United Space Alliance Prepares For a Future Without Shuttle

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  Space News Business

United Space Alliance Prepares For a Future Without Shuttle

By BRIAN BERGER
Space News Staff Writer
posted: 24 April 2006
11:36 am ET


United Space Alliance (USA), the Boeing-Lockheed Martin joint venture created a decade ago to take over space shuttle operations, is trying to broaden its business in order to secure a place in the coming post-shuttle world.

USA executives said they are working to transform the Houston-based company from a large, integrated space operations business that depends on one big government contract into a leaner, more agile company with a broader base of customers.

That transformation, they say, will be an essential element that will help the company make a smooth transition from the shuttle program to NASA’s new human spaceflight systems.

“There’s not a big demand there for a large, integrated space operations business because we are going to be largely in development phase for a while,” Richard Covey, USA’s chief operating officer, said. “We need to adapt to the changing market needs.”

Covey said the company’s foremost goal — beyond ensuring that each of the shuttle’s 17 remaining flights goes well — is to be the operator of choice for the spacecraft and rockets that will replace the shuttle in the decade ahead. NASA expects those new spaceflight systems to be less labor intensive to operate than the space shuttle, which requires the services of some 18,000 people. About 10,000 of those jobs are at USA.

“Undoubtedly we will be a smaller company when the shuttle stops flying than we are today,” Covey said. “How much smaller depends on how well we, as leaders of the company, are able to define our role in future human spaceflight operations and other space operations activities.”

Aerospace analysts say USA’s survival depends on the company securing a substantial role operating NASA’s Constellation systems — the Crew Exploration Vehicle, its launcher and other hardware related to NASA’s planned resumption of lunar exploration.

USA officials agreed that Constellation is critical to the company’s future.

“Our long-term business goal is to be the operator of choice for future space systems on the Moon, Mars and here on Earth,” said Jeff Carr, USA’s director of communications and public relations. “The difference between that market position and the one we find ourselves in today is we won’t be limited to one customer. Conversely, our prospective customers will have more than one choice, so we will need to compete.”

Competition is not exactly familiar territory to USA. Lockheed Martin and Boeing created the 50-50 joint venture in response to NASA’s plan to consolidate some 89 separate space shuttle operations contracts into a single contract meant to save the agency money.

NASA awarded the Space Flight Operations Contract ‑‑ SFOC for short — to USA in 1996 without receiving competing bids. The contract is USA’s primary piece of business, bringing in $1.2 billion to $1.8 billion annually.

Several years ago, NASA considered breaking up or re-competing SFOC, but that idea had fallen out of favor even before the February 2003 Space Shuttle Columbia accident. Although the SFOC expires in September, NASA and USA are negotiating a new multiyear agreement, called the Space Program Operations Contract, meant to run through the end of the shuttle program.

Carr said broadening USA’s customer base beyond NASA’s human spaceflight program is a critical element of the company’s strategy for emerging on the other side of the transition in a good position to be NASA’s operator of choice for the Constellation systems.

USA’s plan for diversifying its customer base beyond NASA’s human spaceflight program includes looking more broadly within NASA for opportunities to apply its space operations expertise, Carr said. The company is also looking beyond NASA for opportunities. “There are also customers for our space operations expertise in the commercial, defense and entrepreneurial sectors,” Carr said.

USA is currently the operations lead on both the Lockheed Martin and Northrop Grumman-Boeing teams competing this year for a contract to build the Crew Exploration Vehicle.

Brett Lambert, a Washington-based aerospace consultant, said USA’s inclusion on both CEV teams, however, is no guarantee that USA will in fact operate CEV and other Moon-bound systems. “They may look like a lock now, but I’m not sure that by the time those systems begin to come on line that will still be the case,” Lambert said. “I think the program is going to change, change back, change, and change back again long before any of these decisions are made,” Lambert said.

Carr said USA is not taking anything for granted and is working hard to prove its worth to both of its CEV teammates and to NASA. USA’s effort to transform its mode of business, he said, is not just about making it past the gap between the end of shuttle and the advent of the Crew Exploration Vehicle, but to prepare for changing market conditions.

“The government has made it very clear that they are not going to have the kind of money for operating space systems in the future that they are spending today,” Carr said.

“Part of this is learning to think like a small business,” he added “We are not going to be a prime contractor in most cases. We also need to learn to be a subcontractor.”

USA already is playing the role of subcontractor on both CEV teams and is providing its operations expertise to ATK Thiokol as it helps NASA design and develop the Crew Launch Vehicle’s first stage.

As USA begins to look in earnest for opportunities beyond its traditional NASA customer, it has to tread carefully. Covey said any moves into new markets will have to be squared with USA’s parent companies, Boeing and Lockheed Martin, which each have a substantial presence in the space operations business.

“There clearly are challenges there,” Covey said. “We need to make sure what we pursue is in the best interest of our member companies.”

Lambert agreed, saying that USA’s efforts at transformation will be kept in check by what Boeing and Lockheed Martin want to become of the company.

“The general rule in aerospace and defense is that 50-50 ventures hardly ever work out over the long term. They are very effective for very specific point solutions but over time they become problematic,” Lambert said. “There’s a great saying in business that companies ought to be run by an odd number of people and three is too many.”

Comments: bberger@space.com