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Home / Business / Air Force terminates agreements with Blue Origin and Northrop Grumman, preparing for contract protests

Air Force terminates agreements with Blue Origin and Northrop Grumman, preparing for contract protests



The choice of SpaceX and ULA was expected. What’s surprising is the great value of the contract awarded to SpaceX for its first Phase 2 mission.

WASHINGTON – The Air Force has called for sticking with SpaceX and the United Launch Alliance as a supplier of launchers over the next five years. Now it has to decide whether to continue working with the companies that lost the Phase 2 National Security Space Launch – Blue Origin and Northrop Grumman.

One emerging issue is the termination of the Inception Services Agreement contracts that the Air Force awarded in October 2018 for Blue Origin and Northrop Grumman, as well as for ULA.

The purpose of agreements is to help Stage 2 competitors pay for vehicle and infrastructure development. Blue Origin received $ 500 million; Northrop Grumman $ 792 million and ULA $ 967 million. Funds will be allocated until 2024, and the Air Force at the outset says LSAs will be terminated with companies that fail to win Phase 2 procurement.

Air Force Assistant Secretary for Acquisition Will Roper said despite political pressure to not end the LSA, the agreements would be terminated on August 7 during a video conference with reporters.

“We will work with those two companies to determine the relevance score to force them to work under the LSA agreement,”

; Roper said. “The aim of the LSA is to create a more competitive environment that leads to Stage 2.” The point is not to take them indefinitely, “he said.

LSA funds have supported the development of Blue Origin’s New Glenn rocket and Northrop Grumman’s OmegA launch vehicle. ULA will continue to receive money for its Vulcan Centaur. SpaceX was not awarded an LSA contract.

Before the LSAs were terminated, Roper said, “We must determine what work has been done and what data rights the government has. We want to make sure we keep those. ”

One main reason the LSA failed to continue for all three companies, Roper said, was that the Air Force didn’t have enough money in the budget.

An Air Force-commissioned RAND report warns that the end of LSAs could cause the Air Force with fewer competitors in the industry to challenge ULA and SpaceX by 2024 when Phase 3 of the Kick-off program. National Security Space Cave is scheduled to begin.

RAND said the cut in financial support could cause companies to forgo certification efforts to qualify for commercial launch vehicles to launch national security. The report says this has national security implications because if an American launch company withdraws from the market, a foreign competitor is likely to show up to try to fill the void.

The Air Force plans to continue to support the US industry, but specific details have yet to be determined, Roper said. “We will be discussing this with Capitol Hill for Phase 3.”

Roper said he agrees with RAND’s stance that it is “in the best interest of the government to have three or more viable systems competing for Phase 3”.

Both the House and Senate versions of the Defense Authorization Act of 2021 include provisions for the Air Force to create a new partnership with the launch industry similar to the LSA.

Possibility of legal objection

Before the Air Force can move forward and begin planning Phase 2 missions with SpaceX and ULA, they are preparing for the possibility of a legitimate protest to the award on July 7. August.

Blue Origin and Northrop Grumman released statements on Friday expressing disappointment over the Air Force’s choice. Any decision to file an objection will be taken after companies have been briefed by the Air Force as to why their bids have not been cut.

“We submitted an extremely attractive offer to the national security community and US taxpayers,” said Blue Origin CEO Bob Smith. New Glenn’s bid is “a very competitive basic launch service price for any given task during the entire order period.”

The company intends to stay in newly launched markets, Smith said. “We are working on the development of New Glenn to fulfill existing commercial contracts, pursue the vast and growing commercial market, and to conclude new civil space launch contracts.”

Northrop Grumman said the company is “confident that we have submitted a strong proposition that reflects our experience of launching into vast spaces and providing value to our customers and we look forward to receiving the answer. ask customers ”.

Surprising prices for the SpaceX mission

The choice of SpaceX and ULA comes as no surprise to their experience. “This has ended as everyone expected,” said an industry source.

What no one expected is the price for the first SpaceX Phase 2 mission awarded on August 7.

SpaceX was awarded a $ 316 million contract to launch the USSF-67, a mission planned for the fourth quarter of fiscal 2022. ULA was awarded a $ 337 million contract to launch two missions. – USSF-51 and USSF-106 – are scheduled for the second and fourth quarter missions of fiscal year 2022, respectively.

Roper in his call with reporters was asked to explain why SpaceX was being paid roughly the same amount for one assignment ULA received for two assignments. Roper declined to comment on the matter and said the launches were top secret missions.

The US Space Force’s Center for Missile and Space Systems, which oversees launch purchases, said in a statement SpaceNews that both contracts include funding the out-of-price support costs that companies bid for launch services.

“The task orders awarded include the first year of the Startup Services Support and the prices for the individual tasks ordered from each respective company,” said SMC. “These prices are proposed by companies as part of the Phase 2 acquisition process and they reflect significant savings when compared to historical prices from previous NSSL starter acquisitions.”

The additional payout to launch suppliers – an industry source estimates around $ 100 million per company – is a surprise. It was reminiscent of “ELC” funding that the Air Force used to pay ULA and was criticized by SpaceX as a government subsidy that commercial companies did not receive.

ELC stands for Evolved Expendable Launch Vehicle Launch Capilities, awarded annually by the Air Force to ULA for infrastructure and technical support. The ELC was shut down in 2019, and the Air Force said it will switch to trade-based pricing.

Based on the August 7 contract value, the SpaceX contract has the potential for a Falcon Heavy launch. An industry analyst requesting anonymity said the $ 316 million launch contract, even if $ 100 million is the cost of support, is huge considering the price SpaceX offers for Falcon Heavy. The company in February won a Falcon Heavy contract for an asteroid mission by NASA in 2022 worth $ 117 million, including the launch itself and other mission-related costs.

SpaceX did not comment on social media or made any statement following the Air Force’s announcement that it was selected as a Phase 2 supplier.

The Air Force has awarded ULA 60% of Phase 2 missions to be performed in 5 years and 40% will go to SpaceX. According to some sources, SpaceX believes it should gain 60% of the market share as it has certified and operational vehicles, while ULA’s Vulcan Centaur is still in development and is expected to fly for the first time. first in 2021.


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