NASA

UNITED LAUNCH
ALLIANCE
SPACEX
SECTION B, GROUP 2
Ankit Goel PGP/17/309
Arun Raj PGP/17/312
Gomathy A PGP/17/319
P V Sravanti PGP/17/330
Rachna Ravi PGP/17/339
NATIONAL AERONAUTICS AND SPACE
ADMINISTRATION
Established in 1958, by a Congressional Act (National Aeronautics and Space Act) absorbing erstwhile
National Advisory Committee for Aeronautics
Monopolistic government authority for space exploration
Act allowed private participation in space programmes with NASA
All intellectual property and strategically important assets were controlled by the government
High impetus on space exploration due to cold war
Launches civilian and military satellites in addition to human exploration of space
Ballooning costs of space exploration (example : Apollo Moon Landing Programme cost $210 billion in
current terms)
Need for expanding private participation in space technologies felt in 1980s


COMMERCIAL SPACE LAUNCH ACT, 1984
Encouraging increased private participation in space programmes
To promote economic growth and entrepreneurial activity through utilization of space environment for
peaceful purposes
To encourage US private sector to launch vehicles and associated services, facilitating and encouraging
the utilization of Government developed Space technologies
Increased contracting of components and services to private sector
Rise of Lockheed Martin, Boeing, United Technologies, General Electric, etc as prominent space and
defence contractors
Provision of stringent terms and conditions to exert government/NASA control over private contractors to
protect US strategic interests
TO ALLY OR TO ACQUIRE?
LOCKHEED MARTIN AND BOEING
LOCKHEED MARTIN
Formed in 1995 as a result of merger between Lockheed Corporation(1912) and Martin Marietta(1961)
American global aerospace, defence, security and advanced technology company
Space division started as Lockheed Missile Systems Division, 1953 diversified into space launch vehicles in 1960
Atlas program started in 1957 as an ICBM (inter-continental ballistic missile)
Post 1965, developed as a satellite launch vehicle
57 years in technological development
Current version Atlas V used to deliver heavy satellites


BOEING
American Multi-National Company that manufactures commercial aircrafts, defence and aerospace equipment
Incorporated in 1916
Delta Rocket Systems developed by McDonnell Douglas in 1960 as a satellite launch vehicle using technology
from Thor Ballistic Missile System
McDonnell Douglas merged with Boeing in 1997



50-50 joint venture between Lockheed Martin and Boeing, formed in 2006
Government approved alliance even as it would create a monopoly in space launch vehicles
Intent was to use combined capability to provide reliable and cost efficient access to space for US Government
missions
Combined expertise of 100 years in space technology to provide cost and technological synergies
Litigation between Boeing and Lockheed Martin/ NASA over technological patents
Two year battle accusing each other of cheating to win rocket launch work
Duplication of efforts in the two entities leading to cost increases and ineffective use of already available
technology
Atlas and Delta systems individually took more than 50 years to develop. So, high investment costs result in
higher launch rates
UNITED LAUNCH ALLIANCE
Parameter Factor Strategy Rationale
Types of synergy
Reciprocal

Acquisition
Shared research and development, manufacturing
and service capabilities with each other.
Nature of resources Low/Medium Acquisition
Intellectual property, processes, and expertise of
the people constituted the core competency
Extent of redundant
resources
Medium Equity alliance
Although it required some lay-offs, it was critical to
maintain the two separate technologies in case of
failures
Degree of market
uncertainty
High Equity alliance
Space exploration remains at the forefront of
technological development and hence inherently
risky
Level of competition Medium Equity alliance
High entry and exit barriers prevent heavy levels of
competition (Northrop Grumman, Spacex, OSS)
UNITED LAUNCH ALLIANCE
Industry functioned as a natural monopoly and hence a combined entity would improve efficiencies
Both companies would never sell their space divisions and hence, alliance is the only option

MAKE OR BUY?
NASA ORBITAL TRANSPORTATION
COMMERCIAL ORBITAL TRANSPORTATION
SERVICES (COTS)
In 2006, it was felt that US will be dependent on Russian Proton and Soyuz systems to launch astronauts
and material to International Space Station (ISS) post space shuttle programme retirement in 2011
Decision to be taken on either developing a new system by NASA or contracting entire COTS to private
contractors
Availability of competent private contractors with sufficient technology and drive for innovation
Strong institutions and enforcement systems in place to protect intellectual property and US strategic
interests
Need to spur economic growth in the country, reduced government grants for NASA, pushed for
privatization
Emergence of new space technology companies such as Spacex and Orbital Sciences Corporation
Relatively routine program as compared to other important missions such as Mars and Deep space missions

COMMERCIAL ORBITAL TRANSPORTATION
SERVICES (COTS)
Existing
suppliers -
economies of
scale?
Coordination
problems, leakage
of info?
Infeasibility of
detailed
contracting
Is common
ownership
required?
Vertical
integration
Alliances, joint
ventures, non-
ownership
arrangements
Vertical
integration
Would
intermediate
arrangements
suffice?
Use the market
YES
NO
YES YES
NO
NO
NO
YES
Asset specificity
YES
NO
NO
YES
COMMERCIAL ORBITAL TRANSPORTATION
SERVICES (COTS)
Existing
suppliers -
economies of
scale?
Coordination
problems, leakage
of info?
Infeasibility of
detailed
contracting
Is common
ownership
required?
Vertical
integration
Alliances, joint
ventures, non-
ownership
arrangements
Vertical
integration
Would
intermediate
arrangements
suffice?
Use the market Asset specificity
YES
NO
NO
YES YES
NO
NO
NO
YES
YES
NO
YES
CONTRACT
NASA AND SPACEX
NASAS CONTRACT WITH SPACEX
Signed in June 2006
Purpose of the agreement is to conduct initial development and demonstration phase of COTS project
Spacex to receive milestone payments from NASA to develop and demonstrate vehicles, systems and
operations needed for Spacex to perform earth to orbit space flight demonstrations
Scope of the COTS Project and Demonstrations involves the development and operation of an end to end space
transportation system including ground operations until safe recovery or return
Agreement is non-exclusive. NASA may enter into similar agreements for the same or similar purpose with
other US private or public parties
Agreement could be terminated in one of the following ways:
Termination by mutual consent
Termination for failure to perform
Unilateral termination by NASA: Upon a declaration of war by Congress/ upon a declaration of national emergency/
upon determination that NASA is required to terminate because of reasons out of its control

SPACEX CONTRACT FOR COTS
Objectives of clause Clause alternatives Explanation
Strategic coordination Decentralized
According to Article 21, all modifications and amendments
shall be done by mutual agreement
Organizational coordination Decentralized
According to Article 19, all disputes concerning questions of
fact or law shall be resolved by mutual agreement
Operational coordination Decentralized
Milestone achievements and contingencies to be resolved
mutually
Credible commitments Unilateral hostage
Sharing of proprietary data by NASA and investment in
specific assets by SpaceX, Government law regulates space
exploration transactions
Supervision Mechanisms Contractor supervisor NASA to supervise milestone achievement of SpaceX
Remuneration system Flat rate Spacex will receive milestone payments from NASA
Contract Duration Long term
Signed in 2006, SpaceX to carry 12 launches in 2014-16. Can
be extended on performance basis
THANK YOU