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News from the 30th Space Symposium | Responding to Critics, ULA Discloses Pricing Information
COLORADO SPRINGS, Colo. — Seeking to blunt critics who say it is overcharging the U.S. government, rocket maker United Launch Alliance on May 19 released previously undisclosed pricing information, including the value of a controversial U.S. Air Force contract for 36 launch vehicle cores.
Michael Gass, chief executive of Denver-based ULA, said the company’s average per-launch price to the U.S. government is $225 million, a figure that includes the block buy contract as well as pre-existing launch backlog. That figure represents the combined value of the contracts divided by the number of missions.
The value of the block buy contract, which covers 36 launch vehicle cores and was concluded in June 2013, is $11 billion, according to ULA spokeswoman Jessica Rye. The contract is being challenged in U.S. federal court by rocket maker Space Exploration Technologies Corp., which argues that a large subset of those missions should have been put out for bid as opposed to being awarded to ULA on a sole-source basis.
Speaking to reporters here at the 30th Space Symposium, Gass also said ULA is taking steps to accelerate production of its Delta 4 rocket following fresh questions about the future availability of the company’s other workhorse vehicle, the Atlas 5. Those questions stem from Russian threats to restrict the use of the Russian-built engine that powers the first stage of the Atlas 5.
ULA has long faced questions about its pricing as a virtual monopoly provider to the Pentagon, and the scrutiny has become more intense thanks to an aggressive lobbying campaign by SpaceX, which seeks to break ULA’s hold on the market. At the same time, Russian meddling in Ukraine has led to a chill in relations between Moscow and Washington, potentially jeopardizing future availability of the Atlas 5’s RD-180 main engine.
SpaceX and others have said each of ULA’s launches costs well over $350 million and sometimes as much as $460 million. Those numbers were arrived at by dividing the Air Force’s total Evolved Expendable Launch Vehicle budget by the number of launches, Gass said.
But Gass said those numbers are not accurate because ULA’s Air Force contracts do not account for the full EELV budget. The unclassified portion of the EELV budget is $1.4 billion this year.
Gass said the average cost of an Atlas 5 401, one of the smaller versions of that vehicle, was about $164 million per launch for those missions under contract. The average cost of ULA’s largest rocket, the Delta 4 Heavy, was about $350 million.
Future versions of the Atlas 5 401, meaning those purchased after the block buy, would start at less than $100 million, he said.
Gass also challenged SpaceX on a number of other fronts, including its relatively short track record of launches. SpaceX has launched its Falcon 9 rocket nine times to date, all successfully, whereas ULA has launched 83 missions without a failure.
He also noted that SpaceX has experienced numerous launch delays and said the company may have signed more launch contracts than it can execute. “It’s time for the other company to prove their technology,” Gass said.
SpaceX’s court challenge to ULA’s block buy contract is an example of that company “trying to change the rules for them,” he said. SpaceX contends in its lawsuit that it has fulfilled the requirements to certify its Falcon 9 rocket to launch national security satellites, something the Air Force vehemently denies.
Air Force officials say SpaceX’s Falcon 9 must be fully certified to compete for EELV missions, something they expect to happen in 2015.
SpaceX advertises Falcon 9 prices that are considerably below the ULA prices disclosed by Gass, but SpaceX officials concede that government requirements are likely to drive up its costs.
Gass said SpaceX might find that it must charge more than it expects. As a new entrant in the EELV program, he said, “you don’t know what you don’t know.”
Gass said by ordering 36 rocket cores at once, the Air Force was able to secure an attractive price. Air Force officials back that assertion.
Based on the block buy order, ULA was able to order components for 50 rockets, a move that helped it achieve further cost reductions, Gass said. ULA also launches satellites for NASA and has the occasional commercial customer.
In a statement emailed to SpaceNews, SpaceX spokeswoman Emily Shanklin said ULA’s numbers don’t add up. “The Air Force budget for 2015 speaks for itself — in the budget, three single core vehicles add up to $1.212B, or $404M per vehicle. Mr. Gass’ statements run counter to budget reality.
“ULA has the most expensive launch services in the world—nearly double that of the next most expensive competitor. When you don’t have to compete, there’s little incentive to control costs or innovate.”
When the Air Force announced plans for the block buy, it also said it would put 14 missions up for bid, giving new entrants like SpaceX a crack at the market. ULA has long said it plans to compete for those missions. That number has since been reduced to seven or eight missions, which Air Force officials say is due to factors including budget constraints and the fact that some of its satellites are lasting longer on orbit than expected.
Meanwhile, Gass said, ULA will be able to fulfill the Air Force’s launch needs even if Russia makes good on recent threats to bar the use of the RD-180 engine in national security missions.
Following an Atlas 5 launch May 22, the company has 15 RD-180 engines in the United States, with five more expected to arrive later this year. If the ban is put in place, ULA would juggle its manifest to move more national security missions to its more expensive Delta 4 rocket. “There is flexibility to reallocate,” he said.
ULA’s block buy contract provides a menu of pricing options for changes, he said. In addition, Gass said ULA is also taking steps to accelerate the process to build more Delta 4 rockets if needed.
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