WASHINGTON — Leaders of the House Armed Services Committee are raising concerns about the Defense Department’s plan to procure space launch services beginning in 2025. They are questioning whether the proposed strategy, known as National Security Space Launch Phase 3, gives new entrants a fair opportunity to compete for contracts.
The Space Force in February released a draft solicitation for NSSL Phase 3 launch contracts to be awarded in 2025. The procurement was divided into two tracks: Lane 1 is a multi-vendor competition aimed at medium-size rockets that would fly less-demanding missions. Lane 2 would select two launch providers that fly medium and heavy rockets to any of the orbits where the military and intelligence agencies deploy satellites.
During a House Armed Services Committee hearing April 27, ranking member Rep. Adam Smith (D-Wash.) noted that the Space Force plans to select two providers to fly as many as 40 missions projected for Lane 2 and that those two companies will get extra government funding not available to Lane 1 competitors.
“As we talked about yesterday when we met … if you get into one of those contracts for those first 39 launches, you get support money to make sure you’re meeting those more difficult national security missions,” Smith told the chief of space operations of the U.S. Space Force Gen. B. Chance Saltzman.
Lane 2 companies are eligible for “launch service support” funding, a subsidy to cover rocket development or infrastructure expenses unique to NSSL. Additionally, Lane 2 winners qualify for annual incentive fees of up to $20 million and also would be allowed to compete for Lane 1 missions.
Smith suggested that this approach would favor established NSSL Phase 2 providers United Launch Alliance and SpaceX, and could discourage emerging commercial startups from investing in new rockets that could challenge incumbents.
“We would like to have as many providers capable of doing that as possible,” said Smith. “So I hope you’ll consider that as you’re finalizing the plan to make sure we maximize the competition in that way.”
Similar debate in NSSL Phase 2
Smith’s comments recall the debate that preceded the NSSL Phase 2 procurement in 2019 when Jeff Bezos’ space company Blue Origin — headquartered in Smith’s home state — was pushing the Air Force to allow a third launch provider. Blue Origin is developing a heavy rocket called New Glenn that did not make the cut in Phase 2 and is expected to compete again in Phase 3.
“Competition is really important,” Smith told Saltzman at last week’s hearing. “Just 15 years ago we had just one launch provider. Now there are multiple that are trying to get in. I just want to really emphasize the importance of trying to make sure that there is as much competition as possible.”
Saltzman defended the Phase 3 strategy. “I think the idea of two lanes for space launch providers is a solid way of both protecting the access to space for our most heavily mission assured missions, our lowest risk tolerant missions, while opening up an avenue for highly competitive emerging providers.”
“We have to thread the needle a little bit,” said Saltzman, “because we have to have assured access for national security launches, but we want to maximize competition for those emerging providers. I think a two-lane approach is a nice balance of those competing requirements.”
Rep. Doug Lamborn (R-Colo.), who chairs the HASC strategic forces subcommittee, asked Air Force Secretary Frank Kendall to discuss the merits of a two-lane procurement.
Kendall said he supports the two-lane approach and revealed that the strategy was conceived by Frank Calvelli, assistant secretary of the Air Force for space acquisition and integration.
“I approved the acquisition strategy that Frank Calvelli came up with,” Kendall told Lamborn. “I thought it was really balanced. It allows us to bring new entrants in early, fluidly, but it also gives us assured access for the higher risk missions.”
Following the release of the draft solicitation seeking feedback from the industry, Kendall said about 2,000 comments have been received. Calvelli is reviewing those comments “and he’s open to other ideas on the draft,” he added.
Kendall cautioned that allowing more than two providers in Lane 2 would drive up costs. “There are some costs associated with having an additional competitor there. And you lose some of the economies of scale if you do that, but he [Calvelli] will take a look at that and see if it makes sense.”
‘Open dialogue with industry’
Maj. Gen. Stephen Purdy, program executive officer for assured access to space at the Space Systems Command, told reporters April 18 that a revised Phase 3 draft request for proposals will be issued this summer. More comments will be solicited before the final RFP is released later this year, Purdy said at the Space Symposium in Colorado Springs.
“We maintain a really good open dialogue with industry,” he said. “There will be some minor changes. But we think structurally the two-lane approach is sound. Most people seem to favor that.”
Based on discussions with launch providers, Purdy said, “there will be some minor wording changes to help make things flow better. Currently, though, the plan is not to modify the major structural components.”
He said Lane 1 is “really designed to get after the new market and new technology and capabilities out there … Lane 2 is about putting our flag out to make sure that we have critical launch capability.”
Purdy explained that a priority in Lane 2 contracts is to “block buy” heavy launchers that are projected to be in high demand and tight supply in the coming years.
Amazon’s procurement of heavy launch services for its Project Kuiper internet constellation “revealed that we’re kind of running out of launch,” said Purdy. “So Lane 2 is designed to block buy, or block that piece out to make sure that we’ve got it.”
In Lane 1, Purdy said, “we want the commercial pricing.” With regard to concerns that Lane 2 providers would be able to compete in Lane 1 and “clean up by under bidding,” he said there are provisions to address that.
There would be rules, for example, to prevent one single company from winning multiple consecutive awards, he said, “to make sure that we have some diversity in the marketplace, we want to make sure that we’ve got multiple providers.”