10.19.2017 0

Will Congress give Elon Musk a monopoly on building rockets for the Air Force?

By Printus LeBlanc

On Tuesday, the Senate approved a motion to convene a conference committee on the National Defense Authorization Act (NDAA). Dozens of Members from both chambers of Congress will now come together to form one NDAA. As you would expect, each chamber has its pet defense projects in each bill, but one section of the House bill is raising a lot of eyebrows. Section 1615 has the unique distinction of smelling like crony capitalism, while simultaneously putting national security at risk.

Section 1615 is titled, “Evolved expendable launch vehicle modernization and sustainment of assured access to space.” The language in the section seems to indicate the intention to eliminate the U.S. need for a Russian rocket, but the Air Force, White House, and dozens of Members of Congress believe the section creates a dangerous monopoly for one company.

It all started with a law created by the 2004 NDAA. 10 U.S.C. 2273, which states, “the availability of at least two space launch vehicles (or family of space launch vehicles) capable of delivering into space any payload designated by the Secretary of Defense or the Director of National Intelligence as a national security payload.” At the time there were several small companies and two giants in the industry, Boeing and Lockheed Martin.

Boeing Defense, Space, and Security and Lockheed Martin Space Systems formed a joint venture called United Launch Alliance (ULA) in late 2006. The joint venture provides spacecraft launch services to many agencies within the U.S. government, as well as commercial customers.

ULA is currently using two launch systems, the Atlas V and Delta IV. Due to costs, the Delta IV is expected to be phased out in 2018, leaving only the Atlas V. The only problem is the first stage booster of the Atlas V. The engine used is the Russian RD-180. There were no problems or issues until Russia annexed Crimea and the Ukraine civil war began.

Following the Russian invasion, the U.S. government issued a series of sanctions and measures designed to damage the Russian economy. FY2015 NDAA Section 1608 states, “the Secretary of Defense may not award or renew a contract for the procurement of property or services for space launch activities under the evolved expendable launch vehicle program if such contract carries out such space launch activities using rocket engines designed or manufactured in the Russian Federation.” The action effectively killed the Atlas V, which depends on the Russian engine. ULA took action and began developing a new launch system called the Vulcan. The new system has two different rocket engine manufactures looking to become the primary contractor for the system, Blue Origin’s BE-4 (Jeff Bezos) the front-runner and Aerojet Rocketdyne’s AR1. The new system is expected to go into service in 2019. By now, Space X had joined the space vehicle launch industry with the Falcon 9 family of launch vehicles. Space X is owned by Elon Musk, who also owns Tesla and Solar City. Elon Musk has a history of depending on government subsidies to make ends meet. One estimate puts the government support at $4.9 billion, noting that none of the businesses would be profitable on its own.

In 2014, Space X sued the Air Force for the right to bid on national security payload missions. They did this despite the fact the company was not rated or approved for the missions. Space X dropped the suit after the Air Force agreed to help complete the certification process. Before the lawsuit, only ULA was qualified to handle national security payloads. Space X would go on to be awarded its first national security payload launch for 2018.

The stage was set for good old-fashioned competition between ULA and Space X. Enter crony capitalism and Section 1615.

The section is designed to do one thing, and one thing only. Give a monopoly to an unproven company that is going to put national security at risk. If the section is included in the final bill, it will stop work on all current projects, including the Vulcan launch-system. 1615 and the ban on Russian engines would give Space X a monopoly when the ULA supply of RD-180 engines run out.

The White House has come out opposed to the Section 1615 stating, “the Administration strongly objects to section 1615, which would restrict development of new space launch systems, including those whose development is significantly funded by industry, in exclusive favor of rocket engines and modifications to existing launch vehicles. The provision limits domestic competition, which will increase taxpayer costs by several billions of dollars through FY 2027 and stifle innovation. It also ignores key recommendations of the Committee’s independent panel of experts, who proposed broad funding at the launch-system level. The Administration’s innovative, agile approach has already saved taxpayers $300 million and is the quickest path to delivering modern, domestic, cost-effective launch capabilities that will support national security requirements for decades to come. This provision would make the Administration’s strategy impossible to execute, causing delays in transitioning from Russian engines and increased risks to continued assured access to space.”

Air Force Magazine quoted a memo from the Department of the Air Force to the House Armed Services Committee stating, “Section 1615 appears to force the Department to end the more than $300M investment in the industry-developed systems and instead use a modernized Delta IV launch vehicle and/or the Falcon 9. United Launch Alliance (ULA) has publicly stated they are phasing out the Delta IV line and that the launch vehicle is at least 30 percent more costly than other launch vehicles. Forcing ULA to maintain the Delta IV product line would make the company less competitive and fully dependent upon the government for funding. The language appears to allow upgrades to the SpaceX Falcon 9 launch vehicle, which can only meet about 50 percent of the National Security Space (NSS) missions. As written, the language is ambiguous on whether it would allow for the development costs for the Falcon ‘Heavy.’ Furthermore, SpaceX’s “Heavy” launch vehicle is not capable of meeting our most stressing, and arguably most critical, NSS requirements. Mandating this arrangement for the NSS community handicaps the Air Force’s eyes and ears in space, as the space community is forced to sacrifice on-orbit capability to fund exorbitant launch costs on a Delta IV Heavy.”

Space X has a history of poor performance. Currently, there is a 70-mission backlog for customers worth an estimated $10 billion. The company also has had several high-profile mission failures, costing hundreds of millions of dollars. And Space X hasn’t even started launching national security payloads. Whereas, the ULA’s Atlas V debuted in 2002 and has flown 73 missions without a mission failure.

The Air Force says section 1615 will harm national security. The White House says section 1615 will harm national security. So why is the provision in the House bill? The conference committee must reject the crony capitalism being lobbied for by Space X and put national security first. Section 1615 must not be part of the final NDAA.

Printus LeBlanc is a contributing editor at Americans for Limited Government.

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