Report Cites Concerns with U.S. Air Force Launch Competition
WASHINGTON — Companies vying to build up to 14 launchers that the U.S. Air Force plans to buy competitively starting in 2015 are worried that the scales will be tipped in favor of the incumbent,( ), by virtue of its current contracting arrangements with the service, according to a report by the investigative arm of the U.S. Congress.
The Air Force confirmed Feb. 13 that ULA, prime contractor on the Evolved Expendable Launch Vehicle (EELV) program, will be allowed to bid for the missions, which have been set aside for competition involving so-called new entrants into the U.S. national security launch market. The rockets are a subset of up to 50 launch vehicle cores the service plans to procure over the next several years; ULA will supply up to 36 of those on a sole-source basis.
In a Feb. 7 report, the U.S. Government Accountability Office said potential bidders for the competitively awarded launches have concerns about “perceived advantages” to Denver-based ULA, which today launches virtually all operational U.S. military satellites. The report cited two main issues: the $1 billion in annual Air Force payments to ULA to cover infrastructure and other costs, such as engine and technology development, that are not tied to specific missions; and rocket design specifications that could mirror ULA’s existing fleet of Atlas 5 and4 rockets.
The report, “Launch Services New Entrant Certification Guide,” focuses on rules drafted by the Air Force for qualifying new-entrant launchers to carry national security payloads. “While potential new entrants stated that they are generally satisfied with the Air Force’s efforts to implement the Guide, they identified several challenges to certification, as well as perceived advantages afforded to the incumbent launch provider,” the report said.
ULA, a Boeing-Lockheed Martin joint venture, currently is paid via two contracting vehicles: EELV Launch Services, which covers the hardware and services associated with individual launches; and EELV Launch Capability, which covers infrastructure and various other activities. Critics have charged that the EELV Launch Capability payments, totaling about $1 billion annually, amount to a subsidy for ULA. In theory, funding could enable ULA to offer prices for the competitively procured launchers that do not reflect, on a pro rata basis, its operating costs.
Air Force spokesman Maj. Eric Badger said the service intends to procure eight EELV rocket cores on a sole-source basis from ULA this year under a single contract that incorporates both EELV Launch Capability and EELV Launch Services work.
In an emailed response to questions, Badger said Air Force investments have not tilted the playing field in ULA’s favor. “The initial investments made by the Air Force have realized cost savings over heritage launch systems and the Department does not perceive these as an advantage, nor an impediment, to competition in the National Security launch market,” he said.
Similarly, Air Force spokeswoman Alicia Garges said, “We are committed to providing a level playing field to all competitors who demonstrate the ability to reliably launch EELV-class payloads.”
Jessica Rye, a spokeswoman for ULA, attributed any “perceived” advantage to the company’s track record with the Air Force.
“The U.S. Government has presented a very balanced approach with a clear path for new entrants to become certified, while ensuring the focus remains on delivering to orbit our nation’s one-of-a-kind payloads with the highest level of mission success,” Rye said in an email. “ULA is uniquely positioned to continue to provide the best value for the government with lowest launch risk for critical, multi-billion dollar space investments and is honored to be the trusted launch provider for past, current and future missions in the most efficient and cost effective acquisition manner.”
Rye said the EELV contracting structure was designed by the Air Force to provide “maximum flexibility and responsiveness” in its satellite launching program. “This contracting approach was started when there were two competing companies,” Rye said. “ULA has been able to provide the increased capability at less cost than two independent competing companies. If and when the U.S. Government customer wants full and open competition, this contracting approach, along with numerous other current contract requirements levied to ULA, will have to be assessed for inclusion and consistency with the new entrants.”
The report identified four prospective bidders besides ULA for the 14 rocket cores: Space Exploration Technologies Corp. () of Hawthorne, Calif., with its Falcon 9 and Falcon Heavy rockets; Launch Systems of Magna, Utah, with a proposed vehicle dubbed Liberty 2; of Denver, with the Athena 3 rocket; and Orbital Sciences Corp. of Dulles, Va., with a vehicle dubbed Antares.
Gwynne Shotwell, president of SpaceX, said in a statement that the Air Force has taken important steps to expanding competition.
But, she said, “there are additional steps that must be considered to ensure a fair and level playing field — including phasing out the ULA subsidy and ensuring that ULA fully account for Launch Capability payments in any competition, whether for commercial or government business.”
The report also said the new-entrant certification process has been complicated by Air Force changes to the technical requirements for integrating satellites with their launch vehicles. Air Force officials acknowledged making the changes in concert with ULA but without consulting the new entrants, the report said. Air Force officials have said they did not expect a significant impact, the report said.