When sworn enemies sign a treaty to stop the bloodshed, it’s usually a good thing. Similarly, the agreement between Boeing and Lockheed Martin to merge their respective Evolved Expendable Launch Vehicle (EELV) programs is a positive development because it promises to end what had degenerated into a bitter and destructive feud in recent years, marked by charges of industrial espionage, recriminations and litigation.
It also is the inevitable outcome for an EELV program facing a likely decline in defense spending and a still-weak commercial launch market.
The deal could be seen as signifying the end of competition in yet another important area of production and services for the U.S. government. But the sad truth is, the EELV program ceased being competitive well before Boeing and Lockheed Martin trotted out the United Launch Alliance joint venture May 2.
Precisely when competition died is a matter of opinion, but it was certainly confirmed in early March, when the U.S. Air Force announced that it would divvy up the third round of EELV launches evenly between the companies.
One also can point to 2002, when then-Air Force Undersecretary Peter B. Teets began pushing a program that came to be known as assured access, which entails giving both Boeing and Lockheed Martin money to keep their respective Delta 4 and Atlas 5 rocket production lines healthy.
And let’s not forget 2000, when the Air Force let Lockheed Martin off the hook for building a West Coast launch pad for the Atlas 5 because the company — having gotten its clock cleaned in the competition for the first round of EELV launches — simply could not afford to do so. Whether or not Lockheed Martin wound up in that position because of Boeing’s improper actions in that competition is beside the point. What is significant is that the Air Force accepted a Boeing monopoly on West Coast EELV missions, a situation that changed only when the service was forced to penalize Boeing for its misdeeds.
All of these developments share one thing in common: each was symptomatic of the fact that the U.S. government, in anticipation of a commercial launch market that failed to materialize, invested in far more EELV launch capacity than anyone could possibly use.
Prior to the EELV program, the U.S. government had three main expendable rockets in its stable, each with a monopoly in its size class. The EELV program was conceived not to end that monopoly situation, but to make it more efficient. The idea was to have a single family of rockets based on common hardware to launch all three classes of payloads.
The government decided to support two EELV families only when it became convinced that a strong commercial launch market would give it the best of both worlds — competition and high production rates, both of which would keep costs down. Meanwhile, the government would have assured access to space in the form of a readily available back-up launch capability should one of the EELV families be grounded for any reason.
Now, some five years after the foundation beneath the two-rocket strategy began to crumble, the EELV program has come nearly full circle with the proposed creation of United Launch Alliance.
It seems highly unlikely that the government will derail the merger on antitrust or national security grounds.
United Launch Alliance would indeed have a monopoly in the U.S. government market, but paying to maintain artificial competition is a self-defeating exercise. The deal also appears to fulfill the Air Force’s desire for two sources of space access, at least in the near term.
But the joint venture announcement has left some important questions unanswered.
While United Launch Alliance would continue producing the Atlas 5 and Delta 4 in the near term, for example, the long-term future is far less certain. The merger may well be a first step toward retiring one of those vehicles as the venture comes under government pressure to bring down costs.
It also is difficult to see how much money the merger will save taxpayers or if it will save anything at all. Boeing and Lockheed Martin are touting cost savings of $100 million to $150 million per year, but Congress should judge that claim by holding it up to the light of recent experience that has seen the price of military hardware continue to rise despite the wave of corporate mergers that were supposed to make the aerospace industry more efficient. Further, it is far from clear how the costs associated with the EELV consolidation will be paid, and by whom. Those costs are not insignificant, given the number of employees who will be moved from California to Colorado and from Colorado to Alabama.
Then there is the question of innovation, and how that will be affected by the end of hostilities in the U.S. rocket industry. Without credible competition, United Launch Alliance will be disinclined to invest in the research and development necessary to enhance the performance and efficiency of its stable of vehicles. That means the government will end up with de facto responsibility for rocket and propulsion research and development (R&D). Let’s hope they do a better job than they have supporting aeronautics R&D.
In the final analysis, however, even if United Launch Alliance is not the greatest development that one might have envisioned for the EELV program, it is one whose time has come.