Bloomberg News

Air Force Spending $60 Million for SpaceX U.S. Launches

May 15, 2014

Space X

A SpaceX Falcon 9 rocket attached to the cargo-only capsule called Dragon lifts off from the launch pad in this Oct. 7, 2012 file photo in Cape Canaveral, Florida. Photographer: Joe Raedle/Getty Images

The U.S. Air Force is spending about $60 million and using as many as 100 people to certify billionaire Elon Musk’s Space Exploration Technologies Corp. for launching military and spy satellites, according to the service’s top uniformed acquisition official.

“We’ve got folks busting their butt to get SpaceX certified despite what everything in the media seems to say,” Lieutenant General Charles Davis said in an interview.

Davis said the Air Force is eager to find opportunities for SpaceX in its $67.6 billion launch program as he sought to rebut Musk’s contention that the service is protecting a monopoly for United Launch Alliance LLC, a joint venture of Lockheed Martin Corp. (LMT:US) and Boeing Co. (BA:US)

“We’ve had to react to SpaceX and members of Congress,” Davis said. “Now there’s allegations of cronyism; there’s allegations of ‘you just want to give money to ULA because you don’t want to have a new entrant certified.’”

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Musk filed a lawsuit in the U.S. Court of Federal Claims last month asserting that the Air Force illegally shut SpaceX out of launch contracts. He also has cited the reliance on Russian-made engines by the venture of Lockheed and Boeing, the two biggest U.S. defense contractors. In response to U.S. sanctions over Ukraine, Russia’s deputy prime minister said on May 13 that his country no longer will export rocket engines to the U.S. to launch military payloads.

Musk, the entrepreneur best known as the chairman and chief executive officer of Tesla Motors Inc. (TSLA:US), told a congressional committee in March that “space launch innovation has stagnated, competition has been stifled” and prices have soared because of the Boeing-Lockheed monopoly. Musk, 42, ranked 133rd on the Bloomberg Billionaires Index with a net worth of $9.2 billion as of May 13.

Exclusive Contract

United Launch Alliance, the contractors’ venture based in Centennial, Colorado, is working under Air Force contracts valued at $2.6 billion. That includes an exclusive award in December for 36 launches through 2017 and contracts for maintaining a launch capability between missions.

On the other hand, the Air Force has reduced to seven from 14 the number of launches through 2017 for which Hawthorne, California-based SpaceX could compete with United Launch Alliance once it’s been certified.

Davis said the competitive launches were reduced temporarily to save $400 million through 2019. SpaceX will be able to bid on launches after 2017, Davis said.

Three Missions

“It is our belief and our goal that we will get SpaceX certified, or somebody, to the point that they can” put all Air Force satellites in orbit by about 2018, including heavy and high-risk payloads, Davis said.

“I know we have a company out there that says ‘we can do everything for you already,’ and I know that’s not exactly the case yet,” Davis said of SpaceX. “We are trying to get them there.”

The Air Force is evaluating three NASA missions performed by SpaceX, all of which must be validated as successful before the company can be certified. The service has informed SpaceX that one of the missions under evaluation already has passed review and will be counted toward certification.

Davis said the Air Force estimates that SpaceX will be certified to receive contracts no later than May 2015.

SpaceX spokeswoman Emily Shanklin said the company could save taxpayers almost $1 billion a year over the existing program if it were allowed to compete today.

Talking Daily

While saying that the company already qualifies to compete for launches, Shanklin said in an e-mail that the certification process provides “an opportunity to audit the safety and reliability of our launch vehicles. We welcome the Air Force’s continued review of our processes.”

SpaceX President Gwynne Shotwell said of the Air Force in a separate e-mail, “We talk with them every day. We are not hiding anything. They get access to the data for assessing our ability to perform.”

Davis said the Air Force has asked the agency that manages U.S spy satellites if it can delay the award of a launch contract by several months into 2015 so SpaceX might have enough time to get certified for that task.

Representative Mike Rogers, an Alabama Republican who heads a House Armed Services subcommittee overseeing military space programs, asked Air Force Secretary Deborah James and NASA Director Charles Bolden in a April 29 letter for information on “any anomalies on the certification launches” or on related SpaceX missions for the civilian space agency or commercial customers.

Lawmaker’s Letter

In the letter, which was obtained by Bloomberg News, Rogers cited an April 18 SpaceX launch to resupply the International Space Station, which wasn’t one of the three flights required for certification.

Rogers, whose congressional district is near the one where the Lockheed-Boeing alliance assembles rocket boosters, said, “I understand the launch vehicle was actually short of the desired orbit and that the initial maneuver plan” to get the spacecraft near the space station “had to be changed.”

Shanklin of SpaceX said “the data points cited in the Rogers letter are factually incorrect. Falcon 9 delivered the Dragon spacecraft to its targeted orbit.”

Marco Caceres, senior space analyst for the Fairfax, Virginia-based Teal Group, said there have been no public disclosures of any anomalies in the April 18 mission.

Caceres, who follows the launch industry, said that even if there was a glitch with the mission, such as falling short of the intended orbit, it was a success because the SpaceX vehicle was able to dock with the space station.

“Rockets don’t usually fall short in delivering their payloads to the intended orbit, but it happens on occasion,” he said. “It’s certainly legitimate for Rogers to ask.”

To contact the reporter on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net

To contact the editors responsible for this story: John Walcott at jwalcott9@bloomberg.net Larry Liebert


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    (Lockheed Martin Corp)
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  • BA
    (Boeing Co/The)
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