Affordable Launch at a Crossroad

by

News of the most recent cost growth and Nunn-McCurdy breach in the U.S. Air Force’s Evolved Expendable Launch Vehicle (EELV) program has once again put a spotlight on the troubled situation in the nation’s space launch business and unleashed new concerns in the space community, Congress and the public. While attention has centered on getting EELV costs under control, the impacts and proposed fixes have much broader implications for the U.S. space program as a whole. With unprecedented budgetary pressures looming ahead, this is a crucial point in time to get serious about more cost-effective and resilient alternatives for space launch.

Despite a national policy that calls for the development and use of commercial space launch capabilities, the government’s answer to skyrocketing EELV launch costs is a proposed “block buy” and continuing taxpayer funding of the United Launch Alliance (ULA) EELV-sustaining infrastructure of well over $1 billion per year. While some argue this will increase stability and economies in EELV production, this approach offers little business incentive to control EELV costs and every incentive to maximize the quantity and duration of the government commitment. It will only serve to perpetuate the status quo of higher launch costs and impose serious barriers for new lower-cost commercial launch providers. Even further, whatever ULA sells, including legacy Delta 2 launchers, enjoys the benefit of the EELV Launch Capability contract, an advantage that ULA’s commercial competitors do not have. This is particularly problematic in the small- and medium-class segment of the launch industry, a sector that has been responsible for some 60 percent of the U.S. domestic expendable launches in the past decade.

The Atlas 5 and Delta 4 EELV rockets, which launch the majority of national security and many civil payloads, cost hundreds of millions each on a fully allocated basis. This has led to a vicious cycle in which growing costs lead to the procurement of fewer satellites, or programs being stretched over longer periods of time, resulting in fewer satellites on orbit and, in some cases, gaps in important national security and science capabilities. This situation is both unsustainable and dangerous to our national security due to increased vulnerability to disruption, failure or attack of our space capabilities.

Government acquisition actions often carry long-term consequences. Historically, the nation has flown only 60 to 70 percent of its planned missions on or near their projected schedules. Delays of years are not uncommon. In fact, some EELV launches purchased in the original 1998 block buy are reportedly yet to be flown. Near-term decisions on how many EELVs to be procured in a block buy are a critical issue, and the government and industry are at an important crossroad. Will the government purchase a large block of EELVs, thereby locking itself into a growing inventory and higher-cost launch expenses well into the 2020s? Or will it act in concert with its stated policy to open the door to greater competition and lower launch costs at the earliest date?

For many years, U.S. space transportation policy has encouraged new launch providers to enter the marketplace. Today, new competitors and product offerings in the medium and intermediate launch markets are becoming available. To its credit, NASA’s Commercial Resupply Program for the international space station has been a bold initiative to foster public-private cooperation in developing new commercial launch and space capabilities. The fundamental business proposition is that new commercial launch providers must demonstrate their performance and reliability, but in return can expect to be able to compete for future business on a fair and level playing field.

We believe there are several near-term actions that should be taken to arrest the growth in launch costs and foster competition. First, the government should carefully limit the number of EELVs purchased to meet its requirements over the next several years, thereby enabling lower-cost new entrants to compete for mid- and longer-term opportunities once their launch systems have proved to be reliable. Next, steps should be taken to level the playing field between ULA and new commercial entrants. One possible solution might be to eliminate the taxpayer-funded ULA EELV Launch Capability sustainment support by moving to fully allocated pricing on all launch vehicles, something commercial providers must do today. Alternatively, the government could create more predictable demand and launch opportunities for new-entrant launchers, something it proposes to do with EELV.

Launch is the single most critical enabler and largest driver of America’s activities in space. The enormous growth in the cost of launch threatens our leadership in space at a time when we face new challenges and the most serious federal budget problems in memory. To break the vicious cycle in the space community, we must have more affordable launch alternatives to enable more affordable and resilient space architectures. Fortunately, new commercial launch providers are coming on line that can open the way to this future.

 

Michael Hamel is senior vice president for corporate strategy and relations at Orbital Sciences Corp.