Introduction:
Gwynne Shotwell, President and COO of SpaceX, addressed the Atlantic Council on the future of American space launch. The Captains of Industry Series aims to provide a platform for business leaders to discuss national security concerns from their perspective.

Background:
Shotwell shared her personal journey into the aerospace industry and her experiences with various organizations. The South Asia Center is exploring Asian space dynamics and sees this event as an opportunity to learn from Shotwell’s address.

Achievements:
SpaceX has revolutionized the launch industry with its reusable rockets, significantly reducing launch costs. The company has successfully launched satellites, resupplied the International Space Station, and is developing a human-rated spacecraft, Starship.

Challenges:
SpaceX faces regulatory hurdles and competition from traditional launch providers. The company is working with the government to address concerns about space debris and safety. SpaceX is also exploring ways to reduce the cost of space travel and make it more accessible.

Vision for the Future:
Shotwell emphasized the importance of innovation and collaboration in advancing space exploration. She believes that SpaceX’s reusable rockets and Starship will transform space travel and enable missions to Mars and beyond. The company aims to make space travel more affordable and routine, benefiting both government and commercial entities.

Q&A Session:
Shotwell expressed her preference for Q&A sessions and encouraged attendees to ask questions. The discussion likely covered various aspects of SpaceX’s operations, challenges, and future plans.

SpaceX’s Mission:
Founded in 2002 by Elon Musk with the goal of changing the paradigm of reliability of access to space. Aiming to carry people reliably and safely to low Earth orbit and beyond.

SpaceX’s Leadership and Growth:
Gwynne Shotwell serves as the president and chief operating officer. 3,500 employees and about 500 contractors currently work at SpaceX. Rapid growth to meet the demands of a critical time in the industry.

Launch Sites:
Launch Complex 40 at the Eastern Range Cape Canaveral. Recently granted access to Launch Complex 39A, a historical launch site. Vandenberg Air Force Base on the West Coast. Aiming to establish a purely commercial launch site in South Texas.

Rocket Development:
Initial development of the Falcon 1 rocket. Moved on to the Falcon 9 launch vehicle, an EELV class intermediate launch vehicle. Upgrade to the Falcon 9 launch vehicle late last year.

Launch Success:
10 for 10 on the Falcon 9 launch program. Most missions to date have been to the International Space Station with the Dragon capsule.

Public-Private Partnership with NASA:
Commercial Orbital Transportation Services (COTS) program. NASA provided $396 million, and SpaceX invested over $450 million. Resulted in an EELV-class launch vehicle competitive on the international scene.

SpaceX Business and Success Factors:
Founded with $100 million investment and additional venture capitalist funding. Developed capabilities serving various market sectors, reducing reliance on a single customer. Vertically integrated company, designing, building, and launching their own rockets and spacecraft. Design philosophy emphasizes redundancy and simplicity, leading to successful outcomes.

SpaceX Market Dominance:
Captured 100% of Falcon 9 business and 30% of the overall launch market in 2011-2012. Monthly launch cadence demonstrated with SES-8 and TICOM missions. Dynamic portfolio allows for flexible customer acquisition and cost distribution. Anticipating 50% market capture with the Falcon family of launch vehicles.

American Competitiveness in Commercial Space Launch:
US dominance in the 1980s declined, but SpaceX is regaining market share. SpaceX’s success contributes to American jobs and competitiveness in the global space industry.

Russian Reliance in Space Launch:
Retirement of the space shuttle led to US reliance on Russian engines and launch capabilities. NASA’s commercial crew program aims to address this issue with SpaceX, Boeing, and Sierra Nevada as competitors. National security launch program heavily relies on Russian RD-180 engines, raising concerns about US independence.

EELV Program and SpaceX’s Role:
EELV program established for assured access to national security payloads. SpaceX prices are significantly lower than EELV program costs, offering potential savings. SpaceX seeks policy changes to allow for competition in the EELV program.

Reestablishing US Launch Dominance and Benefits of Competition:
SpaceX’s commercial success and new entrants are revitalizing the US launch industry. Competition drives increased capability, service quality, and reduced prices. SpaceX aims to expand its services to include more missions for the Air Force.

Future of SpaceX:
Executing on the manifest and proving mission capabilities. Adapting Dragon cargo capsule to accommodate crew. Developing Falcon Heavy, a powerful launch vehicle covering the entire launch marketplace. Pursuing reusable rocket technology to reduce launch costs and improve sustainability.

SpaceX and the Space Act Agreement:
SpaceX’s collaboration with NASA under the Space Act agreement, an Other Transaction Authority (OTA) mechanism, allowed for the development of the Dragon capsule and launch vehicle. SpaceX invested more than NASA in this partnership, contributing around $450 million compared to NASA’s $400 million investment. The agreement provided SpaceX with the freedom to innovate and design the Dragon capsule to meet safety requirements while allowing NASA to focus on funding development for its critical needs.

Benefits of the Space Act Agreement:
The partnership resulted in the creation of a launch vehicle that serves both civil and national security communities, helping restore launch dominance to the United States. It was a cost-effective arrangement for the taxpayer, with SpaceX leveraging its capabilities for commercial purposes and broadening its market. Falcon 9 is used for various missions, including commercial payloads, civil payloads, and Dragon missions, allowing SpaceX to diversify its revenue streams.

Innovation at SpaceX:
Innovation at SpaceX goes beyond the highly visible achievements like the reusable rocket technology. The Merlin engine is the highest thrust-to-weight hydrocarbon engine flying, demonstrating technological advancement. Falcon 9’s ability to execute critical missions at dramatically lower costs than its competitors is an innovative achievement. Cost reduction innovations include careful vehicle design, efficient operational practices, and leveraging economies of scale.

Challenges and Future Goals:
SpaceX faces challenges in securing a reliable supply of RD-180 engines for national security launches. The company aims to develop a fully reusable launch vehicle system to further reduce costs and increase operational efficiency. SpaceX is committed to pushing the boundaries of space technology and revolutionizing the space industry.

SpaceX’s Unique Processing Method:
SpaceX processes and builds its launch vehicles horizontally, unlike others who use a vertical configuration. This horizontal approach reduces the need for expensive infrastructure like mobile service towers. SpaceX’s method is inspired by Russian practices and prioritizes operability and cost efficiency.

Cost Benefits of Vertical Integration:
Building the rocket in a low-cost facility (50 cents per square foot) instead of high bay space ($12-18 per square foot) significantly reduces expenses. Vertical integration eliminates exponential GNA and fee additions that occur with multiple layers of integration. SpaceX maintains a vast supplier network of 3,000 suppliers, including 1,100 highly active ones. Over 60% of the revenue is spent on subcontractors and suppliers, primarily for wires, connectors, raw materials, and major subsystems.

Comparison with ULA’s Launch Site Upgrade:
SpaceX highlights the cost-effectiveness of its approach by comparing it to ULA’s upgrade of the Atlas 3 launch site. News reports indicate ULA spent between $250 and $300 million on the upgrade. SpaceX emphasizes it could build multiple launch sites from scratch for the same cost. This comparison underscores SpaceX’s focus on cost efficiency and innovation.

STEM and Brain Drain:
SpaceX does not experience the brain drain issue, which is an industry-wide problem. The company recruits hundreds of engineers annually and successfully attracts top talent. SpaceX’s culture, mission-driven approach, and innovative work environment contribute to its ability to attract and retain skilled engineers.

SpaceX’s Engineering Culture:
SpaceX offers a unique work environment where engineers are given significant responsibility and autonomy. They value engineers who are passionate about building and creating rather than engaging in bureaucratic tasks. Interns at SpaceX get to work on extraordinary projects and witness the entire lifecycle of their designs, from concept to launch.

Lawsuit Against the Air Force:
SpaceX filed a lawsuit against the Air Force’s decision to award a 36 core block buy contract to ULA on a sole-source basis. Shotwell believes it was the right decision to contest the Air Force’s decision and does not regret filing the lawsuit. She emphasizes that the lawsuit is separate from the certification review process, which is progressing well.

Certification Process for Falcon 9:
SpaceX is working towards completing the certification process for the Falcon 9 rocket on the EELV program by the end of the calendar year. The certification process involves a thorough review of mountains of paperwork and data. SpaceX is pushing the Air Force team to expedite the process, but both teams are working hard to meet the deadline.

Tensions with Russia and Impact on Space Infrastructure:
Shotwell highlights the potential impact of tensions with Russia on the US space infrastructure and supply chain. Atlas rockets, which rely on Russian-made RD-180 engines, have 38 missions to fly, but only 15 RD-180s are available in the country. This situation raises concerns about the reliability and sustainability of US space infrastructure.

Balancing Innovation and Certification:
SpaceX’s desire to innovate and make modifications to its rockets may conflict with the Air Force’s preference for a frozen configuration. Shotwell clarifies that the Air Force is open to modifications that improve reliability and performance. SpaceX will provide the Air Force with the option to fly the previous or upgraded version of the rocket.

Engineering Mindset and Culture:
Shotwell acknowledges the different engineering mindsets between the West Coast and the East Coast. She emphasizes the need to move away from the mindset that the best technology is the one that remains unchanged for decades. SpaceX’s culture values innovation and continuous improvement, which aligns with the rapidly evolving technology industry.

SpaceX’s Innovation and Certification:
Gwynne Shotwell emphasizes the importance of continuous innovation to improve SpaceX’s designs. She acknowledges the need to work through processes to make innovations acceptable to customers. Customers can still fly the certified configuration if they prefer. SpaceX aims to demonstrate its ability to innovate and spin its designs successfully.

American Engine Replacement for RD-180:
Heather Molino from the Intelligence Committee expresses concerns about relying on the RD-180 due to tensions with Russia. There is a push in the House to fund an American replacement engine. Shotwell expresses SpaceX’s willingness to participate in the development of a replacement engine. She suggests investing in component and technology development rather than directly replacing the RD-180. SpaceX is working on a future LOX methane engine called Raptor, which has applicable components for a broader propulsion community.

LOX Methane vs. LOX Hydrogen for Main Stage Liquid Propulsion:
Steve Grundman asks about the Mitchell report’s suggestion that LOX hydrogen is not a good alternative to the RD-180. Shotwell highlights the advantages of LOX methane, including its strong energy density and the ability to produce methane on Mars. She mentions that hydrogen is difficult to store and presents safety issues.

Importance of Mars Exploration:
Jonathan Slanov from Bloomberg News asks about the importance of Mars as the next frontier of space travel. Shotwell emphasizes the significance of exploration for human progress. She believes that limiting ourselves to Earth is a disappointment and that Mars represents risk management for humans in case of catastrophic events on Earth.

SpaceX’s Transition from Innovation to Production and Operations:
Jacob Markish from Renaissance inquires about SpaceX’s future as it shifts from innovation and development to production and operations. Shotwell acknowledges the challenges of transitioning to a production-focused company. She stresses the importance of continuous improvement and learning from mistakes. SpaceX aims to become a reliable and cost-effective provider of launch services.

SpaceX’s Focus on Innovation:
Despite focusing on production and operations, SpaceX will always prioritize innovation and constant boundary pushing under Elon Musk’s leadership. A team of R&D engineers and technicians will continue to drive innovation and leverage technologies for the benefit of the company and customers.

Capitalization and Liquidity:
SpaceX has no plans to change its capitalization structure in the near term. No immediate need to raise capital, and the company is providing liquidity for employees through company ownership. Every SpaceX employee owns a piece of the company, promoting a viable and sustainable business model.

Launch Cadence and Customer Readiness:
SpaceX aims to achieve a launch cadence of about one launch per month in 2014 and nearly two launches per month in 2015. The company is working on improving its ability to predict customer launch readiness to minimize delays. Delays are common in development programs, but SpaceX is now starting to experience customer-related delays, which is a positive sign of progress.

Commercial Launch Site in Brownsville, Texas:
SpaceX is close to receiving final approval for its commercial launch site in Brownsville, Texas. Environmental work is nearing completion, and obtaining this approval will be a major milestone. SpaceX is keeping options open for other launch sites but recognizes the need for multiple launch sites in the future.

Falcon Heavy Development and Test Launch:
SpaceX is currently building the tanks and working on the engines for the Falcon Heavy rocket. The company aims to launch the Falcon Heavy in the first half of 2015. SpaceX plans to start servicing customers with the Falcon Heavy in 2015.

SpaceX’s Relationship with DOD Launch Ranges:
Gwen Shotwell expresses her appreciation for the working relationship between SpaceX and the Eastern and Western Ranges. SpaceX absorbed the cost of delays caused by the radar issue at the Cape. Efforts are underway to minimize reliance on radar technology and move towards autonomous flight systems.

Competition in the Global Launch Market:
Shotwell acknowledges the fierce competition in the global launch market, with China being a significant player. She emphasizes the importance of keeping a close eye on China’s launch program.

Challenges for New Entrants in the DOD Acquisition System:
Shotwell acknowledges the inherent disadvantage faced by new entrants like SpaceX compared to established companies like Lockheed and Boeing. She attributes this to the preference for new technology and the financial resources available to incumbents for lobbying and marketing.

Export-Import Banking and International Deals:
Shotwell highlights the importance of export-import credit facilities like Ex-Im Bank in facilitating international deals. These facilities provide financing options for customers who may struggle to obtain commercial financing.

Specific Roadblocks to SpaceX’s Certification:
Shotwell identifies two elements: procurement and certification. The certification process is new for the Air Force, and SpaceX is working closely with them to pave the way for future entrants. On the procurement side, SpaceX seeks the opportunity to compete and clarity on any potential reasons for exclusion.

Conclusion:
The discussion covers a wide range of topics, showcasing SpaceX’s significant role in the launch industry. The event highlights the challenges faced by new entrants in the DOD acquisition system and emphasizes the importance of international partnerships and financing mechanisms.