WASHINGTON — The House Armed Services Committee last week passed legislation that Chairman Adam Smith (D-Wash.) believes will help commercial rocket companies compete on a more level playing field against established military contractors.
The language does not go as far as Smith wanted, but he will continue to push for change, a committee staffer told SpaceNews. A key concern for Smith is making sure the Air Force opens the market to more competitors, the staffer said. Smith also has asserted that he will not interfere with the ongoing National Security Space Launch Phase 2 Launch Service Procurement competition.
The provisions that made it into the committee’s version of the 2020 National Defense Authorization Act direct the Air Force to create opportunities for new entrants to compete in the NSSL program, and requires that the Air Force set aside $500 million to help a company that wins a Phase 2 contract but does not receive subsidies under the Launch Service Agreement program.
Smith had to compromise on other items that SpaceX and Blue Origin wanted in the bill but were opposed by United Launch Alliance and Northrop Grumman, and the language was watered down some to ensure passage.
“You should be thankful that you were spared a larger debate,” Smith told the committee June 13 a few hours before the end of an all-night NDAA markup. He insisted that his goal is “maximum competition” in the NSSL program but will not take any immediate action that would slow down the Phase 2 competition.
The staffer said Smith so far has not been happy with the Air Force’s response to his concerns about the launch program. “We will continue to talk to the Air Force,” the staffer said on Friday. “We’ve had productive conversations in the past two days.” The Air Force has not been open to change, the staffer said. “They have stuck to their proposed strategy,” which is to select two launch providers in 2020 to split all Phase 2 missions from 2022 to 2026. Any company that is not selected in 2020 would have to wait until 2024 to get another chance.
If Smith’s language becomes law, a launch provider would be allowed to challenge the two winners before the end of Phase 2, after the first 29 launches. The Air Force estimates there could be as many as 34 launches in Phase 2, perhaps more or less depending on the demand. Also, his language would help SpaceX get access to a $500 million fund to be used for vehicle certification and infrastructure. The company is the only of the four NSSL competitors that did not get an LSA contract from the Air Force, prompting SpaceX to file a lawsuit.
“The main pieces that Chairman Smith prioritized were kept in the language,” the staffer said. “It increases opportunities for competition, and evens out opportunity to access Air Force funding.” The $500 million set aside for winners of Phase 2 contracts, said the staffer, would come from existing funds the Air Force already budgeted for the LSA program.
The HASC language could be challenged in the coming months by the Air Force and by the Senate Armed Services Committee. The SASC in its version of the NDAA calls for the Phase 2 competition not stay on schedule and for no more than two providers to be selected.
The NDAA will reach the House floor in July. Any differences with the Senate bill have to reconciled. “We’ll talk to them in conference,” the HASC staffer said. Smith’s provision about adding new competitors after 29 launches is a “clear difference between the two bills.”
Air Force officials have told Smith they plan to start mapping out a strategy for Phase 3 while also “maintaining competition throughout Phase 2,” said the staffer.
National Security Launch Architecture
In a memo sent to Smith before the committee markup, the Air Force says it will “ensure a robust launch industrial base for Phase 3 procurement.” It disagrees with the HASC provision that would allow SpaceX to access a $500 million fund as that would “negate hard earned competition and does not address national security needs. Applying these funds to focus on future national security launch needs in Phase 3 provides more value for national security space.”
Industry sources said Blue Origin was disappointed that Smith did not include any language to reverse the Air Force’s decision to cut off LSA funds to launch providers that don’t win a Phase 2 procurement contract. New entrants like Blue Origin would need that money to prepare for Phase 3 if they don’t win Phase 2, an industry source argued. “If the Air Force is concerned about the industrial base, they should not introduce an 18-month gap between LSA and the Phase 3 development program. This all but guarantees limited industry participation in Phase 3 beyond the Phase 2 winners,” the source said. “The most efficient way to protect competition for Phase 3 is to continue LSA with no gap.”
The Air Force says in the memo it has initiated a National Security Launch Architecture study to inform the Phase 3 acquisition strategy. One option is to set aside launches such as demonstration payloads from the Space Test Program or the National Reconnaissance Office to create opportunities for non-Phase 2 providers to work alongside the Air Force and prepare for the Phase 3 competition.
