GAO: Air Force Needs Incremental Approach to Launch Services Acquisition

The Government Accountability Office (GAO) said today that in this changing launch services environment, the Air Force needs to take it slow in planning competitive launch services procurements before committing to something without adequate knowledge.

The GAO looked at the Air Force’s plan to acquire future launch services under the Evolved Expendable Launch Vehicle (EELV) program.   Since 2006, the United Launch Alliance (ULA) has been a monopoly in providing EELV launches using the Atlas V and Delta IV rockets, but with the certification of SpaceX to offer EELV launch services in the future, a competitive environment has reemerged.

GAO explains that the Air Force currently acquires launch services from ULA under a cost-reimbursement, rather than fixed price, contract.  The cost-reimbursement contract requires ULA to give the Air Force cost and performance data that the Air Force can use to monitor contractor performance and identify risks that can affect schedule and cost.  In the new competitive environment, however, the Air Force plans to move to firm fixed price (FFP) contracts where that data will not be available.  That creates a good news, bad news situation where the price for launches may be less with FFP contracts, but the Air Force will have “significantly less insight into program costs and performance.”  GAO also worries that FFP contracts will not give the Air Force the flexibility it needs to change launch schedules, noting that “satellite delays have historically been an issue…”

Added to that, the future of the competitive launch services industry is uncertain and “the ability of the domestic industry to sustain two or more providers in the long-term, while desirable, is unclear.”

The recommendation, therefore, is to move slowly and not make commitments to future acquisition rounds until the Air Force has gained experience with the first one, now underway.  The Air Force should “use an incremental approach to the next acquisition strategy until data is available to make an informed decision.” 

In a letter included as an appendix to the GAO report, DOD concurred: “The Air Force is implementing a phased approach to its EELV efforts, to include awarding launch services on a case by case basis.”

GAO did the study in response to a congressional requirement in the FY2015 National Defense Authorization Act.