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SpaceX and United Launch Alliance Face-Off at Hearing for Military Launch Contracts

United Launch Alliance CEO Michael Gass (top left) and SpaceX CEO Elon Musk (bottom right) testified at a hearing before the U.S. Senate Appropriations Subcommittee on Defense on Wed., March 5 - each outlining why their respective launch services are the best choice for the U.S. Government and tax-payer. Photo Credits: Committee on Appropriations / Mike Killian

United Launch Alliance CEO Michael Gass (top left) and SpaceX CEO Elon Musk (bottom right) testified at a hearing before the U.S. Senate Appropriations Subcommittee on Defense on Wed., March 5, each outlining why their respective launch services are the best choice for the U.S. Government and tax-payer. Photo Credits: Committee on Appropriations / Mike Killian

On Wed., March 5, SpaceX CEO Elon Musk and United Launch Alliance (ULA) CEO Michael Gass both testified at a hearing on National Security Space Launch Programs before the U.S. Senate Appropriations Subcommittee on Defense. The hearing had a focus on the Evolved Expendable Launch Vehicle (EELV) program, and both Musk and Gass delivered their sales pitches to the Appropriations Committee as to why their company’s launch services are the best choice for sending sensitive tax-payer Department of Defense satellites into orbit. 

For almost eight years ULA has owned the market as the sole launch provider for the Department of Defense, delivering an impressive 100 percent mission success over 68 launches with the company’s workhorse Delta-IV and Atlas-V launch vehicles. The company, a joint venture between Lockheed Martin and Boeing formed in late 2006, has launched billions of dollars worth of satellites and spacecraft for the DOD and NASA, but over the last several years overall launch costs have more than doubled annually to $1.6 billion.

That sobering fact could, however, change dramatically if SpaceX and Elon Musk have their way.

The launch of Thaicom-6 atop a SpaceX Falcon-9 v1.1 rocket from Cape Canaveral Air Force Station.  Photo Credit: AmericaSpace / John Studwell

The launch of Thaicom-6 atop a SpaceX Falcon-9 v1.1 rocket from Cape Canaveral Air Force Station. Photo Credit: AmericaSpace / John Studwell

“The safety record of the Atlas-V and Delta-IV rockets made by ULA is remarkable, but we do have some concerns about the acquisition strategy, cost, and future of that program,” said Illinois Senator and panel chairman Richard Durbin. “From 2011 to 2014 the amount the Air Force budgeted, for an average of six satellite launches per year, grew by 60 percent. There are many answers as to why the program became more expensive, but the important question is what should we do about it? Over the last three years the Air Force has tried to control costs by stabilizing ULA production with a block buy of 36 rockets while fostering competition from new entrants such as SpaceX. The subcommittee needs to better understand the cost of the current program, how to ensure competition is fair and presents the best value to the government, and whether we need to do more to ensure we can deliver satellites on orbit in the most efficient and affordable manner.”

Durbin added: “Can the Pentagon learn to live with only one major supplier of rockets by better managing that industrial capability, with smarter buying and better negotiating? Or should the Dept. of Defense be more forward-leaning and embrace companies that challenge the rules on how we normally run defense programs?”

ULA’s reliability is unquestionable; there is no doubt they can get the job done, quickly, but Musk and SpaceX claim they can save the government and U.S. tax payer a whopping $300 million—per launch—a cost savings which, in many cases, would pay for both the launch and satellite combined, according to Musk.

“The Air Force and other agencies are simply paying too high a price for launch, and prices have risen to unsustainable levels,” said Musk. “SpaceX was founded to make radical improvements to space transport technology, with particular regard to reliability, safety and affordability. If you took something like a GPS satellite, which is about $140 million, you could actually have a free satellite with our launch, because our launch plus the satellite would cost less than just their launch – which is an enormous difference. Had SpaceX been awarded the missions ULA received under its recent non-competed 36 core block buy we would have saved the tax payers $11.6 billion dollars.”

Musk was not shy about pointing out ULA’s use of Russian hardware, which—in light of recent events across the Pacific—he believes could potentially cause problems to America’s ability to launch national security payloads should U.S./Russian relations deteriorate.

“Our Falcon launch vehicles are truly made in America, designed in California and Texas, with key suppliers spread across the country, and we launch from either Vandenburg Air Force Base or Cape Canaveral Air Force Station,” said Musk. “This stands in stark contrast to the ULA’s most frequently flown vehicle, the Atlas-V, which uses a Russian main engine and where approximately half the airframe is manufactured overseas.  In light of Russia’s de facto annexation of the Ukraine’s Crimea region and the formal severing of military ties, the Atlas V cannot possibly be described as providing ‘assured access to space’ for our nation when supply of the main engine depends on President Putin’s permission.  Given this development, it would seem prudent to reconsider whether the 36 core uncompeted, sole source award to ULA is truly in the best interests of the people of the United States.”

The launch of NASA's JUNO to Jupiter atop a ULA Atlas-V rocket August 5, 2011.  Photo Credit: Mike Killian / AmericaSpace

The launch of NASA’s JUNO to Jupiter atop a ULA Atlas-V rocket on Aug. 5, 2011. Photo Credit: Mike Killian / AmericaSpace

Gass countered by noting the fact that ULA has a two-year supply of those Atlas-V RD-180 engines stockpiled to minimize potential supply disruptions. According to Gass, ULA also has the blueprints and specifications for the engine, and even developed significant engineering and manufacturing capability which ultimately demonstrated the capability to co-produce the RD-180 domestically.

Gass and ULA emphasized their proven reliability during the hearing and—although welcoming the Air Force’s new acquisition strategy to reduce costs and introduce competition—made sure to highlight their concerns to opening the market to multiple launch providers.

“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,” said Gass. “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 that the 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. We are investing in new technology and concepts to make our products better and more affordable. We are investing internal funds to develop a capability to launch two GPS satellites at a time which will cut launch costs almost in half.

“I believe leveraging the demand from the commercial sector is smart, but relying on commercial demand to enable national security carries huge risks, both to the rocket supplier and to its government customers,” added Gass. “ULA’s Atlas V and Delta IV rockets are the most powerful and most reliable in the world. They are the only rockets that fully meet the unique and specialized needs of the national security community. I believe the EELV program has been a major success for the nation. We will continue to provide the assured access the nation needs to deliver critical capabilities to orbit reliably and on-schedule.”

Orbital Sciences Corporation, another established American aerospace company operating their own fleet of rockets and spacecraft, was not present at the hearing to earn a right to compete for future military launch contracts, probably because Orbital currently holds their own $1.9 billion contract with NASA to carry out eight commercial resupply missions to the ISS, the first of which launched on Jan. 9, 2014 (the second launch for NASA, the first being a demonstration flight to secure the contract). Not only is Orbital already carrying out missions for NASA with their own Antares rockets and Cygnus spacecraft, but they also already have their own contracts to build satellites AND launch them for the Dept. of Defense, but on a smaller scale (the company offers small- and medium-class launch services).

“Orbital’s team is absolutely focused on offering the most reliable and cost-effective launch systems to our government customers for their important space missions,” said Ron Grabe, Orbital’s Executive Vice President and General Manager of its Launch Systems Group, in a statement following the company’s successful launch of the ORS-3 mission for the Department of Defense Operationally Responsive Space Office in Nov. 2013. “This dedication and teamwork with the Air Force has resulted in achieving 25 consecutive successful missions since 2000. We look forward to continuing this collaboration under the OSP-3 contract in the years ahead.”

Orbital's Antares rocket launching their Cygnus spacecraft to the ISS on a contracted resupply mission for NASA last Jan.  Photo Credit: AmericaSpace / Mike Killian

Orbital’s Antares rocket launching their Cygnus spacecraft to the ISS on a contracted resupply mission for NASA last Jan. Photo Credit: AmericaSpace / Mike Killian

As stated on Orbital Science’s website, “Under the Orbital/Suborbital Program (OSP), which is managed by the Air Force Space and Missile Systems Center’s Space Development and Test Directorate (SMC/SD) Launch Systems Division (SMC/SDL) located at Kirtland Air Force Base, New Mexico, Orbital designs, integrates, tests and provides space launch services with the Minotaur I, IV, V and VI rockets, as well as other suborbital capabilities with the Minotaur II and III configurations. Orbital’s use of standardized avionics and subsystems, mature processes and experienced personnel make Minotaur rockets both reliable and cost-effective for U.S. government customers.”

SpaceX has proven they can deliver payloads to orbit for both NASA and private companies alike; the company currently holds a $1.6 billion contract to launch at least 12 resupply missions to the International Space Station for NASA and has already launched for NASA four times, with three of those missions having visited the ISS. Musk’s company also currently has an international backlog of some 50 civilian and commercial launch contracts totaling about $5 billion.

“If our rockets are good enough for NASA, why aren’t they good enough for the Air Force?” asked Musk at Wednesday’s hearing. “It makes no sense.”

SpaceX is scheduled to launch their third contracted ISS resupply mission under a Commercial Resupply Services contract with NASA as soon as March 16.

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20 comments to SpaceX and United Launch Alliance Face-Off at Hearing for Military Launch Contracts

  • JohnFornaro

    It’s clinically interesting to see how ULA argues that their uncompeted 36 launch block buy should stand, holding out that they have a two year supply of stockpiled RD-180’s.

    If there were 18 launches a year scheduled, their argument might make sense. Instead, they chose the cognitively dissonant argument, quietly pretending that the Russian collaboration will survive the current unrest in the Ukraine, and any future political problems that might arise between Russia and the US.

    Presumably, DOD will realize that the reliability argument only holds for two years, which is a very short time, considering the fluidity of likely global events.

  • Tracy the Troll

    Musk said he started SpaceX to make Humanity a multi-planet species. At the time I thought he was premature in thinking our demise on Earth was just around the corner…. Then Obama was elected, Iran decided they need Nuclear weapons while all of Irans’ neighbors will need them to counter Iran and the world just realized that Stalin has come back from the grave in the form of Putin while the most dangerous WMD of all according the current Administration is “Climate Change” so maybe he is right …We need to leave Earth and soon as such …….SpaceX should continue to drive launch cost down through re-useability, re-useability and re-useability to get the cost cheap enough to deliver private sector space customers (which he currently has about 50 launches worth $5B) $100.00 per lb access off this planet… Entrenching himself in the Big Pig of the government trough is NOT going to further LOWER launch costs…Which tells me he is trying to increase profit margins…

  • Elvis in Space

    Elon has to make a profit to afford his plans. If he can make a profit and save the tax payer money AND not share it with Stali…I mean Putin, then he’s cool with me. Don’t see a problem.

    • Tracy the Troll

      Elvis he does need to make a profit….I just want it to be in volume in the hundreds of launches annually…Not the dozen or so from the US Military

    • SpaceX has been profitable for over six years now, and reported over $450 million in revenue in 2012 alone. You can do the research yourself if you want specifics for every year since 2007. The company is cash-flow positive, any statement to the contrary is simply false. Don’t forget too SpaceX has a manifest of around 50 commercial and government launches contracted through 2017 totalling some $5 billion…

      – Mike Killian

      • Tracy the Troll

        Mike,
        I just think the US government work will ultimately create to much RED TAPE that prevents SpaceX from creating 100% reusable rocket systems. With such a large manifest of purely private sector launches why be involved in the slow lane of government space transport…

  • Ken Frazer

    I’m 100% on board with Musk! Mr.Elon Musk should be looked at as this worlds modern day Renaissance man.
    His company is rolling in profits already is and even attracting the attention of acquisitions departments from big buyers like Apple.
    Another plus is these parts are made in the US and he aims to keep jobs in America.
    He also seems to be no a fan of the crony capitalism that has been a growing plague in recent decades.
    Competition is what makes us better and provides growth. When big businesses abide by laws first off and compete, there is usually a positive outcome for the common folk.

    • Ken,

      We all in the space business need to recognize one man’s crony capitalist is another’s gov’t subsidized market leader. It’s all in your point of view.

      I’ll tell you what I’m 100% on board with—growing our space program so that it has the funding to walk and chew gum at the same time, so that we can do both commercial crew and build our beyond low-Earth orbit exploration capability. Because if we don’t grow the space budget pie, then the at times uncivil civil war in human space flight will only drag on and continue to divide the space community, giving aid and comfort to those who are trying to lower funding for this great endeavor.

  • William

    Rather than take sides (as I see most posteres on AmericaSpace.com do), how about we recognize that ULA as well as SpaceX competing for launch contracts has already benefited the tax payer. Most of the “fan boys” on this website would like to see all of the contracts go to SpaceX. If that were to happen, ULA would most likely dissolve, and SpaceX would corner the market. Do you honestly think the taxpayer’s bill would go down at that point?

    Also, in response to Tracy the Troll’s silly attack on the Administration, let’s be clear: the Administration’s approach to NASA and our interstellar ambitions as a whole has, for the most part, been the right course. You can argue the details, but you can’t argue with the fact that U.S. interests in launch vehicles and exploration have EXPLODED since the President took office.

    • Tracy the Troll

      William
      I simply believe that SpaceX should not partake in any further government contracting because the it risks further developing the re-useability model that will make space transport cheap. Additionally when the current ISS cargo resupply mission ends, they should not pursue anymore contracts…Concentrate only on the commercial private sector markets and citizen transportation to Mars…

      The current administration has taken the US down a path which no other administration has. These are very risky times and we desperately need alternatives to Earth if we are to survive as a species.

    • I can argue, and do so convincingly, that the current Administration couldn’t find a compelling space policy for beyond Earth exploration in an otherwise empty paper sack using an interactive guide with turn-by-turn instructions.

      The Administration has has three BEO plans:
      1) Great Give-Away—Cancel the program of record in 2010, give all the money to “commercial space”, and not think about going beyond low-Earth orbit for 15 more years.

      2) Asteroid Fly-By—Only it was known at the time that such a mission had at a minimum 1/6 chance of loss-of-crew.

      3) Asteroid Rendezvous—bring the asteroid to us! This idea is so hair brained that I won’t even go into the risk matrix.

      None of these garnered much support in the spaceflight community, never mind the astronaut corps, because they were, in the words of Neil Armstrong, conceived in private by a small group and unvetted by professionals which resulted poor policy choices.

      You know what hasn’t happened? This Administration’s space people have not gone to NASA, RAND, or anyone else who knows what they are talking about and asked for policy recommendations for BEO HSF exploration given the hardware that we’re building.

      Why has this happened? Because the President cares more about watching Kentucky blue grass grow than space.

      • Tracy the Troll

        Jim,
        Why do you suppose that is that Administration does not want to go BEO? Is it possible that they do not want to know what is out there? If you are Planetary Resources the Asteroid Rendezvous makes all kind of sense…

        • To answer that, I’ll let the President’s own history speak for itself.

          Then candidate Obama’s first statement about space was an education policy position released on Nov. 21, 2007. On the last page of the paper, the candidate explained that the education programs described in the paper would be paid for by cutting the Constellation program by 65% for five years.

          http://web.archive.org/web/20080102204643/http://www.barackobama.com/issues/pdf/PreK-12EducationFactSheet.pdf

          So I do believe at the man’s very core, the President does not believe that the space program adds value to our nation.

          Bolden twice went on the record about a year ago to express that administration policy was not to return to the Moon and that the only way the US would ever do so was if another nation led the way.

          Meanwhile, it is an open secret that the Administration would still like to slow the Orion program and kill the SLS program. This is evidenced by the Administration’s annual attempts in its proposed NASA budgets over the last four years to cut funding for both Orion and SLS. Additionally, the Administration continues to withhold well over 10% of appropriated funds funds from those programs for termination liability, totaling nearly half a billion in 2013, never mind that it admittedly can not legally terminate those programs.

          President Obama will go down in history for many things, one if which will be that he was the President most opposed to human spaceflight.

      • William

        LOL, well you clearly have NO idea about any of what you just posted, so I’ll refrain from arguing against your… points, if you can call them that?

  • alex wilson

    I guess I’ll ask the question no one else seems to want to:
    I Musk is making soooo much money in the commercial launch sector, why is so interested in competing for DoD launches? why would any company wade into the cesspool of “national security” paperwork if it was raking in the profits Musk claims SpaceX is making?

    • That is an excellent question.

    • If I had to guess I’d say they want as much business as possible. If they are trying to privately fund a mission to Mars I figure they need as much money as possible. And since the launch business is limited any business is worth it. Even if you have to deal with all the red tape. They can’t scale as fast as they want without it.

  • Jeff Wright

    I’ve always thought that the hostility aimed at SLS should be aimed at ULA instead. I remember the Boeing managers and the EELV data theft from LockMart before they became on big happy fleet.

    EELVs have neither the capability of SLS, nor the low-cost of Falcon.

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