The Federal Trade Commission (FTC) this spring began an investigation into potential anti-competitive practices on the part of space launch services provider United Launch Alliance (ULA) and rocket engine supplier RD AMROSS related to the exclusive supply of the RD-180 rocket engine. 

RD AMROSS, a joint venture between two rocket engine companies, Russia’s NPO Energomash andUnited Technologies Corp.’s [UTX] Pratt & Whitney Rocketdyne unit, provides the RD-180 to ULA as the main engine for the Atlas V launch vehicle. The RD-180 is manufactured by Energomash.

ULA is a joint venture between Boeing [BA] and Lockheed Martin [LMT] and combines the heavy lift Atlas V and Delta IV launch vehicles along with the medium lift Delta II rocket, for which there is still an inventory but is no longer in production.

The FTC is investigating whether an agreement between RD AMROSS and ULA for the exclusive supply of the RD-180 engine is preventing other companies from competing for space launch services, particularly in the medium-lift space.

It has subpoenaed at least two space launch services providers as part of its investigation, Orbital Sciences Corp. [ORB] and SpaceX. Both companies confirmed with Defense Daily that they received the subpoenas but declined further comment. The FTC also declined to comment on the matter.

However, Orbital has circulated a white paper on Capitol Hill claiming “that it is being denied the opportunity to compete” in the medium-class launch market due to the “anticompetitive exclusive agreement” that is “unlawfully restricting access” to the RD-180 engine. A copy of the white paper, which Orbital entitled Affordable Space Launch at the Crossroads, was obtained by Defense Daily.

In the medium-lift launch space, Orbital has developed the Antares launcher, which currently relies on the AJ-26 engine, an upgraded version of the Russian NK-33 engine. GenCorp’s [GY] Aerojet division provides the AJ-26 to Orbital but the problem is there are a limited number of the AJ-26/NK-33s remaining and to be a long-term competitor in the medium-launch business Orbital wants to purchase the RD-180, for which its says in the white paper that there are currently “no viable alternatives.” 

Without access to the RD-180, Orbital warns “that the Antares rocket will not be available to ensure that military, civil and commercial customers will have affordable medium-class launch alternatives.”

A ULA spokeswoman told Defense Daily via an email response to questions that her company is cooperating with the FTC and that its “contracts to purchase the RD-180 engine are lawful, pro-competitive and designed to provide the most reliable launch vehicle possible for critical U.S. government missions.” She declined further comment on the matter given the ongoing investigation by the FTC.

The Air Force last fall received approval from the Pentagon to negotiate the acquisition of as many as 36 Evolved Expendable Launch Vehicle (EELV) launches from ULA over five years. The EELV program includes the Delta IV and Atlas V launch vehicles. On top of that, the DoD approval includes an additional 14 launches that must be competed.

Last December SpaceX received an award from the Air Force for two EELV missions involving the company’s Falcon 9 and Falcon Heavy rockets, marking the first EELV-class awards to the company. 

Orbital has previously complained that the Air Force’s plans for an EELV block buy award with ULA would maintain a “long-term, high-cost monopoly” and “inhibit” competition for space launch services. Orbital also complained that ULA is receiving an unfair subsidy for its launches.

Last October, the Air Force awarded ULA a one-year $1.2 billion contract related to the Delta IV and Atlas V as a “launch capability” sustainment until a new block contract is awarded. No launches were covered by the contract.

The leaders of the House Intelligence Committee, chairman Mike Rogers (R-Mich.) and ranking member Dutch Ruppersberger (D-Md.), last August wrote to then Defense Secretary Leon Panetta that ULA is receiving a subsidy through the no-compete portion of the EELV contract. Orbital and SpaceX have also complained that the launch costs for ULA don’t account for all costs associated with the joint venture’s launches such as the $1 billion-plus annual EELV sustainment capability contract.

Orbital and SpaceX don’t receive launch capability sustainment awards from the Air Force.

Congressional interest into EELV competition goes beyond the House Intelligence panel. The House Armed Services Committee in its report accompanying their version of the FY ’14 Defense Authorization Bill has directed the Air Force to ensure that cost, schedule and performance are factored into EELV awards, including other contracts such as the launch capability and commercial resupply services for the International Space Station.

The EELV launch capability contracts enable ULA to absorb various costs associated with maintaining a launch capacity in a “highly variable launch environment,” the ULA spokeswoman wrote. In addition to providing mission assurance and launch capability, the contracts provide “for the engineering capability to support the fleets, the launch crews, consumable costs for launch and pays the annual amortization costs for the critical infrastructure (contractor invested and funded originally,” she wrote.