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Pentagon Approves EELV Block Buy, with Competitive Twist

Frank Kendall, Under Secretary of Defense for Acquisition, Technology and Logistics. Credit: DoD photo by Glenn Fawcett.

WASHINGTON — The U.S. Air Force is opening up its primary satellite launching program to competition even as it moves ahead with controversial plans for a multiyear rocket purchase from the current contractor, according to a memo from the Pentagon’s top acquisition official.

In the memo, Frank Kendall, undersecretary of defense for acquisition, technology and logistics, authorized the Air Force to purchase up to 50 rocket cores during the next five years under its Evolved Expendable Launch Vehicle (EELV) program, which is used to loft the vast majority of U.S. national security payloads. Up to 36 of these rocket cores will be procured from incumbent contractor United Launch Alliance (ULA) on a sole-source basis.

The other 14 cores will be procured competitively, according to the Nov. 27 memo, addressed to Air Force Secretary Michael B. Donley and Christine H. Fox, the Pentagon’s director of cost assessment and program evaluation. The first of these competitive awards is expected in 2015 for a mission launching in 2017, according to the memo.

“My intent with this decision is to maintain required mission assurance, obtain the positive effects of competition as quickly as possible, and also reduce the cost of the launch services we must procure from ULA,” Kendall wrote in the memo, a copy of which was obtained by SpaceNews.

As a hedge, the Air Force will retain an option to negotiate with ULA for the 14 cores currently subject to the competitive procurement in the event that no other contractor is able to meet the mission requirements, according to the memo.

EELV prime contractor ULA, a Boeing-Lockheed Martin joint venture, enjoys a virtual monopoly in the U.S. national security launch market with its Delta 4 and Atlas 5 rockets, the latter of which is also NASA’s workhorse vehicle for scientific payloads. The Denver-based company has come under fire in recent years due to the skyrocketing costs of the EELV program, which government and industry officials attribute in large part to rising propulsion costs following the retirement of NASA’s space shuttle and to ULA’s absence from the commercial launch market.

The Air Force’s strategy for reining in its launch costs is to pursue a so-called block-buy strategy with ULA while laying the groundwork for renewed competition in the military market. The block buy is intended to stabilize the rocket-making industrial base and reap the cost benefits typically associated with buying in bulk.

But that argument has failed to win over U.S. lawmakers and ULA’s prospective competitors, who argue that that the block buy would lock the Air Force into higher prices than necessary while making it more difficult for new entrants to break into the market. The U.S. Government Accountability Office, a congressional watchdog agency, has urged the Air Force to hold off on the block buy until it has a better handle on what the EELV program should cost.

Among the most vocal industry opponents of the block buy strategy is upstart launch services provider Space Exploration Technologies Corp. (SpaceX) of Hawthorne, Calif., builder and operator of the Falcon 9 rocket. SpaceX, which has successfully launched the medium-lift Falcon 9 four times to date, has won substantial NASA and commercial business and has promised to bring the Pentagon’s launch costs down if given the chance.

In a prepared statement emailed to SpaceNews, SpaceX Chief Executive Elon Musk called the decision a milestone for the U.S. government’s national security launch program. “The United States Air Force should be commended for opening launches to new entrants and restoring competition to the EELV program, which benefits the American taxpayer and provides the American warfighter with the best possible solution for true assured access to space,” he said. “SpaceX looks forward to providing the safest, most reliable and affordable solution for Air Force launches as soon as possible.”

 

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