NetNews Usenet Archive 1992 #31/NN_1992_31.iso/spool/sci/space/18087

Text File | 1992-12-22 | 3.4 KB | 72 lines

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From: [e-mail] (John Roberts)
Subject: Accounting
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Date: Wed, 23 Dec 1992 03:55:03 GMT
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-From: [e-mail] (Allen W. Sherzer)
-Subject: Re: Terminal Velocity of DCX? (was Re: Shuttle ...)
-Date: 22 Dec 92 16:07:15 GMT

-In article <[e-mail]> [e-mail] (Brian Stuart Thorn) writes:
-> The Space Transportation budget this year was about $5 billion, if
-> memory serves. NASA flew 8 Shuttle missions this year.

-This number does not include NASA overhead, amortization of the orbiter,
-amortization of Shuttle development costs, and a host of other costs. Adding
-those in puts the cost at well over a billion per flight. Hell, interest
-costs on development alone adds over a quarter billion per flight (BTW,
-this interest is not a sunk cost since it is part of the national debt and
-we are paying for it even now).

Accounting is a very complex field - I'm not convinced that there's any
obvious "right" way to do accounting. But in any event, amortization of
past development costs is not a legitimate argument for scrapping an existing
system. In fact, I expect that if you want to consider getting rid of an
existing system and developing a new system to replace it, you should compare
the *operational* costs of the existing system to the *operational plus
development* costs of the proposed system. For instance, if you want to
develop a radically new system that is expected to launch payloads for $10
a pound less than the Shuttle (and assume comparable payload sizes to make it
simple), but the new system will cost $10 billion to develop, then you have
to show that the $10/lb saving on payload will make up for the $10 billion
new development cost. I'd say there's a good chance that the DC approach
can meet this criterion, but those are the numbers it has to beat, not
just a "level playing field" comparison of operational costs or of
operational + development costs for both.

(Unless the government decides to pay for the development of DC - but
that decision would hardly be an argument for the financial merits of DC.)

Of course the Shuttle is still "under development" to some extent (i.e.
the ASRM), but I believe those costs are included in the ~$4 billion/year.

If you want, you can bring up the possibility that payload costs will also
be reduced using a DC system, but that's a separate issue.

->You have done the 'creative accounting' here, I'd say.

-No, it's NASA who is being creative by ignoring billions in cost. BTW,
-if a private company ran their books the way NASA does they would be
-thrown in jail for fraud.

Interesting side note - some people (I don't recall who) have implied
that a private company doing its accounting in the military/NASA style
would get in trouble with the *IRS*. That seems a little farfetched - I'd
think the IRS would be *happy* if companies declared taxable income that
they didn't really earn. Of course, the *stockholders* might not be too
happy... :-)

John Roberts
[e-mail]