U.S. Air Force, NRO Pushing for Lower Launch Costs

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SAN FRANCISCO — Classified elements of the U.S. budget make it difficult to calculate the price that U.S. government agencies pay to put each satellite into orbit. Still, top defense and intelligence officials have left no doubt that the prices are higher than they would like, and they are going public with plans to bring them down.

The Air Force is scrubbing the Delta and Atlas systems for places to cut costs as it negotiates the next batch of Evolved Expendable Launch Vehicle (EELV) launches for the military, National Reconnaissance Office (NRO) and NASA.

In February, the Pentagon announced plans to buy eight rockets per year, beginning in 2013. The move blunts complaints by United Launch Alliance (ULA) and its rocket suppliers that the unpredictable demand for government launches has driven up costs by preventing them from buying parts in bulk and making it hard to anticipate the equipment and people needed from year to year.

Perhaps more significantly, the Air Force and NRO are drafting plans to allow national security satellites to launch on rockets built by Space Exploration Technologies (SpaceX), the Hawthorne, Calif., company founded in 2002 by PayPal co-founder Elon Musk.

That could break the recent monopoly on launches of the most sophisticated and expensive national security satellites held by ULA, the joint venture created in 2006 by Boeing and Lockheed Martin. No other U.S. manufacturer targets that market, and U.S. space policy does not permit national security payloads to be launched on foreign rockets. An exemption would have to be granted by the president’s national security adviser, his assistant for science and technology policy, and the director of the Office of Science and Technology Policy.

The Air Force and NRO have not spelled out the steps SpaceX would need to take to prove it is reliable enough to loft billion-dollar national security satellites, but senior officials have voiced strong support for the idea of fresh competition to ULA.

“DoD [Department of Defense] understands one of the great ways to hold down costs is competition,” Douglas Loverro, executive director of the Air Force Space and Missile Systems Center in Los Angeles, said in a May 11 briefing for reporters. “We are actively seeking out others who might be able to meet our [launch] requirements.”

After its founding, SpaceX got off to a slow start. The company boldly promised to cut costs by building and launching rockets with many fewer people in the chain than its competitors, but then endured a string of failures. Its first rocket model, Falcon 1, failed on its first three attempts before propelling a 165-kilogram dummy satellite into orbit in September 2008.

Most intelligence and communications payloads are too large for Falcon 1, but SpaceX’s profile began to rise in June 2010 when its much larger Falcon 9 reached orbit on its first attempt, delivering a test version of the company’s Dragon cargo capsule, which could eventually deliver supplies to the international space station. In December, a Falcon 9 orbited a Dragon capsule, plus eight small experimental satellites.

SpaceX has seized the initiative from ULA by publicizing its prices everywhere it can, from its website to online blogs. Meanwhile, ULA “does not publicly release its launch costs,” ULA spokeswoman Jessica Rye said. That has left SpaceX to calculate that the DoD could save a billion dollars a year by replacing its Atlas and Delta purchases with the Falcon 9 and a larger version that has yet to fly, the Falcon Heavy. The Falcon 9 costs up to $60 million, and a Falcon Heavy up to $125 million, according to SpaceX.

An aerospace engineer estimated that various models of the ULA Delta 4 cost between $160 million and $400 million, depending on whether the rocket is equipped with strap-on boosters for added lift, and whether infrastructure costs are included in the price.

Atlas 5 prices were discussed during a Jan. 26 NASA meeting. Jim Norman, the space agency’s associate administrator for launch services, said an Atlas 5 costs between $102 million and $334 million. A ULA executive, appearing on “The Space Show” Internet radio program, said NASA is unlikely to ever pay that top figure. When NASA asked ULA to sign a contract in 2010 guaranteeing prices for five years, ULA had to offer a conservative estimate to protect itself, said George Sowers, ULA’s vice president for business development.

The price war went public in May, when SpaceX supporters and critics began a war of dueling blogs. Musk posted a blog entry asserting the company’s prices could be trusted in the face of critics he did not name: “I recognize that our prices shatter the historical cost models of government-led developments, but these prices are not arbitrary, premised on capturing a dominant share of the market, or ‘teaser’ rates meant to lure in an eager market only to be increased later. … These prices are based on known costs and a demonstrated track record.”

SpaceX President Gwynne Shotwell told a congressional panel that SpaceX customers have signed contracts for 38 Falcon 9 missions.

That was too much for analyst Loren Thompson, who is a consultant to Lockheed Martin, maker of the Atlas 5. In his blog, Thompson questioned NASA’s plan to “bet the future of its human spaceflight program” on new launch providers like SpaceX. He cited the company’s “three launch failures in seven attempts, sizeable schedule delays, and some fairly substantial price increases above what were originally proposed.” He posted the comments on the website of the nonprofit Lexington Institute, where he is chief executive, and on Forbes.com.

That is where SpaceX spokesman Robert Block fired back, saying Thompson’s post contained “distortions, innuendos and outright lies.” Block said Thompson was simply trying to protect his benefactors from competition.