Rising Engine Costs, Uncertainty Drive Up Atlas 5 Prices for NASA

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WASHINGTON — Rising propulsion costs, demand uncertainty and an eroding industrial base are the drivers behind what NASA says is a significant price increase for the Atlas 5 rocket, which is used to launch the agency’s most valuable scientific payloads, according to industry and NASA officials.

Industry officials said the winding down of the space shuttle program has led to higher prices for the RL 10 upper-stage engine, the second-most-expensive component on the Atlas 5, which is built by United Launch Alliance (ULA) of Denver, a Boeing-Lockheed Martin joint venture. The RL 10 is manufactured by Pratt & Whitney Rocketdyne of Canoga Park, Calif., which also builds the space shuttle’s main engines.LauncherGraphic_SN02jpg.jpg

 

“The RL 10 is one that’s been impacted substantially by the fact that the space shuttle program is no longer active,” said George Sowers, vice president of business development and advanced programs at ULA. “So Pratt Whitney has all this capacity sized to do a space shuttle program and an RL 10 program, and when the space shuttle program goes away then they have all this capacity and all this cost and the only place they can charge it is back against the RL 10 program.”

The ULA-built Delta 4 rocket also uses a variant of the RL 10 as well as a Pratt & Whitney Rocketdyne-built main engine, but this vehicle currently is not used to launch NASA payloads.

Jim Maser, president of Pratt & Whitney Rocketdyne, said a number of factors, including lower production rates and changes in the way customers buy propulsion products and services, are driving up costs.


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“Procurements over time have decreased in total volume and also the amount being procured per year [has decreased],” Maser said in a Feb. 3 interview, noting that RL 10s at one time were bought in quantities of 40 to 60 over multiple years at high annual production rates. Today, production rates have dropped from tens per year to three or four per year. “Combine that with another reduction in base, particularly on the NASA side, and that tends to challenge costs,” he said.

Maser said NASA’s space shuttle follow-on program, Constellation, was expected to supplant between 80 and 100 percent of Pratt & Whitney’s work on the orbiter fleet, slated for retirement this year. But that changed when U.S. President Barack Obama proposed dismantling Constellation in favor of using privately developed rockets and spacecraft to transport astronauts to and from Earth orbit. Work is continuing on elements of Constellation, including the J-2X upper-stage engine that would be built by Pratt & Whitney Rocketdyne, but with NASA operating under a temporary funding measure and the budget outlook uncertain, the future direction of the human spaceflight program is murky at best.

“So we have to accommodate that at some level,” Maser said. The question is how long do we have to accommodate it for? If we’re expected to carry all the risk of that uncertainty it’s very difficult for us to cover without losing money.”

Pratt & Whitney Rocketdyne is facing the prospect of its business being “about half of what the shuttle business has been in the past,” Maser said, adding that the company is taking steps to reduce its facilities by over half in the next few years.

Meanwhile, prices for the Russian-built RD-180, a liquid oxygen/kerosene engine that powers the Atlas 5’s main stage, are also on the rise. The RD-180, the single most expensive Atlas 5 component, is built by NPO Energomash of Khimki, near Moscow.

“In general when you’re looking at liquid propulsion, costs are going up and it’s reflected in prices,” Maser said.

But Sowers said the Russians are simply charging what the customer is willing to pay. “The Russians have learned over the years the wonders of capitalism, and have become really good at letting the market drive their prices up,” he said.

Jim Norman, NASA assistant associate administrator for launch services, told the NASA Advisory Council’s planetary science subcommittee Jan. 26 that fewer launches, lower production rates, smaller lot buys from suppliers and basic inflation are contributing to higher Atlas 5 costs.

“It is a big jump,” Norman said, detailing projected cost increases over the next five years for launching planetary science missions under the new NASA Launch Services 2, or NLS 2, contracting vehicle. Under the previous NLS contract, in effect between 1999 and 2010, the cost to launch an Atlas 5 rocket was between $100 million and $125 million. Under NLS 2, which NASA signed with ULA and other rocket manufacturers in September, the Atlas 5 cost range grew to between $102 million and $334 million per mission.

Sowers emphasized that the upper end of the cost range is a cost cap that launch providers are not to exceed when estimating the cost of NASA missions. He said NASA insisted on locking in prices as far out as 2015 despite numerous uncertainties concerning overall demand.

“The majority of what NASA would perceive as cost increases is coming from the uncertainty in our business environment and the way they’ve set up the NLS 2 contract,” he said. “Since they’re holding our feet to the fire for these price caps, we’re being very conservative and protecting our risk.”

Sowers said that price cap will come down if ULA is successful in negotiating a bulk purchase of Atlas 5 and Delta 4 launches with the U.S. Defense Department over a five-year period beginning in October 2012.

“We’re working with the Air Force on what we’re calling a multiyear buy and this will help eliminate a lot of the uncertainty we’re talking about and help us bring our prices back into the realm of what our historical prices have been,” Sowers said, adding that the company has urged NASA to consider the potential cost-cap reduction when budgeting for future missions. He said specific mission proposals include a “downward adjustment clause” that would lower cost estimates if the Air Force bulk-buy deal comes to pass.

But Norman cautioned there are risk factors that could drive Atlas 5 prices even higher than the upper range of the NLS 2 prices. The Air Force and National Reconnaissance Office are trying to come to terms on their relative contributions to the so-called Evolved Expendable Launch Vehicle Launch Capabilities contract that covers personnel and other overhead costs that are not factored into the prices of individual Atlas 5 and Delta 4 launches, he said. A failure to reach agreement, Norman said, could raise NASA’s Atlas 5 costs by as much as $140 million per mission as ULA’s overhead costs are swept into individual launch contracts.

Sowers characterized that risk as unlikely. “We’ve had discussions with NASA about how to budget, and that’s really their call,” he said. “We think that’s a very low likelihood and it would be foolish to budget for that. But that’s up to them.”

Norman said another challenge affecting the NLS 2 contract is Atlas 5 performance, which has diminished since the first NLS 1 agreement was put in place.

“There have been some performance losses being offered for the Atlas 5 in particular as part of the NLS 2 vs. NLS 1,” Norman said, adding that ULA has made structural changes that added weight to the rocket. “We’ve lost about 400 to 500 kilograms of performance in terms of what is being offered.”

Norman said his team would work with mission planners to address the performance shortfall, most likely by incorporating strap-on solid-rocket boosters to enhance capability.

Sowers attributed the decrease in performance to ULA’s effort to account for future performance risk.

“All we really did was took our history of performance and put risk into our future performance,” he said. “They’re annoyed at us for doing that. But any time you negotiate a new contract, we’re trying to make sure we’re not putting our company at risk in the future.”