THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Sunday, July 31, 1994 TAG: 9407300241
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY JAMES SCHULTZ, STAFF WRITER
LENGTH: Long : 173 lines
Standing by a crippled bus on I-95 just outside Fredericksburg, a sweating Laurence Richards loosened his tie and yearned for the immediate aid a 21st century-style telecommunications network would surely bring.
Richards was part of a Hampton Roads group of aerospace boosters sidelined one spring afternoon returning from a Washington. conference. Just an hour before, the bus riders had heard speakers extol an inevitable high-tech future full of rockets, satellites and a planet-spanning information superhighway.
``You'd have help here,'' said Richards, head of the Center for Commercial Space Infrastructure at Old Dominion University, in Norfolk. ``You'd be instantly connected any place, any time.''
Instantaneous connection is the ultimate idea behind a $2.5 million proposal Richards' ODU center has submitted to the Air Force. If the military gives the go-ahead in August, a group of private businesses and universities in Virginia and Maryland will use the money to rehabilitate a launch pad at the National Aeronautics and Space Administration's Wallops Flight Facility on the Eastern Shore.
The hope is that Wallops would become the nation's premier rocket launch site for small payloads - in particular, constellations of cheap, miniature communications satellites.
``It could be extremely cost-competitive,'' Richards said, ``orders of magnitude less expensive than launching out of the Cape'' - Canaveral, in Florida. ``That's where the potential is.''
Commercial potential has nurtured a collection of perhaps a dozen small satellite and rocket companies in Virginia. Most cluster in the northern part of the state, within shouting distance of national legislators and a veritable stone's throw from Dulles International Airport.
In Hampton Roads, other high-tech businesses have either spun off from or exist to support the aerospace research done at NASA Langley Research Center or by the military.
``Virginia is the place you want to be if you want to succeed in space,'' asserted Michael W. Miller, general manager of technology transfer for Virginia's Center for Innovative Technology, a state agency based in Herndon that helps small firms commercialize technology.
``I believe we're the leader in space commercialization in the country. We have a soup-to-nuts capability.''
Nevertheless, 25 years after the nation's first moon landing, it's far easier to talk about business in space than to actually conduct it. Equipment failures, technical glitches, cost overruns and program cancellations plague would-be space entrepreneurs. Launch costs remain prohibitively expensive, as much as hundreds of thousands of dollars per pound, depending on the size and complexity of payloads.
An often-fickle federal government remains the biggest paying customer, with the military shelling out most of the money.
Private investors, though, have been reluctant to involve themselves in an industry that is seen as too risky, with too long a payback on investment.
``The problem with the commercialization of space is that, by and large, the companies traditionally part of the aerospace industry are very much oriented toward government contracting - NASA, the Pentagon,'' said Stephen Morgan, a former space specialist for the Herndon technology center. Morgan is now manager of business development for STARSYS Global Positioning Inc. in Lanham, Maryland.
``There's a terrible addiction to government money in this country,'' he said. ``Markets are out there, but they don't often run RFPs.'' The government issues RFPs, or requests for proposals, when it wants to buy services or products.
In 1992, the nation's total commercial space revenues stood at $5 billion, according to an estimate by the accounting firm KPMG Peat Marwick and Space News, a weekly newspaper. Of that amount, 87 percent involved commercial satellites, satellite services and satellite ground equipment.
``Today space is great as a place to park photon factories - communications and remote sensing satellites,'' explained David Thompson, chairman of the board, CEO and president of Orbital Sciences Corporation, in Fairfax County near Dulles International Airport. ``That's what the business of space is all about: the collection and transmission of information.''
Advocates often cite Orbital Sciences as one of the commonwealth's space success stories. The company was founded in 1982 by Thompson and two fellow Harvard MBA graduates, Bruce Ferguson and Scott Webster. Originally nursed by $1.8 million in startup venture capital, the company has gone through a decade-plus growth spurt, most of it fueled by government contracts.
In 1993, Orbital Sciences employed about 1,000 and earned more than $190 million, a 9 percent increase over the previous year. If a proposed merger with Fairchild Space and Defense Corp. of Germantown, Md., goes through later this year, the number of employees could double and revenues might balloon 70 percent, to an estimated $320 million, Orbital officials say.
The company has designed, built and flown two types of rocket, the Pegasus, which is launched from an airplane, and Taurus, a booster launched from the ground. One of its subsidiaries is developing a series of small satellites that would be flown on the Pegasus and would provide message and data communications services anywhere on the globe.
Recently, Orbital also announced a joint venture with a company in Saudi Arabia to make high-resolution satellite imagery widely available. Orbital says that what is good for spy masters is good for customers: These eye-in-the-sky pictures would be of practical use to map makers, agricultural and urban planners, border patrols, environmental monitors and resource managers.
Orbital suffered a serious setback when, in late June, Air Force controllers were forced to destroy an in-flight Pegasus carrying a military satellite when the craft veered off course. Orbital vows to cover all repair and replacement costs, which could soar to tens of millions of dollars.
Rocket problems of a different kind have cropped up in Tysons Corner, headquarters of EER Systems Corp. The $80 million firm is still reeling from cancellation in early May of a NASA program that would have sent the company's Conestoga rocket into orbit from Wallops Island sometime this year.
The program, known as COMET, was a NASA-funded effort to help private contractors develop a low-cost rocket.
NASA administrator Daniel S. Goldin pulled the agency's dollars out of the project, citing delays and chronic cost overruns. EER concedes the money problems, but he says that, given NASA's own troubles with staying on budget and on time, the company should be cut some slack especially since its rocket was so close to launch.
EER officials contend their firm is being singled out because it's an easy target: small, private, with no major political constituency. And, maybe, the Conestoga would prove too competitive.
``If COMET succeeds, NASA's got an image problem: It wasn't done by NASA,'' said EER spokesman Michael W. Bryant. ``It doesn't need Kennedy for launch. It doesn't need Houston for control in orbit. It gives America an alternative to the space shuttle.''
The company vows to get Conestoga into orbit with or without government money. Although close-mouthed about the details, EER is hunting for private investors to underwrite the final $15 million or so needed for launch.
Still, contractors acknowledge the difficulty of weaning themselves from federal support.
``Space is one industry that finds the government to be a major factor,'' David Thompson of Orbital sciences said. ``The government is the primary customer and a supplier of technology. They're a competitor. They're a regulator. Most companies in the business can't afford to ignore the government.''
Informal is the style at AeroAstro in Herndon, where twentysomething employees pad the floor in their stocking feet or barefoot. A short walk from the front door of the company's modest office, though, and the dress code is high-tech and highly protective.
In the firm's ``clean room,'' white-smocked technicians in pink physician gloves bustle about attending to the microelectronics on a scientific satellite the company is preparing for a spring 1995 launch, from Wallops Island and on Orbital Science's Pegasus rocket.
PacAstro, a subsidiary of the 27-person AeroAstro that shares the same quarters, is designing and hopes to build a two-stage, liquid-fuel rocket on which customers could launch a series of small, remote sensing satellites. Both firms have the same mantra: frugal, frugal, frugal.
``Five to 10 years ago, low cost was not the No. 1 priority,'' said AeroAstro spokesperson Melanie Dynes. ``Right now, cost is on everyone's mind.''
Dynes says that, for $6 million - including all launch costs - customers will one day be able to loft their own or an AeroAstro satellite into orbit on the back of a PacAstro booster. By contrast, a NASA shuttle launch - which can carry a lot more payload - costs a minimum of $300 million, analysts say.
Despite the work of all these companies, the day of widespread space commercialization appears a long way off. In the near term, satellites and the signals and images they transmit will be moneymakers. The rewards will accrue to those firms smart and nimble enough to figure out the best way to build satellites and get them safely to space, industry experts agree.
``Space commercialization will happen, in spite of (everything),'' said G.A. Branchflower, director of EER's space products group.
``There are things that we haven't even thought of that will be done.'' ILLUSTRATION: Color photos
AARON GOODMAN
BILL TIERNAN/Staff
Can a rocket program survive after NASA cuts off its launch funding?
Being dismantled behind H. Ray Stanley, an engineer at NASA's
Wallops Island launch site, is a dummy Conestoga rocket belonging to
Tysons Corner-based EER Systems Corp. If the rocket is successful,
EER officials say, it wouldn't need major NASA investment or
facilities, such as Kennedy Space Center. But for now, EER is about
$15 million short of getting the Conestoga off the ground.
by CNB