The Wall Street Journal
By Andy Pasztor
Updated March 15, 2018 5:31 p.m. ET
Seeking to maintain a pair of satellite-launch providers, the Air Force basically split $640 million in contracts between Elon Musk’s low-cost SpaceX and a Boeing Co.- Lockheed Martin Corp. joint venture with higher prices but a long military legacy.
Wednesday’s announcement, implementing the Pentagon’s previously announced procurement policies, said the awards were part of continuing efforts to reduce costs “while maintaining assured access to space with two or more launch providers.”
Space Exploration Technologies Corp., the formal name of Mr. Musk’s company, won a $290 million fixed-price contract to launch three Global Positioning System Satellites into orbit on Falcon 9 rockets by the end of 2020. The closely held Southern California company previously was awarded two other GPS launches.
United Launch Alliance, the joint venture that historically enjoyed a virtual monopoly boosting large U.S. military or spy satellites into space, was awarded a $351 million deal for two launches of Air Force spacecraft on workhorse Atlas V rockets. Based on Air Force numbers, those launches will cost roughly $170 million apiece, or more than $70 million above SpaceX prices.
SpaceX is a scrappy upstart that has used low prices, reusable boosters and aggressive marketing efforts to snare business from rivals around the globe, particularly United Launch Alliance.
The joint venture is developing a lower-cost family of rockets to compete more effectively, but those aren’t expected to begin routine flights for at least three or four years.
Until then, Pentagon brass and Congress effectively have agreed to support transition policies that will allocate launches to both contractors.In its announcement, the Air Force emphasized the contracts were competitively awarded but are intended to “strike a balance between meeting operational needs and lowering launch costs.”
“SpaceX is pleased with the Air Force’s decision to select us for all five of the GPS [launches] competed to date,” said Gwynne Shotwell, SpaceX’s president and chief operating officer.
Tory Bruno, president and CEO of United Launch Alliance, told reporters Tuesday that development of its next-generation rocket, called Vulcan, is on track and some of the venture’s biggest subcontractors have agreed to invest in developing essential technology.
Mr. Bruno said the venture currently doesn’t have any contracts to launch commercial satellites, but aims to build up that portion of its business over the next five or so years to increase launch tempo and thereby reduce prices for all customers. But that may be a steep challenge, according to many industry experts. At this point, Mr. Bruno’s team is launching about half as many rockets annually as SpaceX, which forecasts continued sharp increases in the number of launches in coming years.
In a Thursday interview reacting to the awards, Mr. Bruno said the outcome once again demonstrated the Pentagon’s trust in giving United Launch Alliance missions that are more difficult and sensitive than those won by its rival. So far, he said, Air Force officials “have yet to be willing to trust them with the [type of] missions we won.”
Testifying before a House appropriations defense subcommittee Wednesday, the Air Force’s top civilian and uniformed leaders reiterated the Pentagon’s commitment to eventually end up with at least two viable launch providers able to compete long-term for national security payloads.
But without referring to SpaceX by name, Air Force Secretary Heather Wilson also told the panel the global launch business has been transformed in recent years. “The cost of launch is plummeting” and commercial space ventures now “have multiple choices” to blast spacecraft beyond the atmosphere. “We’re coming to a point,” she said, that low-cost launchers are “enabling business plans to close in space that never were possible before.”
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