LITTLE ROCK — As House lawmakers voted on stop-gap legislation earlier this month to keep the U.S. government running, Elon Musk was in a meeting room just down the hall in the Capitol.
The chief executive officer of Space Exploration Technologies Corp., or SpaceX, was making his pitch for competition in space launches, a development pivotal to his company’s future.
At issue is an Air Force proposal to award a bulk buy of 40 launches over five years to United Launch Alliance LLC, a joint venture of Lockheed Martin Corp. and Boeing Co. that is now the government’s sole provider of medium- and heavy-lift rockets for civilian and military satellites. The Air Force has budgeted about $10 billion for the program during that period.
“We’re like 1 percent of the lobbying power of Boeing and Lockheed,” Musk said, as he walked out of the meeting. “If this question is decided as a function of lobbying power, we’re screwed.”
Musk casts his campaign as a David-versus-Goliath struggle in which SpaceX, which has completed only two satellite launches, would offer innovation and potential savings.
“We’re just engineers here,” he said. “We’re trying to make a case for a fair competition, but we’re up against the two biggest defense contractors in the world. They’re ganged up against us.”
Jessica Rye, a spokesman for United Launch, said the company “has been consistent in our message,” which supports the government opening about 20 percent of its launch needs to competition while reserving the rest for a block buy.
The split would “be a prudent buying practice to protect against any potential satellite delays,” Rye said in an Oct. 6 e-mail.
Musk has supporters on Capitol Hill and he said he had “good meetings” recently with “pro-competition” officials at the Pentagon.
Sen. Dianne Feinstein, D-Calif., where SpaceX is based, said she is concerned the Air Force’s proposal will prevent competition in the launch industry “for years to come.”
“The block buy was intended, in part, to reduce launch costs but it is not clear whether this contract will actually save the taxpayers’ money when compared to a full and open competition,” Feinstein said in an email this month.
United Launch, based in Centennial, Colo., is the sole provider of mediumand heavy-lift rockets under the Air Force’s Evolved Expendable Launch Vehicle, or EELV, program. The rockets fly military and spy satellites into space.
The Air Force plans a “block buy” strategy that will commit the Defense Department to a minimum of eight launches a year for a total of 40 through fiscal 2016, yielding a projected savings of about $830 million from earlier cost projections. The average for the past four years has been about six launches a year.
The Senate Intelligence Committee, which Feinstein chairs, said in a report accompanying the 2012 intelligence authorization bill that the “monopolistic state of EELV providers” was “particularly troublesome” and recommended the Air Force reduce the launch quantity to at most five a year for no more than four years.
The Air Force’s budget for the program, excluding spending for the Navy and National Reconnaissance Office, which manages the nation’s spy satellites, is projected at $9.88 billion from fiscal 2012 through fiscal 2016, according to service figures. That’s $3.48 billion, or 54 percent, more than a projection made last year covering the same period.
U.S. Rep. C.A. “Dutch” Ruppersberger, D-Md., said he is troubled by those figures.
“The system we have now is way too expensive and is getting more expensive and is forcing American space companies to go to other countries to get launched,” he said. “That’s unacceptable to me.”
Ruppersberger, the ranking minority member on the House Intelligence Committee, said the system does not provide incentives to possible new entrants such as SpaceX, based in Hawthorne, Calif., and Orbital Sciences Corp. of Dulles, Va.
“I’m really happy there are entrepreneurs out there like Elon Musk who have taken the risk and see an opening to do something that will be helpful to our country — if they can continue to perform,” he said.
SpaceX, formed in 2002, is the brainchild of Musk, who also co-founded Pay-Pal Inc., the online payment service, and Tesla Motors Inc., which builds high-performance electric cars in California and went public in June 2010.
The company has attempted seven launches using its Falcon family of rockets, three of which failed after liftoff or during the mission. Its next scheduled flight of the Falcon 9 is scheduled for January 2012.
United Launch, established in December 2006, has completed 54 missions. Its Delta and Atlas families of rockets date back to the 1950s and 1960s and have flown a number of high-profile missions, from astronaut John Glenn’s inaugural Earth orbit to the Mars Rovers for NASA.
“The money that United Launch receives from the Defense Department is slated to be $2.5 billion to $3 billion a year,” Musk said. “For the same number of launches, SpaceX would be under a billion.”
Rye of United Launch said the program’s forecast “reflects an increasing launch rate” and does not take into account the proposed improvements in buying practices.
Business, Pages 23 on 10/24/2011