Cost of Delta 4 Heavy launches is down but the real price is a secret

Under the LVPS contract, ULA in October 2018 was awarded three NRO missions

WASHINGTON — The Air Force Space and Missile Systems Center announced May 9 it awarded United Launch Alliance a $149 million contract modification for a Delta 4 Heavy launch of the National Reconnaissance Office mission NROL-68, the second of three missions awarded to ULA under the Launch Vehicle Production Services contract.

Under the LVPS contract, ULA in October 2018 was awarded three NRO missions — NROL-91, NROL-68, and NROL-70 — projected to launch in fiscal years 2022, 2023 and 2024 respectively.

The announcement drew some reaction on social media, mostly from space industry watchers who know that Delta 4 Heavy launches in recent years have commanded a price tag of about $350 million. To observers, the $149 million price for one mission or $467.5 million for three Delta 4 Heavy missions did not make any sense. For perspective, the Air Force in June awarded SpaceX a $130 million contract for a Falcon Heavy launch in 2020 of the Air Force Space Command-52 spacecraft (AFSPC-52).

The explanation is that there is more to the story. The Air Force’s $467.5 million contract for three Delta 4 Heavy launches is one portion of what the government would actually pay to launch the NRO missions — launches that are funded through multiple contracting vehicles. Although the Air Force says the cost of Delta 4 Heavy launches has come down, it certainly has not dropped by half.

Documents obtained by SpaceNews shed some light on this. For starters, the $467.5 million contract is just for the production of three launch vehicles. This covers hardware and labor costs that are paid in advance to ULA because these are complex missions for which it takes four years to prepare. The NROL-91 contract in 2018 is for a 2022 launch, the NROL-68 award that was announced May 9 is for a 2023 launch. According to the contract justification documents, ULA “requires immediate contractual commitment to begin the production process and procure the necessary subsystems to support the production through launch timeline.”

The LSVP agreement is one of two contracting vehicles the Air Force is using to pay for the Delta 4 launches. The other is a Launch Operations Support contract to provide mission assurance and integration activities for the three Delta 4 launches. This is in addition to funds that already had been committed to ULA under an Evolved Expendable Launch Vehicle Phase 1 block buy negotiated in 2013 for 36 cores. The NRO also provides additional funds to ULA for long lead hardware procurement under the “NRO Integration Contract for EELV” to ensure launch capability. According to the documents, the NRO has a “critical requirement to launch the most important assets the United States intelligence community leverages in direct support of the warfigher.” As a result, the NRO “must ensure on-time launches.”

Because these are NRO classified missions, the value of the anticipated contract for launch services and projected dates of awards were redacted from the justification documents. The full contract value for all three missions also was redacted.

The documents were submitted to justify the sole-source contract to ULA, as the Delta 4 Heavy launch vehicle is the only rocket that currently meets the mission requirements for NRO assets, including unique handling at the launch site and mission-specific hardware. A sole source request for proposal was issued to ULA in March 2017 for the three NRO missions.

Spokespersons for the Air Force Space and Missile Systems Center and the NRO did not respond to questions from SpaceNews about this contract.

According to an Air Force memo, the Air Force Space and Missile Systems Center negotiated with ULA a savings of approximately $27.5 million per launch for the three Delta 4 Heavy missions. These are expected to be the final three Delta 4 Heavy launch vehicles that ULA produces.  The prices for these three missions are approximately $27.5 million less per unit when compared to the cost per unit for Delta 4 Heavy launch vehicles under the EELV Phase 1 block buy.

An industry source told SpaceNews that ULA has brought down the price of Delta 4 Heavy launches below $300 million, but could not provide a specific number. Because the NRO made a bulk purchase of three launches, the company reduced cost by negotiating better rates with suppliers, the source said, including the lowest price it’s ever gotten for Aerojet Rocketdyne’s  RL-10 upper stage engines.