Defense Bill Curbs ULA Use of Russian Engines but Draws Veto Threat

by

WASHINGTON — U.S. House and Senate negotiators completed work Sept. 29 on a defense authorization bill for 2016 that gives government launch services provider United Launch Alliance access to far fewer Russian-made engines than the company says it needs to stay viable in its core national security market as it develops a new rocket featuring a domestic propulsion system.

However, the administration of U.S. President Barack Obama on Sept. 30 reiterated its threat to veto the legislation over its proposed use of an emergency wartime spending account to fund military activities that are not related to contingency operations. The White House has accused Congress of using the Overseas Contingency Operations account to skirt spending caps, imposed by the 2010 Budget Control Act, for the military while keeping them in place for domestic programs.

In addition the Russian engine limitation, the conference bill, dubbed the National Defense Authorization Act (NDAA) for Fiscal Year 2016, would end annual U.S. Air Force payments to ULA that critics have long branded as a subsidy.

The Air Force recently made what presumably is the last such payment, an $882 million Evolved Expendable Launch Vehicle (EELV) Launch Capability contract modification that covers Atlas 5 and Delta 4 launch services during fiscal year 2016, the Defense Department announced Sept. 29. EELV Launch Capability contracts, awarded annually, cover services not necessarily associated with a given launch, making it difficult to put an exact price point on individual ULA missions.

But the limitation on access to the Russian-built RD-180, the main engine on the Atlas 5, represents a potentially bigger problem for Denver-based ULA, a Boeing-Lockheed Martin joint venture that since its 2006 creation has effectively had the government launch services market all to itself. Now facing a competitive challenge from upstart SpaceX of Hawthorne, California, ULA is planning to introduce a new launcher dubbed Vulcan around 2020 but needs to continue launching its workhorse Atlas 5 in the meantime to stay in the game.

Congress banned future use of Russian engines for U.S. national security launches in the NDAA for Fiscal Year 2015 in response to Russia’s 2014 incursion into neighboring Ukraine. The ban exempted five RD-180s that were already on order at the time of the law’s enactment, according to the Air Force and ULA, who have pushed Congress for access to more engines.

The House Armed Services Committee’s version of the 2016 NDAA would have granted access to an additional nine engines, making a total of 14 available for future Air Force competitions. But the Senate committee’s version, reflecting the wishes of its chairman, Sen. John McCain (R-Ariz.), a frequent ULA critic, exempted just four more engines, for a total of nine. The Senate position prevailed in the compromise bill hashed out by House and Senate conferees.

ULA has said it is retiring all but the heavy-lift version of its Delta 4 rocket in the next couple of years because it is too expensive to be competitive. There is no heavy-lift version of the Atlas 5, but that rocket is far less expensive and thus is used far more frequently — including exclusively by NASA, whose launches are not subject to the RD-180 ban.

Expanded diagram Vulcan six boosters
ULA ultimately plans to replace the Atlas 5 with the Vulcan, but envisions at least a couple of years of overlapping operations between the two vehicles. Credit: ULA

ULA ultimately plans to replace the Atlas 5 with the Vulcan, whose first stage would be powered by the BE-4 engine being developed by Kent, Washington-based Blue Origin, but envisions at least a couple of years of overlapping operations between the two vehicles. The Air Force has said ULA needs access to at least 18 more RD-180 engines — including the five already exempted — to remain competitive with SpaceX’s aggressively priced Falcon 9 rocket in the national security market over the next several years.

In a statement provided to SpaceNews by ULA spokeswoman Jessica Rye, the company said, “Congress’ actions in the NDAA are a beginning to providing a transition from the Atlas V to a future all-American rocket and engine. While the RD-180 engines authorized by Congress are a start, the number authorized will unfortunately not be enough to keep Atlas flying to support national security needs until Vulcan is developed, tested and certified.”

ULA said it will continue to work with Congress to secure enough RD-180s to ensure competition in the military launch market.

Report language accompanying the Senate version of the bill has suggested that Atlas 5’s intended for NASA could be repurposed for military use should that become absolutely necessary.

The conference bill contains another measure that could spell trouble for ULA’s current plans: a directive that funding provided by Congress to develop an American alternative to the RD-180 be used for that purpose only. That presumably means the money — Congress appropriated $225 million in 2015 — cannot be used for Vulcan development.

In selecting the BE-4 as its next main engine, ULA effectively spurned U.S. propulsion provider Aerojet Rocketdyne, which is developing an engine dubbed AR1 that it says can be retrofitted with the Atlas 5 relatively easily but would need substantial government funding to complete. ULA is providing some support for AR1 development as a backup option in case Blue Origin falters on the BE-4.

But in choosing the BE-4, which cannot work with the Atlas 5, ULA committed itself to developing a new rocket, which is likely to cost $2 billion or more between the vehicle and the new engine.

ULA has said it would rely on its corporate parents to pay Vulcan’s development costs outside of the BE-4, which Blue Origin is funding internally. To date, Boeing and Lockheed Martin, which have booked substantial profit on ULA revenue, have been providing funds for Vulcan work on a quarterly basis.

Craig Cooning, president of Boeing Network and Space Systems of El Segundo, California, and chairman of ULA’s board, said recently that Vulcan should be a government-funded development effort. He also said ULA must have continued access to the RD-180 to stay in business until Vulcan is ready to take over.

Spokespersons for Boeing were not immediately available for comment.