Orbital Sciences: Russian Press Overstate RD-181 Contract Value

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PARIS — Orbital Sciences Corp. expects to take delivery of the first pair of its newly purchased Russian rocket engines in June or July, with a second pair arriving before the end of the year, under a contract whose value Orbital said has been overstated in the Russian press.

Dulles, Virginia-based Orbital, mindful that using of Russian rocket hardware raises eyebrows in some quarters given U.S. and European sanctions against Russia for its actions in Ukraine, also said it stands ready to swap out its Russian hardware with a U.S. supplier should a suitable product be made available for Orbital’s Antares medium-lift rocket.

“If and when a U.S. alternative becomes available, Orbital will definitely consider whether it makes technical and economic sense for Antares,” Orbital said in a statement on the purchase of RD-181 engines from NPO Energomash of Khimki, Russia. The contract was signed with Energomash’s parent company, RSC Energia.

Energia officials widely publicized the contract on Jan. 16, showcasing a rare example of Russian industrial export success at a time when Western sanctions are biting deep into the Russian economy and savaging the ruble.

Russian officials, as they have in the past, said the Orbital contract was valued at around $1 billion, including options, for 60 RD-181 engines.

An Orbital Sciences  Antares rocket, with the Cygnus cargo spacecraft aboard, is seen as it launches from Pad-0A of the Mid-Atlantic Regional Spaceport,Wednesday, Sept. 18, 2013, Credit: NASA
An Orbital Sciences Antares rocket, with the Cygnus cargo spacecraft aboard, is seen as it launches from Pad-0A of the Mid-Atlantic Regional Spaceport on Sept. 18, 2013. Credit: NASA

Orbital spokesman Barron Beneski on Jan. 26 declined to detail the contract’s value, which Orbital as a publicly traded company likely will have to disclose to shareholders at some point. But he said the value, even when all options are included, is well shy of $1 billion.

“Options significantly exceed the initial firm commitment,” the Orbital statement said. “The total value quoted was also rounded up.”

Beneski confirmed that the first pair of engines would arrive at Orbital this summer and then be put through testing in time for a first launch as the Antares rocket’s first stage in 2015.

Orbital had delayed confirming its choice of RD-181 out of concern that it could provide ammunition against Orbital in an unidentified launch competition. Beneski said that while the competition has not yet been decided, all bidders have submitted their documentation, meaning an Orbital disclosure of the RD-181 selection is no longer detrimental to Orbital’s bid.

Orbital shareholders on Jan. 27 are expected to vote their approval of an Orbital merger with ATK Aerospace and Defense of Arlington, Virginia. The vote was postponed to give shareholders and ATK time to assess the impact on the merger, if any, of the October Antares failure – a failure tentatively linked to the Russian-surplus AJ-26 engine, which has been Antares’ first stage.

Antares rocket explodes on liftoff. Credit: NASA Television
The Antares rocket exploded on liftoff Oct. 28, 2014. Credit: NASA Television

Orbital had been weighing options for a new main-stage engine long before the failure but accelerated the process since then, especially since the company is bidding for NASA’s Commercial Resupply Services 2 (CRS-2) contract to deliver cargo to the International Space Station.

ATK officials said they conducted their own investigation into the RD-181 engine selection and, like Orbital, concluded that there was no better alternative available, even after considering the political risks associated with a Russian purchase.

NASA is expected to decide on its CRS-2 supplier lineup in June. Winning a CRS-2 contract is a key component to the company’s estimation of future Antares revenue as presented to ATK, even though the competition’s results won’t be known until after the merger closes.

Beneski declined to address whether the RD-181 contract had an opt-out allowing Orbital to reduce the minimum number of engines stipulated in the contract if the company fails to win CRS-2 work.

Using the RD-181 as Antares’ main-stage propulsion system may compromise Orbital’s long-term effort to bring in the U.S. Air Force as a regular customer for the kind of lighter-weight payloads Antares can handle from the Wallops Island, Virginia, spaceport.

Beneski declined to address the Air Force issue beyond saying that any Orbital request to be certified as a U.S. Air Force supplier likely would have to wait for a year or two in any event to give the new Antares version time to prove itself in flight.

There are other issues for Antares in any Air Force certification, notably horizontal-versus-vertical rocket processing and the payload minimum required by the Air Force in its Evolved Expendable Launch Vehicle program, he said.