Editorial: A Prudent Pause on EELV

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The U.S. Air Force did the prudent thing by delaying its planned block buy of Atlas 5 and Delta 4 rockets used to launch the vast majority of U.S. government payloads, including virtually all of the nation’s operational national security satellites.

U.S. lawmakers clearly are skeptical of the service’s strategy for reining in costs on the Evolved Expendable Launch Vehicle (EELV) program, and a senior defense official’s recent correspondence on the matter was anything but reassuring. In a July letter to the Defense Department’s congressional overseers, Pentagon acquisition czar Frank Kendall said the program has a convoluted contracting structure that makes it difficult to find cost savings and provides little incentive to do so.

As EELV prime contractor, United Launch Alliance (ULA), created by the merger of the Boeing Delta 4 and Lockheed Martin Atlas 5 rocket programs, has a virtual lock on the military market. ULA currently operates under two contracts, one ostensibly covering rocket hardware and associated services, and one for certain overhead and development activities.

Mr. Kendall’s letter recertified the EELV program as required by U.S. law to continue funding the overbudget program. The letter acknowledged that EELV costs have doubled — to some $70 billion over 150 missions — but also said the program is vital to U.S. national security and that there is no viable alternative.

The grounds for recertification are unassailable: The U.S. military and intelligence community absolutely must have satellites to do their jobs, and currently the EELV program is the only means of launching them. Although potential industry competitors are emerging, most notably Space Exploration Technologies Corp. (SpaceX) with its Falcon 9 and planned Falcon Heavy rockets, none has compiled a sufficient track record to be entrusted with a $1 billion national security payload.

The initial thrust of the Air Force’s EELV cost-cutting strategy is the block buy, under which the service would commit to procuring up to 10 rocket cores annually over a three- to five-year period, the idea being to stabilize an industrial base reeling from last year’s retirement of NASA’s space shuttle fleet. The Air Force had planned to move ahead with the block buy this past summer despite congressional skepticism and a U.S. Government Accountability Office report urging that it hold off until it has a better handle on what the likely cost should be. The service has since relented, however, saying it now plans to proceed with the block buy in spring 2013.

Gen. William Shelton, commander of Air Force Space Command, has expressed hope that the service can shave 25 to 50 percent off the cost of the program by the time it is ready to execute a second block buy of EELV rocket cores a few years down the road.

That appears to be a tall order, however. Mr. Kendall and the Air Force note that most of the EELV cost growth is due to market factors beyond the program’s control. And while NASA is developing a heavy-lift rocket that should help fill the void in U.S. propulsion work left by the shuttle’s retirement — the Government Accountability Office report said settlement of the shuttle replacement question would help nail down the appropriate EELV cost — that program’s staying power is uncertain in what look to be lean fiscal years ahead.

But that budgetary environment underscores the urgency of getting the Air Force’s launch costs under control. As Gen. Shelton said, the EELV program is pushing the boundaries of affordability.

Delaying the block buy until next spring isn’t likely to have a major impact, but it will give the service an opportunity to wring out some marginal costs while demonstrating to lawmakers that their concerns are being heard and addressed. In the meantime, SpaceX, the furthest along of the prospective new entrants that the Air Force hopes will bring competition to the market and thereby drive prices down, will have more time to prove that it can not only launch reliably but do so at a higher tempo. In addition to its 12-launch contract to deliver supplies to the international space station, the company has amassed an impressive backlog of commercial business for the fledgling Falcon 9.

If SpaceX can reel off more successes in the next few months, ULA will be incentivized to find further cost savings, even it isn’t readily apparent today where those would come from. Should SpaceX stumble in any way, the Air Force will still have the proven Atlas 5 and Delta 4 vehicles at its disposal as it waits for the company to find its stride.