The chairman and ranking member of the House Permanent Select Committee on Intelligence proposed eliminating the Defense Department’s infrastructure subsidy provided to United Launch Alliance
(ULA) as part of increasing competition for the Air Force’s Evolved Expendable Launch Vehicle (EELV) program.
In an Aug. 2 letter to Defense Secretary Leon Panetta, committee Chairman Michael Rogers (R-Mich.) and Ranking Member Dutch Ruppersberger (D-Md.) said they are concerned the Air Force may offer ULA a five-year “no compete” block buy of launches. The two said they are also concerned that any EELV block buy that goes beyond three years’ worth of launches will unnecessarily exclude competition. ULA is a joint venture between Boeing [BA] and Lockheed Martin [LMT].
“With the best of intentions to achieve mission reliability over the last two decades, we have created a United States government heavy launch capability that lacks domestic competition and is unable to compete internationally due to high costs,” the letter said.
Air Force spokeswoman Maj. Tracy Bunko defended the service’s block buy policy yesterday in an email, saying the EELV acquisition strategy is based upon procuring a planned number of cores and launches needed in each fiscal year.
“This will allow the contractor to pursue economic order quantity procurements from subcontractors and vendors, make investments that reduce overall cost and achieve greater manufacturing learning curve reductions,” Bunko said.
Bunko said the Air Force, in addition to the planned block buy, will “concurrently infuse” competition as soon as one, at the minimum, certified new entrant launch vehicle is available to meet the government’s risk requirements for placing critical national security payloads in orbit. She emphasized the block buy and competition plan are not mutually exclusive and are intended to be concurrent.
The letter said companies like Orbital Sciences [ORB] and Space Exploration Technologies (SpaceX) are developing “impressive capabilities” that are breathing new life into the U.S. space launch market. The letter noted SpaceX successfully launched its Falcon 9 rocket three times, including docking a spacecraft with the International Space Station in May.
“These changes are opening an important window of opportunity to make room for new EELV competitors and reap significant cost savings without sacrificing launch reliability,” the letter said.
Orbital Sciences CEO David Thompson said in a May letter to Senate Armed Services Committee Chairman Carl Levin (D-Mich.) and Ranking Member John McCain (R-Ariz.) the separate EELV launch capability sustainment contract provides an unfair cost subsidy to ULA. Thompson also said the government subsidizes ULA by using a cost-plus contract to fund its annual sustaining engineering, manufacturing, operations and overhead costs. Thompson said this cost-plus contract is separate from production contracts and that fund the costs of building and launching individual EELV rockets (Defense Daily, May 18).
ULA builds the EELV medium- and heavy-launch system, made up of Delta IV and Atlas V rockets. The Air Force, NASA and the National Reconnaissance Office all buy launch services from ULA, which is the only supplier for that class of launch vehicles (Defense Daily, April 5, 2011).
ULA did not respond to an email for comment by press time.