Rocket Lab: Deep Dive On NASA Business

Overview

Rocket Lab announced last week that it has secured a NASA contract that will leverage Neutron launch services through the company’s existing Venture-Class Acquisition of Dedicated and Rideshare (VADR) contract. This is the latest in the growing number of agreements for agile, cost-effective launch services with the space agency that prove their capability to meet the stringent technical and operational requirements of government missions.

Back in 2022, the company was selected by NASA to launch the Time-Resolved Observations of Precipitation Structure and Storm Intensity with a Constellation of Smallsats (TROPICS) mission, as part of the agency's VADR launch services contract. These two dedicated missions leveraged Electron rockets from the NASA Wallops Flight Facility in Virginia.

Most of the company’s NASA missions involve testing new hardware, software, and scientific instruments. This helps NASA rapidly iterate on emerging technology from weather research to climate monitoring and communications experiments. 

NASA is also interested in sustainable and economically viable launch systems, making the fully reusable rocket Neutron capable of catering to the agency’s long-term goals of cost reduction and launch cadence acceleration.

Deep Dive on NASA Contracts

With the upcoming launch of Rocket Lab's Neutron this year, which is capable of deploying payloads of up to 13,000 kg to low Earth orbit (LOE), they are expected to further disrupt the space technology industry through constellation deployments, national security missions, and science and exploration payloads, 

The company's most recent NASA contract will involve the medium-lift reusable rocket to deliver multiple missions across a range of orbits, including CubeSats, Class D missions, and other payloads. Their other orbital launch vehicle, Electron, is slated for NASA’s VADR missions after their successful back-to-back launches within two weeks for the VADR PREFIRE missions.

Neutron will be the end-to-end space provider’s most ambitious project to date as it scales to build, launch, and operate their own constellations and deliver more space-based services in the future.

Regarding the recent contract, CEO Peter Beck remarked: 

“Neutron brings choice and value to the launch industry and is the ideal rocket to support NASA’s goals with VADR to provide new opportunities for science and technology payloads through commercial best practice. Rocket Lab has been a long trusted and reliable launch partner for NASA missions with Electron, and we’re proud to have been selected to expand on this with Neutron.”

Rocket Lab’s previous contracts with NASA include the following:

In October of last year, the company announced that they secured a contract that supports the agency’s Rapid Mission Design Studies for Mars Sample Return, which will gather rock samples from the Martian surface and deliver them back to Earth for the first time.

Two months earlier, the company revealed that NASA’s two Mars-bound spacecraft, Blue and Gold, were assembled, integrated and tested at Rocket Lab’s Spacecraft Production Complex and headquarters in Long Beach, California. The company claimed that they were able to produce the spacecraft in three and a half years compared to typical Mars missions that can take more than a decade from planning to launch.

In June, Rocket Lab also announced that they successfully completed the second of two Electron launches for NASA’s Polar Radiant Energy in the Far-InfraRed Experiment (PREFIRE) climate change-focused mission. They completed a turnaround of two launches within 11 days. The mission collected important climate change data.

NASA has also published the list of contracts they awarded to the company, which includes a $458,758 Space Science, Earth Science, and Engineering Research deal in June 2023.

In May 2023, the company revealed that they signed a deal to launch NASA’s Starling mission that will test and demonstrate autonomous swarm technologies and an automated space traffic management for groups of spacecraft in LOE, as well as two Electron launches to deploy a constellation of storm monitoring satellites for the agency.

Why This Is A Big Deal

Neutron will be a game-changer for the company’s financials once they debut the rocket this year. If successful, this will help Rocket Lab secure more future contracts for more ambitious missions—particularly those requiring heavier payload capacity. Deals with NASA allow the company to build a proven track record of reliable launch capabilities and credibility in the eyes of commercial customers. 

With this, private sector clients gain greater confidence in Rocket Lab’s capability to deliver on complex missions that will pave the way for additional commercial contracts and an expansion of Rocket Lab’s customer base after they signed their first multi-launch agreement with a confidential commercial satellite constellation operator for Neutron in November.

Risks

NASA missions often come with complex payloads and strict performance specifications. Any contractor that does not meet these technical benchmarks or suffer from any major launch disruptions could jeopardize the contract and negatively impact Rocket Lab’s standing with both NASA and other potential customers.

In addition, any delays or cost overruns could hurt profit margins,which will lead to contract penalties, or damage Rocket Lab’s reputation for reliability.

However, these risks are very low. As CEO said last year:

“There’s very few examples in history when monopolies persist…we have an advantage. We’ve learned everything we’d need to learn on a small rocket, including reusability.”

Bottom Line

Rocket Lab’s recent NASA contract for their Neutron launch services follows successful NASA partnerships on missions like TROPICS, PREFIRE, and Mars-bound spacecraft. Neutron’s reusable design is expected to boost cost-effective access to space and support a range of payloads, including constellations and national security. With these NASA contracts, Rocket Lab is poised to strengthen their track record and to attract more commercial opportunities, despite inherent risks that are less likely to occur.

Disclosure: At the time of this publication some members affiliated with Marksman Research own stock, options or other interest in RKLB.