Hyten: No "Fair Competition" If ULA Contract Remains

Gen. John Hyten, Commander of Air Force Space Command, believes that the government’s cost-plus contract with the United Launch Alliance (ULA) that covers infrastructure and engineering services must be changed if “fair competition” is to be achieved in the national security space launch market.

Testifying to a House Armed Services Committee (HASC) panel on March 25, Hyten said “I don’t think you can have fair competition with that contract in place.  There’ll have to be a change.”

Government payments to ULA for launches of Evolved Expendable Launch Vehicles (EELVs) –Atlas V and Delta IV – have two components:  EELV Launch Services (ELS) and EELV Launch Capabilities (ELC).   ELS is a fixed price contract that covers hardware, while ELC is a cost-plus-incentive-fee contract that pays for infrastructure and engineering support.

Hyten said the ELC contract was created because the U.S. launch industry’s industrial base was in a “fragile” state in the mid-2000s.  The robust commercial launch market that had been forecast to develop did not do so.  At the time, Lockheed Martin and Boeing were competitors, offering the Atlas V and Delta IV, respectively, for both commercial and government launches.  Without sufficient commercial launches, the market was insufficient to support both companies against international competition.

The Air Force needed Atlas and Delta to place its satellites into orbit whenever necessary, so “we created the ELC contract as a way to make sure that even if we didn’t launch, and there were years that we launched very small numbers of satellites, there will still be a healthy industrial base,” Hyten explained.

Times have changed, however, and with the emergence of “new entrants” like SpaceX, the time has come to alter the way the government procures launches, according to Hyten.   Mr. Dyke Weatherington, the Acting Deputy Assistant Secretary of Defense for Space, Strategic and Intelligence Systems, agreed.  He said DOD is “modifying and continuing to evolve its space launch capability to take advantage of the competitive launch environment that we see coming in the future.”

SpaceX is awaiting certification from the Air Force to be able to compete with ULA for launches of national security satellites.   After assurances that the certification would be complete by the end of last year, and a subsequent announcement by the Air Force of a delay, there appears to be agreement between the two that SpaceX will be certified by this summer.

The March 25 hearing on national security space issues was before the HASC Subcommittee on Strategic Forces, which held a hearing specifically on space launch issues a week earlier.   Hyten testified at both.  Subcommittee chairman Mike Rogers (R-AL) said at the March 25 hearing that he was offering Hyten an opportunity to give his perspectives on the ELC contract because Hyten did not have a chance to do so at the previous hearing.

The March 25 hearing looked broadly at national security space issues and the witnesses were a who’s who of national security space decision-makers.  Topics spanned a broad range of issues, including protecting U.S. satellites from threats by other countries, such as China.   Doug Loverro, Deputy Assistant Secretary of Defense for Space Policy, said that the United States is reacting to the threat posed by China and “making it very clear we have no desire to have a conflict extended to space,” but that the “U.S. will be prepared to defend our space assets.”

A key message repeated by many of the witnesses is that “we can no longer view space as a sanctuary.”   Loverro emphasized that other countries understand U.S. reliance on space assets and “want to take it away from us.  We won’t let them.”   Still, the United States “remains committed to assuring the peaceful use of space by all” because it is a “global good” and a “driver for economic growth, environmental monitoring, verification of treaties and enabler for everyday citizens at home and abroad.”