> SpaceX can achieve much higher profit margins by reusing rockets
What I've always heard is the legacy defense contractors are used to cost-plus contracts where you don't make bigger profits by reducing costs. They sometimes don't adapt well to firm-fixed-price contracts because changing the organizational culture takes ages. And also the reality is that they can keep raking in money anyway -- Boeing is in fact collecting more cash than SpaceX, so it's not even clear the incentives have changed that much.
That might be the case, but it doesn't take a genius to realize that you can turn a bigger profit by making your rockets reusable. Boeing isn't even just a "legacy defense contractor"--a massive part of their business is commercial airliners. That hasn't gone well for them either lately.
I think the more reasonable explanation for Boeing is that they already have access to ULA's proven launch vehicles, so designing a new one just for Starliner wasn't necessary. I think Boeing just chose a more conservative strategy while SpaceX managed to out-innovate them.
That's the legacy defense contractor strategy -- deliver something that checks off the boxes on the government requirement list at an exorbitant price. It's a very conservative strategy; lots of money, no risk.
The problem is that at some point SpaceX started landing rockets and the formerly safe strategy became extremely risky because Boeing/ULA not only has a competitor, the competitor is cheaper. But getting a fat, lazy organization to innovate and compete is hard even when facing an existential threat, and Boeing/ULA have not (yet?) managed that transformation. They've known it's necessary for years [1] but haven't been able to change course.
Yes, and that NASA expected this from them, that is, they were expected to be a credible, reliable-but-expensive (and not particularly innovative) option.
What I've always heard is the legacy defense contractors are used to cost-plus contracts where you don't make bigger profits by reducing costs. They sometimes don't adapt well to firm-fixed-price contracts because changing the organizational culture takes ages. And also the reality is that they can keep raking in money anyway -- Boeing is in fact collecting more cash than SpaceX, so it's not even clear the incentives have changed that much.