Orbital built the two rockets for TacSat-2 and TacSat-3 for a total of $24 million. The company likely could reduce that price somewhat if the Air Force bought a larger block of rockets, Grabe said.
Elon Musk, founder and chief executive of Space Exploration Technologies, said his company also plans to compete for the block of ORS launches. Musk said his company could reduce its $7 million price tag for the Falcon 1 rocket for a block purchase if the launches came within 12 months of each other, and it could find efficiencies such as increasing its order quantities from suppliers.
Musk said Space Exploration plans to increase the price of Falcon 1 launches in 2009 as part of an effort to increase the rocket’s payload. While the price tag will rise to $8.5 million, the cost increase will be proportionately less than the planned increase in payload mass and volume, he said.
I don't think their can be any doubt about why the Air Force is encouraging Elon Munsk's SpaceX. When he's offering a price half what the big guys are offering, and then in the same breath offering to reduce it more people will listen.
The question is can he really pull off launches at that price? His last launch was a smidgeon less than a complete success. Until he manages to have a launch without any hitches it's all happy guessing as to whether or not Elon can really manage to pull a Dave Nichol when it comes to launch costs.
With these things anything will go wrong. It's a natural part of engineering - that is to say failure. No one is perfect. I don't care how smart you are. We all screw up. Everyone will screw up some percentage of the time if they aren't paying attention, and a very small amount if they really are careful. What's worse is the more people you have working on that project that small chance of screwing up multiplies.
The only way around it is to be in it for the long term. You have to expect that screw ups WILL happen. Deal with them one at a time, learn from them and move on. Eventually, you will have learned enough, and you will minimized the mistakes enough that you can actually accomplish something. So really the question is does Elon have the guts and the pocketbook to see this thing through?