Testimony of Charles M. Chafer given at a field hearing on “President’s New Space Vision” Senate Committee on Commerce, Science & Transportation

Given at a Science, Technology, and Space Field Hearing – President’s New Space Vision Wednesday, February 18 2004 – 9:30 AM –

The Testimony of Mr. Charles M. Chafer President, Team Encounter, LLC

Mr. Chairman and Members of the Committee, thank you for holding this important Senate hearing in Houston and for giving commercial space entrepreneurs the opportunity to offer their valuable perspective on how the private sector and NASA may cooperate most effectively to assist in the realization of the President’s new space policy.

As a boy spending summers on my grandparents’ farm in Republic County, Kansas, during the Apollo era, I can recall looking at moonrise over their fields and wondering how I could make a contribution to what seemed to be that most important human endeavor – the exploration of space.

Years later, as a young man, I was blessed with that very opportunity by being fortunate enough to land a position with David Hannah, Jr., and former Mercury and Apollo astronaut Deke Slayton at Houston, Texas-based Space Services, Inc. of America (SSI). In 1982, SSI became the first ever private company to conduct a launch into outer space – Conestoga 1.

Today, I’ve devoted my career seeking to expand private-sector space activities – because success in this arena holds the key to humanity’s long-term prosperity. We simply must extend our presence throughout the solar system.

May I make four observations that best describe the potential for further private-sector/NASA cooperation.

First, private-sector capital is essential and is available to fulfill the emerging opportunities of new space age. At the first meeting of the President’s Commission on Implementation of United States Space Exploration Policy, there was much discussion devoted to “sustainability” and to the notion that “business as usual” would not result in the early achievement of these bold new space initiatives.

Simply put, significant private investment is a key element to help the President’s initiative achieve sustainability. In an era of tight Federal budgets, every private dollar invested in relevant space technology development is a dollar not required of the taxpayers.

Fortunately, significant private investment capital is indeed available to support space technology development and application in areas of relevance to the new space initiative. The great genius of this country lies in the ability to mobilize capital quickly and efficiently in pursuit of real opportunities. For example, recently we have seen significant investments by successful internet entrepreneurs, including Paul Allen of Microsoft and Elon Musk, founder of PayPal, Inc., in new modes of space transportation. Team Encounter, LLC, has been able to attract significant capital from some of Houston’s leading energy, software, and real-estate developers. Generally speaking, I believe that investment capital can and will flow into space activities under the right set of circumstances.

My second observation is that there are now encouraging signs within various federal agencies that private investment may be welcome. Two examples illustrate vividly this emerging reality.

Recently Team Encounter was awarded a contract from NASA’s New Millennium Program to fly its Inertial Stellar Compass aboard our Flight One Mission late next year. This contract is important to commercial investors for several reasons. NASA has chosen to fly one of its experiments, as a secondary payload, on a mission that is primarily commercial in nature. We represented a “best value” proposition for NASA, and NASA represented important additional revenue and enhanced stature for us. We are risk sharing with NASA in that only upon the success of the mission are we able to collect the second half of the contract value. Finally, both NASA and Team Encounter are learning how to work together in an “imperfect” environment. By that I mean that each side has had to exhibit flexibility and accommodation in order to reach an acceptable mission profile.

A second recent example extends beyond NASA to another federal agency with a significant space portfolio, the National Oceanic and Atmospheric Administration (NOAA). Last year NOAA published a Request for Information (RFI-NESDIS-OSD-002) seeking to understand the viability of a “data purchase” approach to providing next-generation solar-wind data from a commercially operated spacecraft. This request also contemplates a risk- and reward-sharing approach to the achievement of U.S. government space needs and, as such, is further evidence that creative people in the government and the private sector might well be able to work together to achieve common goals.

The above examples, and others, underline the potential for a paradigm shift to take place in government/private-sector interaction in the development and application of space technologies. This should be encouraged further as we embark upon great new space agendas.

Third, governmental policy should focus on methods and systems that best can offer access and certainty to the private sector while offering new risk management tools to governmental managers. I have three suggestions.

First, all federal agencies -not just NASA – should examine their space efforts for co-investment opportunities. New space program initiatives should be designed from the outset to encourage private-sector co-investment whenever possible.

Second, federal commitment to commercial co-investment in space should be institutionalized. not bureaucratized. Ebb-and-flow interest in space commerce does not create a positive investment climate. Each federal agency with a space portfolio should have a commercial-space advocate. This is paramount. All policy is ultimately embodied in the people charged with its implementation.

At NASA, Team Encounter was extremely fortunate to be able to work with Dr. Ed Weiler and his capable staff including Charles Gay and others and former Chief of Staff Courtney Stadd, whose long-term commitment to including the private sector in space is well known, as evidenced by his appearance on today’s panel. Without their commitment to overcome any barrier and willingness to honestly broker very real concerns on both the government’s and industry’s side of the table, I would not be able today to speak to NASA’s new interest in private-sector approaches.

Third, risk management techniques — for example, insurance coverage for federal payloads — should be permitted as a means to assist agencies to accept conventional commercial-risk parameters as they work with existing and emerging private-sector space companies.

My final observation is that a continuous, strong national commitment to the inclusion of private investment in space applications and exploration will inspire a new generation of engineers and entrepreneurs; permit the U.S. to accomplish major new space goals in a budget-constrained environment; and help to maintain our leadership in an increasingly competitive global space industry.

Please allow me to elaborate on the first point. Our own Team Encounter missions – involving a unique blend of cutting-edge technology development, corporate sponsorship and media participation, and direct public participation via the internet – continually attract a steady stream of resumes, inquiries, and “how can I help?” requests from young people from every state and across the planet. Space missions can be fun, exciting, and meaningful to young people as they contemplate their career choices.

By embracing a new generation of entrepreneurial space companies, NASA can help to ensure its own future through the development of talented, enthusiastic engineers and managers. Perhaps this increased inspiration to a new generation will be the most important legacy of increased government/private sector cooperation in space.