SpaceX Wins Contract ULA Refused to Bid; Saves Taxpayer $60 Million

Credit: SpaceX

Credit: SpaceX

Mars was not the only thing in SpaceX’s orbit on Thursday. On the same day that the company announced it is aiming for a landing on the Red Planet as early as 2018, it also landed the first award in its long sought campaign to launch national security missions under the Air Force’s EELV program.

The announcement, which came from the Pentagon, is for the launch of a GPS-III satellite to take place in May 2018, and it is the first of 9 openly competed missions the Air Force ultimately carved out of the decade long monopoly held by United Launch Alliance. ULA is also the recipient of a 36 core “block buy” for which it is the sole supplier.

The award was hardly a surprise, given the fact that the first time it faced open competition since a bid rigging scandal led to the merger of Boeing and Lockheed Martin launch companies in 2005, ULA declined to enter a bid. The company’s ostensible reasons for refusing to participate in a process it had previously profusely praised as a profound privilege has been called into question by U.S. Senator John McCain, as well as one of its own executives, who was subsequently fired for his all too frank comments.

See Related: “Space Settling for Less”:  ULA Dismissal Underscores the High Cost of Low Expectations

With ULA out of the picture, at least for the moment, SpaceX was left as the only plausible choice. It might not have mattered anyway, as the Air Force announced that the SpaceX bid, at $82.7 million dollars was 40% under what the service was expecting to pay based on prior history.

Speaking to reporters, Lt. Gen. Samuel Greaves, commander of the Air Force’s Space and Missile Systems Center said that estimated figure was roughly $140 million. He went on to add:

“Having multiple launch service providers allows the government to ultimately save taxpayer dollars while increasing assured access to space and maintaining our unwavering focus on mission assurance.”

Notably, the amount submitted is very close to that SpaceX previously offered as part of an unsolicited bid for GPS launches which was summarily declined, and actually comes in below other estimates which suggested that the mission assurance charges associated with national security launches would place a Falcon 9 somewhere around $95 million. Commercial prices are listed publicly at $61.2 million. (ULA does not list its prices).

With four more GPS-III launches to be competed as part of the 9 missions to bid, the total savings from this series alone could top $300 million over five launches, assuming the Air Force does not alter the terms to allow ULA to win on points other than price. While there are some indications that the process may be altered, given the comparatively low cost of GPS satellites compared to some other national security spacecraft, as well as a healthy constellation in orbit with multiple spares on the ground, it would take a particularly tortured chain of reasoning to conclude that in this case at least, other terms should apply.

As in any discussion of the EELV program, it is is worth noting that the much higher figure anticipated by the Air Force does not include an allotment of the nearly $1 billion dollar year ELC contract ($800 million this year) that is widely considered to be a barely disguised subsidy. For what it is worth, ULA vehemently disputes the use of the term, but a close reading of the history of the payments, which were originally requested by ULA partners Boeing and Lockheed Martin prior to the company’s formation, strongly suggest that this is in fact the case. In any event, if the full figure is taken into account, the actual cost of any ULA launch to the American taxpayer easily broaches $200 million.

Regardless of what they are called, assurance or subsidy; the payments were one of the reasons ULA cited in declining to bid on the first openly competed launch since the company was formed. Adding to the overall irony, ULA claimed that its accounting systems were incapable of demonstrating that the ELC payments were not unfairly subsidizing its bid at the expense of SpaceX as required by the terms of the competition.

To the uninformed layman, that claim would appear to be a tacit admission of the point in question.


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1 Comment on "SpaceX Wins Contract ULA Refused to Bid; Saves Taxpayer $60 Million"

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  1. PK Sink says:

    “it is the first of 9 openly competed missions the Air Force ultimately carved out”

    Carved out…after caving in.

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