Why Do DoD National Security Space Launch Programs Costs Keep Rising?

On March 5, 2014, the Senate Appropriations Defense Subcommittee held a hearing about National Security Space Launch Programs.  The hearing was a session with SpaceX’s Elon Musk, and the United Launch Alliance’s (ULA) Michael Gass concerning the Evolved Expendable Launch Vehicle (EELV) program and contract with the Department of Defense (DoD) and the program’s rising launch costs.  The costs of launching a rocket through EELV have been rising since Boeing and Lockheed Martin formed the ULA in 2006.  Why then, are they rising?

The answer may lie in Stewart Money’s (The Space Review writer) analysis and reporting of the ULA’s launch prices.  Before getting into his numbers, keep in mind the whole point of the EELV contract was to cut launch prices taxpayers were paying by 25-50%.  Boeing and Lockheed Martin both won EELV contracts in 1998.  In FY 2002, before Boeing and Lockheed Martin formed the ULA partnership, a launch might cost $72 million.  Potentially, then, the whole idea was to bring launch costs down to $36 million.  That didn’t happen.  Mr. Money brings up DoD estimates that EACH unit (including rocket cores and subsidies) the ULA put on a launchpad in FY 2010 cost an average of $272 million.  For FY 2012, the ULA’s charges rose to $425 million per unit.

To put some of these costs into perspective, it only costs SpaceX about $57 million to launch their newest generation of rockets with revolutionary rocket engines and configurations.  And SpaceX is adding landing legs free of charge.  So why does it cost the ULA so much more?

During the Subcommittee hearing, the ULA pushed the idea the DoD is responsible for many of the EELV’s extra costs.  They clarified that the extra costs come from the amount of requirements changes and mission assurance processes imposed during each launch build up.  The ULA also believe SpaceX’s launch costs would be significantly more than what SpaceX is charging currently to customers, because SpaceX would need to address DoD/USAF requirements during launch.

Using the initial SpaceX launch cost as a baseline, if the government decided to open the entire launch allotment in the EELV contract to SpaceX and others instead of giving the ULA its original launch allotment, SpaceX, all on its own, could launch 7 rockets for the price of the ULA’s one.  This would be without needing to comply with more government requirements.  However, Mr. Musk also agreed during the hearing that if his company faced the same launch requirements the ULA faced, his company’s costs would go up 50% per launch (to $90 million).  Even that “markup” means four SpaceX rockets could be purchased for the price of one ULA rocket.  It’s a relative bargain.

And SpaceX is aiming to make launch cheaper.  If they can make their Falcon rockets reusable, as they have been slowly doing, the ULA $425 million price tag will just make the DoD contract deal look silly and irresponsible with taxpayer money.  For now, the Senate Subcommittee can’t seem to agree that competition in the launch industry is a good thing, especially regarding established contracts for National Security Space Launch Programs.  The USAF is obstinately continuing down its planned path of contractual “not-rocking-the-boat” by paying wheelbarrows of money to the ULA to slowly launch the majority of rockets, instead of heading to Musk’s Mega-cheap Missile Market.