Escaping Earth’s gravity does not come cheap.
In an age of austere federal budgets, the Air Force and National Reconnaissance Office are looking to reduce the spiraling cost of placing their heaviest satellites into space. And rocket manufacturers — faced by overcapacity — are making adjustments to the way they do business.
While the approximately $140 million to $180 million per launch the two national security space agencies pay to loft spacecraft is costly, the price of losing a $500 million to $1 billion satellite can add up to more than the money spent. The shards of the destroyed spacecraft that took years to build fall uselessly into the sea — and more importantly — military personnel are deprived of their critical, sometimes life-saving, capabilities for years to come.
Gen. William Shelton, Air Force Space Command commander, made it clear that the Air Force won’t be making any compromises when it comes to assuring that rockets don’t blow up with critical payloads on board.
“There has been a lot of talk about mission assurance and maybe we’re paying too much … Maybe we can look at mission assurance and dial it back,” he told reporters on the sidelines of the Space Symposium in Colorado Springs, Colo.
“The difficulty here is how much is enough? How much of a cut is too much?”
After a string of launch failures in the 1980s and 1990s, the Air Force conducted a broad area review of the launch enterprise and concluded that it had to get back to the basics of quality control, Shelton said.
“Now there are people that are saying, ‘Well, you probably need to dial that back a bit [in order to save funding].’ Well, there will be tire treads over me if that comes to pass,” he said.
The Air Force and NRO carried out the reforms, and began the Evolved Expendable Launch Vehicle Program to upgrade the heavy lift rockets. It is hard to argue with their success. Since its maiden voyage in 2002, the Atlas 5 has not lost a payload. The Delta 4 rockets have not had a blemish since the fourth launch was declared a “partial success” in December 2004. As of April, that makes 48 consecutive launches between the two rockets without losing a spacecraft.
“We’ve got to have mission assurance in the launch business. Period,” Shelton said.
Some of the cost pressures, critics say, stem from the fact that there is currently a monopoly in the U.S. launch service business. There are numerous companies throughout the world that can loft heavy satellites, but the two agencies cannot let sensitive technologies be exported overseas. They can only turn to the United Launch Alliance, a Boeing-Lockheed Martin consortium formed in 2005.
There are currently two companies developing rockets that could someday rival ULA.
SpaceX, founded by PayPal billionaire Elon Musk, has made progress over the past decade with a series of smaller rockets that the company says are much less expensive than traditional space launch vehicles. The secret of its success, Musk has said, is that it has few suppliers. Most of the rockets’ components are manufactured in its Hawthorne, Calif., factory. It is developing the Falcon Heavy, a rocket based on the Falcon 1 and 9, which are already being used by international customers and NASA.
The Liberty is a rocket being offered by Alliant Tech Systems — better known as ATK — and Astrium, a subsidiary of European defense giant EADS. The Liberty in the near term will compete for a NASA contract to send astronauts to the international space station in low-Earth orbit. Long term, it is looking toward reaching the higher geo-synchronous orbit.
SpaceX, which received funding in its early years from the Defense Advanced Research Projects Agency to develop its lower cost Falcon, has yet to sign an Air Force or NRO contract. It asked for years for clarity on what it would take to receive certification to launch the agencies’ critical payloads. Last year, NASA, the Air Force and NRO released guidelines spelling out in detail what the companies would have to do to receive the go-ahead to put U.S. government spacecraft atop their rockets.
With neither of these heavy lift rockets ready to compete, the Air Force is looking for ways to lower ULA’s fees to provide launch services.
Instead of contracting separately for each mission, the Air Force, NRO and ULA are advocating a block buy approach.
The two agencies would contract for a set number of launches per year over a certain period. One of the proposals would set it at eight launches over five years, or 40 total launches.
That would basically shut out potential competitors until the end of the decade, Gwynne Shotwell, president of SpaceX, said at the Satellite 2012 conference in Washington, D.C. in March.
Shotwell engaged during a panel discussion in a testy exchange with Cliff Perkins, a representative of Lockheed Martin’s commercial launch providing service.
Perkins maintained that the government cannot afford to put critical life-saving satellites on unproven rockets. He touted ULA’s sterling success since it formed the alliance. The block buy would actually buy time for SpaceX to develop its rocket, which could be ready to compete by the time the block buy comes to an end, he said.
One month later at the Space Symposium, the two rivals were striking a more conciliatory tone.
There may be a lot more than 40 heavy lift launches coming up during those five years, said Dan Collins, ULA chief operating officer. He estimated that there would be more than 50 launches in the same time period.
“That will leave plenty of launches there for new entrants to establish themselves to meet the criteria and be a part of this game,” Collins said. “We welcome the competition.”
Shotwell said there is room for multiple launch providers. “The key is whether you can provide reliable launches at a price point that is attractive to the customer.”
There are 40 to 50 commercial, nongovernment launches competed annually that represent about $5 billion per year, plus the $3 billion up for grabs from NASA, the Air Force and the NRO, she said. “There is plenty of business for everybody,” she said.
Collins later told National Defense that the block buy may not be as long as five years. It could just as well be three. ULA is currently analyzing all the data to give the agencies all the options and the price points. A three-year buy may not result in as much savings as a five-year buy. The Air Force and NRO will ultimately decide which way it wants to go, he said.
ULA aims to give the agencies all the data it needs by this summer. The buy would begin in fiscal year 2013 for launches needed from 2015 to 2019.
The more than 50 government launches ULA predicts will be required in this timeframe should give the two agencies the wiggle room they need to allow competition from those who have certified rockets, Collins said.
The primary savings for the government would come from the stability and predictability in the supply chain. ULA must contract for components and materials years in advance of a scheduled launch. The current a-la-carte way of doing business drives up the price of components for ULA and its subcontractors. Bulk buys will help suppliers bring their costs down. The stability would end the guessing game for some of the smaller businesses.
“It reduces risk. And risk directly translates into cost,” Collins said.
A second area of savings will be a reduction in the amount of time the agencies and ULA spend negotiating each separate contract, he said.
Depending on how the block buy is structured, ULA predicts that it could reduce the price per launch by 8 to 14 percent.
Some members of Congress are skeptical of the block buy. The 2012 defense authorization bill required that the Air Force keep close tabs on the EELV’s financials. It reclassified it as an “acquisition” program rather than a “sustainment” program. That distinction will force the Air Force to carry out more stringent reporting on costs. Sen. John McCain, R-Ariz., sponsored the legislation and has been a leading critic of the block buy proposal. The Government Accountability Office in a report last year also questioned whether the Air Force will end up with excess rockets.
Collins said the prospect of the government ending up with excess inventory can be mitigated. It all depends on how the contract is written.
Separately from the block buy proposal, ULA is making efforts to reduce its costs, Collins said. First, it is working to streamline its manufacturing processes. It is also making strides to reduce the amount of time it takes to ready launch pads. It wanted to bring the number of days between launches for the Atlas 5 from 47 to 35 and the Delta 4, from 80 down to 70.
“By doing that we will be able to increase our throughput through the launch infrastructure,” Collins said.
Left unsaid in most of these discussions is the decline of NASA. The civilian space agency is not part of the block buy proposal, but the demise of the space shuttle, and the overall cuts to its budgets and programs have sent ripples through the highly specialized space launch industry. Lower volume buys for parts have led to higher prices for the Air Force and NRO.
Pratt & Whitney Rocketdyne, which manufactures the most expensive subcomponent of any rocket, the engine, is one of the companies that found itself with overcapacity after the termination of the space shuttle program.
Rocketdyne also sells its engines to ULA.
Jim Maser, the company president, said Rocketdyne will cut in half the square footage it needs to build rockets at its two main manufacturing facilities in Florida and California from 2.1 million to a little more than 1 million. This was made possible by streamlining manufacturing processes, he said. There was a corresponding cut to Rocketdyne’s work force from 3,400 to 2,400. The “lion’s share” of layoffs has been completed, but there may still be more to come, he added.
Jim Chilton, Boeing vice president and general manager of Exploration Launch Systems, said the aerospace giant is developing a powerful, new rocket that could serve as a case study for low-volume manufacturing.
It is configuring a new launch system for NASA science missions that is expected to carry spacecraft, and perhaps people someday, beyond Earth.
While this rocket is not envisioned for national security purposes, the fact is, with only NASA as a customer, Boeing will never be able to reduce costs for the program by manufacturing the rockets in large quantities, Chilton said.
Yes, “the production run matters,” he said. Whether that is jet fighters, 737s or spaceships, selling high volumes to numerous customers brings prices down, he said. But that will probably never be the case with an exploration-class rocket.
“The question then becomes: Do you throw your hands up, or do you start innovating?” Chilton asked.
First, a multi-skilled work force can move from one manufacturing job to another and bring down labor costs. And working with government-owned tools would mean that NASA bears the brunt of depreciation and makes the large capital investment in the facility, not the company.
Those manufacturing tools should allow for more automation with low defect rates to lessen the number of support personnel needed, he said.
“There is a way to get more efficient at low rates,” he said.