International Negotiation Competition

2021 National Round Problem

Round Two

Moon Base Alpha:

Tonka Corporation and Hestia-Luna Construction

GENERAL INFORMATION FOR BOTH PARTIES

President John F. Kennedy famously and gloriously chose to go to the Moon, “not
because it is easy but because it is hard”. Ever since, the Americans have dominated space
flight. Only Russia and China are also able to put a human being into orbit. The rest of the
world has to catch a lift. Humans in space are either astronauts, cosmonauts or taikonauts.
All of that is about to change. Very soon, there will also be buckonauts.

In order to compete with China and America, a plan has been formed by four major
space agencies to take their own giant leap. The Russians, the Japanese, the Europeans and
the Indians boldly plan to establish a permanent base on the Moon by 2050. The hope is that
they will be able to achieve collectively what would have been impossible acting alone.
Roscosmos (the Russian Federal Space Agency), JAXA (the Japan Aerospace Exploration
Agency), ESA (the European Space Agency) and ISRO (the Indian Space Research
Organisation) have now formed themselves into the so-called “Buckyball Confederation,” a
whimsical name chosen to avoid a tortured acronym. Of course, the chosen name gives us
the term, “buckonauts”—the collective name to be given to anyone visiting the Moon base,
irrespective of their nationality.

“Buckyballs” is the name commonly used in respect of Buckminsterfullerene, the C60

form of carbon in which the sixty carbon atoms are arranged in a so-called geodesic sphere.
The name was adopted by the four agencies because Moon Base Alpha (the provisional
working name given to the intended base) will largely be formed out of a number of geodesic
domes. This lattice form produces a structure which is very strong, relative to its size and
weight. While there are issues with a base consisting of lightweight domes, the model
nevertheless facilitates certain activities, such as hydroponic agriculture and large-scale
scientific experiments. It also generates a comfortable, human-scale living space for the
buckonauts.
 There are a number of possible sites for the Moon base but the one currently favoured
is Shackleton Crater, located near the lunar South Pole. The crater receives direct sunlight
for 94% of the time, which is ideal for generating solar power. Moreover, the South Pole has
a vast supply of frozen water ice under the surface, which can be used to provide three vital
commodities; drinking water, oxygen and hydrogen rocket fuel. In other words, solar power
can be used to break water into its constituent parts. Located 120 km away from Shackleton
Crater is Malapert Mountain, a crater ridge which has the very convenient quality of always
being visible both from Earth and from Shackleton Crater. As such, Malapert Mountain is an
ideal communication relay point between the Earth and any Moon base. Overall, it is almost
certain that the Moon base will indeed be located at Shackleton Crater.

With Moon Base Alpha scheduled to open for business in only thirty years’ time, it
has been necessary to take a number of decisions fairly quickly so that proper development
schedules can be put in train. In particular, it was important to establish a clear end point.
Everyone needs to know now roughly what the base will be like and what it will aim to do.
Plans can then be made accordingly and contracts put out to tender. In addition to the main
base, there will be a solar power station and water ice extraction plant located a short distance
away, as well as a radio astronomy facility located on the far side of the Moon. As part of the
main base, agricultural domes will be intermingled with domes housing laboratories and
science experiments, as well as the living spaces for the buckonauts. In other words, it is
possible to break down the overall construction project into three distinct entities; the radio
astronomy facility which will be many miles away, the industrial facilities which will be a
short distance away and the central, combined facilities where the buckonauts will live, eat
and work. Each of these three entities will be constructed by a different firm, with different
relevant expertise.

Clearly, there are issues involved with constructing a base on the Moon, especially if
the idea is that human beings will be able to live there. Things would be a lot easier and
cheaper if robots were sent instead. Apart from anything else, the Moon is a quarter of a
million miles away across the vacuum of space. There are currently no operational space
flight systems which are capable of transporting the necessary personnel and equipment.
These will need to be developed. Furthermore, the working environment on the Moon is very
different to that on Earth. Clearly, you need to wear a spacesuit if you want to breathe (!) but
then a spacesuit makes it difficult to carry out basic construction activities. Once again, some
clever solutions are needed here. Even digging a hole is not possible in the traditional way
because of the difference in gravity. If a construction worker were to thrust a shovel into the
lunar soil, the result would be that the worker would be comically propelled up into the air.
The same basic physics would operate for heavy equipment, which relies on gravity acting on
its huge weight (technically its mass) to keep it in place. It will be necessary to reinvent
digging.

Of course, there are also challenges simply surviving while standing still on the
Moon. The Earth’s powerful magnetic field protects its inhabitants from the deadly radiation
which streams from the Sun. The Moon does not have a magnetic field. Moreover, the
blanket of the Earth’s atmosphere has the effect of keeping the temperatures at ground level
relatively stable and relatively warm. The Moon does not have an atmosphere and the
temperature fluctuates wildly, depending on whether or not you happen to be in a shadow.
With all of this in mind, many experts have suggested that the best place for a Moon base
would actually be underground, in large empty lava tubes. However, Buckyball has taken the
decision instead to build geodesic domes on the surface, partly because they are likely to
provide a more human-friendly space in which to live and work and partly because the
technology (assuming it can be made to work) would be more transferable to other celestial
bodies which did not happen to have lava tubes in the right spot. In other words, the geodesic
domes are a better practical choice, purely from the point of view of useful, transferable
research and development. Having said that, it may well be that certain elements of the base
will indeed be constructed in lava tubes, if that proves to be a convenient short-term solution.

The Buckyball Confederation is a large and complex entity with commercial ties in all
parts of the globe. As such, there is a need to break down the overall project into manageable
pieces, for which a wide range of public and commercial entities will tender. Moreover, the
timescales will be different for different elements. The main contract for the construction of
the Moon base has been secured by the Tonka Corporation. As required by the bidding
process, all of the Buckyball contractors and subcontractors have formed new, distinct
corporate entities, whose only commercial function is to service the Moon base project. In
effect, Buckyball wants to eliminate the possibility of random, external dynamics (e.g., a
parent company in financial difficulty) from dragging down the 30-year Moon base
construction project. The family corporation that formed the Tonka Corporation was
originally founded three hundred years ago and has a long and distinguished record of
delivering construction projects in challenging locations. It was a matter of great national
pride when they were entrusted by Buckyball with the main Moon base contract. The head of
the corporation and chairman of the board is Mr. Takayama.

The Tonka Corporation will coordinate as necessary with other entities in respect of
the logistics involved in getting personnel and equipment to the lunar surface in a timely
manner. They have also recently put out to tender three subcontracts for the construction of
the three elements of the Moon base referred to above. Subject to agreeing terms, the
contract for the construction of the combined agricultural and habitat facility has been
secured by a newly formed corporation called Hestia-Luna Construction. This construction
contract is the subject of the current negotiation.

Hestia-Luna was chosen by Buckyball because its two constituent parts are uniquely
well-suited to the challenges involved in building geodesic domes on the Moon. The hybrid
corporation is led jointly by two brilliant young women; Elena Papageorgiou and Flavia
Borromeo. Both set up high-tech companies while still at university and both were self-made
billionaires by the age of thirty. Both then stepped back from the day-to-day running of their
respective businesses, focusing instead on other interests and challenges, simply acting as a
consultant with their respective research and development departments. Flavia’s expertise
lies in the field of AI and robotics. Since stepping back five years ago, she has devoted much
of her time to her “bucket list”; a number of exciting and dangerous activities, including dog-
sledding to the South Pole, competing in the Paris-Dakar Rally and discovering a new species
of salamander on an expedition to central Borneo. Meanwhile, Elena is a brilliant architect
and construction engineer, with a number of game-changing and award-winning buildings to
her credit, most notably in Qatar, New Zealand, Brazil and Albania. Since stepping back
from her firm, she has lived a celebrity lifestyle with her girlfriend, the Russian supermodel,
Natalia Lipnitskaya.

The reason why Flavia and Elena were so attractive to Buckyball becomes
immediately apparent when you consider the unique challenges involved. As mentioned
above, the logistics of getting to and from the Moon will be handled by others, as will any
specialist space training that is required for the various buckonauts, whether surveyors,
construction workers or scientists. Incidentally, both Flavia and Elena are intending to take a
hands-on approach to the Moon base project and fully expect to travel to the Moon on a
regular basis over the years. Of course, their relatively young age means that, unlike many
other of the current players, they can expect the base to be completed before they reach
retirement age. For both women, the Moon base, rather than their corporations, will be their
legacy.

Clearly, there are practical challenges in building anything on the Moon, some of
which were mentioned above. In general terms, there are three elements of the lunar
environment that will kill you almost immediately: the lack of atmosphere (resulting in
dramatic temperature differentials), the deadly solar radiation beating down and the very real
possibility of being taken out at any minute by a micro meteorite, in effect a cosmic bullet
(these never strike the Earth because they burn up in our atmosphere). On the other hand,
there are two elements of good news. Firstly, since there is no atmosphere, there are no
storms or winds, unlike on Mars or in Antarctica. This means that relatively flimsy structures
would not be blown away. Secondly, the gravity on the Moon is more benign than on Earth.
This means that there is much less of a tendency for things to collapse. In other words, were
it not for the need to protect against deadly missiles and deadly radiation, you could
comfortably live on the Moon in a well-insulated tent. The trick is to achieve a balance
between tent and nuclear bunker.

Under Buckyball’s master plan, the solution is geodesic domes and regolith; i.e.,
Moon dust. Regolith is a very fine powder, each particle having very sharp edges (i.e., there
is no erosion to smooth things). On the one hand, this quality means that regolith is likely to
clog things up and to cause damage to equipment (apparently, it smells like gunpowder). On
the other hand, it means that it is likely to be an excellent construction material, similar to the
best kind of sand for making concrete. Accordingly, the plan is to use the regolith as the raw
material from which to make bricks and protective tiles, using 3-D printer technology. The
tiles would then be spread as necessary over the lightweight geodesic domes, the frames of
which would also be made out of regolith parts generated by the 3-D printer. The regolith
will also be used to print off glass-like transparent panels which will be used for the
agricultural domes and in order to provide windows in the habitat domes. Psychologists have
determined that windows would have a significant positive effect on the mental well-being of
the buckonauts.

The key to all of the above construction activities will be an army of robots, who will
collect the raw regolith and swarm over the domes like a colony of ants. The point is that,
until at least some of the base is constructed, the Moon will still be a deadly place for
humans. The plan is therefore to land initially with a number of fully-shielded cylindrical
capsules (i.e., based on familiar technology from the ISS), some of which will have inflatable
extensions attached. These capsules will deliver to the lunar surface the army of robots, the
3-D printers and any other necessary equipment. Accordingly, the first phase of construction
will largely consist of the robots doing their stuff, constructing the first protected domes,
without the need for humans to hang about in the danger zone. In other words, construction
of the Moon base will be all about robots and clever design solutions, hence Hestia-Luna
Construction.

In light of the international considerations in play, Tonka and Hestia-Luna have each
taken fresh legal representation and instructed their respective lawyers to meet at a mutually
convenient neutral site in an effort to resolve the outstanding matters in issue between them
in respect of the construction project. Following a preliminary exchange of e-mails, the
following items have been identified as forming the basis for the upcoming negotiation:

1. The overall timescale of the project, including the initial phase of Earth-based
development and lunar surveys, the proposed start date for construction and the planned
completion date. This item will cover the expected build-time of the various elements,
together with any provisions made in respect of building in some flexibility. As such, it will
also be necessary broadly to assign the legal risk between the parties and to agree any
penalties for late completion and/or non-completion.

2. The broad nature of the agricultural-habitation facility of the Moon base, including the
number, size, capacity and differing functions of the geodesic domes. This item will cover
the question of the design freedom afforded Elena and Hestia-Luna.

3. The contract price, both in respect of the overall lump sum and the nature and timing of the
ongoing payments by Tonka to Hestia-Luna. In effect, this item is concerned with how
Hestia-Luna is to be provided with an income and working capital.

4. The extent to which the overall project is to be divided into discrete phases and contractual
“packets”. This item will identify the extent to which a contractual price can be attached to
each of these packets or phases and any ongoing bonuses involved for timely completion.

5. The ownership of any intellectual property generated, either on Earth via the research and
development activities or on the Moon as part of the construction phase.

Note to teams

The term “billion” when used in this scenario refers to the so-called “short scale” definition,
which is used in the USA and the UK. In other words, a billion is simply a thousand million;
i.e., 1,000,000,000.
 International Negotiation Competition
2020 National Round Problem
Round Two

Moon Base Alpha:

Tonka Corporation and Hestia-Luna Construction

CONFIDENTIAL INFORMATION FOR

LAWYERS REPRESENTING THE TONKA CORPORATION

While the Tonka Corporation was formed only recently (as required by the bidding
process), Takayama’s family business is more than 300 years old and has always maintained
the highest values. While it was convenient and pragmatic to delegate the technical function
of instructing the lawyers for this negotiation to his trusted son-in-law, Soichi, it goes without
saying that ultimate control rests with Takayama. All elements of any agreement would
automatically be subject to his final approval.

The contract with Hestia-Luna was awarded by the Buckyball Confederation rather
than by the Tonka Corporation and Takayama has a number of concerns about both the
corporation itself and about Elena and Flavia. Had the decision been left to Takayama, it is
unlikely that Hestia-Luna would have won the bidding process. Nevertheless, the broad
arrangement is now a commercial reality and the Tonka Corporation is determined to make it
work. Takayama would want to be reassured on a number of counts.

First, Takayama is uncomfortable with the overall “youthfulness” of both the

corporation and the two young women in charge. Certainly, Elena and Flavia have been
extremely successful, but in a very short time-frame. They have not worked their way up
steadily or proved themselves over a number of years. They have no meaningful track
record, especially when it comes to a project like the Moon base, which will inevitably take
thirty years to achieve. The base is not something that can be brought about quickly, relying
on youthful exuberance or sheer intellectual brilliance. Their record to date would suggest
that Flavia and/or Elena will lose interest in a few years’ time and will want to move onto
something new.

Second, Takayama is uncomfortable with the corporate management structure of

Hestia-Luna, with two women with equal status sharing the leadership. This runs the risk of
disagreement and disruption at the very highest level. If the two women were ever to fall out,
either personally or professionally, the entire Moon base project would quickly be placed at
risk. Moreover, Hestia-Luna Construction is effectively an artificial, hybrid entity, formed
for a short-term purpose. There is every chance that it will break apart again at some point,
simply because it is inherently unstable. Furthermore, the current negotiation seems to have
been brought forward rather too quickly, apparently seeking binding contractual terms as a
matter of urgency. This surely suggests a youthful and untamed spirit (or spirits) driving
things on apace, when this project is going to run for thirty years and more. Takayama will
need to be reassured that there are good commercial reasons for the urgency and that the
management structure is stable.

Third, Takayama is nervous about how external economic instability might affect the
project. The overall concern Takayama has is that disruption to Hestia-Luna, of any sort and
for whatever reason, will have a knock-on effect on the schedules for the main contract. In
effect, the Tonka Corporation will suffer if a strike or a row between Flavia and Elena means
that a deadline is missed. In particular, disruption at just the wrong moment could mean that
the Moon base does not open on schedule in July 2050.

Takayama has great affection for the Mediterranean countries and has spent enjoyable
vacation time in France, Italy, Greece and Croatia. He is something of an art connoisseur and
especially loves to spend time in the museums and galleries of Ancient Rome, Venice and
Florence. On a professional level, Takayama is also a great admirer of the robotics work.
Flavia has undertaken in her facility near Siena and Elena’s Luna Qatari Tower in Doha is
one of his favourite buildings in the world. In other words, provided that he can be reassured
on the above matters, Takayama recognises that there is no doubt as to the quality of work of
which Flavia and Elena are capable. Moreover, he recognises that thirty years is not a long
time in which to plan and build a Moon base. Accordingly, it is indeed necessary to take
some broad decisions at this early stage. At the same time, it is clearly impossible to know
how things might unfold over the next thirty years and a degree of uncertainty in the detail is
inevitable and advantageous.

In terms of the overall timescale, Tonka has identified six points over the next thirty
years at which specific targets will need to have been met. First, there will be a need to
complete surveys on the surface of the Moon to confirm Shackleton Crater as a suitable
location and to identify any relevant geological features. Of course, Hestia-Luna will not
have complete control over the timing of this phase since it will largely be determined by the
development of space flight-and-delivery systems by other entities. Nevertheless, this phase
should be completed by January 2030. Second, and independent of the surveys, is the
development of the necessary robotics and artificial intelligence (“AI”). This must be
completed by November 2036 in order to allow time for proper testing. Third, and reacting
in part to the surveys, there is a need to generate the overall design of the base and its
facilities. This should be finalised by July 2032 to allow other elements to proceed according
to a clear plan. Fourth, and reacting both to the surveys and to the final design, the various
construction technologies will need to be developed by November 2036. Clearly, these four
phases must start soon and will overlap, reacting to each other as necessary.

The fifth phase will be the actual construction of the Moon base. Although the
logistics involved are challenging, the basic build should be relatively straightforward,
meaning that it should take no more than six years to complete, between November 2040 and
November 2046. The final phase will consist of fitting out the completed base with the
equipment and technologies required, both for the basic base operations and for the
laboratories to be used for ongoing scientific projects. Of course, this phase must be fully
completed by July 2050, in time for the ceremonial opening. Takayama is determined that
any deadlines, once set, should not be missed. If necessary, the eventual contract may
contain penalty clauses, but Takayama would prefer for now that it be left as a matter of
honour.

In terms of the broad nature of the agricultural-habitation facility, Tonka is happy to

take Elena’s expert advice. Unless told otherwise, Tonka envisages that there might be two
basic models of geodesic dome, a large-sized dome with a diameter of 30m and a smaller-
sized dome with a diameter of 10m. On that basis, there might (for example) be two large
“agri-domes” for the agricultural activities and then perhaps four smaller domes--three
science laboratories and a habitation dome. In addition, there might be a large general-
purpose dome to serve as a “daytime” living space for the buckonauts. The plan is that the
completed base could accommodate up to thirty buckonauts, although there would usually be
no more than twenty in residence at any one time. Tonka is happy for Elena to have a good
deal of design freedom, once the overall specifications have been agreed (perhaps largely as
outlined above), subject to final approval in early 2022 by Buckyball and others, no doubt
including Takayama.

In terms of the contract price and the timing of payments, the headline budget figure
for the entire project is $52 billion, although that includes a $4 billion contingency. In other
words, the true budget figure is $48 billion, which would translate into annual payments over
thirty years of $1.6 billion. However, Tonka would prefer to break the contract down into the
six phases identified above and to attach prices to each of those contractual packets, payable
on completion of that particular package. Of course, that structure would incentivise prompt
completion of each phase. In addition, there would be annual running cost payments to
provide a reliable revenue stream for Hestia-Luna during the first decade or so of the project.

On that basis, Tonka is suggesting annual payments in the order of $400 million,
which would translate into $12 billion by the end of the thirty-year period. The remaining
$36 billion would be generated by the completion of the six phases or packets as follows:

Surveys - $3 billion (in January 2030)

Robotics and AI - $6 billion (in November 2036)
Design - $5 billion (in July 2032)
Construction tech - $6 billion (in November 2036)
Main build - $9 billion (in November 2046)
Fitting-out - $7 billion (in July 2050)

In addition (and if pushed), Tonka is willing to consider allocating $2 billion of the $4

billion contingency to bonuses in respect of the timely completion of the four phases above
for which there will be a definite completion moment. Clearly, the two phases involving pure
research and development will actually continue for the duration of the project. In other
words, Tonka would consider four bonus payments of $500 million for the timely completion
of the surveys, the design, the main build and the fitting-out.

Finally, in regard to any intellectual property generated by the project, Tonka

understands that the Buckyball Confederation would expect to retain at least a 50% share of
any patent rights generated by the project.

Buckyball has asked that a press release be drafted in light of this negotiation and
Tonka anticipates that this would include a description of the Moon base and a specific
schedule for the project. While the overall budget price could be mentioned, the details of
any payments would still be subject to confirmation. In effect, Tonka wants certainty with
the schedule, while the exact numbers are left vague.

Assume that you have been given discretion to agree to any terms that are broadly in line
with the above instructions and dynamics. In accordance with INC rules, teams may provide
additional non-self-serving information and details consistent with the facts as stated above
and in the General Information.