Air Force study rubber-stamps Air Force desire to limit launch companies
Garbage in, garbage out: An Air Force commissioned RAND study released yesterday has confirmed the Air Force’s desire to restrict the award of launch contracts for the next decade to only two companies.
“We asked RAND to independently double check the assumptions we used to build our acquisition strategy,” said Col. Robert Bongiovi of the Air Force’s Space and Missile Systems Center in California. “What we found was that our acquisition strategy encompasses RAND’s recommendations as we are already making prudent preparations for a market that will only sustain two providers with our phase two contract structure.”
…Part of the RAND report also recommended that the military closely watch companies over the coming years to see which are the most stable. “The U.S. Space Force should make prudent preparations for a future with only two U.S. providers of NSS-certified heavy lift launch, at least one of which may have little support from the commercial marketplace,” RAND Corporation said of its first main recommendation.
Though the report does suggest that the military continue its development program to help three companies through 2023, it reiterates the military’s belief that there simply isn’t enough business to support more than two companies.
For this reason, the Air Force space division, now the Space Force, had wanted to restrict bidding in the 2020s on its future satellite launches to only two companies out of the four (ULA, SpaceX, Northrop Grumman, Blue Origin) that hope to compete for this business. This report is their attempt to justify that decision.
However, the decision has been repeatedly delayed, partly because of a protest of the plan by Blue Origin and partly because a lot of political pressure in the background from those four companies, none of which want to be excluded from future bidding. It was originally going to be made last year, and is now delayed to later this year.
With the release of the report, the military also suggested that if Congress gives it more money, it might be able to open up bidding to more companies. How typical. Instead of trying to trim costs by allowing competition, the Space Force is now maneuvering elected officials to pump up its budget so that these companies all get more cash while picking the pockets of the taxpayer.
This is the same thinking that caused Boeing and Lockheed Martin to merge their launch operations into ULA and for the Air Force to give that new company a monopoly on launches in 2005. The Air Force assumed then that there wasn’t enough launch business for both companies. Rather than compete to lower costs so that both the Air Force and the private sector could afford more launches, the two companies agreed with this Air Force conclusion and teamed up with the Air Force to form a cartel to control the bulk of the U.S. launch market, while charging the Air Force $200-$500 million per launch.
Then SpaceX comes along and proves them completely wrong. It not only gets more than enough business to make a lot of money (in the billions), it charges only $60 million per launch. When the Air Force tried to deny it the right to bid against ULA for military launches, SpaceX sued, and won.
Now the Space Force wants to do the same thing in the 2020s, limiting to two the number of companies that can bid on contracts. All this will do is raise launch costs, and limit competition.
In the end, I doubt seriously if the Space Force effort here will work. All four companies are developing rockets, and all four should have the right to bid on all future launches. If the military tries to exclude any, they will sue, as SpaceX did, and win. Moreover, the military’s assumption that all four companies cannot survive because it doesn’t have enough business for all four is patently false. SpaceX proved them wrong. All these companies have to do is what SpaceX did, keep their launch costs low enough so that other private customers can buy their services.
There will then be more than enough business to go around, for all.
On Christmas Eve 1968 three Americans became the first humans to visit another world. What they did to celebrate was unexpected and profound, and will be remembered throughout all human history. Genesis: the Story of Apollo 8, Robert Zimmerman's classic history of humanity's first journey to another world, tells that story, and it is now available as both an ebook and an audiobook, both with a foreword by Valerie Anders and a new introduction by Robert Zimmerman.
The ebook is available everywhere for $5.99 (before discount) at amazon, or direct from my ebook publisher, ebookit. If you buy it from ebookit you don't support the big tech companies and the author gets a bigger cut much sooner.
The audiobook is also available at all these vendors, and is also free with a 30-day trial membership to Audible.
"Not simply about one mission, [Genesis] is also the history of America's quest for the moon... Zimmerman has done a masterful job of tying disparate events together into a solid account of one of America's greatest human triumphs."--San Antonio Express-News
Garbage in, garbage out: An Air Force commissioned RAND study released yesterday has confirmed the Air Force’s desire to restrict the award of launch contracts for the next decade to only two companies.
“We asked RAND to independently double check the assumptions we used to build our acquisition strategy,” said Col. Robert Bongiovi of the Air Force’s Space and Missile Systems Center in California. “What we found was that our acquisition strategy encompasses RAND’s recommendations as we are already making prudent preparations for a market that will only sustain two providers with our phase two contract structure.”
…Part of the RAND report also recommended that the military closely watch companies over the coming years to see which are the most stable. “The U.S. Space Force should make prudent preparations for a future with only two U.S. providers of NSS-certified heavy lift launch, at least one of which may have little support from the commercial marketplace,” RAND Corporation said of its first main recommendation.
Though the report does suggest that the military continue its development program to help three companies through 2023, it reiterates the military’s belief that there simply isn’t enough business to support more than two companies.
For this reason, the Air Force space division, now the Space Force, had wanted to restrict bidding in the 2020s on its future satellite launches to only two companies out of the four (ULA, SpaceX, Northrop Grumman, Blue Origin) that hope to compete for this business. This report is their attempt to justify that decision.
However, the decision has been repeatedly delayed, partly because of a protest of the plan by Blue Origin and partly because a lot of political pressure in the background from those four companies, none of which want to be excluded from future bidding. It was originally going to be made last year, and is now delayed to later this year.
With the release of the report, the military also suggested that if Congress gives it more money, it might be able to open up bidding to more companies. How typical. Instead of trying to trim costs by allowing competition, the Space Force is now maneuvering elected officials to pump up its budget so that these companies all get more cash while picking the pockets of the taxpayer.
This is the same thinking that caused Boeing and Lockheed Martin to merge their launch operations into ULA and for the Air Force to give that new company a monopoly on launches in 2005. The Air Force assumed then that there wasn’t enough launch business for both companies. Rather than compete to lower costs so that both the Air Force and the private sector could afford more launches, the two companies agreed with this Air Force conclusion and teamed up with the Air Force to form a cartel to control the bulk of the U.S. launch market, while charging the Air Force $200-$500 million per launch.
Then SpaceX comes along and proves them completely wrong. It not only gets more than enough business to make a lot of money (in the billions), it charges only $60 million per launch. When the Air Force tried to deny it the right to bid against ULA for military launches, SpaceX sued, and won.
Now the Space Force wants to do the same thing in the 2020s, limiting to two the number of companies that can bid on contracts. All this will do is raise launch costs, and limit competition.
In the end, I doubt seriously if the Space Force effort here will work. All four companies are developing rockets, and all four should have the right to bid on all future launches. If the military tries to exclude any, they will sue, as SpaceX did, and win. Moreover, the military’s assumption that all four companies cannot survive because it doesn’t have enough business for all four is patently false. SpaceX proved them wrong. All these companies have to do is what SpaceX did, keep their launch costs low enough so that other private customers can buy their services.
There will then be more than enough business to go around, for all.
On Christmas Eve 1968 three Americans became the first humans to visit another world. What they did to celebrate was unexpected and profound, and will be remembered throughout all human history. Genesis: the Story of Apollo 8, Robert Zimmerman's classic history of humanity's first journey to another world, tells that story, and it is now available as both an ebook and an audiobook, both with a foreword by Valerie Anders and a new introduction by Robert Zimmerman.
The ebook is available everywhere for $5.99 (before discount) at amazon, or direct from my ebook publisher, ebookit. If you buy it from ebookit you don't support the big tech companies and the author gets a bigger cut much sooner.
The audiobook is also available at all these vendors, and is also free with a 30-day trial membership to Audible.
"Not simply about one mission, [Genesis] is also the history of America's quest for the moon... Zimmerman has done a masterful job of tying disparate events together into a solid account of one of America's greatest human triumphs."--San Antonio Express-News
You got it wrong. It’s “Garbage In, Gospel Out.” Applies to climate models, pandemic models, RAND studies, and much more. Pretty much any government activity, in fact.
Since all four companies are already launching and/or developing new launchers – on their own money – why would the Space Force need to subsidize any of them?
No one took Falcon, or Falcon Heavy, seriously. Until they had successful launches. All rockets should be held to that standard, including StarShip and Vulcan, as well as Blue Origin and whatever Northrup Grumann is building. That should mean no bidding on launch contracts, until you’ve proven that you can launch successfully.
As the old baseball announcer Dizzy Dean used to say, If you can do it, it ain’t bragging.
Diane Wilson: Blue Origin, ULA, and Northrop Grumman are already getting significant military money to help finance the development of their rockets. See: https://behindtheblack.com/behind-the-black/points-of-information/air-force-awards-contracts-to-ula-northrop-grumman-blue-origin/
Robert, Nothing we can do about those subsidies, but I’d still like to see launch contracts limited to actual launch vehicles. No vaporware allowed.
For all the grief that ISO 9000 and its many cousins have caused, and the NASA ASAP committee is a full-function equivalent, I’ve heard ISO 9000 explained in very simple terms that should be easy enough to implement. “Say what you do. Do what you say. Prove it.” Prove you can launch, then you can bid with your launch vehicle.
In the context of hims Mars ambitions, Elon Musk once defined SpaceX as a transportation company. That’s really the model that I’d like to see for all of these companies. (Including Virgin Galactic and all the other “commercial” efforts….)
I’ve had occasion to rethink my position a bit on this whole mess. There are some nuances, here, I don’t think I adequately appreciated earlier-on.
Let’s start by acknowledging that the legacy contractors are probably not salvageable in the long term except via utter failure and liquidation. Boeing may, in fact, be headed that way due to a long list of unforced, self-inflicted reverses. But that has yet to be determined. LockMart and NorGrum seem, at least for now, less vulnerable, but then the same could have been said of Boeing two years ago. And NorGrum has had a few of its own “Boeing moments” in recent years too.
All three companies suffer from the same root malady – they’re junkies and Congress is their pusher. Cost-plus contracting is a drug and these firms are now thoroughly hooked. Ordinary businesses seek to minimize costs in order to make money. The legacy contractors have been conditioned to maximize expenses in order to make money. Absent their cost-plus “drug,” they will literally die.
For a variety of reasons, but mainly the destruction of Shuttle orbiter Columbia in 2003, NASA and DoD were prevented from continuing their, up until that time, quite successful, program of infanticide anent space launch start-ups. That gave SpaceX and Blue Origin, then recently formed, but as yet on no one’s radar, the breathing space to get some growth on. SpaceX needed this more than Blue as Musk was nowhere near being a multi-billionaire at the time while Bezos already was.
So both companies were able to grow fairly large – SpaceX much faster than Blue out of necessity – without being forced into cost-plus addiction.
Which brings us to the present day. We are in a period of transition. The erstwhile junkie monopoly has been broken for awhile now and all three junkies are showing withdrawal symptoms, at least anent space. Weapon systems are still an all-you-can-shoot,-snort,-or-pop drug-a-palooza. Thus, only two of the four firms in the NSSL competition are veteran cost-plus addicts and two are not.
One of the veteran addicts, ULA, has made at least some moves toward the Cost-Plus Anonymous 12-step program, but its progress has been uneven and marked by lapses. The fact that it has two confirmed junkie parents doesn’t help matters. The other cost-plus junkie, NGIS, is fine with being a cost-plus junkie and has made no effort at all to change its ways.
Of the two non-junkies, one has been recently indulging a significant flirtation with the pushers and has even been given a sizable sample of Congressional nose candy to take home and try.
And here we come to the somewhat paradoxical aspect of this whole convoluted situation. The “apprentice junkie,” if you will, has been pushing strongly to be allowed to be issued a needle and start mainlining. The USAF – Now USSF – prefers to deal with the junkies it has known forever, plus that pesky and sharp-elbowed non-junkie who pretty much can’t be kept out anyway. But the old USAF procurement bureaucrats-in-uniform find dealing with even two suppliers quite taxing after a decade of feet-up-on-the-desk dealings with just one. The prospect of three or more simply doesn’t bear consideration. Hence the “there can only be two” rule for the NSSL contest.
ULA pretty clearly enjoys “most-favored junkie” status here as it seems to have a much bigger caucus of pushers behind it than either the veteran junkie or the would-be junkie newbie. SpaceX, the abstainer in the group, is hated by the pushers, but is simply too big and high-profile to be kept out via backroom maneuverings. They’ve tried having SpaceX whacked already. None of the dispatched hit men were ever seen again. And the non-junkie is now far larger and even more high-profile than back then. It even has a few friends of its own in high places now.
So, IMHO, the two winners are going to be SpaceX and ULA. Which will get the larger share of business is less clear, but also less important.
If this happens, both a veteran junkie and a would-be junkie newbie will be out in the cold – and will even have their partly-consumed bags of Congressional Marching Powder confiscated.
That will, in turn, produce what I think will be two long-term beneficial effects:
1) It will give Blue, the would-be junkie newbie, a quick trip through cold-turkey withdrawal which, one hopes, would incline it toward avoiding the little cost-plus glassine envelopes and little glass vials in future.
2) It would do the same for one of the veteran junkies and the shock will probably put it in a permanent vegetative state. The nascent big rocket, with zero potential market except Uncle Sugar, would be instantly dead. The motley and expensive little Frankenrockets will quickly go too, done in by smaller non-junkie newbies like Rocket Lab. The vegetating veteran junkie’s autonomic nervous system will keep pumping out two Antares/Cygnuses a year until ISS closes its run at which time NGIS will pretty much die as a space company.
I see both these as good things.
But, absent the “only-2” rule, we would likely have added a newbie junkie to the full-fledged roster and continued to enable another. That would be three junkie providers vs. one that’s not. As things stand, it’ll end up a being a one of each situation. That, IMHO, is the least bad outcome.
Robert wrote: “Moreover, the military’s assumption that all four companies cannot survive because it doesn’t have enough business for all four is patently false.”
Worse would be if the assumption were true. If there is not enough business for four launch providers, then the military will be picking the winners and losers in the American launch industry.
Fortunately, I agree with Robert. There is a growing demand for launch to orbit, and I believe that there is — and will be — enough overall business for all four companies to survive. If the government were the only customer for American launch companies, as it was in the 2000s, then I would agree that two or three of these companies would not survive the next decade, and that we would end up with one company, either by combining two, as they did two decades ago, or by three crashing and burning.
Diane Wilson wrote: “It’s ‘Garbage In, Gospel Out.’”
Ah. It has been a third of a century since I heard anyone else use that. We used it where I worked, once, to describe the boss’s reliance on a model that some of us thought had dicey inputs.
Edward,
You’re correct that the overall launch market will be expanding again once this Covid-19 business is behind us, but that business will go almost entirely to SpaceX, Blue Origin and a few smallsat launcher companies. So USAF/USSF are also right that there’s not enough business to support more than two of the companies competing in the NSSL sweepstakes – not enough government business. The “cost-plus junkie” legacy contractors, ULA and NGIS, have little and no prospect, respectively, of landing significant launch business from private sector customers. Thus, pretty much the only business either will get would be from Uncle Sugar and Uncle simply hasn’t got enough launches to keep two junkie contractors going if the work must also be shared with a third or – horrors! – fourth launch supplier.
Dick Eagleson wrote: “but that business will go almost entirely to SpaceX, Blue Origin and a few smallsat launcher companies.”
The majority of the business would go to SpaceX and Blue Origin because of their lower prices. If the other two companies adjusted, adapted, and found better efficiencies, too, all four would probably find enough business to keep launching.
NG and ULA do not need to stay in the launch business in order to stay in business. NG has other products, so they could just quit orbital launch, wasting some of their purchase of Orbital (but not the ATK portion of the purchase). ULA has talked about making space tugs, so they could change their business model. However, I think that it would be a shame if either NG pr ULA left the launch business.
Edward,
We definitely differ on whether it would be a shame if ULA and/or NGIS go toes-up as launch providers.
ULA might have been salvaged if Tory Bruno had been allowed, from pretty much the time he took over, to pursue a maximum feasible course of action starting in 2014 when the Congressional RD-180 limits/deadlines made it clear Atlas V needed to be replaced. But ULA’s two corporate parents didn’t permit that, just a minimum feasible course of replacing Atlas V with an equally expendable version of Vulcan. If, as seems the increasingly likely consequence, ULA never gets around to doing either ACES or its SMART engine section reuse, then ULA’s demise will take with it nothing essential to U.S. space launch of either the commercial or governmental sorts. In fact, via ULA being closed down and liquidated, the ACES technology could easily wind up in the hands of some entity both willing and able to actively pursue it.
Knock-on effects would also be good. If, for example, some NewSpace firm wound up in possession of ULA’s Decatur factory, that would provide the Alabama Mafia with incentives to cease being complete robot pimps for OldSpace. If the facility was simply abandoned, it would decrease both the rations of, and rationale for, the Alabama Mafia’s very existence – also a sizable net plus.
Similar, if less dramatic results would attend NGIS’s slow recessional and ultimate exit from the launch business. As previously noted, I think OmegA is doomed to non-selection in the NSSL sweepstakes and prompt cancellation as a result. NGIS’s aging and motley stable of Frankenrockets are already mostly on artificial life support. They will die, probably one-by-one, as even the mingy remaining government business they get switches to far more economical NewSpace start-ups like Rocket Lab. They will all be long-gone by the time NGIS’s last government-only launcher, Antares, reaches the end of its run when ISS is decommissioned. That would complete NGIS’s exit from the launch business.
It wouldn’t mean the end of either the NGIS division or the larger NorGrum organization as space companies. NGIS would still have its Mission Extension Vehicle satellite resurrection business, plus any spin-offs. Other parts of NorGrum might still be doing projects like the James Webb Space Telescope or the ill-fated Zuma, but that would seem to be appreciably less certain. Personally, I think NewSpace firms are likely to eat that part of NorGrum’s lunch over the coming decade.
I see both ULA’s and NGIS’s increasingly likely exits from the launch business as positive goods. The future of space is creatively free-market and entrepreneurial, not moribund and effectively state-owned. The sooner this transition is complete, the better off both the U.S. private sector and the U.S. government will be.