RD363 - Virginia Commercial Space Flight Authority Strategic Plan 2012-2017 -- December 1, 2012


Executive Summary:
Purpose

This Strategic Plan (“the Plan”) was developed in response to Chapters 779 and 817 of the 2012 Acts of Assembly (HB 813/SB 284), which requires the Virginia Commercial Space Flight Board of Directors (the Board) to submit a strategic plan to the Governor and the General Assembly no later than December 1, 2012.

The Plan evaluates the current state of the Virginia Commercial Space Flight Authority (VCSFA, or Authority), the industry landscape, the Authority’s competition, and available launch forecasts and trends. Building on these items, the Plan describes the strategic objectives and key actions for VCSFA for the 2012 to 2017 period. The strategic plan is an extension of the work accomplished in the report “Governance, Organization and Competitive Landscape Review of the Authority” conducted in December 2011 and serves as a foundation for accomplishing the Commonwealth’s priorities and the Authority’s objectives.

Overview

Sections 1 to 3 of the Plan assess the key drivers that may shape the future of VCSFA and the commercial space industry over the next five years. Selected key drivers impacting the strategic direction of VCSFA are highlighted below:

• Shift in National Space Policy – The National Space Policy calls for a new approach to space exploration and seeks partnerships with the private sector to enable commercial space flight opportunities. The new focus on space exploration at the federal level encourages education, technological and environmental research, and support of national security measures and promotes a competitive commercial space industry. (*1) Each element of the federal government’s policy has the potential to afford VCSFA with opportunities to expand launch services into these markets.

• Governance and Resource Enhancements – Based on the “Governance, Organization and Competitive Landscape Review,” the General Assembly passed the House Bill 813, which reconstituted the VCSFA Board of Directors (“Board”) and reduced the number of Board members from thirteen to nine, increased annual funding support for the Authority, and made several other changes to the administrative powers and duties of the Authority. House Bill 813 authorized $9.5 million in funding each year to VCSFA from the Transportation Trust Fund for operations, personnel, site maintenance and infrastructure. The funding is committed for the five years spanning FY2012 to FY2016.

• Commercial Launch Demand Forecast – The Federal Aviation Administration (FAA) forecasts growth in the commercial space transportation and enabling industry (CST&EI) sector, as market demand for commercial space flight increases. The FAA and Commercial Space Transportation Advisory Committee forecast an average annual demand of approximately 29 commercial space launches (*2) for the 10 year period from 2012 through 2021.

• Economic Impact to the Commonwealth – Commercial space transportation, a sub segment of the aerospace industry, is an important component of Virginia’s economy. In 2009, the aerospace industry contributed a total economic impact of $7.6 billion and supported 28,110 jobs in the Commonwealth (*3). This accounted for 1.9% of Virginia total spending and industry jobs accounted for 0.8% of total employment. (*4) By these measures, the aerospace industry is more productive than the average industry in Virginia. (*5)

• Key Client Expansion – Orbital Sciences Corporation (Orbital) is among the ten largest U.S. space system and launch vehicle manufacturers with over 1,000 rockets, launch vehicles, and satellites built or under contract. (*6) Orbital’s launch vehicles, satellites and space systems business sectors accounted for $483 million (36%), $554 million (41%), and $434 million (23%) in revenue respectively during 2011. (*7) The company has exhibited steady growth in recent years and successfully completed launches of eight sounding rockets, delivery of seven satellites and launch vehicles for future missions, and the completion of several construction and testing milestones in the Antares rocket and Cygnus spacecraft programs in the U.S. (*8)

Orbital, which is ranked among the top 35 public companies in Virginia, has been headquartered in Virginia since 1983 and has expanded its Virginia-based employment from 6 to over 1,800 people. Company revenues for 2012 are expected to increase 12% over 2011 revenues. Orbital is currently in the process of readying its Antares space launch system for providing a broad range of launch services. The anchor contract for Antares is the Commercial Resupply Services to the International Space Station (ISS) for the National Aeronautics and Space Administration (NASA) to be launched out of Wallops. Such missions are planned to be flown through to the end of 2016.

• Thriving Commercial Space Industry and Competition – There are currently eight FAA licensed commercial launch site operators in six states: Virginia, California (2), Florida (2), Oklahoma, New Mexico, and Alaska. (*9) Each of these states, with the exception of California (*10), have state-owned space authorities responsible for facilitating commercial space activity. Of the eight licensed operators, only four (Virginia, California, Florida, and Alaska) have spaceports that are currently licensed to launch small and medium lift rockets for sub-orbital or orbital slots, and these four are currently the main competitors in the U.S. commercial space launch market. While California, Florida, and Alaska offer services similar to VCSFA, the Mid-Atlantic Regional Spaceport (MARS,) which the Authority operates, is ideal for providing equatorial access for low earth orbit for small to medium size launches on the east coast. MARS also offers easier and more economical access to the International Space Station, an important consideration for commercial space companies serving NASA for ISS resupply missions. Given these advantages, MARS is an attractive spaceport for commercial space companies.

Strategic Objectives

Section 4 of the Plan presents VCFSA’s Strategic Objectives and Direction. VCSFA’s eight objectives are summarized below (see "Strategic Objectives Timeline" on numbered page 3.). These objectives include both tactical and strategic actions that VCSFA plans to undertake over the next five years.

The objectives and related actions are presented below:

Objective 1: Provide a framework for Orbital’s success as the “initial launch” customer

• Develop a contract with Orbital that provides an appropriate level of support for the current ISS contract and future missions

• Beyond ISS contracts, understand Orbital’s launch business objectives with a view to providing the necessary support and balance with requirements of a multi-user environment

Objective 2: Develop MARS infrastructure to satisfy customer needs, manage the business, and enhance competition

• Make MARS a multi-user facility

• Review and update current infrastructure

Objective 3: Position VCSFA as a leading launch service provider

• Focus on small and medium-lift launches

• Create a competitive cost and charging structure and understand per launch unit costs

• Increase launch preparation efficiency and expanding customer service

Objective 4: Develop VCSFA as a self-sustaining entity

• Reduce dependency on state funding through optimal use of resources

• Make best use of external contractors and internal management resources while maintaining schedules in a multi-user facility

• Utilize an effective marketing strategy to develop sustainable revenue streams from new and existing customers and initiatives

• Develop partnerships with other states and educational institutions to share costs and benefits of launch facilities

Objective 5: Develop an efficient and competitive organization

• Aggressively develop and engage a new business development strategy

• Provide a proactive management and governance structure at the operational level

• Establish core values that focus on efficiency and mission success

• Build strategic alliances, seek sustainable investment resources, and negotiate optimal business agreements with key industry players

Objective 6: Establish partnerships to promote research and commercial opportunities

• Promote aerospace science and research

• Enhance research capabilities to position Virginia as the leading space authority in the U.S.

• Expand relationships with educational institutions

• Strengthen relationships with key aerospace industry, military and research establishments

Objective 7: Explore space tourism and other developing opportunities

• Assess developments in the market for space tourism and explore the potential to leverage MARS facilities in order to benefit from this developing market

• React quickly to take advantage of any opportunities in this market in the future, should they be a viable proposition at MARS

Objective 8: Stimulate economic growth and provide a positive impact to the Commonwealth

• Develop Virginia as an industrial hub to benefit businesses in the state through alliances and encourage investment through policies and incentives

• Create highly skilled jobs in the aerospace sector focusing on employer and industry needs

• Enhance aerospace education by fostering relationships with educational institutions

Strategic Direction

VCSFA has a unique heritage and a vibrant future because of the re-energizing efforts that have been completed by the Commonwealth during recent years. Recent actions taken by the Governor and the General Assembly have demonstrated that the Authority will be given the opportunity to grow and benefit from the future of space exploration as codified in the National Space Policy and aggressively compete with other spaceports to attract new business. Based on the forecasted growth in demand from the U.S. government, military agencies, international users, and commercial space users, the supply of launch facilities is less than adequate to accommodate all of the current and the projected demand. As such, the Authority will adhere to a policy of making investments quickly to attract customers while carefully monitoring the commercial space market development and launch capacity supplied by other states. The Authority will balance longer term VCSFA investments with benefits for the Commonwealth (e.g. jobs, education, industry growth, etc.). This Opportunistic Midcourse provides the Authority with the best opportunity to serve the commercial space market. This strategy allows VCSFA to move with the industry, yet it does not commit significant public funds to investment in areas that are still evolving, such as heavy lift crew launches or horizontal launches. The Opportunistic Midcourse positions VCSFA to capitalize on its current strengths, proactively follow the market, quickly adapt to serve changing industry demands and attract new business to the Commonwealth of Virginia.
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(*1) National Space Policy of the United States of America, June 28, 2010
(*2) 2012 FAA Commercial Space Transportation Forecasts
(*3) “Competitive Analysis of Virginia’s Space Industry,” December 2011 (accessed September 14, 2012), Virginia Department of Transportation, page 3, http://www.transportation.virginia.gov/docs/SpaceCompAnalysis.pdf
(*4) Virginia Department of Aviation, Virginia’s Aerospace Industry, An Economic Impact Analysis, November 2010, Revised Edition January 2011, page 3
(*5) Virginia Department of Aviation, Virginia’s Aerospace Industry, An Economic Impact Analysis, November 2010, Revised Edition January 2011, page 3
(*6) Orbital Sciences Corporation, 2011 Annual Report
(*7) Orbital Sciences Corporation, 2011 Annual Report
(*8) Orbital Sciences Corporation Press Release, Orbital First Quarter 2012 Financial Results, April 20, 2012
(*9) FAA Launch Data and Information, http://www.faa.gov/about/office_org/headquarters_offices/ast/launch_license/active_licenses/ , Sept. 6, 2012
(*10) California Space Authority ceased operations June 10, 2011. Spaceport Systems International, LLP now operates the California Spaceport.