it starts flying. New Mexico disputes this claim.

The lease seems a bit vague on this matter. At least that’s my reading of it. It didn’t seem to contemplate a situation where there would be a long gap between VG moving in and beginning flights.

That’s funny because according to the original schedule, the spaceport was supposed to have been ready for VG to occupy by November 2010. They should have occupied the building a few weeks after the dedication of the runway in October of that year. The building wasn’t remotely close to being done.

I It’s hard to understand why precisely the construction took so long. I also wonder what representations VG was making to New Mexico officials about flight schedules when they drew up the agreement. Maybe the same ones they were making publicly. Anyone who had any knowledge of the engine situation knew those claims were bogus.

But, I digressed a bit….

Back to Dwayne’s points. The spaceport was championed by Bill Richardson, the Democratic governor. The new governor, Susana Martinez, was quite skeptical of the spaceport when she entered office in January 2011. She cleaned house, firing a Richardson appointee who ran the spaceport authority and replaced the spaceport board of directors. Continuity of leadership was severed, which may have delayed things in the short term even if it may have paid off long term.

Martinez also cut the authority’s budget, which probably made things worse and seemed counter to her goal of making the spaceport pay for itself. Why not get the thing done and at least get VG paying the rent and fees?

More lately, she seems to have embraced it and realized she needs to make it work or they’re stuck with a giant facility miles from nowhere with no discernible purpose.

As for public money going into NewSpace, that’s an excellent issue. In VG’s case, the contributions break down as follows:

1. New Mexico Infrastructure: $209 million
2. Equity investment in VG by Aabar Investments (37.8%): $390 million
3. Investment by Aabar Investments in air-launch system: $100 million
TOTAL: $699 million

The New Mexico investment was all taxpayer funded. And they involved direct taxes on citizens in two local counties that are quite poor. The residents voted to approve the tax increases. Voters in a third county rejected the increase.

Aabar is an interesting case. It is a private joint stock company, but it almost totally controlled by the Abu Dhabi government, according to Wikipedia:

“The company’s parent is the International Petroleum Investment Company (IPIC), which is wholly owned by the Government of Abu Dhabi. As per IPIC’s annual financial report, its ownership of Aabar increased from 86.17% on 31 December 2010 to 95.35% on 31 December 2011.”

So, Virgin has benefited enormously from public financing. It’s not clear precisely how much of its own money that Virgin has actually put in. But, Virgin does a lot of deals like that.

XCOR’s deals with Midland and Florida are on a much smaller scale (just over $10 million and $5 million, respectively). But, XCOR’s expenses and development costs are many orders of magnitude below those of VG’s.

The COTS and Commercial Crew programs have benefited enormously from NASA’s investment in them. NASA has opted with those programs to go with fixed-cost arrangements focused on partnerships as opposed to the traditional cost-plus contracts. Musk, to his credit, has regularly pointed out NASA’s enormous contribution to his company’s success.

The State of Florida has also stepped up and spent millions on infrastructure improvements and incentives for SpaceX, Boeing, XCOR, etc. It’s understandable; the Space Coast was very dependent upon the shuttle, which the federal government decided to end. Then Florida got crushed by the Great Recession and the failure of NASA to field a replacement vehicle on time.

In Florida’s case, it’s investing in capabilities and facilities that already exist to employ a workforce that is already there for an existing industry that has been operating on the Cape for 50 plus years. They’d be irresponsible not to. And I think most of their investments have been smart.

In New Mexico, they built a very expensive new facility for an industry that didn’t even exist based on a lot of promises. Much riskier investment.

Trent Waddington - February 3, 2013

There’s so little money on the table that New Space companies simply can’t afford to be picky. It’s a shame, because government money always comes with these strings attached.


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