ULA Investigated for Anti Trust Violations

Trouble ? Credit : PWR

Trouble ?
Credit : PWR

What was already likely to not be a very happy week at United Launch Alliance just got a whole lot worse. Only a day after SpaceX entered into an agreement with the Air Force to begin the process of qualifying its boosters for EELV business,  Reuters is reporting that the Federal Trade Commission is opening an investigation into allegations that the ULA prevented RD Amross, a joint venture of Pratt and Whitney Rocketdyne and NPO Energomash, from selling its Russian built RD-180 main rocket engines to Orbital Sciences Corporation for its Antares booster.

The timing of the allegations is fascinating, if more than a little confusing.  Just two days ago the FTC approved the purchase of PWR by GenCorp, the same company which also owns Aerojet, for $550 million from current owner United Technologies. Given that the result of the acquisition will be a new monopoly,  specifically that of large liquid rocket engines, it seems a little late to be raising this issue.

 It could be however, that the FTC, which voted 4-0 to approve the purchase , felt compelled to do so on the basis of Department of Defense assertions that it was needed for “national security” purposes, including the catchall justification of  protecting the industrial base.  The arguments put forward in this June 6th DOD response to the FTC, are nearly comical, and just as demonstrably absurd as the similar arguments put forward in justifying the formation of United Launch Alliance in the first place. But then again, as much larger ongoing events would seem to indicate, the “needs” of national security are being used to justify a whole range of activities many would consider questionable.  

Having acceded to the DOD request, it appears the FTC could be making a point by pursuing the RD-180 issue. According to Reuters,  which cited “industry sources “  Orbital Sciences, anticipating the day that the stock of Russian built Aerojet modified AJ-26 engines runs out,  has made multiple inquiries into purchasing the RD-180, only to be rebuffed, presumably at the behest of ULA which has fought tooth and nail to prevent SpaceX from entering into the EELV market,  and recently scored a pre-emptive victory over Orbital Sciences when it convinced the Air Force to fund a dual launch adapter for the Atlas-V for GPS-III satellites, a market for which the Antares could be expected to compete.

OCS’s reasons for pursuing the RD-180 are interesting, indicating that the company would like to solidify  its entry into the liquid fueled launch vehicle business which took a big step forward with the recent maiden launch of the Antares.  It suggests that even for a fairly conservative, publicly traded company such as Orbital Sciences, the market pricing distortion created by the ULA monopoly is so extreme, that its own analysts believe there is room for entry.   It also at least raises the question of whether or not OSC might have otherwise pursued a liquid fueled first stage for the booster it is supplying to Stratolaunch, but was left with little choice but solids after it was unsuccessful in acquiring the RD-180.

Everybody is of course clamming up at this point, but it would be hard to argue that story doesn’t fit a pattern of behavior which began before the merger between Lockheed Martin and Boeing launch efforts which formed ULA , when the pre-merger courtship was highlighted by lawsuits from both parties claiming the other was attempting to constrain trade, a result of Boeing’s admission that it was in possession of the thousands of pages of proprietary Lockheed Martin documents regarding the Atlas-V.  

Given that ULA bases much of its current justification for excessively high prices on the reliability of its two booster lines,  an argument thoroughly undercut  by the equally reliable, but commercially successful Ariane-V,  it is easy to see the potential threat posed by the prospect of an RD-180 engine, which is the reason for much of that reliability,  powering a domestic competitor.  The ads almost write themselves.   “All the reliability,  half the price.”    

The fact that the entire substance of the allegation is over an American company preventing another American company from buying a Russian built main engine for use after the latter company’s original source of 40 year old Russian engines runs out, highlights the fact that efforts to protect the industrial base have not merely failed, they have become a farce as well.

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5 Comments on "ULA Investigated for Anti Trust Violations"

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  1. Benny Beaver says:

    “Given that ULA bases much of its current justification for excessively high prices on the reliability of its two booster lines”

    Can you support this allegation?

    • An allegation is what the FTC is investigating. The statement quoted could be more appropriately labelled a summarization of multiple statements from ULA such as this one:

      “In ULA’s market of national security payloads and unique science probes, capability, schedule assurance and reliability often overwhelm any other consideration.” -ULA V.P. Dr. George Sowers in an interview with NASAspaceflight.com.

      The “other consideration” being overwhelmed is price.

  2. Benny Beaver says:

    The unsupported allegation is that ULA is charging “excessively” high prices, which implies that ULA is monopoly pricing its services. Do you have data to support that they are charging “excessively high prices?”

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