House and Senate Agree on FY2016 NDAA, RD-180s Still Restricted

The House and Senate Armed Services Committees (HASC and SASC) announced agreement today on a compromise version of the FY2016 National Defense Authorization Act (NDAA).  HASC Chairman Mac Thornberry (R-CA) said that he expects the bill to reach the floor of the House for debate on Thursday.  One thorny space-related issue, on use of Russian RD-180 rocket engines, was resolved largely in the Senate’s favor.

Broadly speaking, the House, Senate, Air Force, DOD, and United Launch Alliance (ULA) agree that the United States should not rely on Russian rocket engines to launch U.S. national security satellites.   ULA was created in 2006 as a joint venture between Lockheed Martin and Boeing and has been essentially a monopoly launch services provider to the national security community since then.  ULA’s Atlas V rocket uses Russian RD-180 engines.  From an engineering standpoint, the RD-180 apparently is an excellent engine and users are reluctant to give it up.

However, the advent of “new entrants” like SpaceX into the launch vehicle market, and the deterioration in the U.S.-Russian relationship following Russia’s actions in Ukraine, marked a paradigm shift in the U.S. launch vehicle industry last year.   SASC chairman Sen. John McCain (R-AZ) has been particularly strident in his views that the United States should not be paying money to Russia for rocket engines that goes into the pockets of “cronies” of Russian President Vladimir Putin.  He also strongly supports the entry of SpaceX as a competitor to ULA.   

In last year’s FY2015 NDAA, Congress set 2019 as a deadline for when RD-180s should be replaced by a new domestic rocket engine for national security launches (the provision does not affect the use of Russian engines for commercial or other government launches).  Flexibility was provided by giving the Secretary of Defense waiver authority to certify that additional Russian engines were needed for national security purposes, but the Air Force and DOD have been fighting to get the 2019 deadline extended to 2022 to 2023.  They argue that while a new U.S. engine could be ready
by 2019, it would take several years to integrate it into a new rocket
and certify the rocket for launching expensive, vital national security
satellites.  HASC has been more sympathetic to that view than SASC.

The Senate version of the FY2016 NDAA kept the 2019 deadline and said only nine more RD-180 engines could be obtained.  The House version provided substantial flexibility by expanding the Secretary of Defense’s waiver authority.

The compromise version announced today mostly adopts the Senate language.  At a press conference today, McCain vehemently reiterated his opposition to paying Russia for RD-180 engines and his support for SpaceX.  He said that SpaceX asserts that it can have a domestic engine ready to replace the RD-180s by 2017.  The compromise still allows the use of nine more RD-180s, he said, as his committee recommended.  He added, though, that the language does allow more to be purchased if needed “but to commit to 6-7 [more] years is not something I’m prepared to do.”  He criticized the ULA-Air Force relationship on this issue as a “classic example of the military-industrial complex.”

In a separate press conference, the four Republican and Democratic leaders of HASC and SASC also addressed the issue.  Thornberry said “we want to wean ourselves off of Russian engines as soon as possible and have assured access to space as we do it” and that is what the compromise language does.  HASC ranking member Adam Smith (D-WA) added that “I think we’re going to get to a good place sooner than most people realize,” but stressed that  “we don’t want just one alternative” to the RD-180s. There are companies out there, a number of them happen to be in the State of Washington, as a matter of fact, Blue Origin, Aerojet, bunch of other folks, and they’ll get there sooner than we expect. Still, “we can’t … count on that and say that we can’t buy the only thing that’s actually available.”  The language in the bill ensures DOD “has good choices,” he remarked, but also pushes “domestic industry to quickly develop an alternative domestically.”

Blue Origin and Aerojet Rocketdyne are competitors in developing a new engine for ULA’s planned Vulcan rocket that will eventually replace both the Altas V and Delta IV, ULA’s other rocket.   ULA and Blue Origin announced a partnership last fall where ULA said it would use Blue Origin’s BE-4 engine for Vulcan.  The BE-4 is an innovative design that uses methane (liquefied natural gas) and liquid oxygen (LOX) as propellant.    ULA said this spring, however, that it is also considering a traditional LOX/kerosene engine being developed by Aerojet Rocketdyne, the AR1, and will make a choice between them next year. Blue Origin is headquartered in Kent, Washington and Sacramento-based Aerojet Rocketdyne has a major facility in Redmond, Washington.  Aerojet Rocketdyne is trying to buy ULA, adding further complexity to the outlook for the U.S. launch services market.

ULA and Blue Origin said last fall that the BE-4 engine is fully funded and no government funds are required, although ULA President Tory Bruno said this spring that he certainly would not turn down government help.   Aerojet Rocketdyne has indicated that it does need government funds.   The compromise version of the NDAA authorizes $184.4 million.

The NDAA is an authorization, not appropriations, bill, so its funding levels only are recommendations.   Democrats still want a grand deal on replacing sequestration, and not only for defense, but for domestic priorities as well.  They object to a maneuver Republicans are using for FY2016 defense spending by putting money into an off-budget account, Overseas Contingency Operations (OCO), to get around the existing budget caps.  McCain and Thornberry argue that since the NDAA is only an authorization bill, that debate should not derail this bill.   SASC ranking Democrat Jack Reed (D-RI), said at the press conference today, however, that he would oppose the bill on those grounds.