Monday, October 17, 2011

Government watchdog report urges better evaluate launch industrial base before signing $15B long term deal with United Launch Alliance

SpaceX CEO had raised questions of fairness, cost

A report issued today by a government watchdog agency the U.S. Government Accountability Office urged the Department of Defense to review plans for a bulk buy of United Launch Alliance (ULA) rockets prior to committing to buy 40 ULA boosters over five years, starting in the 2013 budget year. The report also suggested the D.O.D. should conduct an independent assessment of the health of the U.S. launch industrial base, paying special attention to engine manufacturers.
The report also highlighted other areas that the agency believes need further study before the D.O.D. commits to their plan to spend about $15 billion for launch services from fiscal year 2013 to fiscal year 2017 through DOD's Evolved Expendable Launch Vehicle (EELV) program. The program launches satellites for military, intelligence, civil, and commercial customers.
Prior to the report being released,
SpaceX founder and CEO Elon Musk was critical of the purchase plan, which would have given ULA an unfair advantage in securing military payloads, according to a report published by SpaceX is already under contract to launch NASA cargo to the International Space Station and for a slate of commercial payloads, wants a chance to compete for military launches:

"Musk says the company’s Falcon 9 rocket, which has launched twice, and a planned heavy-lift version of it could by 2014 launch defense missions for at least a billion dollars less annually than ULA — and more if the worst-case cost projections are accurate.
A five-year deal for ULA would mean SpaceX couldn’t compete for those missions until 2018 and fly them for about a decade, he said.
That would diminish the company’s competitiveness for launches of commercial satellites, a market largely lost to overseas competitors.
“The Air Force is the biggest single buyer of satellite launch in the world, so it’s kind of like being shut out by the major anchor tenant in your country,” Musk said. “It would hurt our ability to compete effectively in the rest of the world, particularly against the rising power of China.”
Musk wonders why military officials haven’t deemed SpaceX an integral part of the launch industrial base it wants to stabilize, rather than just backing giant contractors Boeing and Lockheed.
But SpaceX says such a large-scale purchase would effectively shut it out of that market for a decade, limiting competition and wasting money.
“We just don’t think that’s in the best interests of the country,” said SpaceX CEO Elon Musk.
The Falcon 9, he notes, is entirely made in America, while ULA’s most frequently flown rocket, the Atlas V, is powered by a Russian main engine and includes components from Switzerland.
ULA says a long-term deal wouldn’t eliminate competition. A buy of 40 ULA boosters would cover only 80 percent of the projected national security demand, Gass said, leaving the government flexibility to broaden the field of providers if it chooses. SpaceX doubts that excess demand exists.
The Air Force says its internal studies have encouraged block buys to control costs, but it is looking at a range of options and has made no decision."

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