ULA intends to lower its costs, and raise its cool, to compete with SpaceX

PARIS — A senior United Launch Alliance official on March 15 gave a candid assessment of his company’s attempt to reinvent itself at a time when competitor SpaceX has almost single-handedly caused a rebirth of the cool in U.S. rocketry that has all but bypassed ULA.

In a presentation by turns admiring and resentful of SpaceX – not the first time a ULA official has expressed these sentiments — ULA Engineering Vice President Brett Tobey said his company accepts the fact that SpaceX has forced the U.S. government, and thus ULA, to change the way rockets are made and sold.

It still views SpaceX’s Falcon 9 reusability design – returning the full first stage – as “dumb” given the huge amount of fuel needed to bring the stage back. ULA’s plan for its future Vulcan rocket is to separate the Vulcan’s main-stage engines, cover them in a package that deploys a parachute and then scoop them up in midair with a helicopter.

Addressing a University of Colorado-Boulder audience, Tobey began by recalling the history of ULA, created in 2006 after the U.S. government concluded that neither of ULA’s parent companies, Lockheed Martin and Boeing, could survive on its on as a launch-service provider.

A de facto monopoly was born with U.S. government blessing and with a series of lucrative U.S. government contracts whose principal goal was reliability and capability, not value for money.

It included an annual $1 billion EELV Launch Capability contract, since reduced to $800 million per year, that lards on more cost, but also provides maximum flexibility to U.S. government customers.

“If they say jump, we basically say, ‘How high?’ under this capability contract,” Tobey said.

Life was good for a time. ULA got the government business, which was all it needed. The company never much bothered with the highly price-competitive commercial launch market – a roller-coaster ride that Boeing had badly overestimated, in part causing the formation of ULA.

The company has posted a 100 percent launch success record – 105 missions including classified payloads valued in the range of $1 billion.

“Then along came [SpaceX founder and Chief Executive] Elon Musk, who changed the game completely,” Tobey said.

Hawthorne, California-based SpaceX’s Falcon 9 rocket is a design-to-cost vehicle with some launches priced at $60 million. Even with the supplemental requirements that SpaceX has said can add 30 percent to the cost of a U.S. Air Force mission, Falcon 9 is far less expensive than ULA’s workhorse, the Atlas 5 rocket.

“On our best day you’ll see us at bid at about $125 million,” Tobey said. Adding in the Capabilities contract monies and the price climbs to $200 million.

With SpaceX making the rounds in Congress and even suing the U.S. Air Force to open its rocket competitions, ULA’s days under its current structure were numbered – 100 percent success over 105 straight missions notwithstanding.

“The government cannot afford this right now,” Tobey said of ULA’s current cost structure. “SpaceX will take them to court if they [the U.S. military] don’t demonstrate the ability to allow competition…. Now we’re going to have to figure out how to bid these things at a much lower cost.”

Unless the U.S. Air Force decides to end it early, the Capabilities contract expires in 2019. Tobey conceded that the likelihood of its being renewed “is exactly zero. So we have to be ready, in 2020, to roll up the cost of all that work and not make our launch vehicles just extraordinarily expensive.”

The challenge for ULA is even greater given U.S. congressional pressure for it to abandon, sooner rather than later, the Atlas 5’ main-stage RD-180 engine, whose Russian pedigree is a problem at a time of heightened political heat between Russia and the United States. SpaceX has also stoked this fire for its own account.

ULA is now working with Kent, Washington-based Blue Origin, owned by Amazon founder Jeff Bezos; and Aerojet Rocketdyne of Rancho Cordova, California, on RD-180 replacements.

Aerojet Rocketdyne’s AR1 engine uses liquid oxygen and kerosene. Blue Origin’s BE-4 uses liquid oxygen and methane.

Tobey said Bezos has invested $500 million of his own money in Blue Origin and, as demonstrated during the explosion of a Blue Origin engine on a test stand, is willing to “open his checkbook” to pursue what for Bezos is more a passion than a quest for business profit.

Compared to Bezos, Aerojet Rocketdyne’s AR1 is working off a relatively small government budget, Tobey said. He did not reference a recent U.S. Defense Department announcement that substantially more funds would be arriving to develop the AR1.

Comparing the two engine developments – Aerojet Rocketdyne pursuing the classic government funding route, while Blue Origin has a billionaire owner who can act lightning-fast – the two companies’ situations do not favor Aerojet Rocketdyne.

“Compare it to having two fiancées, two possible brides,” Tobey said of ULA’s approach to the two. “Blue Origin is a super-rich girl, and then there is this poor girl over here, Aerojet Rocketdyne. But we have to continue to go to planned rehearsal dinners, buy cakes and all the rest with both.

“We’re doing all the work on both, and the chance of Aerojet Rocketdyne beating the billionaire is pretty low. Basically we’re putting a whole lot more energy into BE-4 for Blue Origin.”

Using methane would be new for the U.S. space sector, imposing risks, but Tobey said the BE-4 engine is only 60 percent of the cost of the AR1, a clear advantage in today’s cost-driven market.

Of both engines, he said: “They are never going to outperform the RD-180.”

Under Chief Executive Tory Bruno, ULA has taken steps to modernize the company’s image. Bruno tweets up a storm and comes across as approachable and possessed of a sense of humor – neither of these traits were associated with ULA in the past.

Fittingly, Bruno turned to Twitter March 16 to put some distance between ULA and Tobey’s remarks. “These ill-advised statements do not reflect ULA’s views or our relationship with our valuable suppliers,”  Bruno said. “We welcome competition.”

.@jsutton101 These ill-advised statements do not reflect ULA’s views or our relationship with our valuable suppliers. We welcome competition

— Tory Bruno (@torybruno) March 16, 2016

The company’s proposed Vulcan rocket – designed to cost substantially less than the Atlas 5 – could help transform ULA’s stodgy, government-coddled image — a complaint voiced by ULA personnel on social media aimed at young jobseeking engineers.

As much as Tobey lamented that ULA deserves more credit than it gets in the market of public opinion, he also expressed – with humor — an engineer’s admiration for SpaceX and what it has done in that same market.

“Don’t get me wrong: SpaceX has done some amazing stuff,” Tobey said. “The landing [in December] of that [Falcon 9] first stage at the Cape was nothing short of amazing. My wife and I were at Best Buy and watching it on my iPhone and I just got goose bumps. It was cool.

“Watching them smash it into the barge was fun, too,” he said of previous, and a subsequent, SpaceX attempts at landing the first stage.

“It’s getting tons of press. It’s extraordinarily, engineeringly cool – but it’s dumb,” Tobey said. “I mean: Really? You carried 100,000 pounds of fuel after deployment of the SES satellite [SpaceX’s March launch of the commercial SES-9 telecommunications satellite, to geostationary-transfer orbit] just to try to land on the barge.”

ULA has concluded that the damage to a rocket’s first stage, including its engine, as it heads toward landing, plus the cost in fuel needed to turn the stage around and prepare for landing, is not likely a winning ticket.

But he said the investments by billionaires Elon Musk, Jeff Bezos and Virgin Galactic backer Richard Branson have been “really, really good for this industry.”

“It’s quite a shot in the arm for ULA,” Tobey said. “It’s going to be a great story written here and my job is to make sure it has a happy ending. But we’ll see.”

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