popular mechanics wrote:Life got tougher this week for the United Launch Alliance, the single provider of space launches for the United States Air Force and national security agencies. Elon Musk’s scrappy company, SpaceX, is filing a lawsuit against ULA, which won a 36-launch contract from the federal government in December 2013.
The Pentagon expects to spend $72 billion on that launch program by 2030, and that huge figure has attracted lots of attention. Sen. John McCain has scrutinized the award and is seeking to review the process; he already grilled the Air Force Chief of Staff and others over the issue on Capitol Hill. By Thursday, the ULA had lost its first legal skirmish, as a judge approved an injunction against buying Russian engines on ground the purchases violate Russian sanctions.
Yes, it’s trendy to hate on ULA. And they are not easy to defend, since they cost a lot of money and, until now, have had no competition. But despite having cornered the market on government launches for years, ULA’s job is not easy. Not many entities can launch payloads for a fickle military and NASA customers as regularly and successfully as ULA has done. The space launch landscape is now shifting under ULA’s feet, leaving it with full manifests but an uncertain future.
Warts and All
ULA was formed to put an end to bitter competition between aerospace giants Lockheed Martin and Boeing. The two were going at each other like gladiators in the 1990s and 2000s, fighting for the hundreds of billions at stake in national security launches. Both companies designed rockets for the job. The fight got ugly; accusations of industrial espionage were leveled and federal law enforcement was summoned. In 2003, two former managers for Boeing were charged with stealing Lockheed secrets.
The solution: have the companies form a 50/50 partnership. The Federal Trade Commission gave its anti-trust clearance in October 2006—but with caveats aplenty, saying the formation of a joint venture "is likely to cause significant anticompetitive harm." But this is space launch, folks. The most important criterion is not fairness or frugality, but reliability. At the time, private space was limping along and Russians and Europeans had locked down the commercial satellite launch market. The national security benefits were enough that the FTC judged the venture worthwhile.
ULA began operations on December 1, 2006, offering satellite shots in Delta IV and Atlas V rockets. The organization has performed 81 successful launches since 2006, an enviable record. Less happily: ULA’s Evolved Expendable Launch Vehicle program busts its original per unit cost by 286 percent.
Over time, the monopoly structure allowed for ways to trim those costs. For example, the Air Force began to make blocks purchases, which makes launches cheaper by stabilizing demand. "This disciplined approach saved the government and taxpayers approximately $4 billion while keeping our nation’s assured access to deliver critical national security assets safely to space," ULA says in a statement.
The plan—warts and all—was working. When the Space Shuttle retired in 2011, ULA was still lofting satellites into space with regularity. America could not launch astronauts but, thanks to ULA, spy sats, Mars missions, and deep space probes left from U.S. soil. It was the backbone of U.S. spaceflight.
Customers accepted high costs. ULA launches might be expensive, people though, and the Air Force and NASA's own rules probably drove up the cost even more. But whether the rockets rise in Russia, French Guiana, China, the USA, launches are expensive. It costs money to assure the precious payloads get into space safely.
At least that’s the way space launch used to be regarded, until Elon Musk’s SpaceX entered the market.
SpaceX Rising
In 2006, when ULA formed, SpaceX was getting its footing. Musk was offering flight so cheap that it seemed impossible he could get the job done safely. Since then, he’s achieved one milestone after another, including launching commercial sats and delivering cargo to the International Space Station, and his costs have not risen much. Now he wants to launch for the Air Force, and there is $72 billion at stake. SpaceX will start competing with the ULA for launch contracts as soon as this year, but the Air Force only opened 14 opportunities to them. The other 36 went to ULA without competition, and that’s why SpaceX sued.
Musk’s rockets cost $60 million per launch. With added Air Force requirements, the price rises to $90 million. Still, SpaceX’s price tag is better by far than a $380 million ULA launch. Musk this week wondered out loud, "I don’t know why ULA launches cost so much," then offered his own theories. He cited modern manufacturing techniques and launch procedures as a main driver of efficiency—and lower cost. This is not hyperbole. Designing something from scratch offers definite chances for improvement.
People understandably focus on price as the main difference between ULA and SpaceX. But when you see them up close another divide becomes clear. ULA is built for the occasional, important launch. SpaceX is trying to become a steady, regular supplier of space access.
How do I know this? During a recent trip to Cape Canaveral, while I toured facilities with ULA staff, one described the benefits of taking on private space clients. "Space launch is a low-rate venture," he said. ULA likes it that way—it's an organization that's comfortable doing 10 launches a year. (What Musk is proposing, they feel, is nuts.) By contrast, SpaceX president Gwynne Shotwell tells PM that her company wants space launch to be "more like an aircraft-type operation. We want to change the flavor of the industry."
It's working. ULA and its business model have benefitted from the industry’s reluctance to take risks with their payloads—SpaceX might be cheap, but they know they can trust Boeing and Lockheed. But, again, poor ULA. It turns out the Air Force is ready to adopt more risk. At a recent press conference, the ULA's CEO Dan Collins said the government has a new attitude about cost versus risk. That opens up chances for ULA to save money, but they’ll never catch up with SpaceX’s rates. To them, this is a question of old-school reliability.
ULA engineers there are talented, dedicated, and put 10 launches a year into space. The United States would be grounded without them. But if SpaceX can follow through with its obligations, and can make truly reusable spacecraft by landing and reusing upper stages, then ULA is doomed. It has played the game well, but the rules have changed, and there was no way ULA's hardware and business model can keep up with SpaceX’s breakneck innovation. Their only hope is seems to be a SpaceX launch malfunction.
The Russian Factor
Once upon a time—not that long ago—having space business dealings with Russia seemed like a great thing. Now, with Vladimir Putin carving up Ukraine and facing sanctions, the use of Russian hardware is a mark of Cain. That's a big problem for ULA, which uses Russian engines in some of its rockets.
"On the surface it appears there's a good probability of some sanctions violation," Musk said this week. "This deserves to have a spotlight on it. Sunlight is the best disinfectant."
He's talking about an engine called the RD-180. Its very existence was a mark of the rosy post-Cold War environment. Lockheed Martin and Russian company NPO Energomash co-developed the RD-180 during the 1990s. The Russians had the experience and the recipe for effective alloys; Lockheed had the money and had those U.S. government space launches in sight. At the time, the pairing was seen as successful and mutually beneficial—it kept Russian rocketeers away from rogue regimes, so the theory went.
Inevitably, politics got in the way. The Russians didn’t like the engine’s use on military hardware, and the Americans felt the reliance on Moscow for parts gave the Russians too much leverage. Threats were levied. ULA, wisely, ordered a two-year supply of the engines to keep on hand in case the Russians pulled the plug.
Now, as a consequence of sanctions against Russia, a court in the United States has pulled the plug in future purchases. ULA will still be able to supply launches—kudos to them for preparing ahead for an interruption. But it will take two years and at least $1 billion to develop a replacement for the RD-180.
All the while, SpaceX can rightfully declare that it has a U.S.-made engine right here, ready to go. In that sense, the chaos in Ukraine is just the latest in a string of lucky breaks that have accompanied SpaceX's great design and revolutionary business approach. ULA, on the other hand, can’t catch a break in international politics.
Few will mourn its loss if private space renders ULA extinct. But first, appreciate it for what it was. ULA was born under a cloud, performed better than could be expected, and tried to save money when it could. Now it is simply the living ghost of another era.