Last week Brett Tobey, a senior engineer with United Launch Alliance, was forced to resign over comments he made at a presentation at the University of Colorado-Boulder. During that presentation, Tobey made remarks that implied the US government had improperly favored ULA over SpaceX when awarding contracts for satellite and national security launches. Now, the Pentagon has declared it will investigate these allegations.
During the course of his speech, Tobey stated that John McCain had allied with Elon Musk to forbid ULA from using the Russian-built RD-180 rocket. It’s not clear how much of a hand SpaceX had in this — the United States’ reliance on Russian technology has become more controversial as tensions rose over the Russian invasion of Ukraine, and joint US – Russian missions on the International Space Station have been threatened as well. Either way, Tobey went on to say that it didn’t bid on a specific launch contract with SpaceX over concerns that doing so would expose it to a cost shoot-out it couldn’t win.
“The government was not happy with us not bidding that contract because they had felt that… They had bent over backwards to lean the fill to our advantage. We saw it as a cost shootout between us and SpaceX,” Tobey said.
The problem with this statement is that it contradicts ULA’s previous explanation that it avoided bidding on the contract because restrictions on imports of the RD-180 had left it without sufficient engines to do the work.
Why is ULA so expensive?
United Launch Alliance is a joint venture between Boeing and Lockheed Martin. Until recently, it was the only company certified to provide national security launch services, which it handled with a fleet of Delta II, Delta IV, and Aries V rockets.
ULA’s launch costs are significantly higher than those of SpaceX, a fact the smaller firm attempted to capitalize on initially by arguing that each ULA launch cost roughly $ 460 million. A more full accounting of what the government paid for in its most recent block buy contract with ULA brought that figure down to between $ 164 million and $ 350 million depending on the characteristics of the launch. (For a full accounting of why ULA’s launch prices are so much higher than SpaceX’s I recommend this article by Air & Space and this piece by Fool.com.)
The quick takeaway is this: Some of ULA’s cost overhead is driven by government cost-plus accounting where companies are guaranteed profit margins even if they miss their cost projections, but not all of it. ULA has developed and maintained multiple types of rockets to meet government specifications, guarantees launch flexibility, and offers some heavy lift vehicles like the Delta IV Heavy that SpaceX can’t currently match. ULA has made some significant cost-cutting efforts in recent years, but the company still has a very long way to go to match SpaceX — a fact that Tobey alluded to in his remarks. Despite the fact that the Atlas V has a perfect launch record after more than 100 launches, that doesn’t justify the vast difference in price much of the time. “The government can’t just say ULA has a great track record, they’ve done 105 launches in a row with 100 percent mission success, and we can give it to them on a silver platter even though their costs are two or three times as high,” Tobey said.
The fact that one engineer at one company (even a highly placed one) felt that the government tried to toss it a contract it could win doesn’t mean that the contract was inappropriately prepared. But an investigation into procurement practices means the government is taking the situation seriously, and it could put further political pressure on ULA to cut costs where they can be reasonably trimmed.