Charles Miller is the president of NexGen Space LLC, a space and public policy consultancy that provides client services at the juncture between civil, commercial, and national security. A former NASA Senior Advisor for Commercial Space, Miller has led a half dozen NASA commercial space teams responsible for assessing barriers to commercial space projects, satellite servicing, funded space act agreements, and commercial reusable launch vehicles and solutions for space debris removal. He is also a cofounder of NanoRacks and a founder of ProSpace, both of which are major players in the push to make space exploration more accessible to the masses.
The Funded Space Act Agreement
The Funded Space Act Agreement allows NASA to form contracts with private companies to develop technology solutions for the space industry. Recent successes in commercial space like SpaceX’s launch of the cargo carrier Falcon 9 and Orbital Science’s unmanned ISS resupply mission with Cygnus are made possible through Space Act Agreements (SAA). SAAs may be reimbursable, non reimbursable or funded. SSAs of the non reimbursable variety imply that NASA provides limited resources to the partner company without the exchange of money. Reimbursable contracts allow the partner company greater flexibility at the cost of reimbursement for the use of certain resources. Funded SAA’s are the most highly sought after agreements, and involves NASA providing resources and funds to the contracted company to produce technologies NASA would not be able to pursue on its own.
SpaceX’s highly televised Falcon 9 rocket and Dragon capsule falls into the last category. Miller notes that during his time at NASA, they conducted an analysis that showed, depending on the statistical method used, you could get from four-to-one and up to ten-to-one bang for your buck through an SAA over traditional procurement and development methods. With the Atlas V, the Delta IV, the Falcon 9 and the orbital Taurus vehicles that’s four successful SAAs in a row, an excellent track record so far for the new method of procurement. This is a success story for America. In all those cases the companies involved put real skin in the game. They had real incentives to keep costs down and to succeed. While there is some opposition due to the loss of government jobs and the elimination of bureau involvement, it is difficult to argue against the current track record of SAAs.
Commercial Space on the International Space Station
Commercial Space is still in its nascent stages onboard the ISS. Miller’s NanoRacks has delivered over 100 payloads to the ISS to date. While the company is still very small it is currently in a high-growth phase. NanoRacks has helped many other small companies and organizations access the ISS through its innovative laboratory platform. NanoRacks can launch satellites over 100 kilograms out of the airlock as long as they are safe and use a nontoxic propulsion system. NanoSatisfi recently went up in the HTV, and they are getting ready to deploy them out of the airlocks in the near future. NanoRacks even does projects on its own like taking Emerald Bio’s standard protein crystal growth technology and attempting it in space. No one thought it could be done, so NanoRacks funded the project on its own, and they were able to grow 100 crystals in a microgravity environment.
CASES is designed to help facilitate commercial work on the station. Miller notes that they got off to a slow start due to infighting on how the organization would be structured, but they are now ready to fulfill that role. There are two different tasks the organization is responsible for. One is to act as a national lab for partnerships based on fundamental science like working with the NSF and researchers. The other is to partner with commercial enterprises. Both roles require completely different methods, processes, thinking and values making it a difficult task for the organization to handle. CASES is also currently underfunded, receiving only $15 million a year to manage the ISS which cost $100 billion to build and $3 billion a year to operate. NanoRacks which has a funded SAA and has been working with the ISS for a long time, has been helping CASES with the commercial aspect of space.
NexGen Space LLC
As mentioned earlier, NexGen Space solves problems at the intersection between commercial, civil, and national security space and public policy. Each branch has a very different thought process and approach to the issues of space and public policy, and it takes someone who has had experience working with all these different people to ensure that resources are shared appropriately and everyone works together. While most of Miller’s experience lies in commercial space and public policy, he did spend three years working directly for NASA, and another six or seven years working with them giving him a solid understanding how the people at NASA think. He now provides a consulting service that helps bridge the gap in understanding between commercial space and NASA. NexGen Space has NASA, NanoRacks and other commercial companies as clients.
The demand for his consulting work is increasing, because as commercial space grows, the number of companies who need help working with larger aerospace companies, NASA, DARPA or the NOAA increases.
For example, DARPA recently announced its XS-1 initiative for a Mach 10 suborbital ROV that can fly ten times in ten days. The goal is a reusable first stage hybrid launch vehicle that can put payloads into space at a reduced cost. They want to transition it into the industry the way DARPA did with semiconductors; however they were having difficulty applying it to the Air Force. DARPA director Jess Sponable envisioned the Air Force and national security being customers to the commercial industry who will operate this less expensive commercial launch vehicle. NexGen Space is helping her outline a strategy to make that happen.
Are there International Commercial Space Companies?
The space industry is inherently an international collaboration. Miller says partnerships with Russia, Japanese JAXA and European companies like Astrium have always been present. One reason you may not have seen the same level of commercialization that can be seen within the United States is that the cultures are different. While European suborbital companies are still waiting for billions of dollars in government funding to do a Mach III or Mach IV suborbital ROV, American entrepreneurial companies have a huge support system, a culture of innovation and the right ecosystem for supporting startups. Virgin Galactic is in America for a reason, Richard Branson understands that the innovation and culture is here for building a suborbital ROV. Many aerospace companies receive a lot of funding from overseas like Hong Kong and the Middle East.
Exciting things in Commercial Human Space Flight
Miller is very excited about the potential of Commercial Crew and opening up new markets for commercial space flight. In the past, Russians sold the first commercial seat going to the ISS for around $12 million to billionaire Dennis Tito. Since then, the price has gone up with billionaires willing to pay up to $40 million. One person even did it twice, showing that there is a significant demand for spaceflight. To billionaires the monetary price tag doesn’t matter. The real price is sacrificing 6 months of their time away from their families to go to Russia, learn Russian and live on the ISS. Once it becomes possible to launch from America with a shorter duration of time, it’s likely that even at this high monetary price, the market will expand and prove highly profitable. There are several thousand billionaires across the planet, and an even larger number of centimillionaires. Going to space is a unique experience unlike anything else in the world, and once reusable spacecraft drive prices down the market for manned space tourism is only going to increase. A SpaceX Commercial Crew system with six seats at $25 million a seat would bring in $150 million of revenue with a single flight. Once the reusable technologies start taking off and prices are driven down, the market dynamics will be able take off and start driving the growth of the space industry on their own.
Bigelow Space Station
Bigelow Aerospace founder Bob Bigelow plans to create his own space station that will target countries that were unable to afford to spend the $200 million to be part of the original space station. Miller believes that if implemented correctly, the Bigelow Space Station could be a huge success by allowing countries to place a real research program in orbit for as little as $50 million. Bigelow would also be much more service oriented than the ISS, allowing projects to scale up for commercial space by transferring to the station. Since Bigelow partnered with NASA to add a storage module on the Space Station, it adds credibility to the Bigelow Space Station which will help it gain traction when they finally begin its construction.
Suborbital Space Industry
When asked what role the suborbital space industry will play in the grand scheme of the space industry, Miller replied that its role lies in its scalability. The approach is to develop suborbital technologies, develop a thriving market and customer base, and gradually use success of this market as a driving force for scaling the technologies up to orbital space flight. Eventually, through multiple cycles of improvement, the technology will reach space at lower cost for access through the power of the market. That’s not to say the opposite approach of going big and scaling down to a more reusable cost effective platform isn’t effective either. Miller believes all approaches are a necessary part of the process, claiming competition is good for accelerating innovation.
Difference between Commercial and Government Approaches to Space
The commercial sector is focused on value proposition, speed, receiving a monetary return on investment or doing something different. It’s all about making the bottom line, stating your case or going home. The government approach is more long term, driven by the budget process and the allocation of taxpayer dollars. From a public policy perspective it is important to know what projects are best suited for which approach. Some technologies don’t have the short return on investment required for the commercial approach to bring in investment; long-lead, high risk research is therefore best handled by the government. On the other hand if a return on investment can be seen within five years, the commercial approach can be much more effective in speeding a technology’s development.
For example, the National Advisory Committee in Aeronautics built wind tunnels, a vital technology that no company at the time could afford, from an infrastructure perspective, because they would have only used it a short time before moving on with whatever technology they were testing. By having the American government create the infrastructure for commercial ventures to use, the nation as a whole benefits.
Crowdfunding and Commercial Space
Crowdfunding helps those who don’t have easy access to startup capital for new ideas. NanoRacks currently has four customers who are at least partially funded through Kickstarter. When asked if crowdfunding is frowned upon in the industry, Miller replied that NanoRacks will provide the means for private companies to get their CubeSats into space and does not care how the money is raised. As long as the parties involved can pay the fare and the payload passes the ISS safety process, NanoRacks will deliver a payload up to the ISS. The third requirement which only comes up on rare occasions is that NanoRacks won’t take anything up to space that will embarrass the ISS, as with pornography. NanoRacks boasts a 9 month delivery time from the date a contract is signed, a noted improvement over traditional space satellite deployment services which operate on the time scale of years. As more entities warm up to crowdfunding, Miller sees campaigns like Kickstarter playing an increasing role in emerging space companies. Crowdfunding is still only part of a larger marketing campaign, Miller notes that the successful companies like Planetary Resources build their brand through free media coverage and other marketing efforts before they announced their Kickstarter campaign. It was built on a very strong foundation of excitement, sizzle, and a lot of free media and branding.
The Ideal Management Team
The management team is a reflection of a company’s strategy. The team needs to support a strategy for making money and getting into business, while understanding the key risks of the business. This is especially important when operating at the intersection between civil, national security and commercial space. National security agencies come with security clearance issues, and you need someone on the team that knows how the NSA works, usually a former executive in the Defense Department, NRO or large defense aerospace companies. At the same time it takes an entrepreneurial mindset to deal with the commercial space industry. So the team has to be able to handle all sectors involved.
Horizon Strategy – Innovative Approaches to National Security in Space
Charles Miller is the commercial space person on the Horizon Strategy team along with Josh Hartman from the Department of Defense who wrote the legislation that became the Operationally Responsive Space Program. Horizon Strategy develops innovative low cost solutions and approaches for a variety of clients in this sector. Miller helps Josh with the commercial or civil component of these services. For example, TetrUSS was originally a commercial partnership between Western Union, TRW and NASA. The first generation TetrUSS was done on a commercial firm fixed-price contract to Western Union from NASA in which TRW built the spacecraft. In the early 1980’s Western Union realized they weren’t making any money and could not see any financial opportunities on the horizon, so they pulled their support for the program. NASA ended up contracting with TRW to finish the project using U.S. government funding. Today the outlook for commercial space is more positive, and Horizon Strategy is looking for a way to reduce government funding by commercially procuring the follow-on systems for the TetrUSS satellite. There are options there to be looked at that people haven’t considered in 30 years, That’s a perfect example of being at the intersection of civil, national security and commercial space.