I have had this article open (see this) for quite a while, and I now see that it dates back to January 2012. What a difference it makes when you can dig up old articles like this. I learned a lot from reading this, which is perhaps because I am now playing catch-up concerning Elon Musk and his many activities, and this piece feels like it was written when a lot of people were first learning about this guy.
In addition to being about Elon Musk, this piece focuses in on why Musk’s rockets cost so much less than the regular rockets that the US government has been buying up until now for its space endeavours. It turns out it’s not been rocket science. Basically, they are cheap because Musk is the first person who has tried to make them cheap:
United Launch Alliance, the consortium of Boeing and Lockheed Martin that produces both the Delta and the Atlas, does not make its prices public. But budget documents show that in 2010 the EELV program received $1.14 billion for three rockets—an average of $380 million per launch. And prices are expected to rise significantly in the next few years, according to defense department officials. Why? Musk says a lot of the answer is in the government’s traditional “cost-plus” contracting system, which ensures that manufacturers make a profit even if they exceed their advertised prices. “If you were sitting at a n executive meeting at Boeing and Lockheed and you came up with some brilliant idea to reduce the cost of Atlas or Delta, you’d be fired,” he says. “Because you’ve got to go report to your shareholders why you made less money. So their incentive is to maximize the cost of a vehicle, right up to the threshold of cancellation.”
I recall once upon a time GodDaughter1’s Dad, who is a structural engineer, telling me how depressed he was that his firm got paid not according to how much extra effort and cleverness they put into designing good structures, but according to how much concrete and steel they wasted, by not putting in that extra effort and cleverness. The good news was that, like Elon Musk, he and his mates were trying to change that.
See also this earlier posting here and in particular Michael J’s comment on it. Musk is now covering himself in glory. Boeing and Lockheed are covering themselves in something else.