House passes NDAA, keeps HASC chairman Smith’s space launch reforms alive
WASHINGTON — The House on Friday approved the National Defense Authorization Act in a party-line vote of 220-197 following three days of debate and uncertainty on whether Democratic leaders would get enough votes to pass it without any Republican support. Eight Democrats and all Republicans voted against the bill.
H.R. 2500, the House version of the National Defense Authorization Act for Fiscal Year 2020, approved $733 billion for national defense spending, $17 billion less than what the White House and the GOP wanted.
House Armed Services Committee Chairman Adam Smith (D-Wash.) hailed the passage of the NDAA for the 59th straight year but expressed disappointment that “following months of bipartisan collaboration … our Republican colleagues chose to abandon one of the last true bastions of bipartisanship.”
Smith did score a victory on an issue of great interest to him: Opening up the national security space launch market to commercial competitors. Proposed changes to the National Security Space Launch program that Smith introduced in the HASC version of the NDAA made it into H.R. 2500 untouched.
The space launch provisions included in Section 1601 of the House bill are opposed by the Senate, the Trump administration and the Air Force, but getting them past the full House gives Smith a strong hand in future negotiations.
Section 1601 deals with the National Security Space Launch Phase 2 Launch Service Procurement, a high stakes competition where four companies — United Launch Alliance, SpaceX, Blue Origin and Northrop Grumman — are vying for two slots. The Air Force in 2020 plans to select two providers to perform anywhere from 25 to perhaps 34 national security space launches from 2022 to 2026.
Smith disagrees with the decision to narrow the field to two companies. He believes the Air Force is prematurely shutting industry players out of the NSSL program and is setting conditions for the two winners to become a permanent duopoly.
National security space launch
The bill the House passed July 12 includes the entire Section 1601 that Smith proposed in his chairman mark of the House Armed Services Committee’s version of the NDAA.
One of the provisions limits the Phase 2 contracts to 29 missions, allowing the losers of Phase 2 to get another chance at competing for launches after the 29th mission. The Air Force in the request for proposals projected about 34 launches for the five-year contract period so Smith’s bill would open up the competition at the tail end of Phase 2.
According to the House bill, the Air Force “shall ensure that each such contract for any launch after the 29th launch is awarded using competitive procedures among all National Security Space Launch providers.”
Section 1601 also creates a $500 million“certification and infrastructure” fund that would be available to companies that win a Phase 2 contract but were not awarded funds by the Air Force under the Launch Service Agreement program, and also to companies that do not win Phase 2 contract but win a competitive launch after the first 29. This provision was nicknamed by industry insiders the “SpaceX earmark” because the company did not win a Launch Service Agreement contract and is favored to win a Phase 2 contract, which would give it immediate access to the $500 million fund.
The bill says the funding would help launch providers “meet the certification and infrastructure requirements that are unique to national security space missions” and necessary for a Phase 2 contract.
Another item in the bill requires the Air Force to give Congress a detailed accounting of how much money each Phase 2 winner received in government subsidies. This report would be due no later than 45 days after the Air Force select its two launch providers. Depending on who wins Phase 2, this provision would help Smith back up his claim that the Air Force has tilted the playing field by giving some companies more money than others under the Launch Service Agreement and Rocket Propulsion System programs over the past four years.
Smith also directs DoD and the Air Force to provide written notification of which companies won Phase 2 contracts at least 10 days before the selection is made public. “The notification shall include, at a minimum an identification of the selected providers; the evaluation criteria used in the selection; the total costs to the Air Force, how such investments in launch service providers were accounted for in the evaluation of the offers.”
What happens next
By all accounts, Section 1601 faces an uphill battle. The Senate has none of that language in its version of the NDAA. The Trump administration expressed strong objections in a July 9 “Statement of Administration Policy.” And the Air Force has been pushing back on every single provision.
Col. Robert Bongiovi, director of the Launch Systems Enterprise Directorate at the Air Force Space and Missile Systems Center, told SpaceNews in a June 27 interview that having more than two launch contractors in Phase 2 puts missions at risk because of the time and cost of integrating new providers. He said adding more competitors late in Phase 2 is problematic because the Air Force could not predict when the first 29 launches would be completed and the manifest changes from year to year.
Bongiovi was insistent that the Air Force only wants to work with two launch providers over the five-year period of Phase 2, and will reintroduce competition in Phase 3, starting in 2025,
The Air Force also objects to the $500 million fund for certification and infrastructure. Depending on the Phase 2 scenarios, Bongiovi said, it could expose the service to having to make up to $1.5 billion available to either SpaceX or any of the other three companies that received Launch Service Agreement funding if they don’t win Phase 2 contracts.
According to government and industry sources, the Air Force is working with the administration to fight off Smith’s provisions. The thinking is that the $500 million certification and infrastructure fund will be easier to defeat because appropriators will challenge it as well. The Air Force is said to be most worried about the requirement to reopen the competition for launches in Phase 2 after 29 missions. “That is one the Air Force feels very strongly about,” one source said.
Air Force leaders have been in talks with HASC staff for months, and although Smith compromised on a couple of launch provisions during the HASC markup, his broader goal to increase competitive opportunities in Phase 2 has not changed. “He has been thinking about this for quite a while,” another source said. “He’s going to go forward with it.”
All four companies in the NSSL program also are engaged in heavy lobbying. ULA and Northrop Grumman have aligned themselves with the Air Force’s position. SpaceX wants to ensure the $500 million fund stays in the NDAA. And Blue Origin is pushing for the provision that would allow more competitors in Phase 2 after 29 launches.
The fight is headed to the House-Senate NDAA conference. “Short of nationalizing the rocket industry I think you’re going to have this fight no matter what because there’s billions of dollars at stake,” another source said. “And when you have so few competitors going after that much money, it’s going to be a knife fight. You’ll see that play out in the next couple of years.”
Other NDAA space policy actions:
Space Corps — The House approved the HASC bill that establishes a U.S. Space Corps within the Department of the Air Force.
Allied launch vehicles — The bill requires DoD and the Air Force to implement a plan laid out in the 2017 NDAA regarding U.S use of allied launch vehicles. DoD must identify satellites that would be appropriate to be launched on an allied launch vehicle, determine policy and certification requirements, and the estimated cost and schedule to certify allied launch vehicles.
Navigation satellites — The House approved a HASC provision directing DoD and the Space Development Agency to design prototypes of secure GPS receivers that could receive position, navigation and timing signals from allied PNT systems like Europe’s Galileo, Japan’s QZSS and India’s NAVIC.
Commercial space situational awareness — The House approved a HASC provision directing DoD and the Space Development Agency to recommend options to procure commercial services “to fill the space situational awareness requirements that were not filled in the Joint Space Operations Center Mission Center.”
Independent study on space deterrence — The House bill says the U.S. must invest in capabilities to defend space systems from aggression but “must also identify and implement policies that will reduce the likelihood of such an attack.” The NDAA directs DoD to contract with a federally funded research and development center or another independent entity to conduct a study on deterrence in space.
Space debris — An amendment from Rep. Sheila Jackson Lee (D-Texas) was adopted by the House require a report on the risks posed by debris in low Earth orbit and to make recommendations on risk remediation and on how to reduce incidents of space debris.
Satellite imagery — An amendment from Rep. Derek Kilmer (D-Wash.) directs DoD to report back on the status of the transition from the National Geospatial-Intelligence Agency to the National Reconnaissance Office of the responsibility for acquiring commercial satellite remote sensing data.