John Young, a former U.S. undersecretary of defense for acquisition, technology and logistics, is an adviser to SpaceX.
United Launch Alliance, the longstanding monopoly provider of U.S. military space launches, has announced that it will not bid for the Department of Defense’s first competitive launch in a decade because it wants more Russian RD-180 engines. Further, ULA claimed to dislike the terms of the competitive solicitation, stating it could not provide a “compliant” bid because it lacked the accounting structures to track its billion-dollar annual contract payments from the federal government.
As the former undersecretary of defense for acquisition, I think it is unfair to DoD and ULA shareholders for the company to refuse to compete, and ULA’s entire rationale is unfounded.
As far back as 2007, I authored an Acquisition Decision Memorandum noting that I was “deeply troubled” by DoD reliance on Russian RD-180 rocket engines. I directed the Air Force to establish a new domestic engine development program or an RD-180 domestic co-production program, or both, as soon as possible.
The use of Russian rocket engines has contributed to the decline of the U.S. rocket engine industrial base and the subsidization of Russia’s. Our nation’s critical space-based capabilities are reliant on the whims, and prices, of Russia and its political leaders. The gradual phase-out of American reliance on Russian rocket engines several years from today is long overdue.
After creating a monopoly provider and paying the world’s highest launch costs by far for over a decade, the Pentagon has taken the critically important step of introducing all-American competition back into its launch enterprise. This effort, which has taken much work by dedicated Air Force professionals, should be applauded. Equally as important, the Air Force has been very deliberate and thoughtful about constructing a competitive procurement environment that strives to be fair and to ensure the best value for the American taxpayer.
With respect to ULA’s need for more Russian RD-180 engines, two consecutive defense authorization bills passed by large bipartisan majorities clearly permit ULA to buy enough Russian engines for its existing Evolved Expendable Launch Vehicle block buy contract, awarded without competition and valued at over $11 billion. Legislation also allows ULA to use up to nine additional RD-180 engines from Russia, with a value of over $210 million. Thus, Congress has also allowed ULA to buy nine extra Russian RD-180 engines for yet-to-be-awarded, competitive DoD missions — covering all of the competitive missions DoD plans to award through at least 2017 and likely well beyond.
The current competition is for a single launcher to carry a GPS 3 satellite. It is not possible that ULA does not have a single RD-180 (of nine) to allocate to this competition, especially since Congress in November authorized the purchase of four additional RD-180s for DoD competitive missions. Further, ULA is free to buy additional RD-180s from Russia for any commercial or non-DoD missions that ULA is given. On this point, there should be no confusion. There is no “need” to spend more limited taxpayer defense dollars on Russian engines.
With respect to the accounting issues, ULA objected to a requirement that bidders certify that they are not billing other government contracts for competitive missions. Notably, this provision applied to all offerers with “other government contracts,” not just ULA. Disturbingly, ULA asserted that it lacked the “accounting structures” to submit a compliant bid and to account for billions of dollars in cost-plus government payments.
ULA also characterized the GPS 3 launch competition as being “lowest price, technically acceptable.” The competition is explicitly a “best value” competition. The request for proposals includes technical evaluation of a number of factors and subfactors defining performance, launch operations, schedule and price. Thus, there is no basis for ULA’s concerns or its unsubstantiated refusal to compete.
Congress and the Air Force have called for competition in the EELV program, largely because the price of space launch had become “unsustainable.” Today, competition is possible by three certified launch vehicle families in the Air Force’s EELV program: the Russian-powered Atlas 5, the American-powered Delta 4 and the American-made Falcon 9. The three systems offer comparable capability for all of the proposed missions that the Air Force has opened to competitive bidding for the next several years. Indeed, taxpayer funds were spent to integrate GPS payloads on the Delta 4 launch vehicle. ULA clearly has the option of bidding a Delta 4 launcher.
ULA said it would not offer the Delta 4 for any mission open to competition, even though it will continue to offer this system under an existing sole-source $11.5 billion block buy for missions through the end of the decade. ULA’s posturing on the RD-180 engine also means its leadership is denying shareholders the potential revenue and DoD the benefits of competition. ULA’s refusal to bid DoD-funded Delta launchers and the retirement of the Delta medium family seems to be a calculated gambit to extend America’s reliance on Russian rockets. DoD should not support this false, orchestrated dilemma.
ULA has a reasonable idea of the pricing necessary to compete with SpaceX because SpaceX prices are listed on the Internet and well known because of the company’s successful competitive bids in the global commercial marketplace. The reality is that any successful ULA bid price would be well below the EELV block buy price — raising extremely serious questions about the prices DoD agreed to pay under the EELV block buy.
Alternately, SpaceX offers DoD the chance to achieve the very goals that are currently being advocated by DoD leadership. SpaceX is a nontraditional supplier offering an American-made commercial product at prices driven by the global, commercial marketplace. DoD will always have insight to, and benefit from, the competitive, commercial sales of Falcon 9 launches. Thus, SpaceX could never be a monopoly supplier with ever-increasing prices.
The government’s job is to create a competitive environment and let the best provider meet national security needs. ULA is seeking to distort the competitive marketplace and to extend America’s dependence on Russia. ULA is advancing false choices for policymakers and DoD officials, all to the benefit of its Russian engine supplier, and its own bottom line. Congress and DoD should stay the course to competition and to ending our addiction to Russian engines.