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Elon Musk  (Source:
Lockheed said SpaceX is inexperienced and is cutting corners by cutting costs

SpaceX is the underdog that proved a private company can rise to the occasion and send a rocket into space, but can it step up and transform the Air Force as well?

Lockheed Martin and Boeing have had a strong hold on the Air Force's launch missions for the last six years. But last month, the Defense Department instructed the Air Force to find a new contractor to break the launch monopoly in an attempt to cut costs. In early December, it was announced that SpaceX was selected for trial missions.

SpaceX scored a $900 million contract with the Air Force for two launch missions in 2014 and 2015. The trial missions will test to see if SpaceX can successfully carry military and spy satellites.

As expected, Lockheed Martin and Boeing, which are partnered in a venture called the United Launch Alliance (ULA), are not too happy about it. They took a few jabs at SpaceX's inexperience in both space launches and in the military.

"I'm hugely pleased with 66 [successful missions] in a row from ULA, and I don't know the record of SpaceX yet," said Robert Stevens, chairman and chief executive at Lockheed Martin. "Two in a row?"

Lockheed Martin also took a stab at the Department of Defense's search for cheaper alternatives to ULA, saying that cutting corners will have poor results.

“Cost doesn’t matter at all if you don’t put the ball into orbit,’’ said Stevens. “You can thrift on cost. You can take cost out of a rocket. But I will guarantee you, in my experience, when you start pulling a lot of costs out of a rocket, your quality and your probability of success in delivering a payload to orbit diminishes.’’

SpaceX Elon Musk fired back, saying that "All of SpaceX's Falcon 9 missions have reached orbit and completed all primary mission objectives." As far as costs go, Musk said that SpaceX's equipment is cheaper because it contains better technology.

“The fundamental reason SpaceX’s rockets are lower cost and more powerful is that our technology is significantly more advanced than that of the Lockheed-Boeing rockets, which were designed last century," said Musk.

The ULA’s Delta 4 and Atlas 5 rockets cost about $464 million per launch, more than double a previous estimate of $230 million.

SpaceX stepped in with its Dragon capsule and Falcon 9 rocket as a means to send supplies (and eventually astronauts) to the International Space Station (ISS) after NASA retired its space shuttle fleet in 2011. This left American astronauts with no way to the ISS except aboard a Russian Soyuz rocket, but these seats became very costly.

SpaceX launched its Dragon capsule and Falcon 9 rocket to the ISS for the first time back in May for a test supply run. After that successful trip, SpaceX and NASA signed a $1.6 billion contract that allows SpaceX to complete 12 supply trips to the ISS and back.

On October 7, SpaceX made its first official supply run as part of that contract. It arrived October 10, making the trip a success.

Dragon is due to make its second run in January 2013. SpaceX is also looking to send the first manned Dragon capsule to the ISS somewhere between 2015 and 2017.

SpaceX is also making huge strides in the use of reusable rockets with its new Grasshopper Project. The Grasshopper Project is a Falcon first stage with a landing gear that's capable of taking off and landing vertically.

Source: The Washington Post

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The Sin
By MFranklin on 12/26/2012 6:03:00 PM , Rating: 5
Lockheed is crumpled because the new kid on the block didn't play the game of soaking Uncle Sam.
ULA is a good example of what happens when competition is removed between competing firms (Boeing and Lockheed). On the flip, SpaceX proves the value of that competition by way of producing a good product at a better price.
Let ULA cry... they'll be forced to work in the free market and not the closed one.

RE: The Sin
By spread on 12/26/2012 7:00:19 PM , Rating: 5
Lockheeed Martin wants a free market when it works in their favor and special treatment when it's not in their favor.

I believe what we are witnessing is a corporate tantrum. Someone call them a wambulance.

RE: The Sin
By Schadenfroh on 12/26/2012 9:33:38 PM , Rating: 1
Defense contracts are not exactly what I'd call free market...

*Profit margins are capped
*Government controls who your "customers" are
*MASSIVE amounts of restrictions, red-tape, paperwork, etc. especially for classified work, but unclassified export controlled paperwork can be epic (OK, that is not really applicable to a free market debate, but quite annoying)

On the plus side, the government tends to pay for most of the expenses, so there is less "risk" for the company.

RE: The Sin
By Samus on 12/26/2012 10:48:24 PM , Rating: 2
I'm sorry, profit margins are capped?

The definition of a military contract is the same as an 'insurance job' on a collision repair of a vehicle.

milk, milk, milk...

RE: The Sin
By Schadenfroh on 12/27/2012 12:13:37 AM , Rating: 3
Well that was a rather blanket statement as margins for "fixed-price" contracts, which are typical in the commercial, world are not capped and sometimes apply to defense contracts as well.

Defense contracts are, for the most part, "cost-plus" contracts and behave more or less as described in my OP:

RE: The Sin
By SAnderson on 12/27/2012 12:59:18 PM , Rating: 2
But who determines the product's actual 'cost'? They could easily say the 'cost' is higher than what it really should be in a free market to increase revenue/profit.

RE: The Sin
By StevoLincolnite on 12/26/2012 11:14:37 PM , Rating: 4
Profits aren't capped.

If you can make your product cheaper and still sell the same amount, you get more profit.

Besides it's been proven all through history that companies can innovate more and produce items that are cheaper than government controlled bureaucratic wasteful companies.

Plus who says that they will only profit from the government? Internet providers and other companies could *invest* and get Satellites into space, which means they would improve on their technology and hopefully ends up being ultimately cheaper. - Which means less taxpayer dollars spent in the end.

I say bring on the competition! We might end up setting foot on Mars one day because of it.

RE: The Sin
By 3minence on 12/27/2012 9:25:25 AM , Rating: 2
Incredible the lack of understanding some of you display. Its either one way or another, it's black or white, never grey. Yet the real world is full of grey. SpaceX doesn't have a lot of experience and maturity in what it does. Its new, with cool ideas and a desire to experiment. It will make mistakes, it will loose rockets and payloads. It will learn and mature and get better.

Lockheed and Boeing have lots of experience. Their rockets are proven, and they take few risks. What they do they do very well. Because they are risk averse they stopped improving. They've become stagnant, and top heavy with expensive ex generals/admirals. They play the contractor game and do quite well for themselves.

Who's right and who's wrong? SpaceX will be cheaper and more innovative, but they will loose rockets and payloads. ULA will be more reliable, but they won't get much better or cheaper. Such is life.

RE: The Sin
By Cheesew1z69 on 12/27/2012 12:51:14 PM , Rating: 2
SpaceX will be cheaper and more innovative, but they will loose rockets and payloads.
As the others can as well....

RE: The Sin
By Samus on 12/30/2012 10:43:27 AM , Rating: 2
and nobody wants a rocket on the loose!

RE: The Sin
By FaaR on 12/27/2012 1:09:23 PM , Rating: 2
*Profit margins are capped

So YOU say. :) Even if true, budgets aren't necessarily capped however, as the miserable F35 for example has shown, so even with a fixed margin a contractor can vampire more and more corporate profits out of the taxpayers simply by letting costs balloon out of all proportions.

RE: The Sin
By kattanna on 12/27/2012 10:02:23 AM , Rating: 2
LOL.. kinda funny seeing how butthurt they are over a couple of test missions.

will be interesting to see the crying if they actually succeed.

"Google fired a shot heard 'round the world, and now a second American company has answered the call to defend the rights of the Chinese people." -- Rep. Christopher H. Smith (R-N.J.)

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