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SpaceX Challenges ULA’s Grip on EELV Military Launches

By Marc Boucher
March 5, 2014
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SpaceX Challenges ULA’s Grip on EELV Military Launches
Liftoff of a SpaceX Falcon 9 v1.1.

“Oh, my!”, to borrow a catchphrase from sportscaster Dick Enberg. Yesterday’s Senate Appropriations Defense Subcommittee Hearing on National Security Space Launch Programs will go down as a classic. Sitting side-by-side, upstart SpaceX challenged the status quo in United Launch Alliance’s (ULA) dominance of the military space Evolved Expendable Launch Vehicle (EELV) program.
The hearing comes a day after the U.S. Government Accountability Office (GAO) released it’s report; The Air Force’s Evolved Expendable Launch Vehicle Competitive Procurement. The report follows the Department of Defense’s new procurement strategy formulated in 2011 to reduce costs. At the time the DoD created a new two prong approach. 1) A block buy of capability and 2) introduce competition.

At stake is an estimated $70 billion in DoD military payload launches for the EELV program through 2030 according to a cost assessment from the Office of the Secretary of Defense. A program which ULA has been the sole source provider since ULA was founded in 2006 when Lockheed Martin and Boeing created the new company.

In December of 2013 the DoD committed to a block buy of 35 launch vehicle booster cores from ULA over a five year period. The DoD had originally set aside up to 14 more launches which it would compete, however this weeks budget documents suggest that only seven launches would be available to compete in the near term.

The hearing focus though was primarily on opening up the EELV program to competition, the second phase of the DoD’s new strategy.

Four witnesses were present; Cristina Chaplain, Director, Acquisition and Sourcing Management, Government Accountability Office; Michael Gass, President and Chief Executive Officer, United Launch Alliance; Elon Musk, Chief Executive Officer and Chief Designer, Space Exploration Technologies; and Dr. Scott Pace, Director, Space Policy Institute, Elliott School of International Affairs George Washington University.

Chaplain was present to discuss the GAO findings from their just released report and Pace was there to provide context and provide objective viewpoints.

The contrast in styles and substance between Michael Gass and Elon Musk was clear.

Gass was smiling, smooth and stuck to a short script. Musk didn’t smile really, was serious, nervous, but did hammer home his points and was much more willing to be forthright with answers to questions from Senators.

The script Gass stuck to in his prepared statement and answers to questions was simple. ULA’s record speaks for itself, why change something that isn’t broken and we’ve been doing our part to reduce costs.

In his prepared statement Gass discussed the new DoD strategy by saying “we welcome the new strategy, as the previous approach of buying rockets one-at-a-time was highly inefficient and costly. The Air Force implemented the first phase of the new strategy with a block-buy commitment which will save several billions of dollars over the next five years. The block-buy created efficiency through economies of scale, eliminated repetitive administrative contracting actions, and provided stability and predictability that enabled informed investment decisions on product and process improvements that were incorporated into our pricing.”

“The next phase of the Air Force strategy is to introduce competition. I believe there are substantive questions about how EELV competitions will be structured to ensure the competition is fair and open and whether it will actually deliver savings to our nation. Ultimately, the central question is whether savings from competition will be sufficient to offset the cost of duplicating existing capabilities. ULA was formed to enable assured access to space with two separate launch systems, with recognition the that market demand was insufficient to sustain two competitors. We went from two competing teams with redundant and underutilized infrastructure to one team that has delivered the expected savings of this consolidation.”

ULA submitted a four page prepared statement that included one page with a list of their EELV launch successes. SpaceX on the other hand submitted a 13 page prepared statement and subsequent statement on their web site outlining five specific points on the EELV prorgram

Musk se the tone when he red his statement. Make no mistake about it, not only does SpaceX want a fair and open competition, he said SpaceX could save the taxpayers over $1 billion a year and that ULA had been overcharging.

He further went on to say that SpaceX rockets are made in America and the same could not be said for parts of ULA’s Atlas V rocket. He singled out the Russian made RD-180 engine which powers the Atlas V saying in the current geopolitical climate can the Russians be relied upon to keep selling them rocket engines.

According to Gass, ULA has a stockpile of engines to last three years and has the blueprints to build more. However ULA was just given a five year contract and does not have enough inventory at the moment to fulfill their contract.

SpaceRef co-founder, entrepreneur, writer, podcaster, nature lover and deep thinker.