PHOENIX — United Launch Alliance (ULA) is looking at options to restructure its workforce in an effort to save money as the company nears completion of negotiations for a first-ever multiyear deal for the sale of cores to the U.S. Air Force.
“We are signing up for significant year-over-year savings that we honestly don’t have plans today to [realize],” says Dan Collins, chief operating officer for ULA, which builds and operates the Atlas V and Delta IV EELV rocket families. “We are sticking our head out and our neck out.”
He made the comment during the Aviation Week A&D Programs conference here Nov. 13.
The company is in the final throes of negotiating a deal for the sale of 36 rocket cores to the U.S. Air Force with priced options for up to 14 more. This is expected to provide launch services for the next five years for the Pentagon and intelligence community. Air Force Program Executive Officer for Launch Scott Correll is retiring from his post in the middle of next month; he says he hopes to have the deal inked by then.
In an effort to reduce cost, ULA is studying its expenses. One emerging pattern is that highly paid engineers only spend about 35% of their time on actual engineering tasks. The remainder was found to be dedicated toward work such as design drafting that can be handled by lower-paid employees, Collins said.
“We are now overpaying for the time engineers are drafting,” Collins said. Those engineers would largely prefer to dedicate more time toward more specific engineering tasks, he added.
Shifting non-engineering tasks to non-engineer employees could save millions of dollars annually, he said.
As ULA looks at how to rebalance its workforce, the company is also under pressure to re-examine its engineering processes. This had once been considered taboo, as ULA’s rigorous processes (and those of the previously separateand teams that merged to form the company in 2006) have successfully placed payloads into orbit 75 times. Financial pressure brought on by sequestration, however, has opened a door to engineering changes that was once closed. “To go mess with your recipe is a risk that our customer saw as a step too far,” Collins said. “That is no longer the case.”
ULA is reviewing whether some of its work could be automated, for example, without compromising mission assurance or whether lower-cost employees can offload some of the non-specialized work now done by ULA engineers to lesser-paid employees.
Collins said the company has already produced a 5% year-over-year productivity improvement. Further savings would add to that and improve the company’s business case going into the block buy of EELV cores.
The Pentagon spends just more than $2 billion annually on EELVs and associated services.