U.S. Air Force To Request $1.8 Billion for EELV Program as Costs Skyrocket

WASHINGTON — Projected budgets for the U.S. Air Force’s Evolved Expendable Launch Vehicle (EELV) program will rise by more than 50 percent over the next few years as the cost of materials has increased sharply and the service buys more rockets to provide stability for the industrial base, according to government and industry sources.

The Air Force plans to request $1.78 billion for its primary launch vehicle program in 2012, some $450 million more than it previously planned to request for 2012, a government source said. The service’s five-year budget plan for EELV totaled $6.3 billion in its 2011 spending blueprint, and that figure will rise to $10 billion in the request it sends to Congress in February, the source said.

The EELV program was established in the 1990s to provide reliable, lower-cost space launch services for all but the smallest U.S. government satellites using a single, modular family of rockets. The Air Force subsequently opted to support two separate families of rockets based on projections of soaring commercial demand that never materialized. The Atlas 5 and Delta 4 rocket families are built and launched by Denver-based United Launch Alliance (ULA), a Boeing-Lockheed Martin partnership, which has a perfect record in 36 launches since 2002.

In a press conference Jan. 6, U.S. Secretary of Defense Robert Gates said the Air Force starting in 2012 would increase EELV procurement “to assure access to space for both military and other government agencies while sustaining our industrial base.” While the Defense Department is the primary EELV user, the rockets also launch satellites for NASA and the National Oceanic and Atmospheric Administration.

The Air Force bought three EELV launches in 2010 and plans to buy three in 2011, though Congress has not yet provided full-year funding for the government. Starting in 2012, the Air Force will seek to buy about five EELV launches per year, Air Force Secretary Michael Donley said Jan. 12 at an Air Force Association media briefing here.

At least some of the money needed to cover rising EELV costs will be drawn from other space programs, and among the missions likely to get squeezed is space surveillance, sources said. The Air Force at one time planned to have a competition under way by now to build a follow-on to the Space Based Space Surveillance satellite that launched in September. That procurement has been deferred beyond 2012, these sources said.

The Air Force would not comment on the service’s 2012 budget submission in advance of its delivery to Congress but acknowledged cost growth on the EELV program.

“ULA is seeing quoted prices with significant increases from their suppliers,” Air Force Space and Missile Systems Center spokeswoman Peggy Hodge said in a Jan. 13 e-mail. “Suppliers’ business base has been reduced making ULA the major customer.”

In addition, the Air Force until recently had been benefiting from rocket prices negotiated with ULA in 1998 that were based on different market conditions, Hodge said.

Material costs for the next lot of EELV rockets will be higher and will have a “mid-2015 cost basis,” ULA spokesman Mike Rein said Jan. 13.

The Air Force provides most of the funding for EELV, but the program is also supported by the National Reconnaissance Office, which buys and operates the nation’s spy satellites, and NASA. The Air Force and National Reconnaissance Office fund the program in two ways: fixed-price contracts for specific launches and cost-plus contracts that help pay for ULA’s standing army of 3,700 employees and overhead costs.

NASA, which pays only the incremental costs of the launches it orders, in September announced a new 10-year contract vehicle that it will use to buy launches from ULA and other companies. The agency in October paid ULA $187 million for an Atlas 5 rocket that will launch a Mars orbiter in 2013.

The increased launch costs have come as a surprise to some at NASA.

“This really is a difficult financial environment,” Jim Green, NASA’s director of planetary sciences, said at a December meeting of the American Geophysical Union. “We are surprised at how extensive those cost increases are. You start to wonder where we go from here. How do we get out of low Earth orbit on a regular basis?”

For its part, ULA says it is doing everything it can do to keep costs down. The company has trimmed its work force from 4,400 to 3,700 over the last five years and plans to shed another 700 jobs in the coming years, ULA Chief Operating Officer Dan Collins said in November. The EELV program has achieved its goal of reducing U.S. government launch costs by 25 percent compared with the previous generation of rockets, Collins said. The total annual EELV budget is not publicly available since the National Reconnaissance Office’s portion is classified. But that agency uses some of the biggest and most expensive rockets in ULA’s inventory.

The issues facing the U.S. space launch enterprise were heavily scrutinized during the last Congress by the committees that oversee the Pentagon and intelligence community.

U.S. Rep. C.A. “Dutch” Ruppersberger (D-Md.), former chairman of the House Intelligence technical and tactical intelligence subcommittee, said other countries have managed to reduce their launch costs while the U.S. government’s launch bills continue to climb.

Furthermore, the U.S. government lacks an adequate road map for fixing the problems of space launch, Ruppersberger said in a Jan. 14 interview. Instead of spending billions of dollars each year on the Atlas 5 rocket that relies on a Russian-built main engine, it might be time to invest in developing better engines that can be built domestically, he said.