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International Space Station Commercialization Study

7 February, 1997

An expert panel organized by the Potomac Institute for Policy Studies has concluded that NASA must become much more industry-friendly to attract commercial investment in the International Space Station (ISS) and other manned activities in low earth orbit. Increased privatization of space assets (to eventually include the ISS and its resupply) could relieve NASA's declining budget, allowing them to accept future challenges, such as Mars expeditions.

The Institute's study team, funded by a NASA grant, interviewed over 150 planners, space experts and product managers from industry and academia, in addition to reviewing earlier literature on commercializing manned-space activities.

"The government is seeking a new way of doing business with industry," said former NASA administrator James Beggs, who chaired the panel. "In this period of constrained budgets, NASA is trying to take advantage of commercial practices. For example, it formed an innovative collaboration with Lockheed Martin Corporation on the X-33 prototype for a low-launch-cost Venturestar Reusable Launch Vehicle [RLV]. However, in other programs, we found that NASA continues to send signals that inhibit badly needed private space investment."

He added, "[w]e are concerned that the 11 Commercial Space Center [CSC] consortia that use NASA seed funding and free shuttle rides to assist companies and universities developing space products are now threatened." The CSCs include blue-chip companies and are essentially the only tool in NASA's effort to reach the non-aerospace sector that will create commercial market demand for the ISS and the RLV.

A Congressional amendment in 1984 to NASA's charter required NASA to "seek and encourage to the maximum extent possible the fullest commercial use of space activities…" Over 1985-1993, NASA and the Reagan and Bush Administrations implemented this congressional edict. NASA's Office of Commercial Programs (OCP) -- led by James Rose, another panel member -- co-funded 17 CSCs (then called "Centers for Commercial Development of Space"). With industry providing over 60% of their support, these consortia built flight hardware in less time and at a small fraction of the cost of traditionally procured government space hardware.

The Institute found at least eight promising commercial ventures, ranging from "virtual presence" to gallium arsenide thin-film devices and macromolecular crystallography for medical and drug products. Since 1981, U.S. companies have invested over $1 billion in internal R&D or co-investment on space projects.

The study urges NASA to assume broad responsibility for commercialization of human space flight. Components of a proposed strategy include focusing efforts to reduce impediments to space access, promoting a "privatization-to-commercialization" effort that spins off NASA's costly "space infrastructure" operations to the private sector, and supporting promising commercial ventures.

The panel also felt that forming a NASA Commercial Development Office (CDO) would reinvigorate and expand the CSCs and serve as a conduit to venture capitalists and other funding sources. The functions of this new office would gradually be assumed by a proposed Space Economic Development Corporation which would help to seek venture capital support for promising commercial ventures. These offices would push innovative partnerships to induce more "dual-use" investment by industry, particularly by non-aerospace companies.

"We see this strategy as a way out of NASA's long-term budget crunch," said James Richardson, the Institute's study director. "NASA should normalize human orbital space flight by spinning off mature space operations to commercial operators while encouraging non-aerospace customers to use these assets."