ULA’s president & chief executive speaks with Mike Gruss

It is increasingly difficult to separate the space launch issues the U.S. Air Force must resolve from those United Launch Alliance, the Pentagon’s chief launch services provider, must decide.

At root, the Air Force demands “assured access to space,” a phrase whose meaning has evolved since the Pentagon first used it more than 30 years ago to explain why it was reluctant to entrust all its payloads to NASA’s space shuttle. “Assured access” got a second run in the 1990s when the Air Force started the Evolved Expendable Launch Vehicle program to spark development of two competing launchers: Boeing’s Delta 4 and Lockheed Martin’s Atlas 5. When market conditions made it tough to keep both rockets in business, the Air Force invoked “assured access” again as it brokered the 2006 merger that created ULA: one provider, but two rockets with enough differences that a failure on one wouldn’t ground the other.

Today, when Air Force officials talk about assured access, they are talking about wanting at least two launch providers at every weight class so no single rocket failure impedes the Pentagon’s access to space

ULA-Atlas5_3.14.16While ULA has a near-flawless record with more than 100 successful launches, its business decisions in the last two years have thrown a wrinkle in the Defense Department’s plans.

The Air Force expects ULA, which ceded a contract for launching a next-generation GPS satellite to rival SpaceX, to not sit out the eight additional missions the service will put out for bid through 2018.

Just one problem: the DoD considers ULA, which has enjoyed a near-monopoly on national security launches for the past 10 years, “barely competitive” with SpaceX in head-to-head matchups where price is king. It also raises the spectre of the Pentagon trading one monopoly for another.

To cut costs, ULA is phasing out its underused Delta 4 Medium rocket and developing Vulcan, a next-generation launcher designed to replace Atlas 5 and to evolve to take over the Delta 4 Heavy’s missions as well.

Some U.S. lawmakers would rather ULA keep Delta and retire Atlas, whose Russianbuilt RD-180 main-stage engine has become a political liability. Still other lawmakers ask whether ULA should simply swap Atlas 5’s RD-180 for the AR1 — as that engine’s designer, Aerojet Rocketdyne prefers — or press ahead with Vulcan and its promise of lower costs and eventual reusability.

Further complicating matters, Boeing and Lockheed Martin’s continued investment in Vulcan depends in part on ULA winning at least some of the eight upcoming matchups with SpaceX.

Tory Bruno, ULA’s president and chief executive, spoke with SpaceNews about the challenges facing his company.

We’re hearing more concerns from Capitol Hill about retiring the Delta 4 Medium, specifically why ULA says Delta 4 is not a viable option.

It’s not ideal for a couple of reasons. Delta is really two rocket families, the Delta Medium, or the single-stick that you can add solid strap-on motors to just like Atlas, and that covers a certain range of payloads. Then there’s the Heavy, which is the three-core version of Delta. In between the biggest Delta Medium and where the Delta Heavy starts is a gap in capability that today is filled by Atlas 5.

Give me an example of the problem this creates.

Take the Air Force’s AEHF satellites. If you didn’t have Atlas, it’s too heavy for a Delta Medium so it has to hop all the way to a Delta Heavy. Lifting that satellite on a Delta Heavy is almost twice as expensive as it would be on a big Atlas. It’s significantly more costly to manifest the whole national security manifest on Delta instead of Atlas.

Several billion dollars?

It’s several billion. It’s a lot more money because Delta is significantly more expensive than Atlas in general. It’s 30-35 percent more expensive. And we head into this period of time when national security space flights are coming down. That smaller number of missions is going to be divided between us and SpaceX. I can’t sell Delta to anyone other than the Air Force. It’s too expensive.

If you produced more Deltas, wouldn’t it bring costs down?

Not enough.

The cost difference you’re talking about is more than it would cost field a new engine or new rocket.

Absolutely. It’s not practical. I need to do about 10 launches a year. I think SpaceX has said publicly they need to do about 10 a year. If all we had was the Delta product to offer, I could sell, I don’t know — two? three? — a year to the government. I can’t sell them to anybody else.

James Clapper, the director of national intelligence, said at a recent hearing he is very happy with Delta.

He did. It is a good rocket. But where are the other seven launches coming from? If I have Atlas I can get those other launches from civil and commercial competitions.

The Air Force will award launch contracts for nine competitive missions in the next few years. Seven of those missions are to launch GPS 3 satellites. But the Pentagon has said Atlas is barely cost competitive. So how do you win any of these missions? Are you going to bid on the remaining competitive missions?

I intend to bid on GPS 3. We have eliminated two of the three barriers we had last time. We had no engines because of the law that existed at the time. We now have four engines. The second barrier was this cost certification thing. It wasn’t that we didn’t have certified cost accounting systems in general. Of course our cost accounting systems are certified. We account for every cent, we get audited all the time. The issue was a requirement in the solicitation that said no other contract can contribute in any way. That was a problem for us because we have overhead pools. We have overhead pools for IT, for security, for safety. We have common pools for common engineering services, like any company does.

The Pentagon didn’t offer any guidance on that?

We could not get to a mutual understanding where our lawyers agreed that we would be able to comply. They’ve since said they don’t think it was a problem. We did. It’s incumbent on us when we bid that we’re going to bid legally.

What’s the worst-case scenario?

Someone protests and they say you violated this requirement and null the contract.

And you’ve already spent the money on the program.

You got it.

That’s settled now?

That’s no longer a barrier.

So what’s left?

Price-only competitions. We do not yet feel we are in a position to win price-only competitions with our competitor, nor do we think that’s an appropriate methodology for buying a launch service, honestly. Lowest Price Technically Acceptable (LPTA) procurements are for items low in risk and complexity. It’s typically used for things like tires, and office supplies, and commodity goods. For my point of view, a rocket is the opposite of low risk and complexity. We’re suggesting to the Air Force that they do a traditional best-value selection, at least in the middle of that spectrum where there is a weighted curve and criteria where reliability and performance are allowed to differentiate between bidders. That’s how NASA has done cargo.

Do you expect to see LPTA in the draft solicitation for the next GPS launch contract?

I don’t know what to expect.

Why do you think “best value” benefits ULA?

Because we believe we have better performance, reliability and schedule certainty. When all of those things are taken as a whole, along with price, then the government is in a position to make an informed best-value decision among providers. We think we can be competitive there.

What if the Air Force sticks with lowest price? How do you win?

If it’s price only, it’s not likely that we’ll be competitive. In general, we offer more than just price. You don’t buy a car that way. You don’t buy the cheapest car the guy has on the lot.

During your tenure, you’ve talked a lot about bringing launch costs down, specifically getting below $140 million. SpaceX said several years ago that they could do a GPS mission for $80 million. Where is ULA in bringing costs down?

I’m not at $80 million.

How much more does ULA need to come down to win a price-only competition?

From what we have seen on the recent awards SpaceX has received, they are still significantly below where we would bid.

Do you think you can make enough progress to be cost competitive on any of the Air Force launch contracts coming up in the next 18-24 months?

We intend to come into family with competitive prices but not to be the lowest priced bidder. For a commercial customer, our insurance rates are much lower because of our reliability. Our schedule certainty is much stronger, which matters to people who need to get to orbit soon. We’re going to come into a competitive price range and we’re going to disclose that and we’re going to get to below $100 million for a basic Atlas 5 401 launch. That’s what we’re targeting to and we intend to be there by about 2019. We’re well on our way to getting there, but we’re not planning to be the cheapest guy.

There’s no good route for you if Air Force decides on lowest price?


If all we had was the Delta product to offer, I could sell, I don’t know — two? three? — a year to the government. I can’t sell them to anybody else.

We intend to come into family with competitive prices but not to be the lowest priced bidder. For a commercial customer, our insurance rates are much lower because of our reliability.

But your parent companies, Lockheed Martin and Boeing, have said ULA needs to win some of these nine competitive missions for there to be further corporate investment in Vulcan.

Yes. Our business plan calls for us to win some of those. I won’t tell you how many.

So if the Air Force sticks with a low price model, ULA is likely not competitive. What does that mean for Vulcan?

That means we’d have to re-evaluate our business case. I can’t say on that data point alone it’s clear we would stop. We would have to look at the whole picture of what’s happening elsewhere and other markets as well.

What are some of those other data points?

NASA cargo and NASA crew. And we are re-entering the commercial market in a big way. We’ve really had very little business there. Less than one launch a year. Our relative success in those other two markets is part of the decision on Vulcan.

ULA’s board has said Vulcan investment decisions would be made a quarter at a time. Is that still the case?

Our baseline going forward is to continue the business, replace the RD-180, and move on towards Vulcan. However, that doesn’t mean they’re going to say “here’s a blank check and go do whatever you want, call me in five years.” It’s a trust-but-verify kind of regime.

If Blue Origin gets the BE-4 to the test stand on schedule and the tests go well, is the competition between Blue and Aerojet Rocketdyne to build ULA’s next engine over?

It’s a little more than that. It’s schedule, the price we expect to achieve, and the technical success. Right now their schedule is looking very good.

Is Blue Origin still 18 months ahead of Aerojet?

I’d say more like 16 months. So far the prices we are discussing with them are consistent with our targets for being competitive. The biggest risk remains the technical risk until they get on the test stand and have successful firings. That will start at the end of the year, or close to it — you can never predict with rocket development. And then we’ll have a really good idea if a methane engine at those power levels is going to satisfy our technical requirements and actually work. But if any one of the three risk areas — schedule, technical, and price (which I’m not very worried about, by the way) — aren’t coming along, then you don’t know what the answer is. I expect that we’ll go all the way to the full-scale static firing and consider all three factors and make our choice.

What happens if you select Aerojet’s AR1? Where does the money the Air Force invested in Vulcan with Blue Origin go?

These are really parallel paths. Aerojet Rocketdyne is also doing great by the way. They’re a little bit further behind but they’re also doing very, very well in their testing. Once we down select, obviously we would want to stop investing in the engine we’re not going to use.


ULA Decatur production facility