ULA Launch Capability Payments Still an Issue as Competition Nears

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COLORADO SPRINGS, Colo. — Both United Launch Alliance and rival SpaceX expect the U.S. Air Force to factor the $1 billion in annual overhead payments that ULA receives from the service into upcoming competitions to launch national security satellites, but how that will be done remains unclear.

The issue, one that SpaceX has seen as a major stumbling block to a fair competition, has gotten increased attention from the Air Force since January, Gwynne Shotwell, SpaceX’s president and chief operating officer, said April 14.

Hawthorne, California-based SpaceX is poised to end ULA’s monopoly in the U.S. defense launch market, with competitions for a limited number of missions expected to get underway this year.

ULA’s current Air Force contract portfolio includes a one-year deal worth nearly $1 billion for so-called Evolved Expendable Launch Vehicle Launch Capability. This is the latest in a series of contracts ULA gets on an annual basis to cover services not necessarily associated with a given launch, and which have been branded as a subsidy by ULA’s prospective competitors.

Gen. John Hyten, commander of Air Force Space Command, has repeatedly questioned how the service can make the launch capability payments and still hold a fair competition. During a speech here at the Space Symposium April 14, Hyten said, “That capability has to go away to enable the business of the future.”

But with the Air Force planning to put up to nine missions up for bid beginning this year, the future is now.

“The Air Force is going to have to figure it out,” Shotwell said in an April 14 interview here. “I don’t know how they’re going to address it.”

“We’re still working through it,” Lt. Gen. Ellen Pawlikowski, the military deputy for the assistant secretary of the Air Force for acquisition, told SpaceNews April 15.

Tory Bruno, president and chief executive of Denver-based ULA, has said he expects the capability contract to end after the final launch has been carried out under the company’s $11 billion sole-source block buy contract with the Air Force. That deal covers the production of up to 36 Atlas 5 and Delta 4 rocket cores as well as the launches of 78 rockets, the oldest of which was ordered in 1998, ULA officials said.

In an April 15 interview, Bruno said he expects the Air Force to weigh the capability contract against ULA’s bids. Hypothetically, that means if ULA and SpaceX bid identical prices for a given launch, ULA’s bid could be viewed as millions if not tens of millions of dollars higher, he said.

In another scenario, ULA officials say, the Air Force could ask ULA to incorporate some of the capability costs into its final bid.

Many of the missions likely to be put up for bids in the early rounds of competition are launches of GPS 3 positioning, navigation and timing satellites, Air Force officials have said. These satellites are part of a constellation that typically comprises some 30 active satellites and are well within the launch envelope of SpaceX’s Falcon 9 rocket, which is expected to win Air Force certification to launch national security satellites in the coming months.