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Orbital Drops Antitrust Lawsuit Against ULA

The Atlas 5’s main engine is the RD-180, which was developed by Russia’s NPO Energomash under contract to Lockheed Martin and is sold exclusively to ULA by RD-Amross. Credit: ULA photo

WASHINGTON — Orbital Sciences Corp. is dropping an antitrust lawsuit filed in June against United Launch Alliance alleging that the Denver-based rocket maker illegally prevented Orbital from buying the Russian-made RD-180 rocket engine, according to a statement filed March 20 with the U.S. Securities and Exchange Commission.

“The parties will now undertake to negotiate a business resolution for Orbital’s access to the RD-180 rocket engine, subject to all necessary approvals from the U.S. and Russian governments,” Orbital said in the filing. “If a mutually agreeable resolution is not reached, Orbital will have the option to refile its lawsuit.”

ULA, a Boeing-Lockheed Martin joint venture, launches most U.S. government space missions, and virtually all U.S. national security payloads, aboard its Atlas 5 and Delta 4 rockets. The Atlas 5’s main engine is the RD-180, which was developed by Russia’s NPO Energomash under contract to Lockheed Martin and is sold exclusively to ULA by RD-Amross, a joint venture of Energomash and United Technologies Corp. 

That exclusivity arrangement was at the heart of Orbital’s antitrust complaint and is also the subject of a probe by the U.S. Federal Trade Commission.

Orbital is considering the RD-180 as a replacement for the AJ-26 engines that power the main stage of the company’s Antares medium-lift rocket. Each Antares rocket uses two AJ-26 engines, which are actually Soviet-vintage NK-33 engines refurbished by Aerojet Rocketdyne of Sacramento, Calif. 

Orbital has secured only enough AJ-26 engines for the eight cargo-delivery missions to the international space station the company owes NASA through 2016 under a $1.89 billion Commercial Resupply Services contract signed in 2008. 

In a March 3 presentation to a conference organized by Raymond James investment advisers, Orbital Chief Financial Officer Garrett Pierce said the company was considering two or three alternatives to the AJ-26, all built in Russia.

In a quarterly earnings call in February, Orbital Chief Executive David W. Thompson said he expected the Antares engine dilemma to be resolved by the middle of this year. 

That would help Orbital eliminate uncertainty about its engine situation in any response it provides to NASA’s planned solicitation for follow-on cargo delivery services to the space station. NASA notionally plans for four to five such flights per year from 2017 to 2024.

Meanwhile, the RD-180 is the subject of two separate Defense Department reviews amid rising tensions between Washington and Moscow, a Pentagon spokesman said March 20.

One is led by the Defense Department at the request of Defense Secretary Chuck Hagel, and the other is led by the Air Force, Navy Rear Adm. John Kirby, a spokesman for Hagel, told reporters March 20.

The studies come on the heels of a January report by the Defense Department’s acquisition office on the use of foreign components in U.S. space launch capability. That report was not released to the public, Jennifer Elzea, a Pentagon spokeswoman, said in a Feb. 25 email.

Russia’s effective annexation of Crimea and the resulting tensions with the United States have heightened concerns about the continued availability of the RD-180.

In a response to questions March 19, Matthew Bates, a spokesman for United Technologies Corp.’s Pratt & Whitney Military engines business, said recent U.S. sanctions on selected Russian power brokers do not impact the RD-180 program. 

“We could manufacture and deliver the RD-180 independently if that became a requirement,” Bates said. But “it would be more cost-efficient to maintain our current [joint venture] with NPO Energomash.”

Gen. William Shelton, commander of Air Force Space Command, said in January that the service was studying the feasibility of setting up a U.S. production line for the RD-180. ULA says it has at least a two-year stockpile of the engines. 

Concerns about RD-180 reliability predate the Crimea occupation. Last year, for example, Russian press reports quoted an unnamed Russian government official as saying a ban on RD-180 exports to the United States was under consideration.

 

Follow Dan on Twitter: @Leone_SN


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