The top two senators from the Senate Armed Services Committee are calling for the U.S. Air Force to halt talks worth up to $15 billion with its top rocket provider owing to insufficient pricing data and management insight for the service to make “informed decisions” for crafting a new buy strategy for the (EELV).
“Given the current climate of fiscal austerity, these developments are profoundly troubling,” says Chairman Carl Levin (D-Mich.) and John McCain (R-Ariz.) in an Oct. 21 letter to Defense Secretary Leon Panetta.
The pair call for the Air Force to pause negotiations with United Launch Alliance (ULA), which manages sales for the Delta IV and Atlas V launch vehicles, until more detailed pricing data is available.
The Air Force submitted to Congress in February a plan to buy 40 launch cores over five years – consisting of five for theand three for the National Reconnaissance Office annually. The strategy was crafted last year in order to avoid the inefficiencies and added cost associated with buying each rocket singly; this is the method currently used in procuring the Delta IV and Atlas V boosters, which typically cost about $200-300 million apiece.
Also adding to the complexity in building a procurement plan is the Air Force’s issuance of new criteria for launch providers that hope to get into the government market. The strategy, released earlier this month, allows for new entrants to compete for government launches if they satisfy certain criteria depending on the class of the payload. The government outlines different payload classes based on their value, strategic importance and fragility of the constellation to which they will contribute. The goal is to reduce the price of launch through competition. It is unclear whether the Air Force will be able to both foster competition and guarantee a buy with the existing provider, as these two aims appear to be at odds.
Last week, Air Force Secretary Michael Donley said the Air Force was re-examining the acquisition strategy for the EELVs. One Air Force source suggests it could be released in about six weeks. “There is no question we are trying to get the benefits of stability in our relation with ULA ... but also the benefits of bringing competition into this picture. We have to bring competition in in ways that will maintain mission assurance in ways we have come to expect,” he told an audience on Capital Hill during an Oct. 21 breakfast. “We are trying to work both ends of this stability and competition equation.”
Thereleased a report in September suggesting that the Air Force rethink its strategy. These congressional auditors found that the Pentagon lacks sufficient insight into the pricing for EELV motors and the cost of mission assurance, which refers to the activities undertaken to guarantee the utmost success for each mission. Buying 40 cores may also result in an oversupply if satellites do not launch as planned, the auditors say.
ULA officials are defending the existing Air Force buy approach. “The Air Force is not taking any action without full data and evaluation of numerous options,” according to a statement from Jessica Rye, spokesman for the company. “ULA is tasked to provide a firm fixed price proposal for numerous buying options, which will include all of the available detailed cost and pricing information for [government] officials to evaluate for their final determination.”