Air Force and Aerojet Rocketdyne renegotiating AR1 agreement

by

WASHINGTON — The U.S. Air Force and Aerojet Rocketdyne are working to revise an agreement to support development of the company’s AR1 rocket engine, as questions continue about the engine’s long-term future.

In a Feb. 14 response to questions submitted by SpaceNews, the Air Force Space and Missile Systems Center (SMC) confirmed that Aerojet Rocketdyne is seeking to revise the Rocket Propulsion System (RPS) award the company received in 2016 to reduce the fraction of development costs the company has to pay.

That award, known as an other transaction authority (OTA), currently requires Aerojet Rocketdyne to cover one third of the costs of work on the AR1 engine. In the company’s latest quarterly filing with the U.S. Securities and Exchange Commission Nov. 2, it said it had spent $86.1 million on AR1 research and development, out of total costs incurred to date of $236.6 million.

“Aerojet Rocketdyne has approached the Air Force about reducing the industry cost share on the AR1 RPS OTA from 1/3 to 1/6,” SMC said in its response. “The Air Force has gained the necessary approvals to do so, if a mutually beneficial arrangement can be reached with Aerojet Rocketdyne. The Air Force and Aerojet Rocketdyne are still in discussions, but are working very hard to find closure on a restructured agreement.”

SMC did not explain why Aerojet Rocketdyne sought the change in the agreement. In a Feb. 15 statement, Steve Warren, vice president and chief communications officer at Aerojet Rocketdyne, said the company has spent more than $110 million on the AR1, counting work done before receiving the Air Force award in 2016, and that the company had previously invested more than $200 million on key technologies incorporated into the engine.

“As we look to the next phase of this contract, we are working with the Air Force on a smart and equitable cost-share,” he said. “We are committed to delivering an engine in 2019.”

SMC did not disclose how such a change in the cost-sharing arrangement would affect overall spending, including the Air Force’s share, on the program, but the center reaffirmed a 2019 deadline for the engine. “Any changes to the RPS OTA would have to be done by mutual agreement and would still require the AR1 to be completed by the end of 2019.”

However, an undated two-page “talking points” memo by the Air Force, circulating on Capitol Hill last month and obtained by SpaceNews, indicated SMC was considering not changing the agreement.

According to the memo, SMC was instead exploring alternative options that would keep AR1 available as a “warm backup” on a slower development track. The memo cited skepticism that Aerojet Rocketdyne could have the engine completed by the end of 2019, as well as progress being made elsewhere in the industry, particularly by the BE-4 engine under development by Blue Origin. That engine started hot-fire tests in October, while Aerojet Rocketdyne has not stated when it expects to begin such tests of its AR1.

The options being considered by SMC, according to that memo, including leveraging technology development programs at the Air Force Research Laboratory (ARFL) and at NASA that could support work on key AR1 technologies, allowing full-scale work on the AR1 to resume later if needed.

SMC did not directly address whether those alternatives remain under consideration. Asked if the Air Force was studying using AFRL or NASA programs to support AR1 development, SMC said only that “the Air Force is working with Aerojet Rocketdyne to see if Aerojet Rocketdyne’s requested changes to the OTA can be accommodated.”

Aerojet Rocketdyne was one of four companies that received RPS awards from the Air Force in early 2016, but was the only company not also developing a launch vehicle. The other awardees — Orbital ATK, SpaceX and United Launch Alliance — are all also competing for Launch Service Agreement awards from the Air Force to fund development of future EELV-class launch systems.

AR1 is currently not the first choice of any of those companies’ vehicles. Orbital ATK plans to use its own solid rocket motors for the lower stages of its proposed Next Generation Launch vehicle, while SpaceX continues to develop and manufacture its own liquid-propellant engines. ULA has considered AR1 for use in the first stage of its Vulcan launch vehicle, but has long indicated the BE-4 remains its preferred choice. ULA has yet to make a formal decision.

SMC noted in its response that, should the AR1 be included in a vehicle that receives a Launch Service Agreement, Aerojet Rocketdyne would be required to return to a one-third cost-share arrangement. The Air Force is expected to make those awards later this year.