DoD Small-Rocket Contract Produces Fierce Competition

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Four U.S. companies are vying so fiercely for a Pentagon small-rocket contract that one already has threatened to appeal an aspect of the competition to the U.S. Government Accountability Office (GAO), which oversees government-sponsored competitions.

The contractors are bidding to build and launch prototype versions of their rockets in 2007 under the Pentagon’s Small Launch Vehicle initiative.

Pentagon officials plan to use the new class of cheap rockets to launch small satellites and also test components of an unmanned hypersonic vehicle that would be capable of destroying targets halfway around the world.

The Pentagon in July plans to choose one or more of the rocket companies , based on available funding, according to Candrea Thomas, a spokeswoman for the U.S. Air Force Space and Missile Systems Center in El Segundo, Calif. The Air Force oversees the Small Launch Vehicle program together with the Defense Advanced Research Projects Agency in Arlington, Va.

The Small Launch Vehicle competitors are Space Exploration Technologies Corp. (SpaceX) of El Segundo, Microcosm Inc. of El Segundo, Lockheed Martin Space Systems of New Orleans and Airlaunch LLC of Reno, Nev.

SpaceX plans to debut its Falcon 1 entrant in late July or August for another Pentagon customer. The two-stage Falcon 1 will boost the Pentagon’s Tactical Microsatellite Experiment (TacSat-1) spacecraft from Vandenberg Air Force Base, Calif. U.S. Pacific Command will use TacSat-1 to test the ability of commanders to control imaging satellites from the battlefield.

SpaceX built Falcon 1 almost entirely with private funds. The launch will be the first for the company founded by Elon Musk, who co-founded the Internet company PayPal.

Falcon 1 had been scheduled to debut in January 2004, but SpaceX repeatedly delayed the launch due to technical issues uncovered during pre-launch tests.

The Pentagon has challenged the Small Launch Vehicle competitors to build a vehicle that can carry small satellites to orbit for no more than $5 million per launch based on a flight rate of 20 flights per year. SpaceX advertises Falcon 1 at $5.9 million per launch.

After launching TacSat 1, SpaceX expects to launch an experimental satellite called Falconsat 2 in August or September.

Musk said he believes the time SpaceX has spent developing Falcon 1 and preparing it for launch gives military officials something tangible to evaluate compared with competing products.

“Our rocket is sitting on the pad right now. Theirs is sitting on a Power Point presentation,” Musk said.

Musk said that if the Pentagon were to select both the Falcon 1 and one of the other entrants, he would expect the government to reimburse SpaceX for its development costs. Otherwise, the government would be unfairly underwriting development of the competitor’s vehicle, he said. Procurement rules do not allow the military to subsidize one company’s concept during a competition without doing the same for other entries, Musk said.

If the Pentagon decided not to reimburse SpaceX, the company likely would protest to the GAO, Musk said.

Two former U.S. military procurement chiefs disagreed with Musk’s interpretation of federal acquisition rules.

Jacques Gansler, a former undersecretary of defense for acquisition, technology and logistics, said that the Pentagon is not bound to reimburse a company for internal research and development spending when another company has not invested similar funds.

SpaceX could choose to recoup that investment by factoring it into its price bid for the Small Launch Vehicle work, said Gansler, now a professor at the University of Maryland in College Park .

Alternatively, the company could take advantage of the work it has done by submitting a lower bid to increase its chances of winning, he said.

Paul Kaminski, another former acquisition chief, agreed that the Pentagon is not likely obligated to cover SpaceX’s development costs if it chooses two companies to move forward under the Falcon Small Launch Vehicle effort. However, not covering Musk’s development cost could work to SpaceX’s advantage by enabling the company to retain greater ownership of the intellectual property of its rocket for commercial use, Kaminski said.

Even if SpaceX is able to fly its Falcon 1 rocket successfully this year, the Air Force believes that there could be value in having another company build and demonstrate a rocket, wrote Thomas, the Air Force spokeswoman, in response to questions. Keeping competition in this area could help lower costs and drive further innovation, she said.

However, the Air Force is not committed to fielding two rocket families through the Small Launch Vehicle work as was done with Lockheed Martin Corp. and Boeing Co. in the Evolved Expendable Launch Vehicle program, Thomas said. The Air Force is asking Congress for $340 million in 2006 targeted specifically to keeping Lockheed Martin and Boeing in the launch business in case one company’s rocket fleet is grounded.

Thomas said the Air Force already has a second option for launching critical small payloads in an emergency: the Minotaur rocket . Made by Orbital Sciences Corp. of Dulles, Va., the Minotaur is capable of launching small payloads on short notice, albeit at a higher price than the Pentagon’s $5 million goal for the Falcon Small Launch Vehicle.

Meanwhile, Microcosm has been refining its Scorpius rocket concept over the years with small amounts of funding added to the Air Force budget by members of Congress, including the late Rep. Joe Skeen (R-N.M.).

The company is proposing a variant of the Scorpius family called Eagle for the Falcon Small Launch Vehicle competition.

Microcosm flew suborbital variants of Scorpius in 1999 and 2001 at White Sands Missile Range, N.M., and plans to conduct several engine tests this year, said Microcosm President James Wertz.

Lockheed Martin Space Systems is hoping to add to the company’s launch work through a win in the Falcon Small Launch Vehicle competition. Bob Simms, Lockheed Martin’s program manager for the effort, said that the company began work on its small vehicle concept at the onset of the Small Launch Vehicle competition in 2003.

The Small Launch Vehicle work complements, rather than threatens, its Atlas 5 rocket, said Simms. Small satellites may add some new capability but will not replace the functions of standard-sized spacecraft, he said.

Lockheed Martin fired the second stage motors for its vehicle in January and plans to conduct further motor tests this summer, Simms said.

Airlaunch LLC brings the only air-launched rocket to the competition. David Gump, the company’s chief marketing officer, said that using a military aircraft to launch the rocket will make it easier to place payloads in a variety of desired orbits.

Airlaunch’s QuickReach concept involves dropping a rocket from an unmodified Air Force C-17 cargo aircraft. The company will conduct tests this summer to ensure that the rocket does not strike the aircraft as it is dropped, Gump said.