Commercial Orbital Transportation Services: A Case Study for National Industrial Policy

Debates over U.S. space policies often focus on the potential economic outcomes of funding a civilian space agency. NASA has consequently become an outlier in a political climate that has generally eschewed active industrial policy and this makes space policy a rich research context in which to weigh a more assertive national industrial policy. A historical analysis of the case of NASA's Commercial Orbital Transportation Services (COTS) program through the lens of industrial policy concludes that it offers a valuable model for national industrial policy. While governmental regulation, ambiguity, and opposition are found to have stymied several efforts, these firms are found to have significantly contributed to the eventual success of follow-on firms. The analysis concludes that the COTS model should be adopted as the default approach for NASA missions where proven technology is sufficient and commercial markets are identifiable, but where specific domestic capabilities do not yet exist to meet the agency's needs. Traditional, cost-plus contracting models should be reserved for missions where the technical risk is significant and markets are unidentified. More importantly, the COTS model should be applied beyond the space agency to leverage necessary taxpayer investments in many areas into further economic development.