The US military is raising the stakes – and expanding the field – in the high-profile competition for Space Force mission contracts.

The Space Force plans to purchase more rocket launches from companies in the coming years than previously expected, giving more companies a chance to secure billions in potential contracts.

“This is a huge deal,” Doug Pentecost, deputy program executive officer at the US Space Force’s Space Systems Command, told reporters during a briefing this week.

Earlier this year, the Space Force began the process of purchasing five years’ worth of launches, under a lucrative program known as National Security Space Launch (NSSL) Phase III.

The United States sees increasing momentum to improve its military capabilities in space, spurring the need to nearly triple the number of third-stage launches it has purchased in second-stage in 2020.

“It just amazes me,” said Pentecost. “We only estimated 36 missions for Phase 2. For Phase 3, we estimate 90 missions.”

In February, the Space Force outlined a “mutual fund” strategy to purchase launches from the companies. NSSL divided Stage 3 into two groups. Track 1 is the new approach, with lower requirements and a more flexible bidding process that allows companies to compete as rockets debut over the coming years. Path 2 represents the current approach, in which the Space Force plans to select a select number of companies for missions that meet the most demanding requirements.

Pentecost said the Space Force hosted an industry day in February to review details of the program and 22 companies attended. Since then, Space Force has made a number of tweaks to Phase 3. It has added more missions, introduced a price cap, expanded Path 2, and established an annual schedule of missions.

The government weighs bids according to a company’s “gross estimated price” to launch. This is broken down into “launch service,” which means the cost of building and launching a missile, and “launch service support,” which covers special requirements the military might have for a launch. The maximum launch service subsidy amount is $100 million per year, per company.

“We’ve implemented some cost constraints so we don’t get inflated. We don’t want to [a situation where] Everyone gets a mission—you get a mission, you get a mission, you get a mission—because there’s no real competition after that,” Pentecostals said.

“We believe all of our partners in the industry want to be the first man, so we think that will provide competitive pricing to keep our costs down,” he added.

While track 1 is expected to attract the most bids and award 30 missions, track 2 is the big show.

With Lane 2, the Space Force awards the most valuable contracts to launch national security satellites at the highest stakes.

“These are billion dollars [satellite] “The payload going into unique orbits,” said Pentecost.

Not only has Lynn 2 seen an increase in the number of missions available for grabs — it’s currently estimated at 58 launches, up from 39 in February — but Space Force also made the decision to expand the slots available for final prizes to three companies, rather than limiting them to two.

Elon Musk’s SpaceX and United Launch Alliance, the joint venture of Boeing And Lockheed MartinThey were supposed to be the main contenders for Lane 2, but now there’s an open door for another company like Jeff Bezos’ Blue Origin.

Space Force will allocate 60% and 40% of the 51 missions to the two largest bidders, respectively, and the remaining seven launches will go to the third-place bidder.

Regardless of where a company ranks, it must demonstrate that it can meet all of Track 2’s requirements, which include having launch sites on both the East Coast and West Coast, and the ability to reach nine high-accuracy “reference” orbits, many of which are much farther from Earth than the LEO requirements of Track 1.

Asked by CNBC how many companies are developing missiles that can meet these requirements by the launch deadline, a Space Force spokesperson declined to specify, saying the Army is “tracking several” that are “expanding their launch capabilities into most of these orbits.”

“Hopefully, not only will ULA, SpaceX, and Blue Origin compete for that, there are others who have interest in the past.” Chad Mellon, chief of procurement and integration at Space Systems Command, said during the briefing.

Space Force presents an annual festival for the month of October. 1 Deadline for assignment of tasks to companies that have won a contract.

Pentecost clarified that the first missions will end in October 2025, but the aforementioned contracts do not guarantee assignments, which protects the Space Force from delays that companies may experience in developing and flying missiles.

“You could have won the contract already, and you had this great plan about how you were going to fly [fiscal year] 2027. But since you haven’t flown yet, and I have a satellite that needs to fly in a couple of years, we’re not going to give you that task—we’re going to pass it on to the other person,” Pentecostal said.

Space Force aims to finish its solicitation for bidders by September and then submit all proposals by December, with contracts awarded in October 2024.

The main driver for this push, Space Force officials said, is “capacity assurance,” since there are “a lot of other companies” trying to buy satellite launches and the Space Force needs to close their orders.

“We wanted to make sure that we basically hedged against the scarcity of launches that could happen because if there is absolutely too much demand and everyone is [buying]”The prices can be very high,” Mellon said.

But despite that fear, Pentecost said that 2026 “looks like the sweet spot” when a number of the companies’ rockets will be developed and ready to fly. And the companies that stay on the right track will have the upper hand in the third phase of the NSSL.

“If you fly before then, or if your schedule shows you will fly before then, you will have significant strengths, which will put you in a better position to win the best provider or second best in this competition,” said Pentecost.

CNBC’s Jim Cramer on Friday named three industrial stocks he thinks worth owning next year, saying he expects them to outperform the sector’s best performers in 2022.

It was the best performing industrial stock in the S&P 500 this year so far Northrop GrummanAnd the Lockheed Martin And the monastery – an increase of 36.9%, 35.6% and 25.7%, respectively. Looking to the future, though, Kramer said he’d rather own the likes LarvaAnd the Illinois tool works and railway operator CSX.

Shares of Caterpillar, which reported strong earnings two months ago, are up 12.6% year-to-date. Kramer said he preferred Caterpillar to fellow machine maker Deere.

“CAT has a lot of infrastructure exposure, and I think they’ve got support from the oil and gas industry going forward,” Cramer said. “Definitely worth owning here with 17x earnings,” he added.

Kramer confirmed that Illinois Tool Works shares fell by more than 12% in 2022 because fears of an economic slowdown overshadowed the company’s actual results. “I like it here, of course more [so] He said, “But I give you my blessing to buy ITW.”

And Cramer acknowledged that transports like the CSX — down about 16% so far — are “absolutely hated” on Wall Street. However, he said he believes CSX is attractive to investors with extended time horizons.

“For me, it’s a long-term story. I see our East Coast ports getting more business as shipping companies adjust to the fact that our West Coast ports are down. In the meantime, CSX mints money through coal,” he said. . “I think it is worth buying until 2023.”

The second quarter was a mixed bag for space companies, with some companies posting steady progress while others faced setbacks.

Most of the space shares, many of which went public last year through SPAC deals, are struggling despite the growth of the industry, which has fallen 50% or more since it first came to market. The changing market environment and rising interest rates affected technology and growth stocks hard, affecting space stocks.

CNBC separates the latest quarterly reports for Aerojet Rocketdyne, AST SpaceMobile, Astra, BlackSky, Iridium, Maxar, Momentus, Mynaric, Redwire, Rocket Lab, Satellogic, Spire Global, Telesat, Terran Orbital, ViaSat, Virgin Galactic and Virgin Orbit.

Planet Satellite Imagery has yet to announce its latest quarterly results, as the company follows the calendar for the fiscal year that began on February 3. 1.

Year-to-date stock performance: -3%

Aerojet Rocketdyne continues to attract a significant portion of revenue from the aerospace segment. The propulsion specialist takes the majority of second-quarter sales of $528.5 million from defense-related contracts. Notably, President and CEO Elaine Drake confirmed that the Aerojet backlog added the United Launch Alliance contract for the 116 RL10 engines needed to power the Vulcan series of rockets, many of which were ordered by Amazon.

YTD stock performance: +36%

The satellite-to-smartphone broadband company reported revenue of $7.3 million and total operating expenses of $35.4 million, both metrics slightly higher than the same period the previous year. The company has $202.4 million in cash, as AST continues to work towards the September launch of its Blue Walker 3 experimental satellite. You’ve spent $86.6 million on the demonstration so far.

Year-to-date stock performance: -88%

Rocket and spacecraft maker Astra reported another huge quarterly loss, with adjusted EBITDA of $48.4 million. The company brought in only $2.7 million in revenue and announced the sudden cancellation of the Rocket 3.3 series along with a hiatus from release until at least 2023 as it focuses on developing the larger version, Rocket 4.0. Astra has $200.7 million in cash on hand.

Year-to-date stock performance: -52%

Seattle-based satellite imagery company BlackSky reported revenue of $15.1 million for the quarter, nearly double what was posted a year earlier, and an adjusted EBITDA loss of $8.8 million. The company scored a big win in the form of an NRO contract for its images, worth up to $1.02 billion over a decade.

Stock performance to date: +9%

The satellite communications provider generated $174.9 million in revenue, an operating EBITDA of $105.9 million and less than 1.9 million subscribers — up 17%, 12% and 16%, respectively, over the same period the previous year. Matt Desch, Iridium’s CEO, emphasized on the call that “business outperformed nicely,” with “the company well positioned for growth…even if recent fears of an economic downturn begin to pay off.” The company also won a significant award from the Pentagon’s Space Development Agency this quarter, which Dish expects to add $133 million in revenue over seven years.

YTD Stock Performance: -58%

The spacecraft manufacturer brought in just $50,000 in revenue, due to the cancellation of the customer contract, and reported an adjusted EBITDA loss of $18.3 million. While Momentus has about $109 million in cash on hand, the company says it plans to reduce its quarterly cash burn by cutting some spending and delaying long-term research and development projects, as it focuses on solving problems identified with its spacecraft during its last mission.

Year-to-date stock performance: -41%

The laser communications maker has yet to begin reporting quarterly results, after it went public in November. During the second quarter, Mynaric announced an agreement with defense firm L3Harris, which will acquire 7.2% of the company and invest approximately $11 million.

Year-to-date stock performance: -54%

The Space Infrastructure Group collected $36.7 million in revenue during the quarter, up 14% from the prior year, with an adjusted EBITDA loss of $4.1 million. Notably, Redwire “expects positive adjusted earnings in the second half of 2022,” even as it continues to invest in infrastructure expansions such as its newly opened robotic arm manufacturing facility in Luxembourg.

Year-to-date stock performance: -54%

The multinational builder of small rockets and spacecraft reported revenue of $55.5 million, up 36% from the previous quarter, largely from its Space Systems division. The total backlog also increased to $531.4 million. The company reported an adjusted EBITDA loss of $8.5 million, but it has more than half a billion cash on hand. Rocket Lab CEO Peter Beck said on the company’s earnings conference call that Rocket Lab continues to “see strong demand for Electron launches.”

Year-to-date stock performance: -53%

The satellite imagery company has yet to begin reporting quarterly results, after it went public in January. During the second quarter, Satellitelogic launched four additional satellites into orbit via SpaceX launches, increasing its fleet to 26 to date. The company aims to have 34 in orbit by early 2023.

YTD Stock Performance: -55%

Small satellite maker and data specialist Spire had revenue of $19.4 million during the second quarter and reported an adjusted EBITDA loss of $7.3 million. For the full year of 2022, the company expects to exceed $100 million in annual recurring revenue from subscribers.

Year-to-date stock performance: -61%

The Canadian Satellite Communications Corporation reported revenue of about $143 million (converted at current Canadian dollars), down slightly from the previous year, with a contract backlog of $1.5 billion. Telesat reported adjusted EBITDA of approximately $112 million. The company noted that pending final plant agreements and financing, capital expenditures “could increase significantly” to fund development of its Lightspeed network.

Year-to-date stock performance: -59%

The spacecraft manufacturer reported $21.4 million in revenue for the quarter and reported an adjusted EBITDA loss of $14.8 million, while its backlog increased to $224.1 million. Terran Orbital began delivering satellite buses, the spacecraft’s main body, to Lockheed Martin under contract with the Pentagon, and supported the launch of NASA’s CAPSTONE spacecraft, which it helped build.

Year-to-date stock performance: -16%

The satellite broadband service provider, which is on the calendar for the fiscal year beginning in April, reported quarterly revenue of $678 million and adjusted EBITDA of $132 million — the first, up 2% year over year. The latter is down 17%. Vyasat noted that he is still straining his finances from supply chain shortages and inflation. The company plans to launch the ViaSat-3 satellite later this year.

YTD Stock Performance: -55%

The space tourism company reported an adjusted EBITDA loss of $93 million on negligible revenue. Virgin Galactic has announced another delay to the start of commercial service, pushing it into the second quarter of 2023 as the company continues to renew carrier aircraft that begin their spaceflights. Virgin Galactic has $1.1 billion in cash on hand and announced plans to sell up to $300 million in common stock.

YTD Stock Performance: -50%

The replacement rocket launcher did not report any revenue, but it completed its launch the day after the second quarter ended and will estimate $12 million of that in the coming period. Virgin Orbit reported an adjusted EBITDA loss of $34.4 million and $122.1 million in cash in the fund. The company expects to complete two more launches this year, for a total of four launches in 2022.

LONDON – Britain’s Farnborough International Air Show will return next week, as aviation and defense industry leaders prepare to meet against a backdrop of travel chaos and labor unrest.

The five-day trade fair, which kicks off on Monday, will showcase the most advanced aircraft in commercial and military aviation.

More than 70 of the top 100 airlines will attend, although Farnborough International has suspended Russian participation, citing the Kremlin’s war in Ukraine.

Six major themes were put at the center of the action: aerospace, defense, sustainability, innovation, future aviation, and the workforce.

This is the first time that major players in the aerospace, defense and aerospace industries have come face-to-face in a major summer air show since Paris 2019 following cancellations due to the coronavirus crisis.

Now, as the airline industry faces a difficult recovery from the pandemic, the air show is set to provide a global platform for executives to determine what the future holds.

Visitors to the air show will see daily air shows of the most advanced commercial and military aircraft. There will also be an opportunity to view the products up close.

Besides the shows, about 1,200 exhibitors from 42 countries will attend.

Some companies such as Airbus, Boeing, Lockheed Martin, Rolls-Royce and BAE Systems are expected to participate in this event.

European aircraft maker Airbus is likely to prepare to sign a deal with US airline Delta Air Lines at the event. Citing two unnamed sources, Reuters reported that Airbus is in talks to sell more A220s to Delta, with an additional order of about a dozen set to be announced at the air show.

It is also believed that Delta may announce an order for at least 100 Boeing 737 Max aircraft.

Airbus and Boeing were not immediately available for comment when contacted by CNBC.

Delta executives declined to comment on reports of upcoming orders for Boeing and Airbus narrow-body jets during a quarterly earnings call on Wednesday.

However, CEO Ed Bastian said: “We have an opportunity in the next three to five years of delivery for some additional acquisitions with a tight, narrow body, and that’s something we’re always talking to with Airbus and Boeing about and whether that’s a used or whether that’s new, There is an opportunity there.”

Industry players will be watching to see if China is willing to announce new orders at this event.

At the beginning of July, Airbus secured a massive order from four Chinese airlines in what was seen as a significant breakthrough for the European airline and a setback for US rival Boeing.

Air China, China Eastern, China Southern and Shenzhen Airlines have pledged to purchase a total of 292 single-aisle A320 family aircraft from Airbus. This was the largest demand by Chinese airlines since the outbreak of the coronavirus pandemic.

Airbus said the deal showed “positive recovery momentum and a buoyant outlook for the Chinese aviation market”.

In addition to a host of order bookings and deal-making, the UK government is preparing to launch a so-called “Jet Zero” strategy.

This initiative is part of a set of policies designed to help bring the UK’s emissions down to net zero by mid-century.

The UK government is expected to include mandates that will force British-based airlines to use a minimum level of sustainable aviation fuel. This policy is designed to increase demand for a much more expensive product than kerosene jet fuel.

Climate activists have harshly criticized the UK government’s Jet Zero initiative as fit for purpose, however, arguing that some sustainable aviation fuels will do more harm than good and that the plan is built on decades of growth out of line with the climate emergency.

The July 18-22 event comes as temperatures soar in parts of Europe and attendees are likely to experience scorching heat at the start of the week. Heat waves are becoming more frequent, intense and prolonged as a result of the climate crisis.

Temperatures may peak above 35°C (95°F) in southeast England on Monday and Tuesday. It provides a sweltering backdrop to the air show at a time when the aviation sector is under tremendous pressure to credibly define plans to cut emissions.

Climate warming emissions from aviation are increasing faster than any other mode of transportation and are a major contributor to the climate crisis.

At the air show, airline executives called for targeted targets to tackle non-CO2 emissions. These non-CO2 effects – such as nitrogen oxides, water vapor, soot and black carbon – from jet engines were found to contribute twice as much to global warming as carbon dioxide in aircraft and were responsible for two-thirds of the aviation climate impact in 2018.

Another major issue for industry executives is lowering demand as a way to curb the aviation sector’s surging emissions.

The airline industry has been grappling with a series of challenges in the run-up to the air show sparked by airport chaos ahead of a busy summer holiday season.

Strikes and staff shortages have forced airlines to cancel thousands of flights and led to hours-long queues at major airports. It has dampened hopes of a rebound in air travel in the first summer after the Covid shutdown.

The airline industry has imposed sweeping job cuts and wage cuts as the Covid crisis halted travel around the world, but the lifting of restrictions saw a sharp increase in passenger demand.

Employees are now pushing for better working conditions and better wages amid rising inflation.

In a sign that one of Europe’s busiest airports was struggling to deal with a rebound in air travel, London’s Heathrow Airport on Tuesday asked airlines to stop selling summer tickets.

The largest airport in the United Kingdom, it is located in southwest London and About 19 miles from Farnborough, he said he’s limiting the passengers who can leave each day during the peak summer months to 100,000. That’s 4,000 fewer passengers than currently scheduled.

The move sparked an angry response from airlines, with the head of the International Air Transport Association describing the restrictions as “ridiculous”. Emirates Airlines echoed that sentiment. The Dubai-based airline rejected what it called Heathrow’s “unreasonable and unacceptable” demands.

CNBC’s Leslie Josephs contributed to this report.

Milford, Michigan. — General Motors and Lockheed Martin said Thursday they plan to produce a range of lunar rovers for commercial space missions and services powered by the automaker’s electric vehicle battery technology.

The companies said they plan to test the batteries in space later this year, aiming to have their first battery-powered vehicle on the moon in 2025. In addition to potential NASA offerings, they hope to strike deals with private companies such as Amazon. Blue Origin founder Jeff Bezos and Elon Musk’s SpaceX.

“The interest around the world is enormous,” said Derek Hodgins, director of product strategy and sales for lunar infrastructure services at Lockheed Martin, during a joint event here at the GM Proving Ground.

The announcement marks the latest expansion of GM’s Ultium technologies, including batteries, outside the automobile market. The automaker has also announced partnerships to use or test the technologies in electric motors for trains, boats and other industries.

GM and Lockheed last year announced a partnership to develop a spacecraft on the lunar surface using its Ultium vehicle and battery platform for NASA, which is evaluating projects after bidding for its upcoming Artemis missions to the moon.

The companies say their expertise in developing NASA’s lunar module is being used to develop other types of vehicles for space missions and services such as data and soil collection.

The Lunar Mobility Vehicle is being developed for commercial use in a multimillion-dollar simulator at the General Motors Test Lab that simulates the lunar surface and atmosphere, including the change in gravity. General Motors was previously the primary subcontractor that helped Boeing build a similar vehicle that was used during three Apollo missions to the moon.

The new vehicle is designed to be more technologically advanced, more powerful and last at least 10 years on the moon. Its top speed, for example, would be 12 mph compared to 7 mph for Apollo-era vehicles. It is also designed to operate independently when not in use by astronauts.

“This is not a buggy on the dunes,” Hodgins said. “These are tools that were not available in the late 1960s.”

Lockheed Martin is already talking to potential customers for the lunar modules, according to Hodgins. He declined to disclose the companies involved in the discussions.

GM also said Thursday that it is drawing on its expertise in developing a Hummer EV for system control, battery management, and torque management for propulsion control. for the new lunar module programme.

“It’s moon dust, but there’s also craters, rocks and other things that you’re going to have to navigate through,” Hummer vehicle dynamics performance engineer Drew Mitchell said Thursday.

The project is still under development. However, executives said they expect to move to the “implementation phase” soon.

For nearly two decades, Jeff Farshman, 72, has spent his golden years like many other adventurous retirees — enjoying leisure trips to exotic ports of call.

But unlike many of his cruise buddies, Farchman lives primarily at sea. He spends months traveling the world’s oceans and waterways – half the year, if not more. Although he still maintains an actual home near where he grew up in Delaware, Farschman is now part of a growing group of older folks who are literally “retiring” on cruise ships.

“Regardless of the pandemic, I’ve been sailing for seven to eight months a year,” said Farshman. “I am a world traveler and explorer type, and cruises have literally allowed me to see the entire planet.”

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Living on a ship wasn’t exactly what Farshman had in mind when he first set sail. But the former vice president at Lockheed Martin found himself stuck on a traditional Caribbean cruise when Hurricane Ivan struck again in 2004.

“I kept extending my time on board because the hurricane spoiled my original plans for the winter,” he explained. “I ended up completing six flights in a row.”

Nearly 20 years later, Farchman now organizes his life around time at sea – making his shore stints as short as possible. However, like any other cruiser, “sea retirees” found themselves again on land during most of the coronavirus pandemic, when the US Centers for Disease Control and Prevention closed all cruises from US ports.

For Farchman, that meant 19 months – including winter – without sailing, the longest he had been on shore in nearly two decades. But once the main lines put in place clear health protocols for Covid, the serial cruisers were the first to get back on board. While outbreaks of Covid have since been reported – including notable cases in San Francisco and Seattle – people like Farshman say they feel safe sailing.

Although there are no firm numbers, retirement on a cruise ship is gaining increasingly higher status – despite the industrial disruptions caused by the coronavirus crisis.

Serial cruiser and author Lee Wachstetter, for example, wrote a much-read memoir about living on cruise ships for 12 years after her husband’s death. Meanwhile, Farschman lists his cruise-related projects on his blog — facilitated by onboard WiFi that “is becoming more reliable, although unfortunately not necessarily more affordable,” he said.

Improved connectivity also allowed semi-retired cruisers to be stationed at sea while on duty. “The WiFi on most ships is now strong enough for Zooms,” said Tara Bruce, advisor and creative brand manager at Goodwin Investment Consulting Services, a Woodstock, Georgia-based financial advisory that helps retirees at sea.

In many ways, retiring on a cruise ship makes a lot of sense. Stereotypes aside, sailing has always appealed to older travelers. In fact, according to At the Cruise Lines International Association, a third of the 28.5 million people who took a cruise in 2018 were over 60 – and more than 50% were over 50.

Furthermore, cruise ships offer many of the essential elements that seniors need to thrive: organized activities, a decent level of medical care, and most importantly, a compact community of like-minded travelers.

Retirement on a cruise ship can be economically sound, too.

“By sailing, you cover all of your living expenses—food, lodging, and entertainment—in one place,” Bruce said. Although deluxe liners can be priced as low as $250 a day, “we’ve seen people get costs down to $89 a day, which is much cheaper than subsidized care or other types of living for seniors.”

Frequent cruisers like Farschman also qualify for in-flight credits for premium meals, drinks, spas and other activities that can easily run into “hundreds of dollars per trip,” Farschman said.

The emergence of the “retire at sea” movement has been underpinned by the recent shift toward longer, more elaborate “global cruises” or “grand cruises” that can last 50 days or more at a time.

Holland America, for example, offers a 71-day Grand Africa Voyage itinerary that stops at 25 ports in 21 countries along with a Grand World Voyage cruise that visits 61 ports in 30 countries, for a total of 127 days at sea.

“It typically consists of several segments with long slots on each port,” explained Colin McDaniel, editor in chief at Cruisecritic.com. With careful planning—often booked by the shorter “Mosul” voyages—”big” courses can keep cruisers at sea almost indefinitely.

So-called Collectors Voyages in Holland America not only help retirees avoid repeat port calls, they also include discounts of 10% and 15%, according to Eric Elfjord, director of public relations for Holland America.

Although a few cruise lines specifically target retirees—Oceania, for its part, had the Snowbird in Residence program, which has since been canceled—special agents are waking up to this lucrative demographic.

CruiseWeb, based in Tysons, Virginia, has launched a Seniors Life at Sea program that builds itineraries for retirees and helps customers manage their lives back on shore. Other than booking reservations, CruiseWeb deals with issues such as beach transfers, ship keys, visas, and insurance.

“We have customers who have been on the ship for over a year,” said Michael Jones, Senior Operations and Marketing Coordinator at CruiseWeb. “They usually downsize their permanent home stay and many even rent it while they are on the plane” to help cover the cost of sailing, he added.

Perhaps the most notable component of the retired naval movement is the arrival of fully residential ships, such as the 20-year-old The World. And the soon-to-be MV Narrative of Storylines. The first includes 165 individually owned residences on board, while the much larger MV Narrative – set to hit the high seas in 2024 – offers 547 one- to four-bedroom apartments.

Owning at sea isn’t cheap: Narrative MVs range from $1 million to $8 million, while limited one- to two-year leases start at $400,000.

“There are also monthly or annual costs to cover things like fuel, port fees, taxes and housekeeping,” McDaniel explained. “It’s kind of like living in an apartment – it happens at sea.”

Written by David Kaufman. Kaufman is a freelance writer.

The head of the National Aeronautics and Space Administration on Tuesday discussed a fundamental shift in the way the agency plans to issue contracts for space exploration programs, citing success in cost-effective competitive bidding.

NASA Administrator Bill Nelson, while testing before a Senate subcommittee on the agency’s budget for landing astronauts on the Moon, has staunchly endorsed fixed-price contracts with companies — and decried more variable-cost contracts as a “plague” for the agency.

Nelson’s focus on competition will likely be a boon to the growing group of space companies looking to provide low-cost services to NASA, and a sharp cutback for aerospace and defense contractors that have traditionally benefited from additional cost deals.

Fixed-price contracts set a maximum payment for a good or service, while additional cost agreements result in the government paying the cost of the work, as well as additional fees, which can balloon over the course of the project.

The biggest difference between the contract structures comes down to who gets to bill for delays or cost overruns: a fixed price assumes that the companies that build the systems absorb any unexpected expenses, while the extra cost leaves NASA in a bind.

NASA has agreements for every chassis for the most expensive parts of its Artemis lunar program: a Space Launch System (SLS) rocket, an Orion capsule designed to carry astronauts into lunar orbit, under cost-plus contracts, and a SpaceX Starship to carry the rocket. Astronauts on the Moon, under a fixed-price deal.

NASA has awarded several multi-billion dollar plus cost-plus contracts to a wide range of contractors for the development of the SLS and Orion, primarily to Boeing, the prime contractor for building the SLS; Lockheed Martin, Orion Development Lead; and Northrop Grumman to supply missile boosters.

Since 2012, NASA has spent about $20 billion developing the SLS, and more than $12 billion on Orion, according to the agency’s inspector general. Excluding development funding, the cost of each SLS launch has ballooned eightfold since 2012: from $500 million to $4.1 billion, with the launch of the missile delayed by five years and that number still rising.

By comparison, NASA has had consistent success with major fixed-price contracts — most notably through its Commercial Crew program. Under the leadership of Commercial Crew, the agency has given SpaceX about $3.1 billion and Boeing about $4.8 billion over the past decade to develop spacecraft to deliver astronauts to the International Space Station.

With the Crew Dragon debuting in 2020, NASA began purchasing transportation services for its crew from Elon Musk. And while Boeing’s Starliner spacecraft has yet to fly with a crew, the costs of the delay have been absorbed by the company, rather than by NASA.

NASA estimates that due to a competitive approach, the Commercial Crew program saves the agency between $20 billion and $30 billion.

SpaceX last year won a $2.9 billion fixed-price contract from NASA to use the company’s Starship rocket to fly astronauts from orbit around the moon to the surface of the moon. SpaceX was the only winner in a competition against two other privately-led vehicles, from teams led by Jeff Bezos’ Blue Origin and Leidos subsidiary Dynetics.

Nelson’s comments Tuesday come as he urges Congress to approve funds for another competition, to develop a second lunar lander. He stressed that SpaceX won because its offering was “by far the most economical of the three,” but said the agency now wants a second landing craft because “in that competitive spirit, you can get it done cheaper.”

“We can leverage that money by working with a commercial industry and, through competition, lowering those costs to NASA,” Nelson added.