There is Plenty of Business for Everyone, Rival Launch Providers Say

COLORADO SPRINGS, Colo. — The satellite launch industry of late has suffered from decreased demand, rising costs and overcapacity. That coupled with U.S. government budget cuts have made for some heated rivalries among providers.
Two of these companies are United Launch Alliance, a Lockheed Martin-Boeing consortium that currently has a monopoly on U.S. government contracts for heavy lift rockets, and SpaceX, a 10-year old company that is developing the Falcon Heavy vehicle designed to compete with ULA.    
The Satellite 2012 conference in Washington, D.C., last month saw a testy exchange between representatives of the two companies. The issue is a proposal being put forth by the Air Force and the National Reconnaissance Office that would lock in a set number of launch purchases over a five-year period. The so-called block buy would give ULA the predictability it has craved, and allow it to reduce costs by purchasing materials in bulk and so forth. The two agencies believe they will need about eight launches per year.
A SpaceX executive said this will prevent the Falcon Heavy from competing until the end of the decade. SpaceX has maintained that its rocket will be less expensive, although it is still under development. A Lockheed Martin representative said it has reliable rockets and the government can't gamble on unproven technologies when it comes to delivering satellites that war fighters depend on. A five-year block buy will give SpaceX time to prove its mettle. It could compete with ULA after the block buy is completed, the executive said.
Executives from the two companies struck a more conciliatory tone at the Space Symposium April 17. There may be a lot more than 40 heavy lift launches coming up during those five years, they said.
Dan Collins, ULA chief operating officer, said a block buy will significantly lower the cost of launching spacecraft. There will be about 50 launches in the same time period, he said.
"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."
Gwynne Shotwell, SpaceX president, 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 represents 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.

Topics: Business Trends, Doing Business with the Government, Space