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Atlas 5 launch
The EELV program and its two vehicles, the Delta 4 and Atlas 5 (above), were supposed to represent the pinnacle of commercial launch philosphies within the government, but in the end both vehicles had to rely on significant government support. (credit: ILS)

Full circle

The announcement by the US Air Force that it was radically overhauling the approach being used for procurement of Evolved Expendable Launch Vehicle (EELV) missions (Aviation Week, March 13, 2006) represents not merely a change in a single program’s procurement strategy but the death of an entire philosophy, that of “commercial launch.”

Following the loss of the Challenger, the US had to quickly reinvigorate its entire expendable space launch industry. Of necessity, this primarily consisted of resuming production of the same boosters that had been in production for over 25 years. However, within a couple of years of the revival of the expendable industry, there arose advocates for a new approach, one that proved to be nearly as significant as the decision to focus exclusively on the shuttle had been.

On one hand, the advocates of “commercial launch” were correct in that the federal government had made a real mess of things with its shuttle-dependant launch approach. On the other hand, the launch failures of 1985–1987 showed that a more hands-off approach had its problems.

Some very small fledgling companies—and a very few large established firms—argued that government requirements and controls prevented industry from efficiently providing better, lower cost space launch capabilities. New firms established along the lines of “Joe’s Screen Door Repair and Rocketships Company” saw themselves being placed at a competitive disadvantage by having to deal with the US Government the old-fashioned way. This was, in fact, quite true, but the situation applied to startup outfits making paper clips, thumbtacks, and innumerable other products as well; the government had a specific way of doing business that was neither simple nor frequently even logical. The argument went that jettisoning the elaborate procurement approach and merely specifying a few general requirements while letting true price competition go into effect would yield tremendous benefits for everyone. The federal government could best meet its own needs and ensure that others’ launch requirements were handled efficiently by simply getting out of the way.

On one hand, the advocates of “commercial launch” were correct in that the federal government had made a real mess of things with its shuttle-dependant launch approach. On the other hand, the launch failures of 1985–1987 showed that a more hands-off approach had its problems. It wasn’t that the government had caused the failures through its procurement process but rather that it had not done the job adequately. Ramping up the shuttle to the flight rate required to meet everyone’s launch requirements while cutting back on expendable production had ensured that almost no launch program had the resources required to ensure success. Arguably, government direction of the nation’s space launch efforts had been both disastrous and essential.

The argument over whether government involvement hurt or helped the launch business raged on in Washington, with numerous discussions in the Pentagon, at NASA HQ, in the press, and finally, with hearings in Congress. The commercial launch advocates had one strong argument going for them, the traditional American commercial model. Typically, government investment in a new technology would be followed 20 or so years later with commercially-produced hardware that everyone could use, including the government.

The biggest problem was that the standard model of commercialization did not apply to the circumstances of the late 1980’s. The government’s shuttle-only edict had killed expendable vehicle development right about at the point where it might have been expected to lead to new vehicles, and perhaps eventually to full commercial exploitation. When the shuttle literally failed to deliver we fell back on the older vehicles. It was not as if the Curtiss Jenny of 1915 had led to the DC-3 of 1935; in 1989 we were still flying space age Jennies, new production Jennies, but still the same old Jenny design, nonetheless. New vehicles using both new technology and the lessons of the past could indeed be designed and built, but that would take quite a while to do.

Despite this rather serious flaw in its main argument, the commercial launch idea became ascendant. One reason was that some government agencies seemed to embrace the idea wholeheartedly. The Strategic Defense Initiative Organization (SDIO), frequently frustrated by the slow pace of Air Force contractual actions, procured a Delta launch using the commercial approach, even taking a launch slot that the Air Force had allocated to McDonnell Douglas for commercial operations. The US Navy went SDIO one better, choosing to launch its UHF Follow-On series of satellites not by sending money to the Air Force, but by specifying that the satellite contractor deliver the payload to the required orbit, the way a private firm might do it.

Legislation will fix it

Then there were the non-governmental players as cheerleaders for the commercial launch idea. After the failure of the shuttle to open up space to the masses, the commercial approach was the “next big thing” in the view of many enthusiasts. The concept proved to have some vocal—if not particularly well-informed—advocates and they soon came up with proposed legislation that would require its implementation with in the federal government. The National Space Society (NSS) placed a high priority on the law’s passage and even organized a phone call program to get its members to write their congressmen in support of it. “A number of companies have developed new means of launching payloads into space,” the phone spiel went, “but highly restrictive government requirements have prevented these companies from being able to market these new systems. We need a law that will force the government to get out of the space launch business and allow private enterprise to take over.”

So what were these wonderful new launch systems? They could not say. And which specific government regulations presented the real problem? That was another detail for which there were no details.

The Air Force and NASA saw the handwriting on the wall and hastened to forestall any such legislative action by adopting “commercial-like” procurement and operations practices for their new series of launches.

The legislation mandating the “commercial” approach never became law. A version of it eventually was inserted into a NASA appropriations bill, and was supposed to be applied to sounding rockets. Someone probably thought that this was a way of getting the government to stick its toes into what might prove to be very chilly water, but the choice of using sounding rocket programs to teach everyone to swim was a very poor one. NASA had been assembling surplus military rocket motors into sounding rockets for the benefit of researchers for years and no one else knew how to do it nearly as well. Also, strangely enough, using free rocket motors proved to be cheaper than buying new ones. Today NASA still assembles and launches its own sounding rockets.

While legislation forcing commercial launch as a mandatory procurement approach never passed Congress, the Air Force and NASA saw the handwriting on the wall and hastened to forestall any such legislative action by adopting “commercial-like” procurement and operations practices for their new series of launches. This approach took on multiple dimensions, all designed to reduce government involvement. The first application was for the first Air Force post-Challenger booster procurement, the Delta 2 vehicles to be used for the deployment of operational GPS satellites. Rather than the government procuring each major component separately and providing the hardware as government-furnished equipment (GFE) to the company building the booster, a prime contractor approach was employed. The prime bought all the booster hardware itself and assumed the responsibility for its subcontractors’ performance, rather than the government. The government stepped back from oversight functions as well, ceding all authority to the contractor for some operations, enabling only government observation for others and requiring government approval for only a relative few. In addition, rather than separate contracts for development, production, payload integration, and launch operations, it was all bought as a package deal.

For the next procurement after the Delta, MLV-II, for the Atlas boosters for deployment of Defense Satellite Communications Systems (DSCS) payloads, the Air Force even went a step further. The launch would be handled as a procurement of services; the Air Force would never even own the flight hardware. The Air Force assured Congress that this was all part of a planned pattern: further reductions in direct government involvement would be implemented as appropriate.

Dollars and sense

So how much money did the streamlined, commercial-like procurement approach save? That is very hard to say. Prior to the loss of the Challenger, most expendable boosters had been built for years at a slow, halting pace, driven more by shuttle delays rather than economic order quantities. After Challenger, the boosters were being built as fast as possible. It is a real apples-to-oranges problem, but there is one potentially good example for comparison.

In 1979 the Delta 2914 was being built and launched at its full production rate, about 12 a year. NASA managed the program at that time, and charged a government user $20 million for each launch. There were commercial users of the Delta as well, and they paid $25 million, the extra $5 million paying for the management and oversight services provided by the government.

In 1989 the Air Force and private industry were buying all of the Delta 2 boosters they could get their hands on. There was a backlog of satellites that had accumulated due to the shuttle shutdown, most notably the operational GPS birds. The years 1979 and 1988 were both years in which the Delta was at essentially full rate production.

What this means is that under its new, commercial-style procurement the Air Force was paying the inflated commercial price for the Delta. Furthermore, for its multi-unit, multi-year buy, it was paying the price that a non-government user would have paid for a single launch.

Now, take the $25 million that a commercial Delta cost in 1979, add a few million bucks to pay for the performance upgrades that were done, apply the official DoD inflation indices for that type of hardware so to adjust the price up to 1989 dollars, and you reach a 1989 equivalent price of $45 million per launch. Then compare that price to what the Air Force actually was paying for the Delta 2 in 1989, which was… $45 million a launch.

What this means is that under its new, commercial-style procurement the Air Force was paying the inflated commercial price for the Delta. Furthermore, for its multi-unit, multi-year buy, it was paying the price that a non-government user would have paid for a single launch. And whether you are buying eggs, socks, or Cadillacs, if you buy a couple of dozen of something you normally get them for a much cheaper per-unit cost than if you buy just one. The obvious conclusion is that the Air Force was paying more for the Delta launches under the new “commercial-style” approach than it would have been under the government-run program of a decade earlier.

Despite this fact, the Air Force used an even more commercial-like procurement for the Atlas launches of the MLV-II procurement and then took a further step backwards from direct involvement with the Air Force Small Launch Vehicle procurement of Pegasus launches that followed.

Enter EELV

Acting on the recommendations of the study group headed by Gen. Thomas Moorman, the Air Force began the Evolved Expendable Launch Vehicle program in 1994. At first, EELV was to follow both a classic competitive procurement approach and the “operational” concept favored by Air Force Space Command. The boosters would be delivered to the Air Force and “blue suit” launch teams would launch them. The blue suit team idea really did not last long; Space Command could never quite explain why Air Force personnel had to replace contractors in the launch role, and in any case, the diametrically-opposed commercial launch concept was the dominant idea of the time.

As EELV evolved, it became more commercial-like in concept. By the mid-90s, launch of commercial payloads had become a large percentage of US launches. In fact, for expendable boosters launched from Cape Canaveral, they were in the majority. In reality, when you considered the shuttle launches, government flights still constituted the largest percentage of missions. When you added in commercially-licensed launches carrying government payloads, the government clearly still dominated the market. Still, the expectation was that commercial activity would continue to grow and as a result the Air Force made a momentous decision to go commercial in a really big way for the EELV program. The Air Force would select two, not just one, winners of the EELV competition, and while the available funds would be split up between the two firms, the companies would assume all responsibility for the required launch and support facilities. The Air Force envisioned itself being the enabler of the EELV program, but soon becoming simply another user of its services. In fact, the “delivery to orbit” idea invented by the Navy was seen as the ultimate goal of the commercial-style launch effort.

As it turned out, the first launches of both the Delta 4 and Atlas 5 were commercial flights. Both companies developed versions of their rockets designed to meet commercial needs, which tended to fall between the Air Force definitions of “Medium” and “Heavy” missions. Everything seemed to be going fine. Commercial launch may not have been the law of the land, but it was the dominant procurement philosophy.

Commercial shuttle

NASA embraced the commercial launch concept early, and even bragged about how far ahead it was of the Air Force in implementing it. Then, as commercial launch picked up steam in the mid-90s the agency did what was eminently logical. NASA “commercialized” the shuttle program.

The launch failures of 1997, 1998, and 1999—a Delta 2, three Titan 4s, two Delta 3s and two Athenas—served as a wake up call for the Air Force. Deeper government involvement in the launch process clearly was necessary.

Of course, it was absurd to think of the shuttle as a commercial launch program, and even the staunchest advocates of commercial launch would no doubt think it at least odd. But in the spirit of the times, and as part of the eternal pursuit of lower costs, NASA stepped back out of shuttle launch operations to a considerable degree, placing more responsibility on its contractor, United Space Alliance (USA). NASA inspector manpower was cut by 25% and USA responded to its newfound responsibilities by laying off some 500 people. This caused considerable angst, but that kind of streamlining was what commercial launch was all about. The benefit was that NASA was then able to focus on the future, which was seen as its real mission, anyway. As for the future, the replacement for the shuttle, a new reusable launch vehicle would be operated in a fully commercial manner, with the government not even funding most of the development cost.

Reality, such a pain

In reality, commercial missions were not going all that well. Overall, they suffered higher failure probabilities than did government missions, and for the introduction of new commercial vehicles, Titan 3 Commercial, Commercial Atlas 1, Delta 3 and Athena, the failure rate was simply atrocious.

The launch failures of 1997, 1998, and 1999—a Delta 2, three Titan 4s, two Delta 3s and two Athenas—served as a wake up call for the Air Force. Deeper government involvement in the launch process clearly was necessary. Then Boeing, after having flown a commercial payload on the first Delta 4 mission, announced that they had been unable to successfully market the Delta 4 for further commercial launches and would stop trying to do so. The Air Force would have to assume all program costs; so much for being just another customer.

Meanwhile, NASA proceeded with its commercialized shuttle program and in 1999 even began to talk about putting commercial payloads back on the shuttle, an idea abandoned more than a decade before, after the loss of the Challenger. Then came the loss of the Columbia; NASA had its own wake-up call. Commercialized launch for the shuttle was abandoned in favor of much increased oversight. Even before then, the commercial launch-style replacement for the Shuttle, VentureStar, was found to be technically infeasible and was cancelled.

Full circle?

Now, with the announcement that the Air Force is adopting cost-plus contracts for Atlas 5 and Delta 4, “full” government oversight, and even separate contracts for production and launch operations, we are almost back to where we were in the 1970s. The prime contractor approach is still going to be used, so we have not quite made a full circle and returned completely to those thrilling days of yesteryear. Still, it looks as though we have made at least a 270-degree turn relative to where we were 30 years ago.

And as for the advocates of commercial launch – not one of the companies or individuals who promoted it so strongly are still in the business today.


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