U.S. Air Force Halves Size of Competitive EELV Procurement

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WASHINGTON — The U.S. Air Force is halving the number of space launches to be competitively awarded from 2015 to 2017 due in part to anticipated production slowdowns in satellite programs, primarily the GPS 3 navigation system.

The reduction, to seven missions, comes amid new doubts about the Air Force’s ability to run a fair competition for the launches. According to a new report by the U.S. Government Accountability Office, the Air Force’s contracting arrangements with its current monopoly launch services provider, United Launch Alliance (ULA), make it all but impossible to compare prices on a per-mission basis.

Hawthorne, Calif.-based Space Exploration Technologies Corp. is the front-runner to become the first new competitive entrant in the Air Force’s Evolved Expendable Launch Vehicle (EELV) program, which is used to launch virtually all operational U.S. national security satellites. Nearly all of those missions are currently launched aboard ULA’s Atlas 5 and Delta 4 rockets. 

In 2012, the Air Force announced it would purchase, on a sole-source basis, up to 36 Atlas and Delta rocket cores over five years from ULA, an activity known as the block buy. At the same time, the service said it planned to competitively award an additional 14 missions to give companies like SpaceX a chance to win Pentagon business.

Many of the launches targeted for competition are of the next-generation GPS 3 satellites, which operate in a medium Earth orbit of roughly 20,000 kilometers in altitude.

But the planned slowdown in procurement of GPS 3 satellites, first disclosed March 4 as part of U.S. President Barack Obama’s 2015 budget request to Congress, would push the award of five of the associated launch contracts beyond 2017, said Maj. Gen. Robert McMurry, director of space programs in the Office of the Assistant Secretary of the Air Force for Acquisition. During a March 4 budget briefing with reporters, McMurry said earlier-generation GPS satellites are lasting longer on orbit than expected, and that the launch of the first GPS 3 craft has slipped to 2016.

Meanwhile, two other satellites that previously were slated to fly on competitively selected rockets will now be launched by ULA, McMurry said. One of those satellites was identified only as an Air Force Space Command mission that now weighed too much for SpaceX to launch; the other is a missile warning satellite. 

SpaceX founder and Chief Executive Elon Musk, in a March 5 interview with SpaceNews, expressed concern about the launch procurement delays, and said the pain from tightening defense budgets “should be proportionally divided” between Denver-based ULA, a Boeing-Lockheed joint venture, and the new entrants. 

Earlier that day, Musk faced off against ULA Chief Executive Michael Gass in a contentious hearing before the Senate Appropriations defense subcommittee.

While insisting during the hearing that ULA welcomes competition, Gass said, “There are substantive questions about how EELV competitions will be structured to ensure the competition is fair and open and whether it will actually deliver savings to our nation.” He also said “SpaceX doesn’t have all the capabilities and requirements” to handle some national security missions.

Musk, in the interview, said the Defense Department should re-evaluate the block buy with ULA — he characterized it as an informal agreement — on account of the company’s reliance on the Russian-built RD-180 engine to power the main stage of its Atlas 5 rocket.  “You have to re-evaluate the strategic situation,” Musk said in reference to Russia’s occupation of Crimea, which has dramatically raised tensions with the United States and led Washington to impose limited sanctions on Moscow.

Meanwhile, a new report by the GAO said the Defense Department may not be able to take full advantage of the new EELV competition because it cannot determine an accurate price for individual launches by ULA. The March 4 report, “The Air Force’s Evolved Expendable Launch Vehicle (EELV) Competitive Procurement,” examined the EELV contract structure and forthcoming competition.

“Minimal insight into contractor cost or pricing data meant [the Department of Defense] may have lacked sufficient knowledge to negotiate fair and reasonable launch prices,” the report said. 

Currently, ULA receives separate lines of Air Force EELV funding under two contracts: one for actual launches and one called EELV Launch Capability that covers overhead and various other activities. The report said the EELV Launch Capability contract spares the company from having to break out costs associated with each launch. Specifically, items such as propellants, the transportation of the completed launch vehicle and mission integration should be tied to specific launches, the report said.

In addition, Defense Department officials have “limited insight into contractor costs,” the congressional watchdog agency said.

ULA spokeswoman Jessica Rye said in a March 5 statement that the U.S. government “has the data to develop an average cost of launch, but as [the] report stated the acquisition approach does not enable specific mission costing.”

Rye said ULA’s business practices, cost structures and engineering data are “the most scrutinized and transparent in the launch industry.” 

A contract for the first batch of rockets in a long-awaited bulk purchase includes increased levels of transparency, the report said, but the Defense Department “may have difficulty identifying the total cost of an individual launch.” 

 

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