Editorial: A Missed Opportunity To Trim Launch Costs

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One of NASA’s biggest concerns these days is the rapidly rising cost of launching scientific missions such as planetary probes. Agency officials have complained loudly in recent months that Atlas 5 rocket prices quoted in the new NASA Launch Services (NLS) 2 contract are so high that they leave little money left over for the missions themselves. It was a bit surprising, then, that NASA did not do the one thing it can do right now to rein in its Atlas 5 costs: commit to using two of the vehicles per year, which is its annual average.

There are myriad reasons for the cost growth on Atlas 5, one of two comparable vehicles built and operated by United Launch Alliance (ULA), the Boeing-Lockheed Martin joint venture that caters primarily to the U.S. Department of Defense. With the impending retirement of the space shuttle, for example, the cost of propulsion has gone up because the providers now have far less business over which to spread their fixed overhead costs. Short of a major new propulsion development and production program — a separate but related issue that is still in play as NASA defines its approach to a heavy-lift rocket mandated by Congress — NASA cannot do much to stem the rising cost of rocket engines.

The agency can, however, add a degree of demand predictability that would allow ULA to tailor its rocket component-ordering and production processes in the most efficient way possible. This would either bring down Atlas 5 costs for NASA and other U.S. government customers; or deprive ULA, which for all intents and purposes has a monopoly in its primary market, of one argument for keeping it that way. With upstart Space Exploration Technologies Corp. (SpaceX) knocking at the Pentagon’s door with rocket offerings including the medium-lift Falcon 9 and a planned heavy lifter, ULA argues that the best way to keep its production lines healthy, vehicle reliability high and unit costs down is a steady stream of guaranteed demand.

ULA has said the upper end of the price ranges quoted for the various Atlas 5 configurations in the NLS 2 contract represent a highly unlikely, worst-case scenario where there is no such guaranteed demand. The NLS 2 contract was negotiated before the U.S. Air Force and National Reconnaissance Office committed in March to buy a combined eight rockets per year from ULA during the next five years. This deal, sealed in a memo signed in March and made public in May, is expected to stabilize ULA’s rocket production line and enable the company to realize volume discounts on component orders for savings that presumably will be passed on to its customers.

Now that ULA has this commitment, which involves both the Atlas 5 and Delta 4 — NASA does not use the latter vehicle — the space agency should see some immediate relief on NLS 2 price quotes. But NASA, the third signatory to the memo, could have helped itself more by committing to buy at least two Atlas 5 rockets per year, enabling ULA to further boost its production efficiency based on the higher volume of known demand.

NASA chalked up its decision not to commit to the fact that, unlike the Air Force, the civil space agency does not have a separate budget account for expendable rockets. At NASA, launch costs are included in the budget for individual missions, which is part of the reason space scientists are the ones expressing heartburn over Atlas 5 prices.

NASA’s argument — summed up by one agency official as, “We don’t budget the way you budget” — is not terribly compelling at a time when each dollar at the agency’s disposal is more precious than ever. True, there is some risk that the agency won’t be able to use two Atlas 5 rockets in a given year, but that will even out over time. If a senior executive decree or change in budgeting practices is required, that should be doable in relatively short order.

It is only natural the agency wants to keep its options open for as long as possible, especially with the Falcon 9 rocket, which has two successful demonstration flights under its belt, emerging as a potential alternative. But the Falcon 9 has a ways to go before it can be entrusted with one-of-a-kind science missions that take years to develop and can carry price tags topping $1 billion. After all, NASA does not use the Delta 4 even though that vehicle has flown 16 missions to date without a failure.

A five-year commitment to two vehicles per year should help depress the upper end of the Atlas 5’s price range — thereby giving science mission managers more budgetary flexibility — while giving SpaceX the chance to demonstrate the Falcon 9’s reliability via both its international space station cargo delivery contract and launches of commercial telecommunications satellites. If at the end of five years NASA sees no pricing relief, or Falcon 9 has established itself as a proven, lower-cost alternative — SpaceX has ambitions to one day launch astronauts using that rocket — then NASA can simply decline to renew its commitment. Giving up some near-term flexibility in terms of launch vehicle selection is a small price to pay for greater flexibility in science mission design and development.