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Mr. CROCKETT. As I said earlier, I would hope the discussion wouldn't focus totally on section 5. I do have sympathy for Mr. Roberts' point of view. I think when it comes to using launch vehicles, whether they're Titans or Atlas Centaurs or shuttle or Arianespace, keep in mind these launches aren't necessarily fungible. You go and you design a satellite to fit within a certain configuration of launch vehicle. You may be going on a launch vehicle by yourself; you may be going with somebody else; you may have designed it like a pancake so it fits on shuttle. If you're in that situation, you're in desperate shape right now. So I think it's difficult to draw analogies as to the fact that we're going to be able to launch satellites because of certain facts and circumstances that relate to the unique characteristics of our satellites as opposed to Contel ASC's.

Mr. VOLKMER. In other words, you're going to be able to modify your satellite so that they can go up on time?

Mr. CROCKETT. Well, we were just fortunate to have satellites that would fit on a Titan and were able to get a Titan launch, and that's more luck than it is business design.

Mr. VOLKMER. I understand that. I understand that. But I've also come to the conclusion where it really wouldn't perhaps help you but it wouldn't hurt anything, either, section 5. And I am a little bit concerned, and I'm sure that the committee will have to look at the area that you mentioned, Mr. Crockett, and also the others, as far as the liability and the question as to the amount, et cetera, because if the insurance is not available, or at the amount that we specify, or the Secretary specifies, or if the costs are prohibitive, that, too, can delay or remove a launch.


Mr. CROCKETT. Yes. There's nothing like competition to force these things to come into line a little bit. For example, when NASA was the only launch vehicle in town a few years ago, they were somewhat difficult to deal with. They had certain terms. They were very uncompromising. Ariane came along and then both Ariane and the shuttle went out and attempted to attract business and both of them got particularly customer-oriented. And now the tide has turned again with NASA unable to launch. Ariane is more difficult to deal with.

And as an example, when both were in heated competition, Ariane was offering launches with no insurance indemnification requirement. They now have an insurance indemnification stipulation. So I don't mean to sound like, we can't deal with these people, but when and if there is competition, it's a healthy environment and the customer is the beneficiary.

Mr. VOLKMER. Thank you.
Thank you, Mr. Chairman.
Mr. NELSON. Mrs. Morella.
Mrs. MORELLA. Thank you.

First of all, I want to welcome the satellite industry panel. I want to particularly call attention to the fact that Mr. Roberts, Contel ASC, is located in the heart of my congressional district, in Rockville, Maryland. I want everybody to know that we're very much involved technologically, and Mr. Crockett is involved with

COMSAT that is also involved in my congressional district, and so I thank all of you.

I was told to keep my questions brief, and I certainly will.

One of the ones that I did want to address to you is that the bill before you-and we're all cosponsors-requires the launch provider to obtain, on behalf of the customers and him or herself and the contractors of both, insurance available to cover the so-called maximum probable loss, and to the third parties that would be associated with activities under the launch license. But the maximum is 500 million dollars. I wondered what your reaction was to that, if you have not already commented on something like that.

Is that okay? Is that reasonable? Is it-

Mr. CROCKETT. We think it's way too high because many foreign launch providers are considerably less than that. One in particular is at 70 million dollars right now, and that's subject to negotiation in general. So we think the 500 million dollars imposes an insurance requirement on the launcher and the people that are going to ultimately own the satellites and probably disadvantages us between 300 to 500,000 dollars per launch.

Mrs. MORELLA. So you would suggest another figure?

Mr. CROCKETT. We would hope it would be flexible, but that it should be considerably lower, substantially lower than 500 million. Mrs. MORELLA. Anyone else want to comment? You all tend to agree with him as the spokesperson on that one.

I also wondered, have any of you met with any members of the administration to discuss space policies? Have you not been invited? Everybody's so quiet.

Mr. FREY. I have not been invited to and have not had an opportunity to discuss that—and I can't speak for other members of our company. But I'm not aware of any conversations that have occurred as of yet.

Mrs. MORELLA. I guess that's throughout the panel, none of you have. I think it's significant, which is why I asked.

Mr. ROBERTS. We've been spending obviously a lot of time with NASA on this issue, and we have a government office in D.C. that has continuing relationships with people in the administration, but I'm not sure that they've discussed this particular issue.

Mrs. MORELLA. Would you welcome a discussion of that nature? Mr. HOLLIS. Ford Aerospace would certainly welcome the opportunity, yes.

Mrs. MORELLA. All right, fine. Thank you.

Thank you, Mr. Chairman.

Mr. NELSON. Thank you for your penetrating question. You obviously exposed something that's rather revealing.

Let me just say that I agree that we don't want to get bogged down in section 5. There's the overall import of the legislation.

Let me just mention a couple of other things as we wrap this up. The part in section 5 that says the Secretary of Transportation shall, wherever practicable, take steps to ensure that eligible satellites receive priority status for launch from United States launch sites, that, according to the drafters, is not an attempt to breach existing contracts for other contracts for launch. This is just simply an attempt to make up and to make right when all of these people

were knocked off the shuttle. But we can continue to discuss and massage that particular part.

Let me just round out this panel by asking you: In view of some of the witnesses yesterday differing on whether the addition of Government support through indemnification on third party protection, where they differed on, in fact, would it enhance the competitiveness of U.S. launch companies, I would like to have your quick views on that, please.

Let's just go down the panel. Mr. Roberts?

Mr. ROBERTS. In my opinion, it would enhance the competitiveness. In my opinion

Mr. NELSON. I'm sorry. What?

Mr. ROBERTS. In my opinion, it would enhance competitiveness. Mr. NELSON. Mr. Crockett.

Mr. CROCKETT. I'll even go a little stronger on that. If you don't do it, you won't be competitive, period.

Mr. HOLLIS. I certainly agree with Mr. Crockett. I think it's an absolute necessity in order for them to hope to begin to compete with some of the companies who have no-they require no third party liability insurance, or else have a much lower cap.

Mr. FREY. And we agree. We think it's an important aspect to the bill, particularly with respect to the subsidized foreign carriers. Mr. NELSON. And you're saying that in that, if you don't have an indemnification over available insurance, that the cost of the insurance on third party liability just gets so prohibitive

Mr. FREY. It's the cost and it's the uncertainty of future availability and costs. Any claim in that marketplace we think would essentially make the insurance unavailable, and certainly at very unpredictable costs.

Mr. NELSON. Okay. Gentlemen, we appreciate it.

Yes, Mr. Hollis.

Mr. HOLLIS. I would just like to add to the statement about the lack of being-the lack of assurance that you're going to be able to get that insurance. If you have a naysayer that wishes to veto or kill a program, all he has to say "but what if it's not available?" And then we're hung out. That aspect of being able to close that argument is a very powerful one.

Mr. NELSON. The certainty-

Mr. HOLLIS. Yes, sir.

Mr. NELSON. —of being able to offer a price and be able to stick to that price by virtue of one of the uncertainties cleaned up. Okay. Well, we appreciate your testimony. It has been most enlightening. We have consistently had excellent testimony from you all as part of this industry and we appreciate it very much. Thank you for your participation. At least the legislative branch will continue to consult your industry.

All right. Let's have Panel II and Panel III, if they will come up. We're going to have the large and the small launchers, so we're talking about McDonnell, Martin, General Dynamics, Space Services and E'Prime, if all five of you would please come up to the table.

Good morning, gentlemen. We're delighted to have you. We're looking forward to your part of the testimony, and we thank you for your consultation over the course of time as we have had hear

ings on this in the past, publicly as well as privately. So we want to get you here today as we start to fine-tune this legislation.

So why don't we just start in the order on the agenda, and Mr. Yardley, we'll start with you.


If it's all right with you, I would like to have my statement put in the record and abbreviate-I know you're short of time and a lot of the points have been already made, so I'll go through this fairly quickly.

We're certainly happy to be here today, and as I told you prior to the hearings, I think the efforts that your committee has put on the H.R. 3765 are outstanding. We were talking to you last September and you listened, and that isn't always the case in Congress, although. It's always the case with your committee. So we're very happy with it, obviously. As has been mentioned before, there are some details that need to be worked more and so on.

But we think the liability issue coverage, by and large, is very good. We can argue about whether the 500 million dollars is too high or too low. I think 500 million dollars is a reasonable number because that's what we used for years on the shuttle. Now, it turned out that a year or so ago we couldn't get that much money for the Palapa and went down to 300 million dollars. So it's got to be somewhat flexible. But I don't see any big problem on that.

We think that, as we mentioned last September, that if our industry is to survive in the face of foreign competition, we must have a long-term solution to this problem, and I think you're on the right track. This is a reasonable approach to risk allocation and we think we can probably cover up to 500 million dollars most of the time in the insurance marketplace.

Now, this doesn't solve all our problems. As we mentioned-most of us mentioned-last September, we still face this problem of foreign competition that is subsidized. The Russians and the Chinese, of course, are getting more active. We have heard-and we can't verify-that the Russians have offered one foreign nation to launch them for free, to get them involved, and it's hard for us to figure any subsidy program that can match that. So I don't know how we're going to solve that problem. I think that we're going to keep trying, and we may not be able to. But we know that you'll be helping us in any way that is reasonable.

Now, we have noted with interest that the President has a new policy on space, and we think it's probably more favorable, the problems we've been discussing here, than the previous NNSD-94. Incidentally, we were asked, as some of the people that were not asked the last time, we did have an opportunity to appear before the Economic Council on some of these issues. We didn't have an

opportunity to see their whole bill or to critique it after they got a draft or anything like that, but we did get, I'd say, one-and-one-half cents in, maybe not a full two cents.

However, we have not been able to find the policy, the actual policy yet. We've been using the press releases and we have been told it's classified and to-mañana and that sort of thing-but we hope to get a policy soon so we can see where we really stand.

Now, about the business of the eligible satellites, I just might make a comment or two. All of these-I can understand these people's concerns, but everybody loses something because there's no way to recover from a Challenger launch. They had to lose two years, even if we kept launching on the shuttle. Now, the Government contract is generally set up in a best efforts manner, and so if they sign those contracts, they knew what they were signing.

Now, they might say well, look, you darned old launch vehicle guy, you don't have any sympathy for us. The fact of the matter is, when the President threw commercial communications satellites off the shuttle, he threw our payload assist modules off, too, McDonnell Douglas, so we probably lost as much as anybody and we're not griping.

I think, with that, I'll just say-I'll conclude and say that we believe, if we can figure out a way to attack this subsidy, that we can retain our position over the long haul as the world leader in commercial launch services. I think we have a great stable of vehicles now and I don't think anybody can match us, but we can't give them away. We think that we need to have a partnership between Government-industry to do this, and we are getting there. This committee has been very helpful. We're not seeking a free ride, but an equitable distribution of the risks so that we will be better able to compete in the long run. We would like to help you in any way that you think we can, to assist you in getting it passed.

Thank you.

[The prepared statement of Mr. Yardley follows:]

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