Over at InnerSpace.net, Stewart Money is pushing for an end to ULA’s current monopoly on military launches by letting SpaceX fully compete for contracts immediately:
In the meantime, with news of defense cutbacks and the impacts of sequestration, which Administrator Bolden pointed out yesterday is a 10 year program, presented in dire tones almost daily, why exactly is it that United Launch Alliance, utterly uncompetitive on the commercial market, and with no meaningful program of technology improvement remotely on par with that being undertaken by SpaceX, still enjoys a competition-free firewall around 80% of its business, and worse, much worse, is still receiving an annual launch subsidy ranging between $500 million and $1 billion per year?
It’s a good question. The answer lies in understanding how the military performs its duties in keeping the nation safe, and in the different statuses of the two company’s launch vehicles.
If you’re a risk analyst evaluating rockets for the Air Force, there are a few things that you know very well:
- ULA’s rockets are extremely reliable.
- The launch vehicles have flown enough times for you to be able to quantify just how reliable they are.
- The military has a lot of insight into how the launch vehicles are designed, built and operated based upon years of day-to-day interactions with ULA.
- The spacecraft you need to launch are extremely expensive and vital to military readiness.
- The nature of the payloads means that reliability is far more important than cost.
On the other side of the ledger, you also know the following:
- Five launches is not sufficient to know how reliable Falcon 9 will be over the long term.
- You have far less insight into the rocket’s design, manufacture and operations than you do with ULA’s launch vehicles.
- There have been some serious anomalies during the missions.
- SpaceX’s practice of downplaying the seriousness of these problems is alienating the very people who decide on launch vehicle purchases.
- The company is about to introduce an upgraded version of the rocket, with changes designed to increase reliability but which also bring uncertainties.
When you add all these things up, it leads to a fairly straightforward calculation:
Yes, you could save money going with Falcon 9s. But, are the saving sufficient to justify the increased risk of going with a less proven rocket? If it works, great. If it doesn’t, the amount you’ve saved is dwarfed by the expense of replacing an extremely expensive satellite. And you’ve now got a hole in the country’s defense posture, the cost of which can’t be easily calculated in dollars and cents.
From that perspective, it makes sense that the military is not rushing to let SpaceX compete for launches at this point. The risks outweigh the benefits at this point. With two reliable — albeit expensive — rockets already flying, there’s no immediate need to add another launch vehicle that is still going through a maturation process. Especially since cost is a secondary issue.
The other positive factor is that SpaceX has other partners that are willing to help it to prove the Falcon 9’s reliability and to retire risks. NASA is paying for a series of cargo resupply missions to the International Space Station. The stakes on these flights are much lower than for national security missions. NASA can easily recover from losing a Dragon full of cargo, which nearly happened on the most recent mission.
SpaceX also has an ever lengthening manifest of commercial launches to fly. Many of those satellites will be going to geosynchronous orbit, a capability the Falcon 9 hasn’t yet demonstrated that is crucial to the military. With the private sector willing to take on those risks, there’s little reason for the Air Force to rush in.
In a broader sense, Money is being a bit too harsh on ULA. The company is hardly standing still in the face of competition. ULA is pursuing a root-and-branch overall of the Centaur upper stage, which includes joint development work with XCOR on a new engine that could dramatically lower costs. None of that is as dramatic as trying to recover the entire rocket for reuse, but these efforts should not be so easily dismissed.
In the meantime, quality control problems with Russian and Ukrainian launches have forced commercial satellite companies to rethink their emphasis on cost savings in favor of reliability.
Satellite operators also showed renewed interest in two vehicles that are not major players in the commercial launch market: the Atlas V and Delta IV, both manufactured by United Launch Alliance (ULA). While the Atlas V has done a handful of commercial launches, its prices have typically kept it out of the commercial market, with both vehicles filling up their manifests with less cost-sensitive US government payloads instead.
“Not many years ago, Eutelsat, like many other satellite operators, used Delta and Atlas,” said Michel de Rosen, president of Eutelsat. “Well, these are not available any more, because Uncle Sam is keeping them busy and rich.”
The satellite executives hoped that ULA could find ways to lower the costs of their vehicles and make them more competitive. The Atlas V “is an excellent rocket, but historically their prices have been out of reach for our industry,” said McGlade. “If we can see a more competitive ULA, one where they can launch more rockets, do it on time, and maintain the reliability they’ve had, I think that’s certainly another option.”
Robert Cleave, president of Lockheed Martin Commercial Launch Services, which markets the Atlas V to commercial customers, hinted at the Satellite 2013 launch panel that the company might be making progress on that front. “We’ve got some great news coming out soon about that,” he said. Both a block buy of launch vehicles by the US government, plus an additional block buy by ULA’s shareholders, Boeing and Lockheed Martin, will drive down costs. “With that, our recurring price becomes very competitive in the marketplace.”
So, the military has a good (if not optimal) situation on its hands. It has two reliable rockets supplied by a company that is working to reduce launch costs. And there is a new entrant in SpaceX that is not only offering lower prices but has clients willing to take on the increased risks associated with Falcon 9’s early flights.
If all goes well, the U.S. launch industry will become much more robust and competitive, with everyone benefiting from much lower prices on a diverse mix of highly reliable launch vehicles. That will take a few years to develop. In the meantime, a military whose primary focus is on reliable access to space can afford to wait.