HASC Grills Company and Government Officials on Space Launch, But No Clear Solution

A lengthy House subcommittee hearing with top officials from the government and private sector yesterday (March 17) left as many questions as answers on how to assure “assured access” to space for national security satellites.  Congresswoman Loretta Sanchez (D-CA) remarked at one point “The more I learn, the more confused I get.”  Maj. Gen. Howard “Mitch” Mitchell (Ret.) offered perhaps the sagest advice, recommending a new Space Launch Modernization Plan be developed, akin to the Moorman study of the 1990s.

Sanchez’s statement is a succinct exposition of what came out of the hearing before the Strategic Forces subcommittee of the House Armed Services Committee (HASC), which featured two panels.  The first was composed of United Launch Alliance (ULA) President Tory Bruno and SpaceX President Gwynne Shotwell.  The second was mostly government witnesses:  Katharina McFarland, DOD assistant secretary for acquisition; William LaPlante, Air Force assistant secretary for acquisition; Gen. John Hyten, commander of Air Force Space Command; and Maj. Gen. (Ret.) Howard “Mitch” Mitchell, who now works for the Aerospace Corporation, but was testifying in his personal capacity as chairman of last year’s study group on alternatives to the RD-180 engine (the “Mitchell Commission”).

The hearing, scheduled to begin at 3:30 pm ET, started 45 minutes late because the members were on the House floor casting votes.  Once it began, opening statements by members and witnesses were brief, but the question-and-answer period was extensive and the hearing lasted until 6:30 pm ET with subcommittee chairman Mike Rogers (R-AL) finally drawing it to a close even though he seemed to have many more questions that he wished to pose.

That pretty well characterizes the hearing – leaving as many questions as answers.  One interesting aspect was the change in tone between witnesses for SpaceX (Shotwell)  and Air Force Space Command (Hyten) who, while on different panels, sang each other’s praises after a bruising year in which SpaceX sued the Air Force for awarding ULA a sole-source contract in 2013.  SpaceX dropped the suit in January after a settlement was reached.  The terms of the settlement were sealed by the judge, but whatever they are, the two parties seem determined to present a united public face now.   (Rogers asked whether SpaceX or ULA would have any objection to the subcommittee seeing the terms of the agreement. Shotwell and Bruno each said it was fine with them, but only the court could make that decision.)

Shotwell emphasized again and again that SpaceX and the Air Force are working “shoulder to shoulder” to get the Falcon 9 certified to compete for Evolved Expendable Launch Vehicle (EELV)-class launches.  Air Force officials publicly promised during 2014 that certification would be completed by that December, but it was delayed and now is expected by June.   For his part, Hyten lauded SpaceX and said that people who might have bet against the company meeting its goals in the past would have lost.  Although he joined other government witnesses in agreeing that Shotwell’s expectation that SpaceX’s new Falcon Heavy rocket will be ready to launch national security satellites by 2018 is optimistic, he said SpaceX has been “amazing, so I won’t say it’s impossible.”  He also downplayed a statement made by Air Force Secretary Deborah Lee James at an earlier hearing where she mentioned that some of the SpaceX launches experienced anomalies.  Hyten acknowledged that SpaceX has had some problems, which are “proprietary,” but “we’ve had the same things with Atlas and Delta.”  The key is that all of the launches were “mission successes,” he stressed.

The issues debated at the hearing basically are how to end U.S. reliance on Russia’s RD-180 engines, used for ULA’s Atlas V rocket, and how to create competition in the U.S. national security space launch marketplace.  ULA has almost exclusively launched U.S. national security satellites on the Atlas V and Delta IV rockets since it was created in 2006 as a joint company owned 50-50 by Lockheed Martin and Boeing, the two companies that had been providing those launch services on Atlas and Delta respectively.  The creation of ULA was driven by market factors and government requirements.

An archived webcast is available on the committee’s website.  The central questions were:

• Does language in Section 1608 of the FY2015 National Defense Authorization Act (NDAA) requiring DOD to build a new American-made propulsion system by 2019 to replace Russia’s RD-180 create the possibility of a “gap” in the U.S. ability to launch national security satellites in the 2018-2022 time frame because
  • ULA has decided to discontinue the medium/intermediate versions of the Delta IV around 2018 because they are too expensive to compete in the current marketplace (they are often referred to as the “single stick” version of Delta IV);
  • Atlas V would no longer be available;
  • SpaceX’s new Falcon Heavy is not likely to be ready by then; and
  • Therefore only the Delta IV Heavy would be available for national security launches and they would be prohibitively expensive
• Does Section 1608 need to be clarified so ULA can use all of the RD-180 engines it currently plans to buy from Russia because the Air Force is interpreting the law such that only a small number would be permitted (the number is widely cited as five, but the government witnesses did not specify it in their statements).

Overall, many of the subcommittee members and all of the witnesses other than SpaceX seemed to want Congress to change Section 1608 to allow RD-180 engines to be used for the Atlas V until 2021-2022 when ULA’s Next Generation Launch System (NGLS) with an American-made engine is ready.   SpaceX’s position is that no more RD-180s are needed because its Falcon 9 and new Falcon Heavy – which it plans to launch for the first time later this year — can provide the launch capability and redundancy needed to assure U.S. access to space after 2018.

Section 1608 requires DOD to develop an American replacement for Russia’s RD-180 engines by 2019, but it also contains a number of waivers that seem to add flexibility if an American replacement is not ready by then.  Nonetheless, the witnesses other than SpaceX clearly view 2019 as a hard cut-off date and want it extended.  Also, Air Force acquisition official LaPlante explained in his written statement that the language allows use only of RD-180s that were purchased or included in a legally binding contract prior to February 1, 2014 (when Russia invaded Ukraine’s Crimean Peninsula) and according to the documentation DOD has available “only a small number of engines actually meet that statutory language.”   DOD wants Congress to clarify that all of the RD-180 engines intended to be purchased under ULA’s current contract can be utilized.

ULA’s Development of New Engines – BE-4 and AR1

Last fall, ULA and Blue Origin announced that they are partnering to develop the BE-4 rocket engine, which uses methane as fuel, as an RD-180 alternative.  At the hearing, Bruno said that ULA also has a “backup” plan with Aerojet Rocketdyne to develop the AR1, which uses traditional kerosene.  Bruno said the BE-4 is three years ahead of AR1 in development and ULA will choose one of the two to pursue in 2016 or 2017.  The new engine would be used for ULA’s NGLS that ultimately will replace both Atlas and Delta.  Whichever engine is chosen, the NGLS will require a significant redesign of tankage and launch pad modifications.

Bruno asserted that the engine development is “largely privately funded.”  “I do not require government funding, but there are wise investments the government can make to reduce risk and I won’t say no to help,” he said.

An interesting wrinkle in the discussion came up late in the hearing when subcommittee chairman Rogers made clear that what he wants is an American version of the RD-180, not a new engine that would require changes to the rest of the Atlas V rocket or launch pads.  LaPlante said that “we build the rocket around the engine” and Mitchell explained that “you can’t jack up the Atlas V and put in a new engine,” but Rogers said that is exactly what he wants to do.   That is not one of the options currently being pursued by ULA, however.

Launch Prices

Significant discussion occurred concerning the prices charged by SpaceX and ULA.  Shotwell explained that she does not know what ULA charges the government, but it was awarded an $11 billion contract for 28 launches (the “block buy” contract signed in 2013), which SpaceX calculates to be an average of $400 million per launch.

She said a Falcon 9 average price is $60 million for commercial customers and $80-90 million for the government, which has special requirements, and the cost to the government for a Falcon Heavy launch will be about $150-160 million.  That yields an average cost across all its vehicles of about $120 million, she said, roughly 25 percent of ULA prices.   Asked how SpaceX can offer such low prices, she replied that “I don’t know how to build a $400 million rocket” and “I don’t understand how they are as expensive as they are.”

Bruno said he did not recognize the $400 million number and the cost of an Atlas V 401 launch, equivalent to a Falcon 9, is $164 million on average and will be about $140 million in the future.   Averaged across all of the launches envisioned in the block buy, the cost is $225 million, he said, a 30 percent reduction from its prices before the block buy.  He did acknowledge separately that the cost of a Delta IV Heavy launch today is $400-600 million.

The “Gap”

DOD acquisition official McFarland’s written statement clarifies that the “gap” they are worried about is a period late in this decade “without at least two price competitive launch providers servicing medium to intermediate class missions.”

That is an important point.   It is not a gap in the U.S. ability to launch satellites, but whether there is competition for medium and intermediate class payloads.   Hyten said “gap” is not the right word, it is really about a “transition” between 2018 and 2022, but everyone else referred to it as a gap.

The gap is precipitated in part by ULA’s recent decision to discontinue the single stick version of the Delta IV, leaving the Atlas V as its only launch vehicle for that class of payload.  If Atlas V is no longer available after 2019, and SpaceX’s Falcon Heavy is not ready by then, these intermediate size payloads would have to be launched by the more capable Delta IV Heavy, but the price would be prohibitive.   Bruno assured the subcommittee that he is committed to launching the Delta IV Heavy as long as the National Reconnaissance Office (NRO) needs it.   If it is ULA’s only rocket, however, all of ULA’s fixed costs would have to be absorbed in those launch costs, raising the price from the current $400-600 million per launch to “upwards” of $1 billion, Bruno said.

Subcommittee chairman Rogers asked incredulously if Bruno thought the government would pay that much per launch and Bruno said no, but Mitchell – who has long experience with national security space launch – pointed out that in the 1990s, launch costs were $550 million “and we launched 41 of them.”  The suggestion was that when escalated to today’s dollars, the cost would not be much different.

Bruno told the subcommittee that he decided to terminate the Delta IV single stick as soon as its current commitments are met around 2018 because it cannot compete in the current marketplace.

Curiously, no one questioned ULA’s decision to phase it out even though that seems to be a critical driver in this debate.

The solution to the gap sought by ULA and witnesses on the government panel are to purchase enough RD-180 engines so the Atlas V can remain available until SpaceX’s Falcon Heavy and ULA’s NGLS are ready in 2021-2022.  Shotwell insisted that Falcon Heavy would be ready and certified for flight by 2018, but the other witnesses considered that an optimistic timetable.

Business Case

Rep. Jim Bridenstine (R-OK) asked about the business case for either ULA or SpaceX and whether the government needs to guarantee a number of launches to make their businesses viable.  DOD’s McFarland said that from what she has seen, all the launch providers are competing for the same pie.

Shotwell said that 60 percent of the SpaceX market is commercial, while Bruno said that ULA’s is “just under 20 percent” today.

Is Falcon 9 “American”?

Rep. Rob Bishop (R-UT) grilled Shotwell on SpaceX’s assertion that Falcon is an all-American rocket.  He forced Shotwell to acknowledge that certain raw materials like aluminum and a GPS “box” are from foreign sources, but “99 percent” is American, she asserted.  Bishop challenged her by asking if she knew there is a statute in California (where SpaceX is based) that would not allow the company to advertise its product as all-American and Shotwell said she was not aware of it.

Launch Pads

Bruno said that in the interest of cost cutting, ULA will be reducing the number of launch pads it has from five to two – one on the east coast and one on the west coast.

A Potential Path Forward

Mitchell articulated what is perhaps the clearest statement on what is needed to move forward on a plan for assured access to space.  In his written statement, he said the government needs to take ownership of the issue and define the desired end-state, take action to reach that end-state, and “adequately resource” the plan.

He recommended that the government initiate an effort similar to the Space Launch Modernization Plan (the Moorman report) of the 1990s “with all the stakeholders participating to assess the risks of the current and planned activities” and make recommendations on how to mitigate them.   Quoting an unnamed “colleague and friend,” Mitchell wrote: “Currently no stakeholder has a credible plan that ‘closes.’ Each stakeholder has a different endgame solution, and each stakeholder’s current ‘non-closing’ game plan has ‘and then a miracle happens’ as the last element of their plan…and ALL the miracles are different.”