Air Force Retaliates Against SpaceX For Its Earlier Protest

The US Air Force decided to shake up the satellite launching industry this week with its latest award for launch development money for specialized launch services. It kicked in $2.3 billion to two defense contractors and one commercial outfit, none of whom was SpaceX. The money is for development of lift vehicles for spec cargoes–namely military and spy satellites.

It is telling that SpaceX was locked out of the newest Air Force launch contract after it successfully sued the service for trying to award a sole-source $11 billion contract to the United Launch Alliance (ULA), a joint venture between Boeing and Lockheed Martin. ULA had a monopoly on US government launches before SpaceX’s successful protest. Indeed, the ULA monopoly was yet another example of the stupid practice the Pentagon has in sole sourcing its equipment and vehicles, as noted multiple times in this blog. The practice nominally arises from the military’s desire to reduce logistic and development costs over the long run, but award outcomes appear to point more to congressional district politicking than any sort of procurement common sense.

The awardees are ULA, Blue Origin–SpaceX’s primary commercial competition; and Northrop Grumman. Northrop Grumman managed to get into the rocket game by buying Orbital ATK in 2017–a questionable financial purchase, but one that makes more sense in the context of being a player in the satellite launch market. The award here appears to validate Northrop’s gamble.

None of the awardees currently have a viable launch vehicle. The ULA’s aging Atlas 5 rocket (it was originally designed as an intercontinental ballistic missile in the 1950’s) uses Russian RD-180 engines, an option that has run out politically. Orbital ATK’s bid relies on its Space Shuttle solid rocket fuel boosters–those of the O-ring fame that led to the destruction of one of the shuttles. Blue Origin has yet to launch a rocket into space. It is unlikely that any of the three will offer as economical an option as those SpaceX can provide.

The Air Force has some ready-made excuses as to why SpaceX was excluded from its latest award if it needed them. Foremost of them is the claim that the new award was competitive, at least from the perspective of there being more than one awardee. Second would be the failure of the Zuma spy satellite launch earlier in the year–although the failure has been pinpointed to Northrop Grumman’s payload adapter rather than SpaceX’s rocket. Third would be the legal troubles visiting SpaceX chairman Elon Musk’s Tesla Inc–the maker of electric vehicles–including a $20 million settlement with the SEC and an ongoing investigation by the FBI (both for public statements made by the company and/or Musk).

SpaceX isn’t completely without political clout as its business significantly benefits two important electoral states–California and Florida. But Boeing, Lockheed Martin, and Northrop Grumman haven’t become the top three defense contractors in the US for being political novices. It will be interesting to see whether SpaceX will have to return to the courts to win more military contracts in the future or whether it will be able to win solely on the merits of cost, unenviable launch success history (although the Atlas V comes close), solid program management, and superior engineering–factors which failed to help it for the current award.

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