United Launch Alliance (ULA) never let its exclusivity agreement with RD-180 engine provider RD AMROSS expire, according to company CEO Michael Gass, refuting a key allegation in
Orbital Sciences’ [ORB] lawsuit against ULA.
“We have an ongoing lawsuit, so we’ll not comment,” Gass told Defense Daily this month. “But I would submit that we never let it lapse.”
Orbital alleges ULA let an exclusivity agreement with RD AMROSS expire two-and-one-half years before renewing it in the late 2000s as a direct reaction to Orbital’s attempts to compete in the medium-class market. Orbital last summer sued ULA and RD AMROSS, alleging it reached an agreement with Rocketdyne, formerly a division of United Technology Corp.’s [UTX] Pratt & Whitney, to supply RD AMROSS’ RD-180 engine to Orbital so that, with its Antares launch vehicle, it could remain a long-term competitor in the medium lift market, which as of now ULA holds a monopoly on. ULA uses the RD-180 in its Atlas V launch vehicle.
Orbital said Lockheed Martin [LMT], which has 50 percent interest in ULA along with Boeing [BA], entered into a 10-year exclusivity agreement with RD AMROSS in August 1996 that wasn’t renewed nor extended after it expired. Orbital said Gass attended a telephone meeting of RD AMROSS’ board of directors to consider the sale of RD-180s to Orbital. This displeased Orbital because it believed Gass had no valid reason to participate in the call as it is in RD AMROSS’ economic interest, as an engine provider, to sell as many RD-180 engines to as many buyers as possible.
It was after that meeting that RD AMROSS backed out of its agreement to sell RD-180s to Orbital, the company alleged. With no alternatives, Orbital said it was forced to buy 20 AJ-26 engines from GenCorp’s [GY] Aerojet. Rocketdyne is now a division of Aerojet.
Gass this month disputed the notion that participating in a conference call with RD AMROSS’ board of directors was in any way unusual or inappropriate. RD AMROSS is a joint venture between United Technologies and Russian engine manufacturer NPO Energomash, which develops the RD-180.
“I talk to RD AMROSS and participate on their board on a regular basis,” Gass said. “I attend meetings. ULA is a portion of the RD AMROSS venture, so I participate on a quarterly basis of all board meetings. (That) is nothing special.”
Subsequently, in 2010, Orbital said ULA and RD AMROSS executed an extension of the expired exclusivity agreement, extending it through July 31, 2016. Orbital said it then requested to buy RD-180s after the exclusivity agreement ended in 2016, only to have RD AMROSS reject the deal once again and extend its agreement with ULA through 2018.
Orbital wants access to the RD-180 because it currently relies on the AJ-26 engine, an upgraded version of the Russian NK-33 engine developed by Russian manufacturer Kuznetsov, which isn’t in production and is in low quantity. Orbital said the RD-180 is the only engine in the world that can help it compete in the medium-lift market.
Orbital said in the lawsuit it has suffered damages of at least $515 million and is asking for treble punitive damages of more than $1.5 billion (Defense Daily, June 25). The Federal Trade Commission (FTC) is also investigating the exclusivity agreement (Defense Daily, June 24). The lawsuit, Orbital Sciences v. United Launch Alliance and RD AMROSS, was filed in U.S. District Court for the Eastern District of Virginia.