NASA to Buy a New Space Station. Price Tag: $34.1 Billion

By now, you've heard the news: The International Space Station, which began construction in 1998 and was originally only supposed to last for 15 years, is finally getting ready to retire. Sometime after 2030, Elon Musk's Space Exploration Technologies will launch a dedicated mission to "deorbit" ISS, pushing the station into a fiery death as it burns in Earth's atmosphere before drowning in the ocean's depths -- and NASA will pay SpaceX $850 million for the privilege.

What happens then?

Well, at least four separate teams have floated plans to build a new space station (or space stations), which will be privately owned but leased to NASA (and others) for research missions. Private space companies Axiom Space, Blue Origin-led Orbital Reef, a consortium collectively known as Starlab, and Vast are all part of this effort. It's not 100% clear which of these teams will win, but we should get a clue soon.

Because NASA is ready to award a space station contract.

Image source: Getty Images.

Calling all space companies

On Friday, Oct. 9, NASA released its official Request for Proposals (RFP) to build a new space station. The RFP runs to 360 pages and is chock-full of technical details, but here's the gist:

Bidders have until Dec. 8 to submit proposals for the space stations they wish to bid on. NASA intends to pick "two or more" teams of contractors to award funding to get the ball rolling. NASA won't pick up the whole tab for construction, but will commit at least $100 million to begin phase 1 design, engineering, and development work.

Further funding will be available to companies that proceed to phase 2, which involves developing and certifying the stations. Anyone chosen to actually build a station will then be awarded additional funds in phase 3, which will include a NASA commitment to pay for at least four crewed missions to the station(s), plus at least eight supply shipments, all spread over the first four years.

NASA notes that a space station may require two crewed missions and four supply missions per year -- and potentially more -- but it's only committing to half that. Still, at posited price tags of $325 million per crewed mission and $300 million per supply mission in 2030 (rates vary and are set to increase each year), a space station contract winner can probably anticipate an annual revenue stream of at least $1.85 billion from NASA contracts alone.

What's more, NASA envisions the potential for additional phases in which it will contract (and pay for) "pre-priced additional services" and "special studies," creating additional and supplemental revenue streams for the winner(s).

The big prize

The winner(s) will be awarded an eight-year contract running from April 2027 to April 2035, during which time a station will be built, launched, and operated. This base period contract may be first extended by four years, then three more years, through the exercise of contract options by NASA.

If exercised in full, these optional periods could keep a new station in operation for a total of 15 years, through April 2042. (Or the station might last even longer, if ISS' experience is any guide.)

Even over the envisioned 15-year period, however, NASA anticipates spending $34.1 billion on an ISS replacement. Note that this is the total ceiling value. If multiple stations are built, they will be expected to split this pot of NASA gold. But if only one winner is chosen, the victor can expect to receive the entire $34.1 billion (minus however much is spent developing alternative space station concepts that are eventually rejected).

Whom do investors want to win the contract?

As noted, Axiom Space, Orbital Reef, Vast, and Starlab have all expressed interest in building a new space station. Of these, Starlab appears to have both the biggest and best-funded team. At present, it is also the only team that space investors can buy into.

Unlike the Axiom, Orbital Reef, and Vast teams, all of which are controlled by private companies, Starlab includes a whole series of publicly traded companies among its coalition: Voyager Technologies (NYSE: VOYG) first and foremost, as the leader of the effort, but also Hilton Worldwide, Leidos, Northrop Grumman, and Palantir.

Although there is no guarantee that Starlab will win the contest to build a space station to replace the International Space Station, absent initial public offerings by some of the other participants, a Starlab victory is currently investors' best chance to profit from this effort.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Leidos, Northrop Grumman, and Palantir Technologies. The Motley Fool recommends Voyager Technologies. The Motley Fool has a disclosure policy.