After Canceling NRO Launch Competition, Air Force Dangles More Plums for SpaceX

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WASHINGTON — The U.S. Air Force on Jan. 28 called off a high-profile competition to launch a spy satellite but now intends to put as many as 10 individual launch contracts up for bid between now and the end of 2017, a service official said.

The official, who did not want to be identified, said the seven to 10 missions to be awarded competitively — previously seven or eight such contracts were planned through 2017 — would include an unspecified number of GPS 3 satellites. SpaceX, the hard-charging rocket maker seeking to break United Launch Alliance’s monopoly in the national security launch market, previously submitted an unsolicited bid to the Air Force to launch the navigation satellites, which appear well suited to the capabilities of SpaceX’s Falcon 9 rocket.

The question now becomes when the Air Force might award its first competitive launch contract in some 15 years.

Capt. Chris Hoyler, an Air Force spokesman, said in a Jan. 31 email that the service “will identify the launches as the acquisition strategy matures.”

The first competitive mission had been expected to be a payload for the U.S. National Reconnaissance Office, which operates the nation’s spy satellites. But the service on Jan. 28 canceled the solicitation for that mission — bids were due in August, and the award was said to be imminent — and swept the launch into its existing block buy contract with Denver-based ULA, a Boeing-Lockheed Martin joint venture.

This came after SpaceX on Jan. 23 dropped its lawsuit challenging ULA’s $11 billion sole-source contract in exchange for an Air Force agreement to increase the number of future satellite launches to be awarded competitively. That contract, awarded in 2012, covers 36 Atlas 5 and Delta 4 rocket cores and was part of the Air Force’s two-pronged strategy for bringing its launch costs under control.

Introducing competition was the other component of the Air Force strategy, which originally called for putting 14 missions up for bid in the next couple of years. The Air Force subsequently cut that target in half, setting off a storm of congressional criticism and likely triggering SpaceX’s lawsuit, filed in April in the U.S. Court of Federal Claims.

GPS 3. Credit: Lockheed Martin
SpaceX argued in court that a large portion of the block buy missions were well within the Falcon 9’s performance range and that it could have launched the GPS 3 satellites for about $80 million apiece. Credit: Lockheed Martin

Hawthorne, California-based SpaceX argued in court that a large portion of the block buy missions were well within the Falcon 9’s performance range and that it could have launched the GPS 3 satellites for about $80 million apiece. After eight months and a court-mandated mediation, the Air Force and SpaceX worked out a deal behind closed doors under the guidance of former U.S. Attorney General John Ashcroft. The specifics of the settlement were sealed by court order.

The Air Force rolled the NRO launch into a $382 million modification to ULA’s block buy contract that assigned three national security missions. The NRO mission, dubbed NROL-79, will launch atop ULA’s Atlas 5 rocket.

“Canceling the [request for proposal] was determined to be in the best interest of the Government,” Hoyler said.

Hoyler said the newly assigned launches will not add to the Air Force’s original order of 36 Atlas 5 and Delta 4 rocket cores from its incumbent launch services provider.

SpaceX, whose Falcon 9 rocket has yet to earn the necessary certification to launch U.S. national security missions, had given strong indications of interest in launching the NRO mission but never confirmed that it actually bid. The Air Force had expected to certify the vehicle before the end of 2014 but recently conceded that the certification might take until as late as mid-2015, a delay that triggered an independent review of the service’s processes.

SpaceX, did, however, submit questions about the NROL-79 competition to the Air Force, including one asking whether ULA would reimburse the government for some costs if it won the contract. ULA receives two funding streams from the Air Force as part of its primary satellite launching program, known as the Evolved Expendable Launch Vehicle program. Those include one that covers certain overhead costs, a portion of which the company repays the government for missions conducted outside the EELV contract structure.

SpaceX has long argued that the Air Force’s so-called EELV Launch Capability payments to ULA, amounting to nearly $1 billion annually, are a subsidy that could allow the company to offer artificially low prices for competitively awarded missions.