PayPal Billionaire, Boeing Battle Over Who Can Build a Better Space Taxi

Elon Musk thinks his company can do a better job of sending military satellites into space, and he wants Congress’s help to break into the game.

A SpaceX rocket takes off on a 2012 mission for NASA.
National Journal
Alex Brown
March 5, 2014, 10:38 a.m.

Bil­lion­aire en­tre­pren­eur Elon Musk has a plan to launch mil­it­ary satel­lites that he claims could save the gov­ern­ment hun­dreds of mil­lions, but to make it work, he says he needs Con­gress’s help to break up a mil­it­ary-in­dus­tri­al mono­poly.

“Com­pet­i­tion and the free mar­ket is a good thing,” Musk told Con­gress on Wed­nes­day, es­tim­at­ing that his SpaceX rock­ets would cost nearly $300 mil­lion less per launch if giv­en the op­por­tun­ity to com­pete with United Launch Al­li­ance — a part­ner­ship of Boe­ing and Lock­heed Mar­tin that the mil­it­ary cur­rently re­lies on to ferry its satel­lites.

SpaceX ships have already con­duc­ted re­sup­ply mis­sions for NASA to the In­ter­na­tion­al Space Sta­tion, but have found it more dif­fi­cult to break in­to the De­fense De­part­ment’s launch pro­gram.

At present, the Air Force is slated to buy up to 36 rock­ets from ULA, while an­oth­er 14 will be made open to com­pet­i­tion for SpaceX and oth­er com­pan­ies. ULA CEO Mi­chael Gass said his com­pany’s ex­clus­ive role in mil­it­ary launches is a good thing, of­fer­ing re­li­ab­il­ity (the com­pany boasts 68 straight suc­cess­ful launches; Musk and Gass had a back-and-forth over each com­pany’s mis­haps and what con­sti­tutes a “suc­cess­ful” launch) and pre­vent­ing spend­ing on re­dund­ant tech­no­logy.

But Musk took is­sue with the re­li­ab­il­ity ar­gu­ment, us­ing events in Ukraine to un­der­cut ULA’s stand­ing. “It makes no sense to claim that ULA’s At­las V [rock­et] provides as­sured ac­cess to space when it de­pends on a Rus­si­an en­gine,” he told re­port­ers after the hear­ing. “In light of Rus­sia’s re­cent ac­tions, with the de facto an­nex­a­tion of Ukraine’s Crimea re­gion and the fact that we’ve severed mil­it­ary ties with Rus­sia — we’re con­tem­plat­ing sanc­tions — it does not make sense to award Rus­sia right now with a huge multi-hun­dred-mil­lion dol­lar con­tract for rock­et en­gines.”

He pro­posed that SpaceX’s Fal­con rock­ets could re­place the At­las V, with ULA still provid­ing its Delta rock­ets to the mil­it­ary.

Gass countered that his com­pany has a two-year sup­ply of At­las V en­gines already stock­piled, mean­ing near-term ten­sions between the two coun­tries are un­likely to keep the U.S. out of or­bit. “We are not at any risk,” he said.

Sen. Di­anne Fein­stein — a Cali­for­nia Demo­crat whose state hosts both SpaceX and some ULA launches — came to Musk’s aid, pro­du­cing a chart from the Gov­ern­ment Ac­count­ab­il­ity Of­fice that showed spend­ing in­creas­ing rap­idly after Boe­ing and Lock­heed merged their launch pro­grams. “The costs to the gov­ern­ment, to the tax­pay­er, have skyrock­eted,” she said. “Com­pet­i­tion is the Amer­ic­an ba­sic de­mand for the ac­cord­ance of a con­tract. So what keeps us from do­ing this?”

Ad­ded Musk: “When Boe­ing and Lock­heed merged, the point at which they stopped be­ing com­pet­it­ors, the costs doubled,” The gov­ern­ment, he said, fur­ther di­min­ishes com­pet­i­tion with a bil­lion-dol­lar an­nu­al pay­ment — which he re­ferred as a sub­sidy — to ULA. He ar­gued that fund­ing “ex­clus­ively in sup­port of the in­cum­bent pro­vider” should be elim­in­ated, or at least factored in­to cost ana­lyses when ULA com­petes for con­tracts.

That pay­ment, known as the ELC, is cru­cial for en­sur­ing ULA’s read­i­ness to meet Amer­ica’s space needs, even when de­mand ebbs, Gass replied. “The na­tion needs a launch vehicle com­pany to stand ready,” he said.

Sen. Richard Shelby — whose home state of Alabama hosts ULA’s pro­duc­tion plant — praised the com­pany’s track re­cord. The Re­pub­lic­an ar­gued that com­pet­i­tion, while gen­er­ally a driver of pro­gress, could lead to “du­plic­a­tion of ex­ist­ing in­fra­struc­ture” and ex­pressed skep­ti­cism at “re-cre­at­ing the wheel.” He also pressed Musk on a SpaceX en­gine fail­ure that sent a cargo ship in­to the wrong or­bit.

Mean­while, Gass used an ar­gu­ment Musk couldn’t — his know­ledge of clas­si­fied tech­no­logy — to in­sist that get­ting mul­tiple com­pan­ies the cap­ab­il­ity to handle such pay­loads isn’t feas­ible. “Those mis­sions can’t work in a com­pet­it­ive com­mer­cial en­vir­on­ment,” he said. “If you don’t have a win­ner-take-all, sur­viv­al of the fit­test com­pet­i­tion “¦ it doesn’t work.”

Musk replied that his com­pany is pre­pared to meet the needs of any mil­it­ary launch, adding that ex­pan­ded cap­ab­il­it­ies are built in­to its cost es­tim­ates. He dis­missed the no­tion that ULA’s longer track re­cord should give it the edge in launch­ing mil­it­ary satel­lites. “Re­li­ab­il­ity is a key factor in com­pet­i­tion. It doesn’t be­come less im­port­ant; it be­comes more im­port­ant,” he said. “If our rock­ets are good enough for NASA, why are they not good enough for the Air Force?”

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