Profile: Merging Interests

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  Space News Business

Profile: Merging Interests

By WARREN FERSTER
Space News Staff Writer
posted: 11 April 2007
03:28 pm ET




Michael Gass, President and Chief Executive Officer

Dan Collins, Chief Operating Officer

United Launch Alliance

B oeing and Lockheed Martin are perennial competitors in the space arena, but by the late 1990s their rivalry in launch vehicles had spiraled downward into a bitter feud. Hostilities peaked in 2003 when Lockheed sued Boeing for allegedly stealing its proprietary pricing data to gain an edge in the U.S. Air Force Evolved Expendable Launch Vehicle (EELV) competition.

But that’s all in the past. Today, the companies operate as one in government launch services via United Launch Alliance (ULA), a monopoly joint venture borne of necessity: the collapse of a once-promising commercial launch market and not enough government business to go around.

Michael Gass and Dan Collins, who came to ULA from senior positions at Lockheed Martin and Boeing, respectively, say the transition so far has been a smooth one. Among their immediate tasks are moving production of Lockheed-heritage Atlas rockets from Denver to the Boeing-built Delta 4 production plant in Decatur, Ala., something they say will occur over the next two to three years; and finding ways to cut overhead costs — all while continuing to reliably launch critical national security, weather and scientific satellites for the U.S. government.

Gass and Collins spoke recently with Space News Deputy Editor Warren Ferster.


ULA is on its last batch of Delta 2 rockets, with no orders in the pipeline. At what point does NASA or anyone else have to order more Delta 2s to avoid a costly break in production?

Gass: We’re pretty much already past that point. The production runs of key components of Delta 2 have finished. We’ve received deliveries and there is a stop in some of the key components… There are about nine unsold vehicles available.

Collins: As we came to those points, we took action to enable startup again at some point in time, but that does come with increased cost. We’ve supplied the data to NASA. We’ve tried to help them understand what the costs going forward are so they can make a decision.

Will innovation suffer under ULA, as many have suggested?

Gass: What’s unique for ULA is that we have some underlying independent research dollars that get embedded in our overhead rates that the U.S. government encourages us to invest in research and development. In a bigger aerospace company those investment dollars are shared among all the product areas based on future returns. At ULA the only place we can spend our investment dollars is on launch.

Collins: Right out of the box, we’ve got a great opportunity with just looking and comparing best practices between Atlas and Delta and importing some of those best practices from one to the other. The Atlas manufacturing folks were able to go to Decatur and saw a really simple fix on the Delta production line to a problem that they’ve been working with for a couple of years and went back to Denver and implemented it.

Are there production-line efficiencies to be realized through ULA?

Collins: With the launch tempos we’re seeing on both of the rockets, it is going to make huge production gains difficult. When you’re building three or four of each rocket a year, it doesn’t lend to those large order quantities.

Gass: We’re delivering assured access through two separate systems. So the synergy we’re delivering is in the improvement and utilization of the infrastructure by sharing the same building, using the same material handling teams, the same maintenance teams. That’s by design. We do not want to have one production lot for both products because then we put assured access at risk.

Both Atlas 5 and Delta 4 use similar upper-stage engines. Are there any efficiencies to be had there?

Gass: A way to get benefits from a savings standpoint, and more importantly from a mission success standpoint, is not a common engine but having one team of propulsion engineers and one team of procurement specialists managing the inventory and balancing the workload at Pratt & Whitney Rocketdyne. In years past, we issued conflicting requirements or demands or we both wanted high priority for the same month. Now ULA can work with Pratt & Whitney to figure out how to optimize their production line where before because of competition they couldn’t share that kind of information with either one of us.

Why does the EELV budget keep going up?

Gass: The Air Force made huge block buys early on and still is realizing the benefit of some of those. So when you look at year-to-year budgets, it’s not at a steady state position. In 2005, ’06, ’07, ’08 and even into ’09 there’s going to be a mix of missions that in some cases were bought five years earlier and Lockheed and Boeing received some payments, blended with the current practice of individual mission orders with a two-year lead time.

When do you expect the Air Force to make its first block buy from ULA?

Gass: We don’t see the government buying by blocks. They’re buying annual infrastructure support, buying the capability per year; then they buy the vehicles on a per-mission basis. We’re working with the Air Force to bring some balance on multi-quantity buys so that the Air Force, NRO and NASA can take full advantage of the nation’s buying power.

We’ve got several years yet to go [before the next order]. I wish it wasn’t so many.

How does ULA handle commercial launches?

Gass: Boeing and Lockheed Martin will market to commercial customers. ULA will basically wholesale the product to Lockheed and Boeing. So the revenue goes into Lockheed or Boeing and then there’s a contract from Lockheed to ULA or Boeing to ULA for that launch and revenue would transfer again.

Given what the government pays on average for Atlas 5 and Delta 4 launches, how can these vehicles be commercially competitive?

Gass: The government is contracting with ULA for two things: Fundamental capability and then some launch services. When we sell commercially or to the U.S. government, we’re pricing for that incremental launch service. That price tag, the cost basis of that launch service — the material, the production — is very consistent. I submit to you that Ariane has a similar process and Proton has similar kinds of mechanisms going on.

How is ULA optimizing the Atlas and Delta launch teams?

Collins: A lot of it depends on launch rate. The most efficient solution for a program that’s launching 20 times a year is very different than the most efficient solution for a program that’s launching three or four times a year. We’re projecting almost 20 launches for ULA this year. As we get further out down the line, we’re probably going to come down more into the dozen a year category.

We think there’s some ability to get synergy at the launch sites but there’s also some complicating factors that we have to look into. There will always be people dedicated to a certain rocket. We will always have people who are fully focused on a portion, a system on a vehicle. For some of the more generic jobs, such as machine shops at the launch sites, there might be opportunities for consolidation.

Could there be a scenario under ULA where a labor dispute grounds the entire U.S. fleet?

Gass: When we make the move to Decatur and have production in one location we will end up having one union at Decatur supporting both lines. That risk of job interruption could come to bear. But whether or not that affects a particular launch is something we’ll be working with in our production schedules. It’s not something we’re overly concerned with. We’ve got good relations with the unions that represent our employees and hope never to have a strike — ever.

Will the fact that Atlas and Delta are now operated by the same company make it easier to switch payloads from one to the other
?

Gass: Absolutely. The Wideband Global Satellite system, Advanced Extremely High Frequency and GPS are examples of constellations that are both on Delta 4 and Atlas and with this scenario we can do some switching in short order.

Could the delay to the upcoming Delta 4 Heavy launch prompt the Air Force to shift some payloads between vehicles?

Gass: Possibly. We’ll determine how far the delay goes and then take a look at the manifest. The Atlas manifest is fairly full in the ’07, ’08 timeframe.

Might there come a day when ULA reverts to a single family of launchers?

Gass: Both from a ULA and a taxpayer standpoint it would be a terrible waste for us to not maintain assured access capability. The investment’s already made, so now ULA wants to prove how they can deliver assured access — two systems — with one team.

 

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