Air Force stakes future on privately funded launch vehicles. Will the gamble pay off?

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Analyst Bill Ostrove: Vulcan’s first flight has slipped from 2019 to 2020. "The engine choice will affect the design of the entire rocket."

WASHINGTON — The schedule is getting tight for the U.S. Air Force as a 2022 deadline looms to bid farewell to the Atlas 5 and switch to a different rocket that is not powered by a Russian engine.

The target date was mutually agreed by Congress and the Air Force in 2016, allowing what was considered sufficient time to find alternatives to the United Launch Alliance’s Atlas 5 that uses the Russian RD-180 engine. The solution they settled on was for the Air Force to sign deals with the space industry to co-finance the development of new rocket propulsion systems.

The program known as the Launch Service Agreement (LSA) fits the Air Force’s broader goal to get out of the business of “buying rockets” and instead acquire end-to-end services from companies.

The Air Force signed cost-sharing partnerships with ULA, SpaceX, Orbital ATK and Aerojet Rocketdyne. The original request for proposals noted the Air Force wants to “leverage commercial launch solutions in order to have at least two domestic, commercial launch service providers.”

The next step is to select three companies this summer to move forward with launch system prototypes.

“We are on schedule to make LSA awards in July 2018,” a spokesman for the Air Force Space and Missile Systems Center told SpaceNews.

The selected competitors will face a schedule that seems ambitious even by the standards of commercial space companies.

ULA’s CEO Tory Bruno called the Launch Service Agreement a “pretty rational” approach that puts the onus on the private sector.

As the operator of the Atlas 5 rocket, ULA will come under enormous scrutiny as it moves to develop its replacement, the Vulcan Centaur vehicle. Although the Atlas 5 will continue to be sold commercially, without the ability to offer Atlas 5 to the military after 2022, the future of ULA rests on Vulcan.

Which explains why there is so much anticipation about what engine ULA will select for the reusable first stage of the Vulcan Centaur. It is considering either the BE-4 made by startup Blue Origin or the AR-1 designed by established military contractor Aerojet Rocketdyne. The new first stage would be paired with the existing Centaur upper stage from the Atlas 5. A decision was expected months ago, and Bruno has said recently that it is “coming soon.”

Asked about the implications of the delayed engine selection on the LSA program, the Air Force Space and Missile Systems Center spokesman said officials would not comment on an ongoing source selection.

During a recent talk with reporters, Bruno predicted ULA would be able to meet the LSA timelines regardless of what engine is picked. From the government’s perspective, the risk lies in the fact that private industry is “bringing most of the money,” he said. “That’s always what governs a big complicated aerospace development program — being funded.”

The good news for the government is that there are multiple bidders, Bruno said. “That bodes well, that means the government has choices.”

Vulcan Centaur is 75 percent privately funded, Bruno said. To remain a contender in the LSA program, it needs to be ready for certification flights by 2020. ULA has agreed to two non-government flights to certify Vulcan for national security missions. The certification could happen as early as 2020 or early 2021.

“We feel very confident about our schedule and our plan to achieve that whole timeline,” he said.

The engine choice has kept the industry in suspense.

The Blue Origin engine is further along in development than the AR-1, although there are other issues to consider. “If we were to select AR-1 that puts more pressure on the schedule,” said Bruno. “But it does not necessarily invalidate the LSA requirements. I have much less schedule margin if I choose AR-1. But I could still meet the timelines.”

Some companies in the LSA program are partners and rivals at the same time. Orbital ATK will compete with its own rocket but it also has invested in the development of the Vulcan solid rocket booster. There is speculation that Blue Origin could also jump into the LSA fray with its New Glenn rocket.

“Having a competitor in my supply chain … Absolutely that is considered carefully,” said Bruno. “That is not unusual in our industry.” Orbital ATK is not only a competitor and major supplier to ULA but also a ULA customer for cargo missions to the International Space Station.

Orbital ATK has made a “substantial investment in developing that component for Vulcan,” he noted. “The supplier in this case is investing their own money. In exchange we give them a long-term contract that allows us to have stability in pricing.”

Blue Origin is investing a “considerable amount,” he said. “To a lesser degree Aerojet Rocketdyne is investing their own funding in AR-1.” The engines are the most expensive parts of the rocket, accounting for two-thirds of the cost of the booster.

Timeline too ambitious?

William Ostrove, aerospace and defense analyst at Forecast International, noted that ULA has been on the verge of picking a winner “for a long time.”

Vulcan’s first flight has slipped from 2019 to 2020, said Ostrove. “The engine choice will affect the design of the entire rocket. A decision has to be made if the Air Force is going to stick to the plan” of phasing out the Atlas 5 by 2022.

The delay could be adding risk to the Air Force LSA strategy, Ostrove said. For the program to succeed, launch contractors need to have both government and commercial business. “If there is no market for these large launch vehicles then the Air Force may have to step in and provide more funds.” That is exactly what the Air Force had to do more than a decade ago with Atlas 5 and Delta 4, which were originally intended as dual use.

A contrarian view comes from the defense industry establishment. Loren Thompson, of the Lexington Institute — a think tank that receives funding from ULA owners Boeing and Lockheed Martin, Aerojet and other defense firms — has called on the Air Force to keep the Atlas 5 and swap the RD-180 engine for Aerojet Rocketdyne’s AR-1 rather than develop a new launch vehicle.

“In an effort to save time and money, they accept greater risk,” Thompson told SpaceNews. “In an attempt to spur innovation, they turn to untested commercial products and practices. This approach was an utter failure in the 1990s, and yet we are gradually backing into the same errors again.”

Air Force Secretary Heather Wilson has expressed confidence in the LSA approach.

“We are cost sharing with companies as they develop alternatives to the Russian engine,” she told reporters last month on Capitol Hill. “We are doing that intentionally. We need a couple of options. It’s a risky business.”

The program is moving forward as planned, she said. “Usually if they haven’t walked in and said, ‘Houston we’ve got a problem,’ it means it’s continuing on, on schedule.”