Lawmakers: Air Force launch procurement strategy undermines SpaceX

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In a Feb. 4 letter addressed to Air Force Secretary Heather Wilson, Sen. Dianne Feinstein and Rep. Ken Calvert argue that the Air Force launch procurement plan creates an unfair playing field.

WASHINGTON — Sen. Dianne Feinstein (D-Calif.) and Rep. Ken Calvert (R-Calif.) are calling for an independent review of the Air Force’s space launch procurement strategy. They contend that the Air Force, in an effort to broaden the launch playing field, is putting SpaceX at a competitive disadvantage.

In a Feb. 4 letter addressed to Air Force Secretary Heather Wilson, Feinstein and Calvert — both with strong ties to the space industry — argue that the path the Air Force has chosen to select future launch providers creates an unfair playing field. Although SpaceX is not mentioned in the letter by name, it is clear from the lawmakers’ language that they believe the company is getting a raw deal because, unlike its major competitors, it did not receive Air Force funding to modify its commercial rockets so they meet national security mission requirements.

Feinstein and Calvert in the letter ask Wilson to “review how the Air Force intends to maintain assured access to space while preserving maximum competitive opportunities for all certified launch providers.” A copy of the letter was obtained by SpaceNews.

At issue are Launch Service Agreement contracts the Air Force awarded in October to Blue Origin, Northrop Grumman Innovation Systems and United Launch Alliance. The three companies collectively received $2.3 billion to support the development of space launch vehicles that meet national security requirements. The Air Force started the LSA program in 2016 to ensure future access to space and to end its reliance on ULA’s Atlas 5 and its Russian main engine.

SpaceX was widely considered a front-runner for an award but came away empty-handed. The Air Force did not disclose why SpaceX did not receive LSA funds.

The LSA awards are not traditional contracts but cost-sharing agreements known as Other Transaction Authority. OTA awards cannot be protested through the appeals channels that exist for traditional contracts. According to multiple sources, SpaceX launched a lobbying effort shortly after the LSA winners were announced to make the case to lawmakers that the decision unfairly tilted the playing field.

SpaceX did not respond to a request for comment about the letter or the company’s efforts to challenge the LSA decision.

In the letter, Feinstein and Calvert also object to the planned next phase of LSA, known as Evolved Expendable Launch Vehicle Phase 2 Launch Service Procurement. In this phase, the Air Force said it will select only two companies to compete head to head for launch services contracts over eight years. SpaceX, despite not winning an LSA award, is a certified EELV launch provider and would be able to compete in Phase 2. But the lawmakers in the letter assert that the EELV Phase 2 approach “unfairly disadvantages” current certified launch providers. SpaceX, in this case, would have to meet all national security requirements to be selected in Phase 2 even though it did not get the benefit of government funds as its competitors did to develop their rockets.

The letter points out that all three vehicles selected under LSA are in early development and are “unlikely to be ready to launch high-value national security satellites by 2021.”

With LSA funds, the three winners can defray the costs of meeting the government’s unique launch requirements. Meanwhile, “non-LSA awardees will be either required to bear the brunt of those costs on their own or find themselves unable to compete for future launches as a result of the unreasonable unrecoverable costs required to compete,” says the letter.

The Air Force is right to invest in new suppliers to make the industry more competitive, the lawmakers write, “but we are concerned that the LSA decisions and Phase 2 proposal will create competitive unfairness by placing undue financial burdens on companies that were not selected by LSA and will eliminate continuous competition through the long-term allocation of missions.”

If SpaceX decided to not compete in EELV Phase 2 because of the significant expense, the result would be a “gap in access to space in the near term or a continued reliance on Russian rocket engines,” the letter adds. “Neither outcome is consistent with the LSA original goals or with national security.”

Feinstein and Calvert requested that Wilson and the commander of Air Force Space Command conduct an independent review of the LSA decision. They also want the Air Force to clarify how it plans to maintain assured access to space in the event that LSA awardees are not able to meet requirements in time for Phase 2 and the current certified provider (SpaceX) opts to not compete for national security launches.

In a statement to SpaceNews, Calvert said:

“I wholeheartedly support the Air Force’s plan to preserve assured access to space. However I do have some reservations about their plan to achieve that goal. My letter with Senator Feinstein supports competition of multiple providers but specifically requests clarification on why the only current, certified launch provider was left out of the LSA award and what their plan is should the three awardees not be able to meet requirements in the coming years.  We have seen the script of overly optimistic assumptions on cost and delivery before. It is our duty to the taxpayer and to the warfighter to understand the reasoning and, most importantly, the risk of falling short.”