LOS ANGELES -- SpaceX announced Monday it submitted a proposal to NASA last month to start an estimated $1 billion process upgrading the company's Dragon capsule, the first step in making the ship ready for crew rotation flights to the International Space Station.

Artist's concept of the Dragon spacecraft maneuvering in orbit. Credit: SpaceX
 
The Hawthorne, Calif.-based firm transmitted the proposal to NASA Dec. 13. It entered the second Commercial Crew Development, or CCDev 2, competition along with several other aerospace contractors for a share of the expected $200 million payout to be released as early as March.

According to a SpaceX website update, the company is proposing to begin the design of a launch abort system, the emergency escape rocket that would save astronauts from an exploding rocket.

Unlike traditional emergency systems, called a tractor design by engineers, SpaceX wants to build an integrated launch abort rocket to provide escape capability throughout the rocket's flight to orbit. Tractor designs used by the U.S. Mercury and Apollo programs were thrown away a few minutes after liftoff, as soon as their boosters cleared the atmosphere.

The integrated system would be part of the Dragon capsule, staying with the spacecraft during months at the International Space Station and returning to Earth at the end of a normal flight. It could even be fired for a rocket-assisted touchdown on land, bringing astronauts home to a soft landing closer to recovery teams.

The launch abort engine "enables superior landing capabilities since the escape engines can potentially be used for a precise land landing of Dragon under rocket power," the SpaceX announcement said.

Musk alluded to the rocket-powered landing concept in a press conference last month.

An emergency parachute would always be carried as a backup, according to SpaceX.

SpaceX claims the concept improves crew safety and reduces Dragon operating costs.

If the company wins a slice of NASA's award money this year, it will be just the first step in a multi-year development to make the Dragon capsule ready for crewed missions. Although the Dragon was designed from the start for human flights, the cargo version of the craft SpaceX tested last month lacks an escape system, seats and flight controls.

SpaceX launched a Falcon 9 rocket and Dragon space capsule Dec. 8. The Dragon circled Earth twice before plunging back into Earth's atmosphere and successfully splashing down under parachutes in the Pacific Ocean. It was a critical demo mission for the company, which now employs more than 1,000 workers and hopes to take over a large chunk of NASA's crew and cargo transportation to low Earth orbit.

The Dragon capsule after recovery in the Pacific Ocean in December. Credit: Mike Altenhofen/SpaceX

NASA's commercial crew development program is likely to include milestone-based agreements with industry, a similar approach to the Commercial Orbital Transportation Services, or COTS, initiative. SpaceX and Orbital Sciences Corp. are now executing a series of rocket and capsule test flights to demonstrate their ability to deliver supplies to the space station.

According to Musk, it will likely cost $1 billion and take three years to have a flight-ready Dragon ready for crew duty. That includes test flights.

SpaceX is calling for a three-step design, development and test schedule, beginning with the initial concept of the abort engines and crew accommodations, progressing to static fire testing of the escape engines, then prototype evaluations by NASA crews of seats, control panels and cabin layout.

"If a reasonable number of test articles and abort flights are assumed, then the total development cost to get crew to station and meet all the NASA requirements is probably around $1 billion and three years from initial contract award," Musk told Spaceflight Now Monday. "To put that figure into perspective, that’s roughly how much NASA will spend on Soyuz seats over the same period of time."

SpaceX’s competitors will not discuss how much it will cost to develop their designs.

Musk acknowledged his estimates are "a bit fuzzy" and will depend on the safety requirements levied by NASA. He has long publicly disclosed it would cost roughly $500 million for the hardware modifications themselves, but a "huge variable is what level of testing is required, how many tons of paperwork and how many qualification articles need to be built," Musk said, emphasizing extras could push the cost closer to $1 billion.

The company says the Dragon spacecraft is scheduled to fly at least 11 more times, and the Falcon 9 rocket 17 more times, before humans strap inside.

SpaceX is sticking to its figure of $20 million per seat for Dragon, adjusted for inflation. That price is contingent upon NASA using the Dragon's full capacity of seven seats and purchasing at least four flights per year, enough to cover SpaceX's fixed costs.

"Over time, we'd like to make that a lot lower, but it is still a huge savings over Soyuz," Musk said.

Until a U.S. commercial operator is ready for crew rotation, space station residents will continue flying to and from the complex on Russian Soyuz spacecraft. In its last agreement with NASA, which provides for seats through 2013, Russia charged the space agency more than $50 million for each roundtrip seat. NASA and Russia are expected to soon begin negotiating for more Soyuz services stretching into 2015.

SpaceX's competitors are Boeing Co., Orbital Sciences and Sierra Nevada Corp. None of the companies have disclosed the price of a seat aboard their spacecraft, but Boeing has stated their cost projects compare favorable with Soyuz.