News Analysis | With Pentagon award, SpaceX joins the establishment

WASHINGTON — Six years ago, SpaceX was the upstart launch company seeking to break United Launch Alliance’s monopoly on national security space launches. Now, it’s part of the establishment.

When the U.S. Air Force announced Aug. 7 that SpaceX and ULA would split the National Security Space Launch (NSSL) Phase 2 contracts for launches between 2022 and 2027, it cemented SpaceX’s position in the government launch market, one that it went to court not that long ago to enter.

In 2014, frustrated with the Air Force’s award of a block buy contract to ULA for Atlas 5 and Delta 4 rockets, SpaceX filed a lawsuit in federal court, arguing that some of those launches should be competed. The Air Force countered that SpaceX’s Falcon 9 vehicle was not yet certified and thus could not compete.

“New entrants have to fight every day,” recalled Gwynne Shotwell, president of SpaceX, during a panel discussion at the Satellite 2020 conference in March. “If we’re entering a market where we weren’t before, the folks that are in the existing market are going to be upset and they’re going to make sure you have as difficult a road as you possibly can.”

SpaceX dropped the lawsuit in early 2015 after winning concessions from the Air Force, such as speeding up certification of the Falcon 9 and making more launches available for competition. SpaceX has since won several launch contracts for national security missions, which have included the launch of a GPS 3 satellite June 30.

Around the same time that SpaceX sued to win access to the national security launch market, the souring of U.S.-Russian relations raised concerns about continued reliance on the Russian-built RD-180 engine used by the Atlas 5, particularly when Russian officials threatened to ban exports of the engine in response to Western sanctions of Russia. That started a process to end reliance on the RD-180 that culminated in the NSSL Phase 2 competition.

SpaceX, once considered an unproven new entrant, went into this competition as something of an incumbent. It was the only one of the four bidders that offered vehicles flying today: Falcon 9 and Falcon Heavy. SpaceX instead made more incremental changes, such as an extended payload fairing. It will also build a mobile service tower at Launch Complex 39A at the Kennedy Space Center in order to support vertical processing required for some national security payloads. Yet it was also at a bit of a disadvantage, failing to secure a Launch Service Agreement award to support vehicle development that the other three bidders all received from the Air Force in 2018.

“We fought hard to enter this market and we really hope we can continue,” Shotwell said at Satellite 2020. “We have done a good job building a launch vehicle that can serve many markets.”

ULA may have fought SpaceX when that company tried to get into a market the Boeing-Lockheed Martin joint venture had dominated for years. However, it also adapted to the changing market and the competition under the leadership of Tory Bruno, who became president and chief executive of the company in 2014. ULA has spent the last several years working on a next-generation rocket, Vulcan, that will ultimately replace both the Atlas and Delta and end reliance on the RD-180.

Although Vulcan is new, ULA’s long record of working in national security launch made it a front-runner, and Bruno was confident that ULA’s track record would overcome any uncertainty about a new launch vehicle. On that Satellite 2020 panel, he predicted the global launch market could sustain four large vehicles, of which one would be Russian and another European.

“Thank goodness that leaves two for the U.S. because we want to have assured access via two providers,” he said. “That is the right number, and that is why the Air Force will select two this summer. It’ll be ULA and one of my colleagues up here.”

The two losers in the competition, Blue Origin and Northrop Grumman, face different fates. Blue Origin’s development of New Glenn, which company executives have estimated to cost $2.5 billion, has been funded by company founder Jeff Bezos, who has leveraged his massive Amazon.com wealth to support a long-term vision of millions of people living and working in space.

That vision is unlikely to be derailed by losing a single government contract. Work continues on both the New Glenn rocket and a launch complex at Cape Canaveral, not far from where the company built a large factory for building the rocket. Blue Origin is also still involved in the NSSL Phase 2 program as a supplier to ULA: the BE-4 engine it developed will be used on the first stage of Vulcan, as well as its own New Glenn rocket.

Bob Smith, chief executive of Blue Origin, said in an Aug. 7 statement that while the company was “disappointed” it lost the NSSL Phase 2 competition, it would forge ahead. “We are proceeding with New Glenn development to fulfill our current commercial contracts, pursue a large and growing commercial market, and enter into new civil space launch contracts,” he said. “We remain confident New Glenn will play a critical role for the national security community in the future.”

The future of Northrop Grumman’s OmegA rocket is less clear, though, without having a base of national security launch contracts. Company executives have emphasized that its use of hardware for the rocket with ties to other programs, like the Space Launch System, make it possible for the vehicle’s business case to close with just a handful of launches a year.

“OmegA is not a rocket seeking multiple payloads, it’s a rocket built on the margins of a number of other businesses we have,” Charlie Precourt, vice president of propulsion systems at Northrop Grumman, said on that Satellite 2020 panel.

“We’re doing synergies to make sure that we can sustain very, very low flight rates, lower than you could traditionally see in a launch vehicle provider,” he said. However, it’s unclear if that business case can still close without the U.S. government as an anchor customer.