Retired Gen. Larry Welch, a former Air Force chief of staff, led the Broad Area Review 15. Credit: U.S. Air Force, Joseph Pagán

WASHINGTON – The U.S. Air Force may need to guarantee SpaceX and United Launch Alliance a set number of national security launches if the service hopes to have to two financially viable families of rockets available in the future, according to a report completed in April.

The report, formally known as Broad Area Review 15 and led by retired Gen. Larry Welch, a former Air Force chief of staff, raises anew a persistent question about the U.S. national security launch market: Is there enough business for two companies?

The report was commissioned by Air Force Secretary Deborah Lee James in January following delays to the Air Force’s certification process for SpaceX’s Falcon 9 rocket. The process, which had been expected to be completed by the end of December, dragged on until June, when Falcon 9 was cleared to carry military payloads.

A copy of the report was released to SpaceNews in July.

“There is no assurance of a viable business case for two competitive providers,” the report said.

As a result, he said, the Air Force may need to “provide some number of assured launches to one provider to sustain two families” of rockets if it hopes to have competition for both medium- and heavy-class payloads. The report did not include specifics.

Denver-based ULA was created in 2006 by the merger of the government launch services businesses of Boeing and Lockheed Martin, and has enjoyed a monopoly in government market ever since. Previously the companies had been expected to compete for military business, with both relying on a robust commercial market to keep rocket production rates high and prices low. But the commercial market collapsed, leaving the government with sole responsibility for feeding two hungry mouths.

The combination of ULA’s high prices and the introduction of the privately funded Falcon 9 has driven the Air Force to reintroduce competition to the military market. The first of those competitive missions, to launch a GPS 3 satellite, is expected to be awarded later this year.

ULA currently operates the Delta 4 rocket family alongside the workhorse Atlas 5, but plans to phase out all but the heavy variant of the Delta 4 over the next few years due to its high costs. That, coupled with a congressional ban on future military use of the Russian-built engine that powers the Atlas 5, could eventually force ULA out of the market, the report said, a concern that has been voiced by Air Force officials in recent months.

ULA is developing a new rocket called Vulcan powered by a U.S.-built engine that the company hopes will keep it competitive in the future. But Tory Bruno, ULA’s president and chief executive, has repeatedly said the company needs commercial in addition to government business to remain viable, particularly in the next few years when government demand is expected to drop.

In what Welch describes as the most likely scenario, the report envisions a continued Delta 4 monopoly for the biggest national security payloads — there is no Atlas 5 heavy-lift variant — despite the fact that Hawthorne, California-based SpaceX is working on a Falcon Heavy rocket that is expected to make its first flight next year.

The Falcon 9 would have a monopoly for medium-class missions, the report said.

In essence, Welch appears to be warning the service not to repeat the mistake of counting on the commercial market to keep two healthy providers available to serve the government.

To that end, the report calls on the commander of Air Force Space and Missile Systems Center, which buys military space systems, to prepare a contingency plan to ensure that two providers stay in the national security market “in the face of lack of a viable business case for competitive launch services.”

Meanwhile, the report also suggests that the Air Force’s mission assurance requirements for launch have become too stringent, to the point of being unreasonable.

“There was not an expectation of the 100% launch success rate for [national security] payloads over the past decade,” the report says. “Nonetheless, this has become the standard.”

The report suggests that the Air Force follow a certification standard closer to NASA’s, which requires “significantly fewer resources, accepting more flexibility in processes, relying more on provider engineering processes, and conducting less independent testing.”

Mike Gruss covers military space issues, including the U.S. Air Force and Missile Defense Agency, for SpaceNews. He is a graduate of Miami University in Oxford, Ohio.