So with a 5.5% margin the $1.6 billion contract would be expected to yield $88 million in profit? Given what I'm assuming are large R&D expenditures on top of launch-related costs, I wonder whether the business is sustainable.
I used to work for Orbital as a NASA contractor. I never dealt with the business end of things, but the margins were small and very stable so long as there was work to be done (i.e. a giant (sub)contract on some huge NASA project). It wasn't exactly a pressure cooker of a work environment. The government stuff was a very different atmosphere than the commercial side.
I too am a former Orbital employee. I worked on the sounding rocket program. It was very much a pressure cooker because of the incessant pressure to work more overtime and do more missions in less time.
I always heard that other parts of the company were far more laid back. Wish I had worked in one of those parts.
Yeah, I worked there for 6 years, mostly at Goddard on the HST project. It was very relaxed - to the point of boredom at times (that's why I left, despite the insanely cool work). The guys in Virginia (where I worked about a year or so, but still on NASA stuff) told a different story about the Orbcomm and other commercial rocket businesses. I have no idea what it's like today though.
5.5% profit, if reliably realized, is sustainable. It's comparable to a conservative investment return. That said, most businesses strive for more than that.
Yea where I live I get 7% (over inflation) on treasury bonds (it's kinda insane here, but 5.5% does seem like a low value). I assume all missions are fully insured to prevent bankruptcy with such low margins?
If it is so I would imagine simply improving the reliability track of the vehicle to lower insurance would have a very large effect on profitability. If they could eventually tank the insurance partially/completely in house (given a low chance of failure) that would be even better.
