Russian Rocket Engine Ban Forces ULA to no-bid Air Force Launch Contract
After Russia annexed Crimea, the U.S. Congress slapped the country with sanctions -- including a ban on the Russian rocket engines used to launch the Atlas V rocket.
That didn't sit well with the United Launch Alliance (ULA), a joint venture between Boeing and Lockheed Martin and maker of the Atlas V. The Atlas, you see, uses the RD-180 Russian rocket engine. A ban on those engines directly affected ULA's abilities to not only fulfill existing launch contracts, but to compete in the future for new business.
So in December, Sen. Richard Shelby (R-Ala.) added language to the 2016 omnibus appropriations bill that authorized U.S. Federal spending budgets and lifted the ban.
The relief is only temporary, however, since it remains in effect only for the current fiscal year until Congress passes new appropriations for 2017.
But still -- excluding those Russian rocket engines from sanctions didn't sit well with Senator John McCain. As he said in an address to the U.S. Senate in December:
It is simply immoral to help subsidize Russia's intervention in Ukraine and line the pockets of Putin's gang of thugs who profit from the sale of Russian rocket engines.
And now he has gone on the attack.
Joined by House Majority Rep. Kevin McCarthy, whose Mojave, California congressional district is a hub of commercial space activity, McCain is working to repeal the relief language of the Russian rocket engines in the 2016 omnibus bill.
If McCain and McCarthy prevail, ULA would only have access to nine RD-180 engines for Air Force launches not already under contract.
As McCain stated:
This legislation is vital to ensuring the United States does not depend on Vladimir Putin’s regime for assured access to space.
To make things worse for ULA, the U.S. Air Force may agree. They are now looking to terminate their current contract with ULA -- to the tune of $800 million in savings. That contract was issued years ago as a $11 billion sole-source agreement with the Air Force and is currently scheduled to end in 2019 after the last of 78 missions.
So why cancel it now?
According to McCain, the contract not only covers manufacturing costs of the rockets themselves, but also provides funding to ULA for launch services not necessarily associated with any particular launch. In essence, McCain commented during a Senate Armed Services Committee meeting on Wednesday, the contract is:
$800 million to do nothing.
Testifying at the Committee hearing, Air Force Secretary Deborah Lee James said the Air Force is considering the early termination but did not say how quickly the Air Force would -- or could -- end the contract.
Nor did she comment on how soon the Air Force expects to complete its evaluation of an early termination.
One thing is certain, however.
ULA's competitor SpaceX is almost sure to win the Air Force's next launch contract (they were the only bidder, after all) ...
... and that will make things much worse for ULA's future in the launch business.