Inside the Room Where It Happened: When NASA Almost Gave Boeing All Crew Funding

In the early 2010s, the competition for NASA’s Commercial Crew came down to three players: Boeing, SpaceX, and a Colorado-based company that built a spaceplane, Sierra Nevada Corporation. Each had its own advantages. Boeing was the giant, with decades of experience in spaceflight. SpaceX had already built a capsule, Dragon. And some NASA insiders nostalgically loved Sierra Nevada’s Dream Chaser spaceplane, which mimicked the shuttle’s winged design.

The competition reached its peak in 2014, when NASA prepared to whittle down the field to no more than one or two companies, moving from the design phase to actual development. That May, Musk unveiled his Crew Dragon spacecraft to the world in a typically spectacular event at the company’s Hawthorne headquarters. As lights flashed and a smoke machine billowed, Musk literally pulled back the curtain on a black-and-white capsule. He was particularly proud to reveal how Dragon would land. Never before had a spacecraft returned from orbit other than by parachute or by gliding on wings. Not so with the new Dragon. It had powerful thrusters, called SuperDracos, that would allow it to land under its own power.

“You’ll be able to land anywhere on Earth with the precision of a helicopter,” Musk boasted. “That’s something a modern spacecraft should be able to do.”

A few weeks later, I sat down with John Elbon, a longtime Boeing engineer who managed the company’s commercial program. During our conversation, he criticized SpaceX’s performance to date, pointing to the limited number of Falcon 9 launches per year and the inability to fly at a higher rate. As for Musk’s little Dragon event, Elbon was dismissive.

“We’re looking for substance,” Elbon told me. “Not pomp.”

Elbon’s confidence was justified. That spring, the two companies were finalizing bids to develop a spacecraft and fly six operational missions to the space station. The contracts were worth billions of dollars. Each company told NASA how much money it needed for the job, and if selected, it would receive a fixed price for that amount. Boeing, SpaceX, and Sierra Nevada obviously wanted as much money as possible. But each had an incentive to keep its bids low, because NASA had a limited budget for the program. Boeing had a solution: It told NASA that it needed the entire Commercial Crew budget to succeed. Since many decision-makers believed that only Boeing could safely fly astronauts, the company’s gamble nearly paid off.

Offer Rating

The three competitors submitted their initial bids to NASA in late January 2014 and, after about six months of evaluations and discussions with the “source evaluation committee,” presented their final bids in July. During this first phase of evaluation, subject matter experts scored the proposals and met to establish their scores. Sierra Nevada was eliminated because its overall scores were lower and its proposed cost was not low enough to justify remaining in the competition. This left Boeing and SpaceX with a single winner.

“At the time, we didn’t really have the budget for two companies,” said Phil McAlister, the NASA official at the agency’s headquarters in Washington who oversees the Commercial Crew program. “Nobody thought we were going to award two. I kept saying, ‘One or more,’ and people would roll their eyes.”

The evaluation committee members rated the companies on three factors. Price was the most important criterion, given NASA’s limited budget. It was followed by “fit for mission” and finally, “past performance.” The latter two factors, combined, had about the same weight on price. SpaceX topped Boeing on this measure.

Boeing asked for $4.2 billion, 60 percent more than SpaceX’s bid of $2.6 billion. The second category, mission suitability, assessed whether a company could meet NASA’s requirements and safely transport crews to and from the station. For this category, Boeing received an “excellent” rating, above SpaceX’s “very good” rating. The third factor, past performance, assessed a company’s recent work. Boeing received a “very high” rating, while SpaceX received a “high” rating.

While that makes the bids appear relatively even, McAlister said the differences in scores for mission fit and past performance were actually modest. It was a bit like grades in school. SpaceX scored something like 88 and got a B, while Boeing got a 91 and an A. Because of the significant difference in price, McAlister said, the source evaluation committee assumed SpaceX would win the competition. He was pleased, because he thought it meant NASA would have to choose two companies, SpaceX based on price, and Boeing because of its slightly higher technical score. He wanted the competition to boost both companies.