Zero Genie

Companies are increasingly looking to space as a place of business, and the National Aeronautics and Space Administration has been changing in several different ways, especially by partnering with corporations to develop new technologies.

Earlier this year NASA announced it would open the International Space Station to private astronauts, with short missions beginning as soon as 2020. Additionally, NASA said it would allow companies to bid for new activities on the space station, as the agency unveiled a directive to “enable commercial manufacturing and production” in space.

The space station has been touted as a stepping-stone toward creating an ecosystem of business in orbit around the Earth, so companies can manufacture, experiment, advertise and even host tourists. After NASA’s announcement, agency CFO Jeff DeWit spoke to CNBC about how more companies involved in the space station will “lower the cost and lower the risk” of doing business in outer space.

“How you drive that is based on what we’re doing now, which is trying to now prove the concepts and get the commercial sector involved,” DeWit said. “The only outcome for this is a positive, not only for NASA but for the space economy for private companies.”

DeWit pointed to the satellite segment of the industry as an example for how shifting ownership and operations from government-built-and-owned to commercial can drive innovation, such as communications or services like satellite television.

“The early satellites were all government-owned, and they were limited in their scope and very expensive. When satellites really took off is when the commercial sector came in,” DeWit said. “The commercial sector figured out these uses that the government never would have figured out, and they put their own satellites up there. The cost came down a lot, and the uses went up a lot.”

That’s a model DeWit sees NASA increasingly replicating, whether its purchasing services from private companies for the agency or providing development awards so companies can develop technologies that NASA wants to utilize. A key example of the latter is NASA’s “Tipping Point” awards, which the agency began issuing in 2014. The awards created public-private partnerships, as NASA calls them, which officials such as administrator Jim Bridenstine often refer to today as critical to the agency’s future success.

“The idea was to see how we can actually make use of this emerging commercial space sector,” LK Kubendran, a NASA leader in commercial partnerships, told CNBC on Wednesday. “So it’s just NASA alone in developing technologies.”

In the past five years, NASA has awarded five groups of tipping point awards, worth more than $120 million combined. Broadly speaking, a company or project selected for a tipping point award receives NASA resources up to a fixed amount, with the private side paying for at least 25% of the program’s total costs. This allows NASA to shepherd the development of important space technologies while trying to save the agency money. Kubendran highlighted manufacturing company Made in Space as an example of the success of this program, as the company received a tipping point award in 2015 and is now testing its 3D-printing technology in space.

“That can go a long way to actually making the demo in flight and eventually allowing us to manufacture in space,” Kubendran said. “That’s actually a great example of how private sector and we have collaborated to make certain things happen.”

Each batch of tipping point awards are divided among multiple programs. The most recent awards, announced in September, saw 14 U.S. companies win a combined $43 million to develop technologies that will help NASA’s “Moon to Mars” initiative. The contracts went to a wide variety of companies — from SpaceX to Blue Origin to Astrobotic – for a variety of purposes — from producing cryogenic production, to developing sustainable energy generators or building affordable propulsion systems for small spacecraft.

Another one of the agency’s top focuses is a program called Commercial Crew, which is the agency’s solution to end reliance on Russian Soyuz spacecraft to send astronauts to the space station. NASA has awarded SpaceX and Boeing more than $3.1 billion and $4.8 billion, respectively, since 2014 to develop capsules capable of launching U.S. astronauts multiple times per year. SpaceX and Boeing are close to completing work on their respective Crew Dragon and Starliner capsules, while Bridenstine said in October that the first launches with crew on board may happen as early as the first months of 2020.

Commercial Crew is representative of a shift within NASA, where the agency buys services rather than hardware from companies. While delays have plagued the program, both companies are in the final stages of testing the capsules. Boeing expects to conduct its uncrewed test flight of Starliner on Dec. 17, which will be much like SpaceX’s Demo-1 mission earlier this year. And, after SpaceX completed a key test of its Crew Dragon capsule, the company expects to conduct a test of the capsule’s emergency escape system during a launch in December.

NASA expects to pay about $90 million per seat to fly with Boeing and $55 million to fly with SpaceX. A seat on a Russian Soyuz spacecraft would cost about $82 million per person currently.