Gass Steps Down at ULA, Did SpaceX, RD-180 Play a Role?

Image Credit:

A number of news stories over the last week have focused on SpaceX firing somewhere between 200 and 400 employees, and the lawsuit filed over California’s WARN act as a result. Now however, a more interesting story is unfolding regarding the departure of just a single employee, not from SpaceX, but from arch rival United Launch Alliance.

As of yesterday, long running ULA President and CEO Michael Gass stepped down from his position, and was promptly replaced by Lockheed Martin Space Systems exec Tory Bruno. Although the announcement indicates the 58 year old Gass will remain with ULA until December 31st, both the timing and the abrupt nature of the announcement suggest that Gass was shown the door.

It is an interesting development for several reasons. First, as the ULA statement indicates, Gass who came to ULA as its first president from Lockheed Martin, has presided over an uninterrupted record of launch success which neither the company nor the outgoing president are shy to remind us about. For the record, it is a stunning 86 launches. Also, as recent reports have indicated, ULA has been something of a cash cow for parent companies Boeing and Lockheed Martin, contributing heartily to the bottom line on the strength of its lucrative, but shamelessly monopolistic control of U.S. military space launches. Based a record of both launch and financial success, it is difficult to see what led to yesterday’s move, if in fact it was non-voluntary.

Past performance is no guarantee of future success however, and with every successful SpaceX launch, the storm clouds gathering over ULA have grown a little darker, a process greatly accelerated by events in Russia, where the once dependable pipeline of Russian built RD-180 engines for  the Atlas V, Lockheed Martin’s contribution to the partnership, were temporarily threatened by an angry Dmitry Rogozin in series of tweets this spring. As of late summer however, the crisis appears to mostly passed, with Rogozin suggesting that Russia is not about to interrupt American supply to the engine due to the cash generated by its sale which is helping to modernize the Russian aerospace industry.

For what it is worth, Rogozin is making the argument critics of the ULA arrangement have made for years. In continuing to import the engine year after year, all while demanding and receiving a subsidy for conducting launches, ULA has effectively supported the Russian aerospace industry while damaging the very U.S. industry it claimed the subsidies were necessary to protect. For better or worse, Gass is fully deserving of the credit, or the scorn, depending on your perspective, for engineering this arrangement.

If the close tie to the RD-180 is a factor in Gass’s sudden departure, ironically enough, it may be partially a result of a lawsuit brought not by SpaceX against the Air Force, but by Orbital Sciences against ULA last year. As one of the counts listed in the suit, Orbital describes a telephone meeting of the RD Amross (the engine’s importer) Board of Directors in which Gass (according to the suit) injected himself in an attempt to prevent OSC from gaining any access to the engine. During recent Senate hearings regrading the RD-180 issue, influential Arizona Senator John McCain has been highly critical of the role and the pricing charged by RD-Amross related to the engine, having sent the Air Force a letter containing a very pointed list of of questions, asking among other things the service to address allegations that the company charges a 200% profit over what it pays the actual manufacturer, NPO Energomash for the engines. Notably, SpaceX amended its complaint against the Air Force to include information contained in McCain’s letter. It is a non-trivial point. Over and above SpaceX complaints about the bid process, the block buy legally depended on certified pricing data which the Senator’s letter suggests was never obtained.

In the broader view, the reaction to Russian threats over limiting access to the RD-180 have underscored in very bold colors just how badly the United States has sold itself short in failing to insist, as first Lockheed Martin and then ULA assured us they could, that domestic production of the engine be initiated.  Gass re-iterated this point in a widely covered Congressional hearing opposite SpaceX head Elon Musk earlier this year, when he stated that ULA had “invested hundreds of millions of dollars to prove that we have the capability to demonstrate our ability to build that exact engine.”

Although never challenged on the statement, subsequent findings by the hastily convened Mitchell report looking into the issue suggested that re-producing the engine domestically would be problematic at best. Given the changing perception of the wisdom in relying on the engine, and the resulting confusion as to what should be done to replace it,  Gass’s role may have become a political liability.

With ULA now waiting on the outcome of court imposed mediation between SpaceX and the Air Force regarding the 36 core block buy secured by Gass, it will be interesting to see what if any changes are brought to ULA by new leadership. Will the company, eternally at the mercy of parent companies Boeing and Lockheed Martin, begin to undertake take the dramatic changes necessary to compete with SpaceX on what is slowly becoming, against its best efforts, a more level playing field? Or will the company double down on political maneuvering as substitute for innovation as suggested by recent letters from members of Congress from Alabama and Colorado to NASA and the Air Force, betraying a regrettable mindset which is much more concerned with hobbling SpaceX than unleashing talent at ULA?

One thing is clear. The appointment of yet another Lockheed Martin executive to helm ULA does nothing to dispel the impression that despite the “50/50” nature of the partnership, Lockheed Martin has been in the driver’s seat from the outset, and remains firmly planted in that role. Whether that is good or bad, or is even accurate, depends on your perspective, but it is otherwise difficult to fully reconcile long running dependence on the Atlas and RD-180, particularly for military launches, in any other light. Surely somewhere along the way, an unchained Boeing would have begun making many of the same arguments now being put forward by SpaceX.  While both parent companies are major defense contractors, Lockheed Martin is clearly the least commercial of the two. To that extent, we may have a clue as to which direction ULA will take under new leadership.

Posted in: Uncategorized

About the Author:

Post a Comment