US Air Force: SpaceX likely raised price to meet requirements
March 20, 2017
PARIS — The U.S. Air Force appeared to buttress SpaceX’s claim that it charges more for U.S. government launches than for commercial missions not just because it can, but because government customers demand more than commercial customers for each launch.
SpaceX’s price to the U.S. government appear to be rising. In a rare apples-to-apples comparison, SpaceX won an Air Force contract to launch a GPS-3 positioning, timing and navigation satellite into medium-Earth orbit in 2019. SpaceX’s winning bid of $96.5 million bested rival United Launch Alliance, whose bid was not disclosed.
In an identical GPS-3 competition a year earlier, SpaceX was the sole bidder and won the contract with an offer of $82.7 million. Even the lower of these bids is 18 percent or more below SpaceX’s commercial price of $70 million or less into the higher geostationary-transfer orbit.
The orbit in question will require a couple of maneuvers of the SpaceX Falcon 9 rocket’s supper stage, but its not considered a long-duration mission, said Dr. Claire Leon, launch enterprise director at the Air Force’s Space and Missile Systems Center.
In fact, SpaceX’s Falcon 9 has not been fully certified by the Air Force for long-duration missions, she said.
USAF: SpaceX is getting used to our bid process
In a March 15 briefing with reports on the latest contract award, Leon declined to speculate on what elements go into SpaceX’s price calculation. But she said the difference between last year’s and this year’s could be explained by SpaceX’s realization of how much work goes into an Air Force mission.
“The proposal for their [earlier] bid was their first time bidding on an EELV contract,” Leon said, referring to the Air Force’s Evolved Expendable Launch Vehicle program.
“We’ve now been working with the for over a year. They chose to increase their price on this one. I am assuming it’s to cover any additional scope for working on an EELV contract. I think they are becoming more familiar with the expectations of the Air Force and so, for this competition, they decided to change their price.”
European, especially French, government officials have long accused SpaceX of lowballing its bids for commercial missions for which Europe’s Arianespace is a direct competitor, and offsetting these marginally profitable missions with U.S. government work.
The prices that are publicly released by the customers do show a sharp variance between commercial and U.S. government prices.
But Leon’s statements during the briefing lent credence to SpaceX statements that a price difference of 20 percent or more is fully justified given the additional data that Air Force launch contracts are freighted with requirements that are not typical of a commercial mission.
Leon said price was the key deciding factor in selecting SpaceX over United Launch Alliance. She did not mention ULA as the second competitor but there is no other launch-service provider certified by the Air Force. And for SpaceX, the Falcon 9 is the only rocket that has certification.
She said the more-powerful Falcon Heavy rocket, which SpaceX hopes to debut this year, has not been put through certification.
Even the two GPS-3 launches that SpaceX has now won will require the company to demonstrate to the Air Force that it has remedied the problem that caused the explosion of a Falcon 9 rocket in September while preparing for a prelaunch test.
Further work needed post-September 2016 failure before USAF launch
Asked if the Air Force was satisfied with SpaceX’s post-failure report, Leon said:
“The short answer is yes. But I am not going to tell you there isn’t more work to do before we have an Air Force launch.
“We have a flight-worthiness process that we go through for every launch. There is a nonrecurring part that verifies the design and the margin and the test program; and a recurring part, so that when our hardware gets built, we do detailed hardware reviews. We make sure the hardware was built to the specifications and tested properly. It’s part of our mission-assurance program. So we do a thorough scrub of the hardware that flies for us.
“So as we get close to the first GPS launch we will have really combed through the actual hardware that we are going to fly — a detailed review, nothing different than what we do with any other provider,” Leon said.
At least 1 Falcon Heavy demo needed for Air Force
For the Falcon Heavy, she said SpaceX is expected to conduct at least one demonstration flight before the Air Force would use it — and perhaps more than one, depending on the mission. “If the mission is low-risk-tolerance than more flights would be required,” she said.
On the September failure, Leon said the SpaceX has “narrowed [the cause] down to the COPV [composite over-wrapped pressure vessel] and how they load the vehicle for test. They have adjusted their procedure and changed their COPV configuration. It is something we are following carefully.”
The two SpaceX GPS-3 launch service awards are part of an Air Force procurement procedure, called Phase 1A, which is in part designed to bring new providers into the mix of Air Force providers. In addition to these two, a third contract has been bid and an award is expected by June.
Twelve other missions, including several GPS launches, are scheduled under the current procurement vehicle. Leon reiterated the Air Force’s position that it was not ready to launch with a previously used Falcon 9 first stage, but would be open it once it had proved itself with commercial customers.
Peter B. de Selding