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OUT LINE 


EXECUTIVE SUMMARY 

Page No. 

ACKNOWLEDGEMENTS i 

LIST OF FIGURES 

LIST OF TABLES iv 

0.1 INTRODUCTION 0-1 

0. 2 STATEMENT OF THE ECONOMIC PROBLEM 0-8 

0. 3 ECONOMIC PRINCIPLES APPLIED IN THE ANALYSIS 0-l6 

0. 3, 1 Cost Effectiveness Analyses 0-l6 

0. 3. 2 The Measurement of Induced Benefits 0-19 

from Incremental Space Activities 

0, 3. 3 The Social Rate of Discount 0-22 

0. 3,4 The Uselife of the Space Transportation 0-26 

System RDT&E Investments 

0.3.5 Other Economic Parameters: Program Start, 0-26 

Gestation Period and the Initial Operational 
Capability 

0. 3.6 The Incremental Costs of Space Flights in 0-27 

the 1980's of Different Space Transportation 
Systems 

0. 3, 7 Risk and Uncertainty 0-31 

0.4 SUMMARY OF THE QUANTITATIVE RESULTS OF 0-34 

THE ECONOMIC ANALYSES 

0.5 CONCLUSIONS 0-60 


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ACKNOWLEDGEMENTS 


The Report on Economic Analysis of New Space Transportation 
Systems has been prepared for the National Aeronautics and Space 
Administration under Contract NASW-2081 dated June 4, 1970 by 
MATHEMATICA, INC. The study is being directed by Drs. Oskar 
Morgenstern and Klaus P, Heiss. The following persons are associated 
responsibly: David Bivins, Edward Greenblat, J. Preston Layton, 

Courtland D. Perkins, Uwe Reinhardt, Miklos Remenyi, Joseph Traybar 
and Kan Young. 

The NASA monitor is Mr. Robert N. Lindley, Director, 
Engineering and Operations, Office of Manned Space Flight. His 
informed interest and warm concern are gratefully acknowledged. 

Thanks are extended to other NASA and contractor personnel who have 
contributed to this work. 

Last, but not least, this report owes much to the dedication of 
Margaret Wirth, the project secretary, who directed and participated 
greatly in the typing and editing of this work. 


LIST OF FIGURES 


Figures 

0, 1 The Role of Economic Analysis in the Evaluation of Public 

Projects 

0, 2 Flow of Inputs to the Economic Analysis 

0. 3 STS Recurring vs. Non-Recurring Launch Cost Trade-Offs 

at Given Discount Rate 

0.4 Space Program Costs (1978-1990 Operations) - -Scenario I 

0. 5a Equal Capability Analysis, NASA, DoD and Other Users 

0. 5b Equal Budget Analysis, NASA, DoD and Other Users 

0. 6 The Measurement of Induced Benefits from Incremental 

Space Activities 

0. 7 Sensitivity of Net Present Project Value to the Discount 

Rate 

0. 8 Average and Incremental Launch Costs of the Space 

Shuttle 

0. 9 "Equal Capability" Cost Analyses (10% Discoimt Rate) 

0. 10 "Equal Budget" Cost Analyses (10% Discount Rate) 

0.11 "Equal Capability" Cost Analyses (No Net Mass Effect, 

10% Discount Rate) 

0.12 "Equal Capability" Cost Analyses (15% Discount Rate) 

0.13 "Equal Capability" Cost Analyses (5% Discount Rate) 

0,14 Summary of Different Cost Effect Analyses (10% Dis- 
count Rate) 

0.15 "Equal Capability" Cost Analyses with Lunar Option 1 
Added 


0-3 


0-5 


0-11 
0- 14 
0-18 
0-18 

0-20 

0-24 

0-30 

0-36 

0-43 

0-45 

0-48 

0-49 

0-50 

0-52 


11 






0.16 Summary of ’'Equal Capability” Cost Analyses - -Different 

Discount Rates; 5%, 10% & 15% 0-53 

0.17 Space Program Costs (1978-1990 Operations) --Scenario 3 0-55 

0.18 Space Program Costs (1978-1990 Operations) --Scenario 23 0-56 

0.19 Space Program Costs (1978-1990 Operations) - -Scenario 24 0-57 

0.20 Space Program Costs (1978-1990 Operations) --Scenario 25 0-58 


0 . 21 


Space Program Costs (1978-1990 Operations) - -Scenario 26 


0-59 




0. 1 INTRODUCTION 


This Executive Summary is an abstract of MATHEMATICA's 
report, Economic Analysis of New Space Transportation Systems of 
31 May 1971, which was carried out in accordance with the provisions 
of Contract NASW-2081. 

The study conducted by MATHEMATICA examines the economic 
merits of three alternative Space Transportation Systems^ for use in the 
decade of the 1980's: 

• The Current Expendable System, The system envisages 
continuing use of the types of expendable launch vehicles 
in the United States inventory at present. 

• The New Expendable System. As its name implies, this 
envisages use of a new family of expendable vehicles, 
designed to have better (economic) performance than the 
current expendable vehicles. 

• The Space Shuttle and Tug System (a new Space Trans- 
portation System), This system differs in concept from 
the previous systems in employing reusable rather than 
expendable launch vehicles. Two major elements are 
employed: a Space Shuttle which operates between the 
Earth’s surface and Earth orbits of altitudes between 
185 and 1, 110 kilometers (100 and 600 nautical miles); 

a Space Tug, which can be transported within the Space 
Shuttle and which can operate from the relatively low 
orbits of the Space Shuttle to high Earth orbits such 

A Glossary of Terms is included in the Report. 


0-1 


as the synchronous equatorial orbit (35, 500 km or 
19, 230 n. m, altitude). The combined Space Shuttle and 
Tug System provides a fully reusable launch system able 
to place payloads into all widely used Earth orbits, and 
to return payloads to Earth from these orbits. 

The costs associated with reaching an Initial Operational Capa- 
bility (IOC) with these three systems vary widely. The two expendable 
systems represent modest investments by space program standards, 
but the recurring costs of operation under them would remain relatively 
high. The Space Shuttle and Tug System requires a substantial investment, 
but would substantially reduce the recurring costs of operation. The 
impacts of the three systems on the costs of the space program of the 
1980's also vary widely. MATHEMATICA has analyzed economic 
benefits and costs of the different systems. The findings, as well as 
the economic principles applied, are summarized herein. 

Figure 0. 1 shows the logic of the overall economic analysis 
performed by MATHEMATICA and the context within which this analysis 
should be seen as affecting the Space Shuttle decision. MATHEMATICA 
submits that within this framework a consistent and detailed economic 
analysis of the fully reusable Space Shuttle has been made. As Figure 0. 1 
shows, there are other than economic factors that influence a decision 
of the scope and character of the Space Shuttle; they have to do with 
political criteria, the ranking of technological preferences, national 
priorities and other non-economic criteria. The economic analysis is 
but one important element to be considered in the approach to the 
decisions relating to the development and use of a new Space Transpor- 
tation System. 


0 

1 

(Jj 


DATA GED’ERATION 


ECONOMIC ANALYSIS 


PROJECT RANKING 


PROJECT 

CHOICE 



Figure 0.1 The Role of Economic Analysis in the Evaluation of Public Projects 







Tli 0 study conducted by MATHEMA.TICA. makes major use of 
the results of the studies performed by two other contractors, LMSC 
(Lockheed Missiles and Space Company) and Aerospace Corporation, 
as well as facts, plans and assumptions provided by NASA and the 
Department of Defense. Figure 0. 2 shows the flow of inputs to the 
economic analysis performed by MATHEMATICA. 

The contributions of LMSC consisted primarily of estimates of 
sample payload costs for the expendable and the re suable Space Trans- 
portation Systems for the period 1978 - 1990, based on extensive payload 
preliminary designs. LMSC first performed an analysis of expected 
payload costs based on historical experience to determine whether cost 
reductions could be achieved. To accomplish this LMSC selected four 
typical satellites and estimated their expected research, development, 
test and evaluation (RDT&tE) costs, first unit costs and operating costs 
for each of the three Space Transportation Systems considered. Then 
these four satellites were looked at in great detail at a subsystem level 
and redesigned to correspond to the three major classes of satellites 
anticipated for the 1980's space traffic. Aerospace Corporation then 
used the results of the LMSC effort as a basis to generalize the payload 
effects across the Baseline mission model supplied by NASA, which 
incorporates traffic of NASA, the Department of Defense and other users 
Aerospace Corporation then provided MATHEMATICA with the life 
cycle cost streams from 1971 to 1990--RDT&E costs included- -for the 
Current Expendable launch vehicles and payloads, the New Expendable 
launch vehicle family and payloads, and the fully reusable Space Shuttle 
Transportation System based on a two- stage Space Shuttle and reusable 
Space Tug configuration. 

In recognition of the problems of accurately predicting the 
rate of space activity more than a decade in the future, MATHE- 
MATICA introduced many variations of the Baseline model which 

0-4 


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Figure 0. 2 Flow of Inputs to Economic Analysis 


Contract NASW-2156, approximately 12 man-years of effort 
Contract NASW-2129, approximately 25 man-years of effort 
Contract NASW-2081, approximately 8 man-years of effort 


0-5 









resulted in analysis of twenty- six scenarios that bracket the most likely 
possibilities for the 1978 - 1990 period. All of the aforesaid considera- 
tions formed the basis on which MATHEMATICA performed the economic 
analysis of the new, fully reusable Space Shuttle Transportation System, 

It should be emphasized that the systems data used in the 
analysis were generated for this study principally by NASA, by the 
Department of Defense, by Aerospace Corporation, by LMSC and to 
some extent by other contractors. They were not generated by MATHE- 
MATICA. MATHEMATICA reviewed the data generated including the 
Cost Estimating Relationships (CERs) used by the Aerospace Corporation 
and is satisfied that they reflect current standards for such efforts and 
represent the best procedures available at this time. 

Aerospace Corporation stated that it tested its cost estimating 
relationships by estimating costs of well known aerospace systems 
with good approximation of actual costs. On the other hand, it must be 
recognized that the fully reusable Space Shuttle Transportation System 
advances major new areas of technology, and therefore involves cost 
uncertainties not easily related to present aircraft or spacecraft costs. 

The analysis is based on data published by Aerospace 
Corporation in Integrated Operations /Payloads /Fleet Analysis, Mid- 
Term Report, (6 Volumes), dated 31 March 1971, Aerospace 
Corporation plans to publish an update of these data in June 1970, 
MATHEMATICA will undertake a study to assess the impact of the 
updated data on the findings of this report. 

MATHEMATICA is continuing its validation of the cost data 
and the details of their aggregation from individual components to 
larger units. 


0-6 


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MATHEMATICA has designed the model for the benefit- cost 
analysis into which the data provided for MATHEMATICA have been 
inserted. This model is comprehensive and takes into account the 
relevant concepts provided by advanced, modern economic analysis. 

The present model has been modified and expanded for general use in 
cost effectiveness analyses of new Space Transportation Systems (STS). 

In the Report only expendable launch vehicle systems and the 
fully reusable, two- stage Space Shuttle and Tug System are considered. 

An economic evaluation of other viable alternative concepts has as yet 
not been made by MATHEMATICA. Assessment of the cost effective- 
ness of other Space Shuttle configurations to determine the most 
economic choice can be performed in accordance with the methodology 
of this analysis, once technical validation is accomplished and comparable 
technical performance and cost data are available. 


0.2 STATEMENT OF THE ECONOMIC PROBLEM 

NASA is studying the development of a new, fully reusable 
Space Shuttle Transportation System for the 1980’s to replace its 
Current Expendable Space Transportation System. Table 0. 1 gives 
the complete life cycle cost summary of launch vehicle systems and 
payloads for the alternative Space Transportation Systems considered 
in this study. The two- stage, fully reusable Space Shuttle System as 
estimated by Aerospace Corporation on March 31st, 19V1 is 
expected to have non-recurring launch vehicle costs of approximately 
$12.8 billion (RDT&E and initial fleet investment costs) in constant 
1970 dollars. {Section 0.3.7. See also p. 0-31.). In terms of past 
historical experience in either NASA or the Department of Defense, 
this is a major research and development project — about half of the 
cost of the Apollo program of the 1960*s — and, therefore, deserves 
very careful examination and scrutiny. 

Any investment in large scale RDT&E projects has either or 
both of two major economic objectives: 

(a) to develop a new good or service, 

(b) to reduce (future) production and operating costs. 

An example for (a) is the development of space transportation 
capability in the United States during the 1950's and the 1960's. Today 
the United States has an Earth orbital space transportation capability 
and the aim of future RDT&tE outlays is mainly (b), that is, the 
expected reduction of space activity costs; however, added capabilities 
are also anticipated from such a program. 



0-8 


Table 0. 1 


SPACE TRANSPORTATION SYSTEMS 
LIFE CYCLE COST SUMMARY 
(Scenario 1) 

(in Millions of Undiscounted 1970 Dollars) 



Current 

Expendable 

New 

Expendable 

Space 1 
Shuttle 
Tug 

Expected Launch Vehicle Costs 




RDT&E (FY 1971-1980) 

$ 960 

$ 1, 185 

$ 9,920 

Investment (FY 1973-1990) 

584 

727 

2, 884 

TOTAL NON-RECURRING 

1, 544 

1,912 

12,804 

Recurring Costs (FY 1978-1990) 

13, 115 

12, 981 

5, 510 

TOTAL LAUNCH COSTS^ 

$15,000 

1 — < 

0 

o 

0 

$18,000 

Expected Payload Costs 
(Satellites) 




RDT&E (FY 1974-1990) 

12, 382 

11, 179 

10,070 

Recurring Costs (FY 1976-1990) 
TOTAL PAYLOAD COSTS^ 

31, 254 

28, 896 

15, 786 

$ 44, ooo 

$40, ooo 

$26,000 

EXPECTED TOTAL SPACE 




PROGRAM COSTS^ 

$58,000 

$55, ooo 

$44, ooo 


Table 2 gives a breakdown of these costs over time. 
Small zeroes indicate rounding to nearest billion. 





















In the case of the Space Shuttle and Tug System, the ex- 
pected cost reductions in the 1980’s will occur in two major areas: 
first, the launch system recurring costs will be reduced from $13 billion 
total to $5.5 billion due to the repeated use of the launch system. 

Second, the cost of payloads- -the major portion of space program costs -- 
will be reduced from about $40 billion to $26 billion due to the reuse, 
refurbishment and updating of payloads. Once the Space Shuttle System 
is in operation the total direct costs of the national space program will 
consist of the recurring launch costs and the total (i, e, , non-recurring 
plus recurring) costs of the payloads to be carried. Table 0. 1 illustrates 
that recurring launch costs make up about 20 percent or less of space 
program costs (1978-1990), while 80 percent or more are due to the 
total cost of payloads. Therefore, an economic analysis of the New 
Space Transportation System has to look at payload costs as the major 
part of total space program costs, and not only at launch costs. 

In economic terms the problem can be stated as follows: What 
must the future savings in space program costs (launch- -as well as pay- 
loads) be to justify an RDT&E and Initial Investment outlay on the Space 
Shuttle of, say, $13 billion? Or, as illustrated in Figure 0. 3, one can 
ask the reverse question: considering the expected cost of the national 
space program using an Expendable Space Transportation System in the 
1978 - 1990 period and given the expected savings in the operating phase 
of space programs with the Space Shuttle System, both launch costs and 
payload costs considered, what are the justifiable non-recurring costs 
of New Space Transportation System concepts? A convenient way to 
illustrate all the possible economic configurations of recurring versus 
non-recurring costs of different technologies is shown by the trade-off 
line in Figure 0. 3, Estimates and configurations below the trade-off 
line are, in economic terms, better than the Current Expendable System, 
while configurations of non-recurring costs and recurring cost estimates 
above the trade-off line are worse than the expected Expendable System costs. 


0-10 


FULLY 


REUSABLE STS 


HYBRID 


SYSTEMS 


I 

EXPENDABLE 


SYSTEMS 


COSTS PER FLIGHT 

(MILLIONS OF UNDISCOUNTED 1970 DOLLARS) 


Figure 0. 3 STS Recurring vs, Non-Recurring Launch 
Cost Trade-Offs at Given Discount Rate 
e. g. , 10 percent. Payload Effects and 
Space Transportation Activity. 

For Space flights that require the Space Tug, $0. 46 million have to 
be added. 


In the expendable case the Upper Stage Costs have to be included, where 
required. They vary from $2.5 million to $5.0 million. 





Figure 0. 3 shows the trade-off line between the ^ ^ j-nch costs 
for one additional flight and the expected non-recurring costs of 
different systems. Underlying each of these regions of economic 
choice shown in Figure 0,3 is a very complicated and extensive set 
of cost estimates, demand estimates, and estimates of other economic 
variables influencing system choice which will be listed subsequently 
and which are analyzed in detail in the main Report, Chapters 2, 0 
and 6, 0. 

The costs may be subdivided into two major broad categories: 

(a) The non-recurring costs associated with the RDT&E and 
investment phase, including both launch vehicle and payload costs , 

(b) The recurring costs per mission or per year for both 
the expendable and the fully reusable system after the Initial Operating 
Capability (IOC) date, again including both launch vehicle and payload 
costs . 

Figure 0, 3 does allow for the correct adjustment of the trade- 

X 

off line for payload effects (see 2,4 and 2. 6) . The fully reusable 
Space Shuttle and Tug Transportation System is shown with an estimated 
xion-recurring cost of $12, 8 billion and an estimated cost per launch 
(based on incremental costs) of $4. 6 million. Alternate (Hybrid) 
systems that consist of both expendable and reusable elements may 
have a wide range in expected non-recurring and recurring costs: the 

one shown has $7 billion in non-recurring costs and a recurring cost 
per launch of $8 million, again on an incremental cost basis. The 
Expendable systems would also have an associated non-recurring cost, 
to meet mission requirements of the 1980’s, of about $1,5 billion, but 
an expected cost per launch of $13, 1 million — averaged over a large 
family of expendable rockets (from $3,2 million to $27, 0 million, see 

^ These numbers, as well as similar subsequent numbers, refer 
to sections in the Main Report. 

0-12 


Chapter 6.0, Table 6, 3), An analysis comparing the cost of Expendable 
systems to expected costs of the Space Shuttle and Tug was made on a 
mission-by~mission and payload- by- payload basis. The figures shown 
in the summary graph are aggregate, averaged figures. The regions 
around the point estimates indicate the uncertainty in non-recurring 
and recurring cost estimates of the various systems. 

The particular trade-off line in Figure 0. 3 was drawn based on 
a 10 percent social rate of discount. ^ There are a set of other economic 
factors that influence the location, the shape, and the slope of the trade- 
off line in Figure 0. 3; among these are the level of demand for space 
transportation and the magnitude of payload effects for different systems. 

Figure 0,4 illustrates the space program cost streams (annual 
cost vs. time) associated with the Space Shuttle System and with the 
Current Expendable System. It reflects the space program activities of 
the mission model established by NASA and by the Department of Defense 
for this study. Figure 0, 4 summarizes the total life cycle costs for 
RDT&E, investment and operations phases of both launch vehicles and 
payloads. 

MATHEMATICA introduced considerable variations to these 
activities, called Scenarios, to cover a broad range of space transporta- 
tion demand in the 1980’s. In Table 0.2 the Scenario 1 (NASA and DoD 
Baseline model) life cycle cost summary data are presented for the Space 
Shuttle System. The cost data are given by year from 1971 to 1990 for 
launch vehicle RDT&E, initial fleet and operation costs as well as for 
payload RDT&E and operation costs. Total costs are also shown for each 
year and for each category, all in undiscounted 1970 dollars. 


The social rate of discount is discussed in Section 0. 3. 3. 


-13 


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ANNUAL SPACE PROGRAM COSTS 
(BILLIONS OF UNDISCOUNTEO 1970 DOLLARS) 



Table 0.2 


LIFE CYCLE COST SUMMARY DATA 



SCENARIO 

(MILL 

1 - NASA + DOD BASELINE MODEL 

SPACE SHUTTLE SYSTEM 

IONS OF UNDISCOUNTED 1970 DOLLARS) 




NON-RECURRING 

COSTS 

RECURRING 

COSTS 

TOTAL 

FISCAL 

YEAR 

LAUNCH VEHICLE 
RDTCE INVEST. 

PAYLOAD 

RDTCE 

LAUNCH 

PAYLOAD 


1971 

18 

0 

0 

0 

0 

18 

1972 

492 

0 

0 

0 

0 

492 

1973 

1528 

0 

0 

0 

0 

1528 

1974 

2289 

0 

33 

0 

0 

2322 

I97t> 

2344 

32 

262 

0 

0 

2638 

1976 

1914 

85 

1198 

0 

465 

3662 

1977 

970 

314 

1814 

0 

1526 

4624 

1976 

365 

533 

1101 

678 

1690 

4367 

1979 

0 

800 

650 

365 

1205 

3020 

1960 

0 

613 

551 

415 

970 

2549 

1981 

0 

310 

617 

364 

906 

2197 

1982 

0 

74 

796 

409 

891 

2170 

1983 

0 

49 

883 

364 

1059 

2355 

1984 

0 

49 

894 

381 

1272 

2596 

1985 

0 

25 

591 

420 

1480 

2516 

1986 

0 

0 

242 

479 

1364 

2085 

1987 

0 

0 

113 

386 

1143 

1642 

1988 

0 

0 

149 

437 

930 

1516 

198 9 

0 

0 

137 

366 

686 

1189 

1990 

0 

0 

39 

446 

199 

684 

TOTAL 

9920 

2884 

10070 

5510 

15786 

44170 


0. 3 ECONOMIC PRINCIPLES APPLIED IN THE ANALYSIS 


Given the expected reductions in space transportation system 
costs in the 1980' s, MATHEMATICA analyzed the circumstances and 
consequences of an investment in a New Space Transportation System 
made in the 1970's. For this, total life cycle costs of the investment 
were used. ^^ATHEhlATICA gave additional attention to the costs per 
flight for the different Space Transportation Systems and their effect 
upon the demand for space transportation in the 1980' s. For the purpose 
of considering efficient use of alternative transportation systems the 
incremental costs of space flights are relevant. The actual pricing 
policy of flight operations is subject to institutional constraints and one 
has a variety of choices, ranging from total cost recovery down to recovery 
of incremental cost per flight only; it could also be based on demand elasti- 
cities of users. However, the two problems of cost effectiveness and 
demand analysis (for pricing strategy) should not be confused with each other 

The principal economic considerations are the following: 

0, 3. 1 Cost Effectiveness Analyses, 

Under cost effectiveness analyses, in a strict sense, MATHE- 
MATICA includes only those economic analyses that use a definition of 
economic benefits which are either directly or indirectly derived from 

% 

expected cost savings between alternative systems. Within cost effective- 
ness analyses MATHEMATICA chose two alternative and equally valid 
approaches that lead to different economic results; 

a. Equal Capability Effectiveness. These cost effectiveness 
analyses assume that the same demand (capability) has 
to be met. Estimates of the net cost savings are made 


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that can be achieved when introducing new technology. 

These cost savings are then compared to the expected 
outlay of RDT&E and hardware costs of the new system. 

In Figure 0, 5a the approach is illustrated (see Chapter 

2 . 0 ). 

b. Equal Budget Effectiveness. These analyses assess 
whether the direct cost savings implied by (a) above 
and increases in the demand for space transportation 
induced by the new system up to the same annual budget 
level justify the expected RDT&E and initial fleet invest- 
ment over the complete uselife of the new system. The 
new system is operated with the same budget level that 
the existing technology requires to meet the space trans- 
portation capabilities within each scenario. This 
approach is indicated in Figure 0.5b (see Chapter 2.0). 

Figures 0. 5a and 0. 5b illustrate these two types of cost effective- 
ness analyses. Neither approach considers potential additional benefits 
and options that a fully reusable Space Transportation System can offer 
the Nation, i. e. , capabilities that with the Expendable rocket technology 
simply are not achievable for technical reasons. In making cost effective- 
ness analyses in this strict sense, one need only make the assumptions 
that prior to the development of the New Space Transportation System 
society is willing to spend, say, $3 billion to place 46 payloads into orbit, 
per year, (this was the average over the years from 1963 to 1970 for the 
unmanned programs, excluding the manned space program completely) 
and that the projected space budget for NASA and the Department of 
Defense jointly is being spent in an efficient way. 


0-17 


NUMBER OF SPACE NUMBER OF SPACE 

FLIGHTS PER YEAR FLIGHTS PER YEAR 








«SiSBB»iKRsa»nssr%!iiss^x^.^ 



(BILLIONS OF 1970 DOLLARS) 

Figure 0. 5a 

Equal Capability Analysis, NASA DoD and Other Users 



Figure 0. 5b 

Equal Budget Analysis, NASA, DoD and Other Users 


0-18 


This means that with the existing technology, sizeable cost 
savings cannot be achieved for the same program capabilities either in 
the Department of Defense or in the science and applications programs 
of NASA. 

Equal capability analyses and equal budget analyses were per- 
formed for a whole range of expected space programs, from 450 to 
900 flights, over a 13-year (19”78-1990) period for expendable and 
fully reusable systems. The range of space programs (scenarios) 
considered is described further in the quantitative summary. 

Section 0, 4. 

0. 3. 2 The Measurement of Induced Benefits from 
Incremental Space Activities. 

When performing "Equal Budget" analyses one has to allow 
for one basic axiom of economic theory: the decreasing marginal 
value of goods and services. In keeping with this fundamental 
principle, as additional missions are added to the existing space 
program, they increase the total value received by society, by the 
agency, or by the scientific community; however, the increment 
in utility received by society or the consumer will be decreasing as 
the number of missions increases. This holds for NASA, for the 
Department of Defense, and for other government agencies. The 
assumptions made for the "Equal Budget" analyses in measuring 
the benefits of additional space flights beyond those undertaken with 
the Expendable Space Transportation System in the 1980’s are 
illustrated in Figure 0. 6. The horizontal axis shows the number of 
space flights demanded per year, and the vertical axis shows the price 
or cost per space flight, including payload costs. (Ignoring, correctly, 
fixed costs and considering incremental costs; see 0. 3. 6,). The 


0-19 


PRICE/COST PER SPACE FUG 
(PAYLOADS INCLUDED) 
(MILLIONS OF DOLLARS)_ 



I 


Sole 

46 




NUMBER OF FLIGHTS PER YEAR 


Figure 0. 6 

The Measurement of Induceci Benefits 
from Incremental Space Activities 



direct benefits are the cost savings if the Space Shuttle would 
undertake the same missions (equal capability) as those done under 
the Expendable Space Transportation System, The demand curve 
which goes through was constructed under the assumption of a 

constant budget for NASA and the Department of Defense space 
activities, launching all the space flights possible within the limits of 
a given budget. The downward sloping demand curve, therefore, 
shows a constant U.S. space expenditure; it reflects how changes in 
the cost per space flight (launch costs and payload costs considered 
in combination) influence the number of flights demanded with such an 
assumption. If the nominal cost savings of the Space Shuttle System 
compared to current technology had been included in the equal budget 
analyses as a benefit, then a considerable overestimate of the 
"benefits” of the New Space Transportation System would result. 

In general, the "Equal Capability" analyses are the most 
conservative way of looking at the economic efficiency of New Space 
Transportation Systems. The "Equal Budget" analyses do allow, in 
part, for the increased activity to be expected by lower cost systems. 
The lower and upper limits of space activities for the economic analyses 
were determined within the context of the history of space flights in the 
1960’s for the United States and for the Soviet Union, as illustrated in 
the summary charts in Section 0.4 of this Executive Summary. 

MATHEMATICA tested the constant budget hypothesis on the 
example of Department of Defense payloads in the 1960’s and found an 
elasticity of demand exceeding that implied by the constant budget 
hypothesis. This would indicate that demand for space transportation 
in the 1980*s with the Space Shuttle System may well be larger than that 
indicated by the Equal Budget demand curve. To the extent possible 


the precise shape and location of the demand curve should be established 
but its determination is a major task. 


0. 3. 3. The Social Rate of Discount , 

No proper investment analysis is possible, whether private 
or public investment is considered, without using a discount or interest 
rate. For private investnaent the interest rates in the capital naarket 
provide the critical information. For public investment the correct 
rate is more difficult to determine because the allocation of resources 
both to and within the government is directed only in part by the forces 
of the market. 

For the government sector the social rate of discount fulfills 
the function of the interest rate in the private capital market. It reflects 
the sacrifice that is borne by the economy when resources are 
withdrawn from other production or consumption in the economy and 
are instead transferred to a public investment project. MATHEMATICA 
analyzed the investment alternatives of the Space Transportation 
Systems for discount rates ranging from 1 percent to 20 percent. 

The discount rates included in this Summary concentrate mainly 
around the 10 percent rate of discount. For purposes of comparison, 
results are also given for 5 percent and 15 percent rates of discount. 

The 10 percent social rate of discount used for the summary of 
MATHEMATICA’s results is among the highest discount rates used 
in the federal government for the evaluation of an investment project 
of this type. The use of the 10 percent rate, therefore, is a very 
conservative way to evaluate the economics of the Space Shuttle 
System. 


A survey of the major government agencies for Fiscal 
Year 1969 indicates a wide variation in the use or non-use of 
social rates of discount for the evaluation of public research and 
development projects. The rates used by government agencies 
varied between 0 percent, i. e. , the use of no discount rate 
to a concentration among major agencies around 4 percent to 5 
percent. For some projects, mainly of the Department of Defense, 
the rates used were 10 percent or more. One of the major advances, 
yet to be achieved, is the use of a single discount rate to evaluate 
public investment projects across government agencies. In the light 
of the present usage, the 10 percent rate used by MATHEMATICA 
is among the highest applied. A survey of the recommended social 
rates of discount by economists again leads to the conclusion that a 
10 percent rate ranks among the highest rates suggested by 
different economists, A survey, extending from 1958 to the present, 
of the rates suggested by economists indicates a range from 4 percent 
to 13.5 percent. Only two economists out of fifteen suggested in 
the published literature rates in excess of 10 percent. 

One must emphasize that the 10 percent social discount rate 
was applied to constant 1970 dollars and not to an inflated benefit 
stream in current dollars over the 1970’s and 1980’s, This fact adds 
further conservatism to the economic analysis performed for the New 
Space Transportation System, 

The higher the social rate of discount applied to a project, 
whether private or public, the less likely is the economic acceptance of 
such a project. Figure 0, 7 shows the net present value of an invest- 
ment project such as the Space Shuttle as a function of the discount 
rate applied to the benefit and cost stream over the expected lifetime of 
the project. 


0-23 


NPV (NET PRESENT PROJECT VALUE) 






(+) 


t = N 


O 



NPV(0)= 2 
t=0 


[Bt-Ct] 



Figure 0.7 Sensitivity of Net Present Project Value (NPV) 

to the Discount Rate (r), given the levels of 

Benefits (B ) and Costs (^,) over time (t). 
t T 


0-24 


The problems of estimating the discount rate from empirical 
data, the problem of ranking alternative projects, and the uses and 
misuses of the internal rate of return have been discussed in 
considerable detail in this Report and in an earlier paper. ^ The matter 
is somewhat intricate and for the purposes of a summary we shall 
not repeat the discussion here. The correct intuitive interpretation 
of the social discount rate can, however, be explained as follows: 

When the government undertakes a public investment project, the 
resources absorbed by the project must necessarily be withdrawn from 
the pool of investment and consumption resources in the economy. 

The government can justify the transfer of the resources to a particular 
project only if it can put these resources to a more productive use than 
the private sector could have achieved with them. In the case of the 
Space Shuttle System, this applies to the $12. 8 billion for RDT&E and 
Initial Fleet costs. The opportunity costs of using the resources for 
the public sector are the foregone benefits that would have been pro- 
duced with these resources by the private sector. The social rate of 
discount reflects the magnitude of these opportunity costs for government 
investment projects. 

Though MATHEMATICA also shows in the summaries the 
results for the 5 percent and 15 percent discount rates applied to the 
Space Shuttle investment decision, we, nevertheless, recommend 10 
percent and draw our conclusion based on the 10 percent social discount 
rate applied to the different space programs. 


Heiss,K. P. , Reinhardt, U. , ”On the Principles of Public 
Project Evaluation, ” Volume 1, Cost Benefit Analysis of New Launch 
■Systems . MATHEMATICA. prepared for the National Aeronautics and 
Space Administration, Princeton, N, J, , July 17, 1970. 


0-25 






0.3.4. The Uselife of RDT&cE Investments in the 
§ 2 ^ ce Transportation System . 

The economic uselife of an investment project is normally 
something short of infinity. This is so because the typical investment 
project ceases to have economic value when the physical uselife of 
the project ends. The technology created with the development of the 
Space Shuttle, however, does not vanish, MATHEMATICA submits 
that, after careful consideration of all the issues involved in choosing 
between a finite or an infinite uselife for RDT&E investments, the 
selection of an infinite uselife for such projects is the correct 
procedure. 

To limit the uselife of these expenditures to, say, the year 
1990 assumes that all scientific and technical knowledge used as part of 
the Space Shuttle development will be lost by 1990, and that the develop- 
ment of whatever new system might be built in 1990 will not have 
to draw on such knowledge and not have to prove cost effectiveness 
compared to the 1978 Space Shuttle, but rather the Expendable systems 
of the 1960*s and 1970*s, Such an assumption is obviously not realistic 
and would lead to a serious understatement of the true economic value 
of RDT&E investment activities, 

0. 3. 5. Other Economic Parameters: Program Start, 

Gestation Period and the Initial Operational 
Capability Date, 

In most cost effectiveness analyses the program start and 
gestation period, as well as the initial operational capability of the sys- 
tem to be developed, are very important variables affecting the cost 
effectiveness of alternative systems, MATHEMATICA has allowed in 
the analysis for a considerable variation in the gestation period of the 


0-26 


RDT&E program, the Initial Operational Capability (IOC) date, and the 
program start of the Space Shuttle. The gestation period of the Space 
Shuttle program was extended by up to 50 percent of the time estimate 
of the present development schedule. With regard to the IOC date and 
the slippage of the development program, delays in the IOC date of one 
and two years have been considered by MATHEMATICA. Although 
delays in each of these variables (the program start, the lengths of the 
gestation period, and the IOC date) do influence negatively the net 
present value of the Space Shuttle investment project, none of them has 
sufficiently significant effects, within the limits analyzed by MATHE- 
MATICA, to change the decision to accept or reject the Space Shuttle 
investment. However, the conclusion has to be based on a careful 
understanding of the complete methodology of the economic analysis. 
Data points for the evaluation of such space programs are included in 
the summary charts and the results are reflected in the general 
economic findings, 

0. 3. 6, The Incremental Costs of Space Flights in the 1980' s 
of Different Space Transportation Systems . 

Table 0. 3 presents an economic breakdown of the launch 
vehicle life cycle costs of the Space Shuttle and Tug. The total costs 
are classified into non-recurring and recurring costs. While the non- 
recurring costs are independent of activity level, the recurring costs 
may be further classified into activity- level dependent (incremental) 
and activity -level independent costs. 

For the fully reusable Space Transportation System, the 
incremental or marginal cost is estimated to be $4. 6 million per launch 
for the Space Shuttle and $0. 46 million for the Space Tug. Costs 


0-E7 


-28 


Table 0, 3 

Launch Vehicle Cost Classification for Economic Analysis 
{Millions of Undiscounted 1970 Dollars) 


Space 

and 

$18, 


o 


Investment 
$2, 884M 


Facilities 

$654M 


Y 

The incremental launch costs per flight 


Shown are Space Shuttle and Tug Transportation Costs, for NASA-Department of Defense Baseline 
Mission Model 


Fleet 
$2, 229M 





y 


RDT & E 
$9, 920M 


Non-Recurring Costs 


Activity Level In- 
dependent 
$12, 804M 


Shuttle 

Tug 

314M 



1 ^9 m 


1 

















RDT&E program, the Initial Operational Capability (IOC) date, and the 
program start of the Space Shuttle. The gestation period of the Space 
Shuttle program was extended by up to 50 percent of the time estimate 
of the present development schedule. With regard to the IOC date and 
the slippage of the development program, delays in the IOC date of one 
and two years have been considered by MATHEMATICA, Although 
delays in each of these variables (the program start, the lengths of the 
gestation period, and the IOC date) do influence negatively the net 
present value of the Space Shuttle investment project, none of them has 
sufficiently significant effects, within the limits analyzed by MATHE- 
MATICA, to change the decision to accept or reject the Space Shuttle 
investment. However, the conclusion has to be based on a careful 
understanding of the complete methodology of the economic analysis. 
Data points for the evaluation of such space programs are included in 
the summary charts and the results are reflected in the general 
economic findings. 

0, 3. 6, The Incremental Costs of Space Flights in the 1980^s 
of Different Space Transportation Systems . 

Table 0, 3 presents an economic breakdown of the launch 
vehicle life cycle costs of the Space Shuttle and Tug. The total costs 
are classified into non-recurring and recurring costs. While the non- 
recurring costs are independent of activity level, the recurring costs 
may be further classified into activity- level dependent (incremental) 
and activity- level independent costs. 

For the fully reusable Space Transportation System, the 
incremental or marginal cost is estimated to be $4. 6 million per launch 
for the Space Shuttle and $0, 46 million for the Space Tug. Costs 


0-E7 


-28 


Table 0, 3 

Launch Vehicle Cost Classification for Economic Analysis 
(Millions of Undiscounted 1970 Dollars) 


o 



\ 


V 


y 


The incremental launch costs per flight 


Shown are Space Shuttle and Tug Transportation Costs, for NASA-Department of Defense Baseline 
Mission Model 

















independent of activity level are not relevant when measuring the 
incremental costs. One could calculate average costs of space flights 
by considering the flights of an arbitrary 10 to 13 year space program 
and allocating to them the total RDT&E costs as well as the initial 
fleet and operating costs, which would then lead to figures ranging 
from $25 million to $30 million per launch. The use of this average 
as a price would prevent the Nation from using the Space Shuttle 
optimally. The examination of this assertion is presented in 
Appendix A to Chapter 1.0, 

Figure 0. 8 illustrates the difference between (a) total average 
cost, (b) the average operating cost, and (c) the incremental cost for 
Space Shuttle flights. On the horizontal axis we show again the number 
of Space Shuttle flights, and on the vertical axis the cost per launch 
of those flights. While total average costs range from $24 million to 
$18 million as a function of expected Space Shuttle flights, and average 
operating costs range from $7. 1 million to $6.0 million, several 
alternative calculations of the incremental costs of additional Space 
Shuttle flights ranging over many different flight levels, indicate that 
the incremental cost of Space Shuttle flights is $4. 6 million (see 2. 5. 4.). 
This is the cost incurred when launching an additional flight, e. g. , 
when increasing the flights from 56 to 57 per year. The incremental 
costs of Space Shuttle flights prove to be very close to this figure 
when different approaches are taken to determine incremental costs. 

Also, the incremental costs are found to be constant over a large 
range of flight levels. 

For Expendable launch vehicles the incremental costs per 
flight are much higher, and close to their average total operating cost. 
The main reason for this is that with each expendable launch all the flight 


0-29 


AOC = AVERAGE OPERATING COST 
IC = INCREMENTAL COST 
TAC = TOTAL AVERAGE COST 


TAC = $ 23.92 M 


TAC=$ 18.46 M 


1C=$4.58M i IC*$4.53M 


NUMBER OF FLIGHTS PER YEAR 


Figure 0. 8 Average and Incremental Launch Costs of 
the Space Shuttle as a Function of Flights 
per Year. 


-3 







I 

I 


hardware (and associated testing) is "thrown away, " Chapter 6. 0 and 
Table 6. 3 of the Report detail the cost range of the Expendable launch 
vehicles. These costs range from $3,2 million (Scout) to $27,0 million 
(Titan III Li2/ Centaur), 

When selecting the vehicle assignments (between Expendables 
and Space Shuttles), one has to include the different mission costs due 
to payload effects in addition to the incremental launch costs of the 
Expendable and the fully reusable Space Shuttle and Tug Systems, The 
process by which vehicle assignments are made on the basis of incre- 
mental costs is called "capture analysis, " A complete set of these, 
i. e, , choice of Space Shuttle or Expendable modes, has been performed 
on the Space Shuttle and Tug Transportation System, Analyses of the 
sensitivity of system selection to changes in incremental costs of the 
Space Shuttle and Tug System have also been performed in the context 
of mission capture analyses and are further described in Chapters 2,0 
and 6, 0 of the Report, 


0. 3. 7, Risk and Uncertainty. 

First and foremost, in terms of the acceptability of the Space 
Shuttle investment, must loom the estimate and the accuracy of the non- 
recurring costs in the 1970' s to develop a fully reusable New Space 
Transportation System, Different system configurations which would 
provide a reusable capability are associated with different levels of 
research and development efforts as well as initial fleet requirements. 
With regard to the selection of the best system, the effects of these 
differences have yet to be fully evaluated. Nevertheless, MATHEMATICA 
believes that the present estimate for the non-recurring costs of the 
Space Shuttle and Tug System, as used in the Report, should not be 
equated with either a "political" price to get the Space Shuttle accepted 


0-31 


or with very early estimates of non-recurring costs of research and 
development investments. 

The estimates of the non-recurring costs of the Space Shuttle 
and Tug System have changed significantly over the past two years. 

RDT&E costs of the Space Shuttle and Tug System have shifted from 
the early estimates of $5, 2 billion (Space Task Group Report, 

September 1969 ) to $ 9 * 3 billion (Aerospace Corporation, March 31, 

1971), ^ Although further changes in the estimated RDT&E, and the 
Initial Fleet costs of the Space Shuttle and Tug System will occur, 
MATHEMATICA feels that with an efficiently managed development 
program of the Space Shuttle and Tug System, the cost escalation 
experience of the early and middle 1960‘s should not apply to the present 
non-recurring cost estimates of the Space Shuttle System, This holds 
in particular if the non-recurring cost estimates are all made in con- 
stant 1970 dollars and, therefore, eliminate the artificial effects of 
inflationary cost escalation that will continue to occur in the 1970* s, 

MATHEMATICA has also performed a cost uncertainty analysis 
of the Space Shuttle cost savings to be expected in the 1980’s. It should 
be recalled that the major advantage of the New Space Transportation 
System, when compared to the Expendable mode, lies in the following 

areas: 

(a) The reduction in: First, payload RDT&E costs; second, 
payload first unit costs; third, the costs of space 
programs after 1978 upon inclusion of reuse, refurbish- 
ment and update of payloads, made possible by the 
Space Shuttle System, 

(b) In comparison with the Expendable Space Transportation 
System, the Space Shuttle and Tug System has lower launch 
costs, 

^ Both estimates expressed in 1970 dollars. 


0-32 


I 

I 

I 

I 

i 

I 

I 

I 

I 

I 

I 

I 

I 

I 

i 

I 

I 

I 

I 


However, these expected cost savings are in the future and by 
their very nature relatively uncertain as to their particular level as well 
as to the time by which they can be realized. MATHEMATICA has 
applied risk analysis methods to the payload and Space Shuttle launch 
cost streams classified as ’’activity level dependent” costs. Although 
the estimation of cost uncertainties will, admittedly, always remain an 
area of major concern, by applying techniques of risk analysis to the 
recurring cost streams of the Space Shuttle, MATHEMATICA found the 
Space Shuttle investment unquestionably superior to the New Expendable 
System at a 5 percent social discount rate and calculated an 0. 86 proba- 
bility that the Space Shuttle investment will have a rate of return of at 
least 10 percent. Although by the very nature of large scale RDT&iE 
projects as exemplified by the Space Shuttle investment, an element of 
uncertainty will persist, the analytic tools available show that the Space 
Shuttle investment is confirmed to be economically acceptable. 

On the other side, there is an additional consideration which 
favors a Space Shuttle System; the mission reliability as measured by 
the initial assured functioning of the payload in orbit is significantly 
higher than that of expendable systems. Empirical evidence shows that 
the majority of failures of payloads occur very early, within the first 
several days from launch; these failures can- -for all practical purposes- - 
be eliminated by the Space Shuttle System through in-orbit checkout 
before payload release. This benefit has not been allowed for in this 
study. It may have a major effect on the commercial and national 
security demand for space activities in the 1980’s, favoring the Space 
Shuttle System, 

1 

^ In other words, the analysis will show a breakeven on present 
value at a social discount rate of at least 10 percent. 


0-33 


0. 4 SUMMARY OF THE QUANTITATIVE RESULTS 
OF THE ECONOMIC ANALYSES 

MATHEMATICA evaluated a range of space programs covering 
the expected range of space activities in the 1980's, on the basis of con- 
servative projections of the history of United States space flights in the 

1960's. 

In this Report the term "space program" is defined as a parti- 
cular combination of NASA, Department of Defense, and commerical 
space applications. The term "space program" is used interchangeably 
with the term "scenario." "Space program costs" (the costs of a 
scenario) as used in this Report include the cost of development, con- 
struction, launch and operation, and payloads. These costs also allow 
for the associated support costs such as the cost of launch sites. Excluded 
are general administrative costs. 

The space programs analyzed by MATHEMATICA cover widely 
different mixes of scientific, defense, and commercial applications of 
space. About thirty different space programs for the 1980's were analyzed 
with regard to their economic effects on the choice between Current 
Expendable technology and a fully reusable Space Transportation System. 
The payloads and traffic of the Baseline Mission Model (with wide varia- 
tions provided by the scenarios) and the various Space Transportation 
System concepts are described in detail in Chapters 2. 0, 4. 0 and 5. 0. 

The space program identified as Scenario 1 (736 missions over 
13 years, with an average of 56 missions per year, see also Figure 0.4) 
describes the program requirements established for this study by NASA 
and the Department of Defense for the 1980's. This program includes a 
substantial Office of Space Science and Applications (OSSA) budget, a 


0-34 




Department of Defense budget in line with current projections of the 
Department of Defense, commercial space applications of about 
$300 million a year, and manned space flight activities of only $200 million 
per year on the average (that is, only Space Station support missions of 
four to five flights per year were included). Cost streams were estimated 
for Current Expendable and fully reusable Space Transportation Systems. 
These cost streams include both launch vehicle and payload costs 
(RDT&cE, investment and operating costs). (See Figures 0.4, 0. 17, 0. 18, 
0. 19 and Tables 0. 2 and 0. 3. ) The cost streams were then used as a 
basis for the different cost effectiveness analyses. 

Figure 0. 9 summarizes results of ’’Equal Capability” cost analy- 
ses of the fully reusable Space Shuttle, On the horizontal axis a great 
variety of alternative, postulated space programs are ranked in ascending 
order based on the average number of flights they imply. The vertical 
axis shows the economically justifiable (or allowable) reusable launch 
vehicle RDT&cE and Investment costs (in undiscounted 1970 dollars) 
associated with these alternative space programs. By economically 
’’justifiable” cost in this context is meant the maximum RDT&cE and 
Investment outlays which could be incurred without depressing the net 
present value of the reusable Space Transportation System, (i. e. , the 
present value of all future benefits minus the present value of all costs 
associated with the reusable Space Transportation System) to a level below 
zero, at a 10 percent discount rate. All the benefits attributable to this 
investment- -i. e. , cost savings in the recurring launch costs and all of 
the expected payload cost savings (RDT&E included) --are reflected in the 


The upward- sloping line in Figure 0. 9 is a least- squares fit 
to a number of points closely scattered along this line with an R of 
better than 0, 99, 


0-35 


TOTAL ALLOWABLE LAUNCH VEHICLE 
NON-RECURRING COST 
(BILLIONS OF UNDISCOUNTED 1970 DOLLARS) 


“EQUAL CAPABILITY" COST ANALYSES (io% DISCOUNT RATE) 


• DATA POINTS FOR VARIOUS SCENARIOS 

® DATA POINT FOR SCENARIO I (NASA a DoD Baseline- 736 fits, 57 fits/yr) 

A break EVEN POINT (506 fits, ~ 39 fIts/yr, 1978-1990) 
'■^'ESTIMATED NON-RECURRING SPACE SHUTTLE + TUG COSTS (3/31/71) 


12 II 24 10 3 23 M i^ Scenorio number 

494 547 562 585 600 678 736 Number of flights 



Figure 0. 9 


IZ-I2-S 



evaluation of these allowable non-recurring launch vehicle costs, as a 
function of either the flight level or the annual space budget levels. The 
$12. 8 billion lines reflect the 31 March 1971 estimate of these non- 
recurring costs. Therefore, any particular point on the upward sloping 
line indicates, on the vertical axis, quite closely, the maximum allow- 
able RDT&E and Investment costs for transportation vehicles associated 
with the corresponding average annual traffic flow on the horizontal axis. 
As an example, the 1984- 1969 U. S. traffic equivalent is represented 
by an annual traffic of 51 Space Shuttle flights. This is equal to 663 
flights over the 1978 to 1990 period. The allowable RDT&E and Invest- 
ment costs for this traffic rate are $15. 8 billion. ^ (See Figures 0. 14 
and 0. 16). The 1965 - 1970 equivalent traffic of the USSR was 65 flights 
per year. This amounts to 845 flights over the 1978 - 1990 period. If 
this rate were projected for the United States a total of $20 billion in 
RDT&E and Investment costs could be incurred for the Space Shuttle 
System without reducing the net present value of the Space Shuttle System 
to a level below zero, i. e. , without rendering the Space Shuttle System 
economically unjustifiable. Any other point on the upward- sloping line 
is to be interpreted analogously. Thus, as long as the allowable non- 
recurring Space Shuttle System costs exceed the actual, estimated non- 
recurring costs ($12, 8 billion), the Space Shuttle System is economically 
better than the Expendable System. The level of space activity (over 
13 years) where allowable and actual costs are equal is identified as 
"break-even point. " 

MATHEMATICA’s Baseline space program for the 1980’ s, 
identified in Figure 0. 9 as Scenario 3, contains an OSSA budget using 
the Expendable System of about $900 million for 20 flights per year. 

This is one-half of the budget and traffic for OSSA projected by 
Scenario 1, the NASA-DoD Baseline model. 


Total absolute funding level over about ten years. 


0-37 


The Department of Defense budget of about $1. 2 billion and 28 
flights per year on the average, as well as the commercial applications 
and manned space flight programs, are the same as those of Scenario 1. 
The other scenarios are variations around the MATHEMATICA Baseline 
space program for the 1980’s. Of particular interest are Scenarios 23 
and 24 which reflect historical levels of space funding for OSSA and the 
Department of Defense, with commercial and other civil applications 
and manned space flight activities at the level of MATHEMATICA ’s 
Baseline space program only. Scenario 23 is based on the 1963 to 1971 
average funding level for the different agencies, while Scenario 24 
projects for the 1980' s a space program based on the funding levels of 
Fiscal Years 1970 and 197 1 --historical low points for recent United 
States space activities. 

Even though the different space programs include (1) a drastic 
variation in the mix of activities between OSSA, the Department of 
Defense, and commercial applications; (2) a variation in the phase-in 
of the Space Shuttle--the period between 1978 and 1984 was considered; 
and (3) different build-up rates, we find an extremely good fit of the 
different economic results to the line shown in Figure 0. 9- One would 
have expected a wider scatter of the economic answers from benefit- cost 
analyses of these different programs. If this had been the case, the 
defined measure of capability by which the space programs were ranked- - 
i. e, , the number of space flights- -would not have been sufficient to 
adequately describe and measure the costs of space activities. In that 
case one would have to estimate not only the overall level of space 
transportation activities for the 1980's relatively accurately, but also 
the actual composition of the 1980's space flight programs as they 
divide up into defense, science and commercial and other civil 
applications. 



0-38 


In constructing the scenarios the same relative cost distribu- 
tion of payloads was maintained within each agency. As the different 
space programs also covered options including and excluding manned 
space flights the results are divorced from the issue of manned -versus 
unmanned space exploration although all systems considered maintained 
a manned space flight capability. The results of the economic analyses 
indicate that a decision on a future manned program is not required to 
justify or reject the fully reusable Space Transportation System for 
the 1980*s, 

What this implies is that the complete set of economic analyses 
(methodologies and results), presented in Chapters 2.0 and 7.0 of the 
Report, lend themselves to reliable conclusions with regard to the 
economic desirability of Space Transportation Systems, once the overall 
demand for space transportation in the 1980*s can be established. 

Furthermore, given the detailed descriptions of the space pro- 
grams (scenarios), the space history of the United States, and projections 
of space activities over the 1970*s and 1980*s in NASA and the Department 
of Defense--with a potential underestimate of commercial applications- - 
one can draw reasonably accurate conclusions of whether or not a New 
Transportation System with reuse and refurbishment capability of pay- 
loads is desirable, taking into account the expected budgetary environ- 
ment for space applications in the 1970's and 1980’s. MATHEMATICA 
took the United States space flight activity from 1964 to 1969, and made 
for the 1980’s a similar 13-year average projection of space flight 
activity- -not in budgetary terms, but in numbers of flights only. We 
see that this leads to an ”Equal Capability” scenario of 663 flights, 
roughly in the neighborhood of space programs of Scenarios 2, 7 and 8. 
MATHEMATICA then took the historic funding level of United States 
space flight activity by agency- -excluding the manned space flight 


0-39 



program- -between 1963 and 1971 as the basis for a budget constrained 
analysis for the 1980’s and again arrived at a flight level corresponding 
exactly to the number of flights between 1964 and 1969. In the ’'budget 
constrained" case the number of possible flights, given the cost estimate 
for Current Expendable technology was found to be a 13-year total of 
663 flights, or the exact 1964-1969 average of 51 United States flights 
per year. Thus the agreement of these two analyses tends to support 
the consistency of the economic analysis. 

The results of the economic analysis are summarized in 
Figures 0. 9 to 0, 16. 

Figure 0. 9 shows the allowable non-recurring costs for 
developing, testing and producing the fleet of necessary, fully reusable 
vehicles as a function of the numbers of flights from 1978 on, with the 
total flights shown over a 13-year horizon, and using a discount rate of 
10 percent. The space flight level varies between 450 flights and 900 
flights, the range covered by our analyses. Figure 0. 9 shows the 
allowable non-recurring costs in terms of the "Equal Capability" cost 
effectiveness analysis (see 0, 3. 1). This line shows the case where 
no allowance is made for increased space flight activities within each 
space program due to the greater incentive of using a lower cost 
Space Transportation System. It assumes that the space activities of 
NASA, the Department of Defense, and commercial applications will 
not increase at all when the costs of space missions are reduced by 
nearly one -half! This is a very conservative way of evaluating any 
economic investment. Figure 0. 9 relates the cost savings of a fully 
reusable Space Transportation System in the operating phase of the 
program to the allowable non-recurring costs of developing such a 
system. 


With the "Equal Capability" analysis, a non-recurring cost 
for the new, fully reusable Space Transportation System of $1Z. 8 billion 
(undiscounted 1970 dollars) would be justified, at 10 percent, with a 
space flight program from 1978 to 1990 of 506 flights, or 39 flights 
per year. We find that the range of allowable non-recurring costs 
goes from $12,1 billion in the case of Space Program 12 up to 
$21,4 billion in the case of Space Program 5, the two extremes analyzed 
by MATHEMATICA (38 flights per year up to 70 flights per year). 

Space Program 3 - -the program used by MATHEMATICA as its pro- 
jection for the 1980’s--gives an allowable non-recurring cost of 
$14,5 billion (undiscounted 1970 dollars in all cases). 

Two major points should be added here: 

1. If a substantial manned space flight program were 
added, the economic advantage of the Shuttle would improve, 

2, If a substantial lunar exploration program were to be 
added to the options used in our analyses, significant reductions in 
lunar space transportation costs could be expected from the Space 
Shuttle. ^ Scenarios 25 and 26 analyze the effects of such an option on 
the economics of Scenarios 1 and 3. Figure 0, 15 shows the effects of 
such an option on the economic results of our analysis, ScenaTio 25 
included the NASA-DoD Baseline (Scenario 1) and Lunar Option 1; and 
Scenario 26 includes the MATHEMATICA Baseline (Scenario 3) and 
Lunar Option 1, For both of these scenarios the launch costs of the 


^ This reduction is due to both the increased advantage of the 
Shuttle in expanded space programs, and the ability to use a 100 percent 
load factor in flying hydrogen as a Space Shuttle payload, 

0-41 


iTOlWJiiiiiiiiiyuiyiiiij 






Space Shuttle are but one -third of the Current Expendable and New 
Expendable cases. The Lunar option makes use of the Nuclear 
Shuttle for Earth orbit to Lunar orbit flights. 

Figure 0, 10 shows the allowable non-recurring costs for the 
fully reusable Space Transportation System as a function of the annual 
space program budget in terms of the ^'Equal Budget* * cost effectiveness 
analyses performed at a 10 percent rate of discount. The allowable 
non-recurring costs for developing a fully reusable Space Transporta- 
tion System are increased by about 25 percent when compared to the 
"Equal Capability" analyses of the same scenarios. The "Equal Budget" 
line shows, for each scenario, what the economic return is, if each 
space program had allowed for the same funding level as that required 
by Current Expendable technology. Again, the economic analyses give 
results that fit very closely the "Equal Budget" line shown in Figure 0. 10 
and lend themselves to similar conclusions as gained from the results 
presented in Figure 0. 9, both at discount rates--in real terms-- of 
10 percent. With the "Equal Budget" analyses, a non-recurring cost 
of the new, fully reusable Space Transportation System of $12. 8 billion 
(undiscounted 1970 dollars) would be justified, at 10 percent, by a 
space flight program requiring an annual funding of $2. 0 billion for 
NASA and the Department of Defense (launch costs and payload costs). 
The MATHEMATICA Baseline space program (Scenario 3) for the 
1980’s now yields allowable non-recurring costs for a New Space 
Transportation System of about $19. 5 billion (undiscounted 1970 dollars). 
The NASA and Department of Defense requirements of Scenario 1 yield 
a comparable, allowable non-recurring cost of about $23,7 billion. The 
historic expenditure level of the United States unmanned space program 


0-42 


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TOTAL ALLOWABLE LAUNCH VEHICLE 
NON-RECURRING COST 

(BILLIONS OF UNDISCOUNTEO 1970 DOLLARS) 


gives an "Equal Budget" figure close to $22, 1 billion. That is, if the 
United States were to continue to spend for scientific, defense and 
commercial space applications (the unmanned U. S. space program) 
similar funds as in the 1960*s, the economic analysis shows that the 
New Space Transportation System would still be an economic investment 
with a 10 percent rate of return if it cost $22, 1 billion in non-recurr in g 
outlays (RDT&E and Fleet Investment). In this example, as in all 
others, we assume that the non-recurring launch vehicle costs are 
distributed proportionately over time in the same way as shown in 
Table 0. 1. 

The strongest, most conservative results of the economic 
analysis are shown, however, in Figure 0, 11. In the analyses sum- 
marized in this figure, MATHEMATICA proceeded on an "Equal Capa- 
bility" cost effectiveness basis for all space programs listed. In addition 
to this, MATHEMATICA excluded in these calculations --at 10 percent-- 
volume and mass (weight) related payload effects that may also be realized 
with expendable systems. MATHEMATICA included reduced space pro- 
gram payload costs due to the reuse and refurbishment capability of 
satellites made possible by a fully reusable Space Transportation System, 
With this analysis the new, fully reusable Space Transportation System 
breaks even at a space program of 566 flights (1978-1990), or about 
44 flights a year (cf. Figure 0. 11). The economic analyses, at 10 per- 
cent, still indicate allowable non-recurring costs for "buying" a fully 
reusable Space Transportation System of: 

a. $12, 9 billion for the projected space program in 
Scenario 3; 

b. $15.4 billion for the projected space program in 
Scenario 1; and 


0-44 



TOTAL ALLOWABLE LAUNCH VEHICLE 
NON-RECURRING COST 
(BILLIONS OF UNDISCOUNTED 1970 DOLLARS) 


"EQUAL CAPABILITY" COST ANALYSES 

(NET MASS EFFECTS, 10% DISCOUNT RATE) 

• DATA POINTS FOR VARIOUS SCENARIOS 

® DATA POINT FOR SCENARIO I {NASA a DoD Boseline- 736 flts,57flts/yr) 
A BREAK EVEN POINT (566 fits, ~44 fits/yr, 1978-1990) 
•"■''ESTIMATED NON-RECURRING SPACE SHUTTLE +TUG COSTS (3/31/71) 
12 II 24 10 3 23 I Scenario number 

494 547 562 585 600 678 736 . Number of flights' 



NUMBER OF SHUTTLE FLIGHTS (1978-1990) 


Figure 0, 11 


5-21-71 



c. $14.6 billion for the historic flight and funding level 
of the unmanned United States space program of the 
1960»s. 

• All of these allowable funds are expressed in undiscounted 
1970 dollars. 

If the development of the two- stage, fully reusable Space Shuttle 
now being considered by NASA were delayed by one year- -with a corres- 
ponding shift of the Initial Operating Capability date- -the results from 
our economic analysis do change, but not significantly . This conclusion 
is, of course, predicated on the assumption that engineering research 
and advanced development in the critical areas of the Space Shuttle 
technology are continued. Similar economic results also hold for a 
reduction in the rate of the phase-in of the Space Shuttle after its intro- 
duction into operation. The scenarios identified as 10, 11 and 12 in 
Figures 0, 9, 0, 10 and 0. 11, show the economic effects of phasing-in 
the Space Shuttle over successively longer periods holding the Initial 
Operating Capability date constant at 1978, while the space program 
objectives of Scenario 3 are maintained. Scenario 10 phases the Space 
Shuttle in over a two-year period (1980), For that scenario (538 flights), 
this delay in the full operation date from 1978 to 1980 reduces the eco- 
nomically justifiable non-recurring program costs from a range of 
$14.5 billion to $19. 5 billion to a range of $14.2 billion to $18. 9 billion. 
The likely economic gains from slippage or stretch-out- -with continued 
or increased funding of research and advanced technology- -are greater 
cost certainty and potential RDT&tE cost reductions due to the possibilities 
of more certain, flexible development scheduling. The economic costs 
of slippage or stretch-out are the foregone reductions in the expected 
recurring costs of the space program, for the year(s) 1978, ... in which 
the Space Shuttle and Tug System is not available- -including increased 
payload costs. 

0-46 





I 


I 

I 

I 


I 

I 


Figure 0. 12 and Figure 0. 13 show the influence of the different 
rates of discount used on the results of the economic analyses. MATHE- 
MATICA recommends a 10 percent discount rate as abasis for evaluating the 
New Space Transportation Systems funding. Nevertheless, Figure 0. 12 
shows the summary of economic analyses when the evaluation is made 
at 15 percent on an "Equal Capability" basis. At this high a discount 
rate the relative advantage of the Space Shuttle naturally decreases. 

Yet, even with a 15 percent rate of discount and the conservative "Equal 
Capability" analyses, the fully reusable Space Transportation System 
does break even at a space program of 845 flights (1978-1990 total) or 
65 flights a year. The summary of results indicates that up to $11. 4 billion 
could be spent on a new, fully reusable STS program, if the NASA- Depart- 
ment of Defense model for the 1980's were taken as baseline. At MATHE- 
MATICA's projection of unmanned space activities for the 1980's, the 
Space Transportation System investment would have an allowable, non- 
recurring cost of $9. 4 billion (at 15 percent) , a figure too low to 
cover the expected non-recurring costs of the new, fully reusable Space 
Transportation System as estimated by Aerospace Corporation, the 
Phase B contractors and various centers of NASA. 

Figure 0. 13 shows the summary of economic analyses performed 
at a 5 percent discount rate, which gives much higher allowable non- 
recurring costs since the opportunity cost of time is valued here rela- 
tively low, at 5 percent. For Scenario 3, the allowable non-recurring 
costs increase to nearly $30.0 billion. 

Figure 0. 14 is a summary of all economic calculations that were 
performed at 10 percent, i, e. , for "Equal Budget" cost effectiveness, 
for "Equal Capability" cost effectiveness, and for "Reuse-Refurbishment- 
Update Payload Effects" only. It also shows MATHEMATIC A* s estimate 
of the historic flight and funding levels of the United States and of the USSR, 

0-47 




TOTAL ALLOWABLE LAUNCH VEHICLE 
NON-RECURRING COST 
(BILLIONS OF UNDISCOLINTED 1970 DOLLARS) 


"EQUAL CAPABILITY" COST ANALYSES (15% DISCOUNT RATE) 

• DATA POINTS FOR VARIOUS SCENARIOS 

® DATA POINT FOR SCENARIO I (NASA a DoD Baseline. 736 fils, 57 fits /yr) 
BREAK EVEN POINT (845 fHs,~ 65 fits/yr, 1978-1990) 

X -r xESTI MATED NON-RECURRING SPACE SHUTTLE + TUG COSTS (3/31/71) 



Figure 0. 12 


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5 - 21-71 


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TOTAL ALLOWABLE LAUNCH VEHICLE 
NON-RECURRING COST 
(BILLIONS OF UNDiSCO'JNTED 1970 DOLLARS) 



5 - 21-71 


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TOTAL ALLOWABLE LAUNCH VEHICLE 
NON-RECURRING COST 
(BILLIONS OF UNDISCOUNTED 1970 DOLLARS) 



in terms of equivalent Space Shuttle flights (the vertical lines). 

Figure 0. 15 shows the impact on the economic evaluation of 
the Space Shuttle System of the addition of the NASA Lunar Option 1, 

The net increase in economic benefits is due to launch cost savings 
only since lunar payloads have not been included in the analysis. (The 
exclusion of Lunar Option payloads, however, cannot adversely affect 
the economic analysis since some of the payloads may well exhibit 
favorable cost effects when the Space Shuttle System is used.) The 
incremental cost savings have been converted into allowable non-recur- 
ring costs, and for all scenarios considered, as shown in Figure 0. 15, 
this amounts to an additional $3.0 billion. The allowable non-recurring 
cost for the Space Shuttle System evaluated for Equal Capability under 
Scenario 3 and a 10 percent discount rate is $17. 5 billion with Lunar 
Option 1 and, excluding Lunar Option 1, it is $14. 5 billion. The important 
conclusion to be drawn from this result is that when some large lunar 
or planetary (or defense) space flight option is considered for the 1980's 
the Space Shuttle System offers economic advantages also in terms of 
transportation costs only. These have not been included in any of the 
other MATHEMATICA scenarios. 

Figure 0. 16, finally, summarizes the economic calculations 
done at different discount rates (5 percent, 10 percent, and 15 percent) 
for the ’’Equal Capability" cost effectiveness analyses. 

The complete set of economic analyses performed by MATHE- 
MATICA on which these results are based, at discount rates from one 
to 20 percent, and the statistical backup to judge the quality of these 
results--as conditioned by the validity of the input cost data- -are given 
in Chapter 7. 0 of the Report. 


0-51 


TOTAL ALLOWABLE LAUNCH VEHICLE 
NON-RECURRING COST 
(BILLIONS OF UNDISCOUNTED 1970 DOLLARS) 


"EQUAL CAPABILITY " COST ANALYSES WITH LUNAR 
OPTION I ADDED (USING NUCLEAR SHUTTLE WITH 
SPACE SHUTTLE SYSTEM) (10% DISCOUNT RATE) 

• DATA POINTS FOR VARIOUS SCENARIOS 

(S) DATA POINT FOR SCENARIO 1 (NASA a DoD Baseline:736flts,57fils/yr) 

* BREAK EVEN POINT ( 506 fits, ~ 39 flts/yr, 1978-1990) 

XX ^estimated non-recurring space SHUTTLE + TUG costs (3/31/71) 


12 -J_ Scenorio number 

494 547 562 585 600 678 736 ^ Number of flights 



(PROGRAM FLIGHTS EXCLUDING THE LUNAR OPTION) 
Figure 0, 15 


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TOTAL ALLOWABLE LAUNCH VEHICLE 
NON-RECURRING COSTL 
(BILLIONS OF UNDISCOUNTED 1970 DOLLARS) 



Figures 0. 17, 0. 18 and 0. 19 depict the budgetary implications 
of the following three space programs: Scenario 3, the MATHEMATICA 
Baseline projection; Scenario 23 which is based on the historic funding 
level of U, S, programs from Fiscal Years 1963 to 1971; and. Scenario 24, 
which is based on projections of FY 1970 and FY 1971 funding levels. 

The Current Expendable funding level in Scenario 23 is about $3 billion 
(NASA and Department of Defense) and in Scenario 24 it is $2, 5 billion. 
The expected costs for new Space . Transportation System operations at 
the same funding level (’’Equal Capability”) are also shown. 

Figures 0. 20 and 0, 21 consider the addition of the NASA Lunar 
Option 1 transportation costs to the life cycle costs of Scenarios 1 and 3. 
This Lunar option assumes the existence of a Nuclear Space Shuttle for 
Earth orbit to Lunar orbit transportation. The Lunar payload costs have 
not been included, and potential Space Shuttle payload effects for this 
traffic has not been allowed for. 

All the life cycle costs for transportation and payload costs are 
given in detail in Chapter 6. 0, 


0- 54 


SPACE PROGRAM COSTS (1978-1990 OPERATIONS) 


SCENARIO 3 (Funding Basis Described in Text) 

CURRENT EXPENDABLE SYSTEM vs SPACE SHUTTLE AND TUG SYSTEM 


0 

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Figure 0. 17 




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ANNUAL SPACE PROGRAM COSTS 

(BILLIONS OF UNDISeOUNTED 1970 DOLLARS) 




ANNUAL SPACE PROGRAM COSTS 
(BILLIONS OF UNDISCOUNTED 1970 DOLLARS) 



SPACE PROGRAM COSTS (1978-1990 OPERATIONS) 
SCENARIO 24 (Based on U.S. Funding, 1970 -1971) 

CURRENT EXPENDABLE SYSTEM vs SPACE SHUTTLE AND TUG SYSTEM 



FISCAL YEARS 


-Figure 0. 19 




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ANNUAL SPACE PROGRAM COSTS 
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0.5 


CONCLUSIONS 


1, The most conservative economic analyses show, at a 

10 percent social discoxmt rate, that the allowable non-recurring costs 
for "buying” a fully reusable Space Transportation System are: 

a. $12. 9 billion for an annual activity level of 46 Space 
Shuttle flights (Scenario 3). 

b. $15.4 billion for an annual activity level of 56 Space 
Shuttle flights (Scenario 1). 

c. $14.6 billion for the historic flight level of the 
unmanned United States space program of the 1960’s, 
corresponding to 51 Space Shuttle flights (Scenario 23), 

The present estimate of the actual non-recurring costs of the 
Space Shuttle and Tug System is $12. 8 billion. All of these estimates 
are made in constant (1970) dollars. 

2, The major economic potential identified for Space Trans- 
portation Systems in the 1980*s is the lowering of space program costs 
due to the reuse, refurbishment and updating of satellite payloads. The 
fully reusable, two- stage Space Shuttle is a major system- -but conceivably 
not the only system- -identified to achieve this reuse, refurbishment, and 
updating of payloads. Other technically acceptable systems should be 
studied to determine the extent and the cost at which they can achieve 
reuse, refurbishment and updating of payloads. Any such studies must 

be performed in adequate depth to generate meaningful comparative data 
for an economic evaluation. 


0-60 


The cost reductions originate in three distinct areas: (a) the 
Research, Development, Test and Evaluation (RDT&cE) phase of new 
payloads (satellites); (b) the unit cost and operating cost of payloads 
(satellites) for different space missions; (c) the cost of launching pay- 
loads into orbit. 

Although it is, perhaps, natural to identify the economic effects 
of a reusable Space Transportation System primarily as reductions in 
launch costs, it is apparent that the major cost savings lie in the area 
of payload development, construction and operation. For example, with 
the Expendable System, launch costs constitute only 20 to 25 percent of 
the cost of a typical United States space program; 75 to 80 percent are 
payload related costs (see payload costs and recurring launch costs of 
Table 0,1), 

3, The currently projected non-recurring costs associated 
with developing a Space Shuttle and Tug are shown by the economic analy 
sis to be covered by the identified benefits, provided the United States 
intends to operate a space program with a number of flights equal to the 
unmanned space program activities of the United States in the 1960’s. 

The direct costs (payload and transportation) of space activity 
carried out by a Space Shuttle System are expected to be about one-half 
of the direct costs of the Current Expendable Space Transportation 
System, 

These conclusions are based on what MATHEMATICA considers 
to be realistic and, indeed, conservative projections of space activities 
in the 1980’ s- -with most of the projected unmanned space programs 
operating below the level maintained during the 1960‘s, and with the 
manned space flight program limited to about $200 million a year. 


0-61 








The analysis of the lunar option has shown that the Space 
Shuttle System offers economic advantages also in terms of transporta- 
tion costs only, when some large lunar or planetary (or defense) space 
flight options are considered for the 1980’s. Due to the great uncertainty 
of these options being adopted by the United States, MATHEMATICA did 
not allow for these advantages in the basic conclusions, 

4, The choice of the social discount rate has a major 
influence on the economics of a new Space Transportation System. 
Differences in the rate applied to the analysis outweigh many other 
important issues usually raised- -and analyzed--in the context of large 
scale RDT&E projects, including uncertainties in the cost data. 


I 

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5. The economic justification of a reusable Space Transpor- 
tation System is independent of the question of manned versus unmanned 
space flight. The space programs used and analyzed by MATHEMATICA 
are in line with the activity and funding levels of the unmanned United 
States space program of the 1960’s (NASA, DoD, and commercial users 
included). This does not preclude the possibility that the future unmanned 
space program can be much larger than in the past, 

6. This Report analyzes the economically allowable non- 
recurring costs of a reusable Space Transportation System. The task of 
identifying the best reusable Space Transportation System among all the 
viable alternatives requires equally detailed economic consideration. 

7. Finally, we state with emphasis; any investment can only 
be justified by its goals . This applies to business as well as to govern- 
ment, hence also NASA. A new, reusable Space Transportation System 
should only be introduced if it can be shown, conclusively, what it is to 


0-62 






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be used for and that the intended uses are meaningful to those who 
have to appropriate the funds, and to those from whom the funds a*re 
raised, as well as to the various government agencies that undertake 
space activities. The space goals can be military (to meet military 
space efforts of other countries or use the potential of space to meet 
needs of national security), scientific (e. g, , astronomy, environment), 
commercial (e. g. , earth resources applications, communications, 
weather forecasting) or political (rivalry with the space programs of 
other countries). All these goals will, of course, be mixed into one 
national space program, representing to various degrees a joint de- 
mand for space transportation with a varying mix of payloads.