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Comment by vonklaus | Hacker News Reader

>Last month, NASA said it would pay SpaceX its largest single contract ever, $2.6 billion

>Boeing, will do the same job but at more than half again the cost—some $4.2 billion.

Leaving aside how horribly this is worded, what does this even mean? Two lines later it said Boeing was awarded a contract nearly twice as large.

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Apparently it's not quite settled. A 3rd company which lost the bid is suing over just this issue. How can you pay two companies such drastically different amounts for the same end product?

I think it represents the varying levels of perceived risk in delivery, and a tacit acknowledgement that SpaceX is simply operating (at least) 2x as efficiently. If SpaceX fully delivers on their contract, I hope we see Boeing squeezed harder next time. What would be even more interesting is if SpaceX were to hit the finish line on time and budget, and Boeing getting lost in billions of cost overruns and delays. The article talks about "cost+" accounting, so that may play a part in how this happened as well.

In the end I like that they awarded two contracts. There really is nothing like good competition to motivate everyone.

No I actually follow spaceX and understand the political reasons. I meant, how did spaceX receive the largest contract ever, then 2 lines later, it says Boeing received a larger contract.

> I meant, how did spaceX receive the largest contract ever, then 2 lines later, it says Boeing received a larger contract.

The contract SpaceX received was bigger than any contract SpaceX had previously received. The contract Boeing received was larger than SpaceX's, but not Boeing's largest in its history by far.

Thanks you for this. That means that in the original wording:

>Last month, NASA said it would pay SpaceX its largest single contract ever, $2.6 billion

The word "its" is an ambiguous pronoun - those who read it to mean "NASA" are left confused, since it seems like NASA just went around awarding even larger contracts. In fact, I think it's not only ambiguous, but in the most obvious interpretation of that sentence, it does indeed sound like NASA's biggest single awarded contract ever.

Cost+ accounting for a contract means that the contract is awarded at face value, and the contractor is allowed to bill more than face value for a variety of reasons, mostly based on if the government changes/adds requirements (blows projection estimates up), moves locations (employee compensation changes), increases delivery needs, things like that. It also often ends up getting abused by the contractor who will claim "market forces" or something forced production costs to increase, or "unforeseeable complexities" lengthened production time (such as with all of the set backs in the joint strike fighter programs).

What will be a real blow for Boeing is if they actually have to execute options on the "+" side of that -- if SpaceX hits their cost target and Boeing costs not only double, but triple, good luck wining the next contract as a prime.

Additionally the contractor has to do the extra work at cost, meaning no profit fees. It protects the contractor from going under and protects the prime from bad motives.

Usually there are additional award fees for getting stuff done on time.

Any Firm Fixed Price RFP response (versus Cost+ or many other forms) considers the profit margin as part of the proposed contract value. Any company not insulating an FFP proposal with enough margin to absorb a few unexpected issues shouldn't be in business anyways, IMHO.

Same way Orbital was awarded vastly more for CRS contract, by even larger margin. Reason is simple and completely valid: both Orbital in 2008 and Boeing in 2014 have much higher chances to perform to the expectation. So SpaceX makes a discount for risk.

In 2008, SpaceX did only 4 launches, of which only 1 successful, of much smaller light Falcon 1 vehicle, Orbital built 2 distinct successful launch vehicles - Taurus and Pegasus - and apart from that, it built complex satellites, being a company with 25+ years of experience and much more funding and track record. Should 2008 CRS contract be awarded today, it would be probably much different because now SpaceX appears more qualified.

Same applies to Boeing today - for all achievements of SpaceX, Boeing is a nearly 100 year old company which was in space business since before the space age, and about two orders of magnitude larger - for them, CST-100 is a simple device not presenting much technical risk.

Actually, the CST-100 vs. Manned Dragon comparison is more complicated than that. Manned Dragon is based on Cargo Dragon, which has already flown six times. While Manned Dragon is eventually planned to land on rockets, it can start by landing in the water with parachutes, just like Cargo Dragon, while Cargo Dragon is flown a bunch of times with rocket landing to work out the bugs.

Since the CST-100 is only used for people, it will have a much lower flight rate and much less testing before humans fly in it.

Finally, Manned Dragon will have its abort test flown within the next few months; CST-100 is a bit behind.

Pegasus has a 5% failure rate. Taurus has a 33% failure rate. Taurus has three failures in its last four flights. Not impressive. SpaceX had a perfect launch record on the Falcon 9. Not bad for a 12 year old company. And regarding Boeing being 100 years old, I'll drive a Tesla and not a Model T, thank you.

Please read my post carefully. Right now yes, SpaceX is more qualified. That was not the case in 2008 when CRS contract for SpaceX and Orbital was awarded, both SpaceX track record and success rate were far inferior.

Boeing and SpaceX both submitted proposals, including a proposed price. They both got what they asked for; the process allowed the selection committee to say yea or nay, but not "could you do it for less?". And this particular program (CCtCAP -- Commercial Crew Transport CAPability) issues fixed-price contracts, so "cost-plus" accounting is not at issue in this particular deal (though it certainly is in aerospace procurement generally).

See http://en.wikipedia.org/wiki/Commercial_Crew_Development#Com...

To clarify the pronoun:

> NASA said it would pay SpaceX SpaceX's largest single contract ever, $2.6 billion

Ahhh. I thought they were speaking about NASA. Cheers.

I believe the first sentence is talking about SpaceX's "largest single contract" not NASA's largest contract.

  2.6 + 2.6 / 2 =
  2.6 * 1.5 = 
  2.6 + 1.3 =
  3.9 < 4.2

“Half again” something means 1.5 times something.

Right. Sorry I meant how could spaceX have the largest contract, then 2 lines later, it says Boeing gets nearly twice as much. The author did some linguistic gymnastics to make Boeing sound like it was in fact, undercutting SpaceX. I felt the need to clarify it in my above post because of how obtuse that language was.

NASA said it would pay SpaceX >>its<< largest single contract ever

the "its" here refers SpaceX, so largest contract of SpaceX, not largest contract of NASA.

could be considered a vague pronoun reference: http://www.towson.edu/ows/modulepro.htm

I came here to comment on the deeply amusing spin of "more than half again the cost". SpaceX came in second on the evaluation process, and was awarded less money than first-place Boeing as a result. They're not somehow being thrifty.

(I'm a big SpaceX fan, I am just even more a fan of accurate reporting.)

Each company set their own bid amount. SpaceX didn't get less because they 'came in second', they got less because they put in a lower bid in the first place.

Oops, you seem to be right. Some of the early reporting implied otherwise[1], but that seems to have been in error[2]. Sorry for spreading misinformation!

[1] http://www.forbes.com/sites/alexknapp/2014/09/16/reports-boe...

[2] http://www.forbes.com/sites/alexknapp/2014/09/16/nasa-awards...

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