Faced with competition for the first time, the United Launch Alliance said on Monday that it would not bid on the next contract to send Pentagon satellites into space, a stunning announcement for a company that held a monopoly on national security launches for a decade.
The decision to bow out of the competition means that SpaceX, the only other firm certified for the launches, could walk away with its first lucrative Pentagon contract without a single rival in its way.
In a phone interview, Tory Bruno, ULA’s chief executive, said that the company, a 50-50 joint venture between Lockheed Martin and Boeing, is “unable to submit a compliant proposal” because of contract requirements and the limitations Congress has imposed on the Russian-made engines that power its Atlas V rocket.
Congress wants to phase out the use of the RD-180 engine for national security launches by 2019 as a result of Russia’s actions in Ukraine. In this year’s defense spending bill, it authorized ULA to use four of them. But as of Monday, the day the proposals were due for the contract, the bill had not yet been signed into law. And the engines, therefore, were technically unavailable, Bruno said.
“I very much want to participate in future competitions,” he said, “and having access to the Atlas V launch vehicle is key.”
But even if the company did have access to additional engines, the way the contract was structured made it impossible for it to compete, Bruno said. For instance, he said, the Air Force used a procurement process that would give a lot of weight to the prices companies bid – and not their experience and past performance.
“The key elements of reliability and schedule, certainly our most important strengths, are not allowed to be considered to differentiate bidders,” Bruno said. “It comes down to being a price-only comparison, which takes our biggest strengths off the table.”
SpaceX declined to comment. Ellen Tauscher, a former member of Congress who serves as an adviser to the firm, said ULA is trying to hold the Pentagon “hostage.”
“They are effectively saying, ‘We’re not going to bid unless you give us these Russian rockets’,” she said.
For SpaceX, the development means that the fast-growing space company is primed to enter yet another market that it has helped disrupt. Founded by Elon Musk, the billionaire technology entrepreneur behind the electric Tesla automobile, SpaceX was the first commercial space company to fly cargo to the International Space Station for NASA. And it has another NASA contract to ferry astronauts there as well.
Last year, SpaceX sued the Air Force for the right to bid on the contracts to launch spy and communications satellites for the Pentagon and intelligence agencies, arguing that it could do so for far less than ULA. The parties ultimately settled, and earlier this year the Air Force certified SpaceX for the launches.
The contract to launch the Pentagon’s next-generation GPS III satellite was the first where there would have been two certified bidders. Air Force officials said the competition between ULA and SpaceX could dramatically reduce the cost of the launches.
Claire Leon, the Air Force’s launch enterprise director, recently told reporters that “it is critical to the Air Force that we get more than one bidder… . The whole purpose is to reduce cost and get companies to operate at the lowest price point as possible.”
Bruno said that he remains hopeful that Congress will loosen restrictions on the RD-180 engine and change the requirements so that ULA would be able to compete for future contracts. The company is working with Blue Origin, Jeffrey P. Bezos’s space company, to develop an American-made engine that would power ULA’s new Vulcan rocket.
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