SpaceX Sues the Government Over $2 Billion In Rocket Contracts

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Seven months ago, the Defense Department made a controversial call. In a trio of contracts announced on its daily digest of contract awards, the Pentagon announced it was awarding these rocket development contracts:
  • A $967 million deal to United Launch Services, a subsidiary of the United Launch Alliance (ULA) joint venture formed between Boeing (NYSE: BA) and Lockheed Martin (NYSE: LMT).
  • A $791.6 million contract to Orbital Sciences, part of Northrop Grumman (NYSE: NOC).
  • And one worth $500 million to Blue Origin, the space launch venture created by (NASDAQ: AMZN) CEO Jeff Bezos -- and financed by $1 billion worth of sales of his own Amazon stock annually.
Rocket landing on floating barge
Image source: Getty Images.

What's missing from this picture?

Funding rocket development per se isn't controversial. For years, the U.S. space program has largely depended upon Russian-built engines to power American rockets -- making development of a new American rocket, independent of Russian parts, an important national security objective. But did you happen to notice which company is missing from the above list?
That's right: SpaceX -- the company that led the charge in favor of freeing the U.S. from reliance upon Russia's RD-180 rocket engine back in 2015. The Air Force handed out more than $2.25 billion in contracts -- but not $1 of these awards went to SpaceX.
Why not?

Two possible reasons

Let's look at the awards in question. Using nearly identical language, each space contract announced in October described the disbursal of monies "for the development of a Launch System Prototype for the Evolved Expendable Launch Vehicle program." This may be our first clue: The Pentagon sought expendable rockets for satellite launch, rather than the reusable rockets that are SpaceX's claim to fame.
To achieve this goal, the Pentagon decided to fund development of ULA's Vulcan Centaur launch system, Northrop Grumman's OmegA launch system, and Blue Origin's New Glenn launch system. It did not, however, give any money to SpaceX, which had bid three separate reusable rockets: Falcon 9, Falcon Heavy, and Starlink.
Here's where things get interesting. By all accounts, Northrop Grumman is designing OmegA to be an expendable (i.e., use once and discard) rocket. ULA, however, while continuing to design Vulcan Centaur to be expendable, plans to eventually upgrade its rocket, switching out the expendable Centaur second stage for a new refuelable-in-orbit ACES second stage -- making the rocket at least partly reusable.
And Blue Origin? Jeff Bezos always intended his rockets to be reusable.
So if the argument for not giving SpaceX a Launch Services Agreement (LSA) contract is because its rockets are reusable, not expendable, that argument simply falls flat. Two of the other three companies winning such "expendable" rocket contracts are also looking to build reusable rockets -- just as SpaceX does.

Heavy, heavier, heaviest

The Pentagon also noted that its aim in subsidizing development costs was to ensure there will always be at least two domestic, commercial launch-service providers capable of launching the heaviest and most complex payloads for the U.S. government. Could this be the reason SpaceX was left out in the cold?
With an ability to lift more than 25 metric tons of payload to low earth orbit (LEO), ULA says Vulcan Centaur will offer the Air Force "greater capability than any currently available single-core launch vehicle" -- seemingly a strong argument in favor of giving ULA the biggest contract of the bunch.
Northrop Grumman's OmegA rocket, meanwhile, has been reported to be aiming for a 10.1-ton payload to geosynchronous transfer orbits (GTO). In LEO terms, that probably translates to about a 24- to 28-ton payload.


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