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FCW : January and February 2017
shelf products; one onboard radio cost $5,000 compared to the United Space Alliance’s high-end mil-spec radio for $100,000. Musk “wanted a turbo pump to be built in less than a year for under $1 million,” Vance wrote. “Boeing might do a project like that over five years for $100 million.... Build quick and learn quickly was Elon’s philosophy. He was relentless in wanting the costs to come down.” In addition to lowering costs on the traditional way of managing vehicle launches, SpaceX is also testing a major innovation: reusable rockets that can land after launch by using reverse thrusters that allow the rocket to touch down gently. Many have been skeptical that it can work because of metal stresses during launch. How- ever, SpaceX has had some successful tests, and if it works, it would produce huge further cost savings. Defenders of the United Space Alli- ance note that it has never had a failed launch, while SpaceX has had a few, most recently in September 2016. But if the reusability innovation works, it would dwarf any costs from failed launches. Granted, the smoking gun here involves satellites, not IT development projects. And because IT projects seldom involve real-time post-award competition or fixed-price contract- ing, we don’t have direct comparisons between doing IT development con- tracting the traditional way versus an alternative. But there are reasons to expect that the cost and innovation penalties for IT development contract- ing would be similar if they could be known. This kind of smoking gun is taking on a new urgency thanks to President Donald Trump’s interest in lowering prices for expensive development projects. He has already publicly criticized Boeing and Lockheed, the two partners in the United Space Alli- ance, over costs for the new Air Force One and the Joint Strike Fighter. So I would not be surprised, to switch metaphors, to see satellite launches in his crosshairs. As the Fortune article makes clear, Boeing and Lockheed officials were already worried about their costs long before the election. If I were the Unit- ed Space Alliance, I would be even more terrified of the danger of losing government business now. And those of us in federal IT need to realize that our turn might be next. n Steve Kelman is a professor of pub- lic management at Harvard Uni- versity’s Kennedy School of Govern- ment and former administrator of the Office of Federal Procurement Policy. His blog can be found at fcw.com/thelectern. SpaceX costs half the price of the United Space Alliance. I suspect many readers will react as I do: That’s a big difference. January/February 2017 FCW.COM 33 SPACEX.COM 0217fcw_032-033.indd 33 1/25/17 9:34 AM
November and December 2016