McCain Cites Conflict in EELV Block Buy Plan

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WASHINGTON — A senior U.S. lawmaker and leading critic of the U.S. Air Force’s primary satellite launching program questioned the service’s plan to rely on the prime contractor’s cost estimates to determine how many rockets to buy over what time period, saying the data are unreliable and represent a conflict of interest for the company.

Sen. John McCain (R-Ariz.), the ranking member of the Senate Armed Services Committee, wrote Air Force Secretary Michael Donley Jan. 27 to reiterate his concerns with the service’s Evolved Expendable Launch Vehicle (EELV) block buy strategy. In response to a Government Accountability Office report last year criticizing its plans to buy eight booster cores per year over five years, the Air Force said it would choose from a matrix of priced options ranging from six to 10 booster cores annually over a period of three to five years.

Because EELV prime contractor United Launch Alliance (ULA) stands to benefit from large orders, relying on the company for data that could affect the size and timeframe of the block buy “gives rise to a conflict of interest,” McCain said in his letter. “In my view, the government should develop price estimates based on certified data provided by ULA and its subcontractors and conduct its own analysis to find the ‘sweet spot’ that most furthers the taxpayers’ interests.”

The Government Accountability Office report, released in October, urged the Air Force to hold off on the planned block buy, which was devised to bring EELV costs under control by stabilizing a rocket manufacturing industrial base reeling from the retirement of NASA’s space shuttle. The report said the Air Force had insufficient information to proceed and could wind up being stuck with excess rocket inventory.

McCain, the author of measures in the 2011 National Defense Authorization Act that subject the EELV program to tighter government scrutiny, said ULA’s cost estimates have been repeatedly criticized as unreliable by the Defense Contract Audit Agency. He also cited a review by the Air Force and National Reconnaissance Office that found that ULA’s cost accounting and estimating systems are immature.

Senior Air Force officials say they plan to move ahead with the block buy in 2013, with contractual specifics yet to be determined.

In a written response to a query, ULA spokeswoman Jessica Rye said the company is committed to providing quality, value and transparency in the EELV program. “The US government has over 1000 government employees engaged with the EELV programs, with full insight to every business process being performed at our company,” Rye wrote. “In these difficult economic times ULA applauds Senator McCain and his oversight efforts to control government spending. ULA encourages the Air Force to review and certify the government is getting fair value on any data our company provides and, as Senator McCain accurately points out does the analysis to find the ‘sweet spot’ that has the taxpayer’s best interests (and wallets) at hand.”

The statement also said ULA has been subjected to a number of external audits and quality-control assessments and has passed each one.