U.S. Air Force Aims To Slash EELV Costs by 20-50 Percent

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WASHINGTON — The U.S. Air Force is aiming to reduce the cost of its primary satellite launching program by 25 to 50 percent, savings that would be realized on the second batch of rockets it plans to order under its block-buy procurement strategy, a senior service official said.

The Air Force is reaching the point where it cannot “afford the price tag” for the Evolved Expendable Launch Vehicle (EELV) program, Gen. William Shelton, commander of Air Force Space Command, said Sept. 18 during a media roundtable here. He said he wants to reduce costs significantly for the first block buy, scheduled to go under contract in 2013, but is hopeful of finding even greater savings on a follow-on bulk procurement of rocket cores to take place at a later date.

Block buys constitute the centerpiece of the Air Force’s EELV cost-cutting strategy, the idea being to take advantage of economies of scale while stabilizing a U.S. rocket-making industrial base that was hit hard by the retirement of NASA’s space shuttle. Under the initial block buy, which was planned for this past summer but delayed to next spring, the service intends to buy as many as 10 rocket cores per year over a period of three to five years from EELV prime contractor United Launch Alliance (ULA) of Denver.

Frank Kendall, U.S. undersecretary of defense for acquisition, technology and logistics, in July recertified the EELV program for continuation as required by law for weapon systems whose acquisition costs grow by 25 percent or more. In the recertification letter sent to the congressional committees that oversee defense spending, Kendall said the program’s projected cost over 150 launches had more than doubled, to nearly $70 billion.

Kendall attributed most of the cost growth to market forces beyond the Air Force’s control, but also said the program’s complicated contract and management structure have made it difficult to find potential savings. ULA operates under two contracts, one for rocket hardware and associated services and the other for overhead and ongoing development efforts, but the Air Force hopes to consolidate those with the block buy.

Air Force Secretary Michael Donley said the service has thoroughly analyzed what the much-maligned EELV program should cost, and that this work will inform the specifics of the block-buy strategy, such as the number of the rockets to be procured over what time period. He said it is in the best interest of the Air Force to drive down costs on the EELV program and introduce competition in U.S. military launch services as soon as it is “safely possible.”

Air Force officials will decide the number of EELV rocket cores to be purchased in the first block buy based in part on when they project so-called new entrants in the military launch business will be ready to compete, Shelton said. Of ULA’s potential competitors, Space Exploration Technologies Corp. of Hawthorne, Calif., is furthest along in its rocket development program.

Shelton said ULA has performed its mission well, but that the Air Force is paying too much for program. New launch entrants can bring some new ideas to the mission, he said. Nevertheless, he said, new entrants will undergo a very rigorous certification process before they will be entrusted with launching U.S. national security payloads.