Editorial | Pentagon Finds the Right Balance

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In recent years the high cost of launching U.S. national security satellites, and what to do about it, has been a major bone of contention in the space community, pitting advocates of stabilizing the rocket-making industrial base through bulk buys from the current contractor against those who believe the introduction of competition is a better answer.

In November, the U.S. Defense Department settled on an approach that appears to have mollified both camps while ensuring continued access to space for critical military and intelligence-gathering assets. The strategy entails buying as many as 50 rocket cores in the next five years under the Evolved Expendable Launch Vehicle (EELV) program, including 36 from incumbent United Launch Alliance (ULA) and up to 14 from “new entrants” in the national security launch business.

ULA, a Boeing-Lockheed Martin joint venture, has had an effective monopoly on the U.S. government launch market since its creation in 2006, and critics say it’s no coincidence that launch prices for the Pentagon and NASA have risen dramatically since then. Indeed, according to the architect of the latest EELV strategy, Pentagon acquisition czar Frank Kendall, the program’s projected cost has more than doubled since 2004, to some $70 billion over 150 missions, a figure that averages out to more than $460 million per launch. NASA, meanwhile, has repeatedly complained that high launch costs have eroded its ability to fund new missions.

Certainly there are factors beyond ULA’s control that have contributed to the cost growth. These include a commercial launch market that never lived up to the expectations that drove the Air Force’s decision in the 1990s to support competing EELV rockets, and the retirement of NASA’s space shuttle, which had covered a large portion of the U.S. propulsion industry’s overhead.

But in a July report, Mr. Kendall cited other inflationary factors including a contracting arrangement that not only makes it difficult to identify potential costs savings, but worse, provides little incentive to do so.

That being said, some of the more vocal competition advocates, including key members of the U.S. Congress, have tended to overlook the fact that ULA is the only company with the demonstrated ability to launch all of the operational payloads on the U.S. national security manifest. ULA has done so reliably — its workhorse Atlas 5 and Delta 4 rockets have suffered no failures since being introduced in 2002, even if there has been an anomaly or two.

Space Exploration Technologies Corp. (SpaceX), the most credible of the new market entrants, has carried out four launches to date of its medium-lift Falcon 9 rocket, all to low Earth orbit. Launches to geostationary orbit — the company has several under contract, the first of which is slated for this year — are far more challenging, however, and these missions make up a substantial portion of the government manifest. Also on tap for this year is the first launch of SpaceX’s Falcon Heavy rocket, another challenging capability the company must have to handle the big national security satellites.

Some have argued for giving SpaceX responsibility for launching the Air Force’s GPS 3 navigation satellites, which are expected to be ready starting around 2014. But Mr. Kendall’s plan to set aside 14 launches for competition among new entrants makes more sense: The type and timing of the missions can be tailored to the demonstrated capabilities of companies like SpaceX.

The strategy also wisely provides a bit of insurance by reserving the Air Force’s right to award the 14 missions set aside for competition to ULA if prospective new entrants fail to demonstrate that they’re up to the task.

In the meantime, SpaceX has been given the opportunity to launch a pair of experimental satellites under a Pentagon contract. Assuming funding for those launches comes through — granted, this is no sure thing in the current budgetary environment — these missions will give SpaceX and the Air Force the chance to familiarize themselves with one another.

The National Defense Authorization Act for Fiscal Year 2013, signed into law Jan. 3 by U.S. President Barack Obama, fences off 10 percent of the EELV program’s budget — the Air Force requested $1.68 billion — pending submission of a detailed report on the acquisition strategy. The EELV program has been studied exhaustively, of course, and Mr. Kendall appears to have won over some of its biggest critics, including the Government Accountability Office, which has no financial stake in this game.

It’s good that lawmakers are still paying attention, but the Air Force appears headed down a path that will show whether or not it can get a better deal in satellite launching. Should SpaceX or some other company prove successful in winning and carrying out 14 EELV-class missions starting in 2017, the next batch of launches can be awarded on a truly competitive basis with price as a key selection factor.