Sunday, September 23, 2012

The Aerospace Review and the First Rule of Fight Club

One of the most memorable lines in the 1999 movie "Fight Club" came from Tyler Durden, the fictitious alter ego of the sleep deprived and unnamed main character, who explained that "The first rule of Fight Club is: You do not talk about Fight Club. The second rule of Fight Club is: You DO NOT TALK about Fight Club!"

Both the movie and the 1996 novel of the same name name by Chuck Palahniuk, use those words as an example of the isolation people put themselves through and how they adapt in a society wrapped around an explicitly consumerist philosophy. But the words are also indicative of how bureaucracies like the Canadian Space Agency (CSA) normally go about discouraging any public airing of "dirty laundry" or internal issues.

That's why it's so surprising to see public submissions from both Telesat and ComDev International (COMDEV) to the Federal Aerospace Review. These submissions, from two of the three largest Canadian space systems companies, call for major changes in existing CSA and federal government policies in order to help grow the $3.5 billion dollar per year Canadian space systems industry.  

The eight page COMDEV submission, complete with introductory letter from CEO Mike Pley, made four high level recommendations relating to:
  • Affordable access to space and industry partnership activities - This recommendation is focused on moving away from the current CSA emphasis on "traditional large missions" like the James Webb Space Telescope (JWST) and RADARSAT Constellation towards a larger number of lower cost missions such as the exactEarth Constellation or the Microvariability and Oscillations of STars (MOST) telescope. In essence (at least according to the submission) the lower the cost per mission, the greater the overall access to space for the same amount of money.
  • National competition and "international access to opportunities" which will help contain rising costs - The submission states that growth and international partnerships can be encouraged by utilizing the existing Industrial and Regional Benefits (IRB) tax program for Canadian space projects in much the same way as they are used for Canadian companies involved with military or aerospace procurement.
  • Investment in technology and innovation to "leverage long-term sustainable growth and wealth creation" - According to the submission, "Canadian government investment in new technology has virtually ceased," especially for satellite communications technologies and this trend needs to be reversed.
  • A national space agency that "acts as a catalyst for opportunities" - The submission states that the CSA appears "overburdened with administrative, financial and bureaucratic procedures and practices." and points out a ten year pattern of "increased staff " within a lower overall budget.
Telesat CEO Dan Goldberg.
It's interesting to note that the nineteen page Telesat submission, signed off by President and CEO Daniel Goldberg, generally ignores the CSA altogether.

The Telesat submission instead argues that satellite services require large, fixed operating costs which can only be built with economies of scale and the creation of a favorable business environment. These two items are facilitated primarily by national governments (and not space agencies) which normally buy satellite services to fulfill domestic communication requirements and also craft domestic policies which often benefit their national providers.

According to the submission:
The Government of Canada should use commercial satellite services offered by Canadian satellite services providers to the maximum practical extent to meet Canadian Government requirements and, moreover, should employ other innovative arrangements for acquiring Canadian-supplied commercial space goods and services.
It references the June 2010 National Space Policy, developed by the US as a cost cutting measure which would also assist domestic suppliers, the UK government experience selling their Skynet family of military satellites to private industry and the recent Australian government decision to subcontract the launch of a military communications satellite to commercial supplier Intelsat. In each of these instances, fixed cost commercial suppliers were preferred over traditional cost plus military contractors.

In essence, the Telesat submission seems to be positioning the company (a fixed cost, commercial supplier) to actively bid for a series of potential Canadian government satellite contracts relating to northern sovereignty and military activities, some of which were outlined in the August 23rd, 2012 article "DND wants Arctic Surveillance Network."

Of course, there's certainly more to the Telesat submission. It also calls for the government of Canada to "encourage use of Canadian commercial space services and capabilities in international cooperative arrangements and otherwise actively promote their export," plus "support technology development and innovation through targeted R&D grants and tax breaks and by helping to secure flight opportunities for technology demonstrations" and "first consult closely with industry to ensure a mutual understanding of functional requirements and industrial capabilities" and even to "avoid procurements using detailed technical specifications" among other things.

But the key thing to remember isn't the specifics of any individual submission to the Aerospace Review. All of them are useful and provide insight into an area of Canadian public policy which very few people have any awareness of.

The main point to these submissions is that large Canadian space system companies with a great deal at stake are suddenly taking public stances concerning their industry. This is an approach that none of them would have dared to consider, even as recently as the 2008/2010 period, when the last serious attempt was made to craft a Canadian space policy.

In essence, both the first and the second rules of "Fight Club" have now been broken.

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