The launch showdown

Blue Origin CEO Bob Smith speaks at a ceremony marking the completion of the company’s rocket engine factory in Huntsville, Alabama, February 17. The factory will build engines for both the company’s own New Glenn rocket, a model of which is on the right, but also ULA’s Vulcan (left). (credit: J. Foust)



On President’s Day back in February—less than three months ago, but feeling like a previous era—a couple hundred people gathered at a new Blue Origin building in Huntsville, Alabama. The attendees, ranging from local business leaders to members of Congress, were there for the formal dedication of the 32,500-square-meter factory, which the company will use to produce rocket engines.

The factory, located in a sprawling business park that is home to biotech and other aerospace companies, took about a year to build. “Twelve months to actually build this kind of facility is an amazing accomplishment for our team,” Bob Smith, CEO of Blue Origin, said, although at the time of the event the factory wasn’t complete: there was still work on the grounds around the building, and interior was still empty, with tooling set to arrive in the coming weeks.

The factory is important to more than just Blue Origin. It will ultimately be able to produce up to 42 BE-3U and BE-4 engines a year. The BE-3U, the upper-stage variant of the BE-3 used on Blue Origin’s New Shepard suborbital vehicle, will power the upper stage of the company’s New Glenn rocket. The BE-4 will be used on the New Glenn’s first stage as well as on the first stage of United Launch Alliance’s Vulcan rocket, which will be built just down the road in Decatur, Alabama.

How much demand there will be for those rockets, and thus the engines that will be built at that Huntsville factory, depends significantly on the outcome of an ongoing Defense Department competition. Some time in the next few months, the Pentagon will announce the winners of the National Security Space Launch Phase 2 competition for launching national security payloads over a five-year period starting in 2022.

Blue Origin and ULA are two of the companies competing for the contracts, with Northrop Grumman and SpaceX the other two. The US Air Force has made clear it plans to select only two companies for contracts, a move that would lock the other two companies out of the market and, possibly, fatally undermine the business case for their vehicles.

The Air Force argued that it would only award contracts to two companies, despite whatever capabilities the competing vehicles offered, because of its belief there was only sufficient government and commercial demand to support two US vehicles. That brought up memories of the Evolved Expendable Launch Vehicle (EELV) competition nearly a quarter-century ago, when the Air Force decided to award contracts to both Boeing and Lockheed Martin on the belief burgeoning commercial demand forecast to emerge in the near future could support both. That demand collapsed, though, and both companies suffered until they merged their vehicle efforts into a joint venture, ULA.

To bolster its argument, the Air Force commissioned a study by the RAND Corporation regarding the demand for launch services. That report, released in late April, appeared to support that belief based on forecasts for national security space (NSS) and commercial demand. The Air Force, it concluded, “should make prudent preparations for a future with only two U.S. providers of NSS-certified heavy lift launch, at least one of which may have little support from the commercial marketplace.”

The Air Force saw the report as a validation of its approach despite criticism from some in industry that it should back three companies. “What we found was that our acquisition strategy encompasses RAND’s recommendations as we are already making prudent preparations for a market that will only sustain two providers with our Phase 2 contract structure,” said Col. Robert Bongiovi, director of the launch enterprise at the Space and Missile Systems Center, in an Air Force press release about the report.

“Given the market projections highlighted in the RAND market study, supporting more than two operational national security space launch providers would also decrease each provider’s launch tempo which lowers overall reliability and increases satellite launch costs,” added Brig. Gen. Donna Shipton, vice commander of SMC, in that release.

The RAND report’s conclusions, though, were more nuanced what those statements might suggest. While it concluded that, in the long run, there is only sufficient demand for two companies, it left an opening in the near term—though about 2025—for a third company.

“The USAF should continue to provide tailored support through 2023 to enable three U.S. providers to continue in or enter the heavy lift launch market,” it stated in its report. That could be done by exercising options on existing contracts with SpaceX and ULA for national security launches or the use of “contingency clauses” in Phase 2 contracts.

RAND said that there may be a shortfall in supply of certified vehicles for national security launches in that 2022–2025 period in large part because of delays in the development of new vehicles. Besides Blue Origin’s New Glenn and ULA’s Vulcan, Northrop is developing the OmegA rocket (its unusual capitalization an homage to corporate predecessor Orbital ATK.) All three of the rockets are under development with Air Force support, with first launches scheduled in 2021.

Launch vehicle delays, though, are likely, based on experience with past vehicles. The report noted as one example SpaceX’s Falcon Heavy rocket, whose first launch slipped from 2013 to 2018 and “which displays a fairly typical pattern for first launch forecast as being ‘one year away’ over a number of years.”

The report offers some hard truths about projecting schedules for launch vehicle development. “There is no evidence that a forecast more than one year in the future will be achieved,” it states. “For predictions of ‘three to six months,’ there is high probability of first launch within eight to 12 months.”

While the potential delays of new vehicles make the case for that “tailored support” for a third company in the near term, it doesn’t argue that there’s demand for three over the rest of the decade. The RAND report projected relatively flat demand for both national security and commercial launches through the 2020s. Moreover, it expected new launch vehicles developed outside the US, including Europe’s Ariane 6, Japan’s H3, and possibly future Russian vehicles, to take market share away from current and future US vehicles in the commercial launch market.

SpaceX is not offering a new vehicle for the National Security Space Launch Phase 2 competition, but will build a mobile servicing tower (right) at LC-39A to allow for vertical processing of payloads. (credit: SpaceX)

That forecast included a fairly bearish assessment of satellite megaconstellations that project launching hundreds or thousands of satellites for broadband applications over the next several years. RAND considered four of the more advanced constellations, proposed by Amazon, OneWeb, SpaceX, and Telesat (see “Handicapping the megaconstellations”, The Space Review, March 2, 2020) and concluded that only OneWeb “is generating new demand for addressable heavy lift launch services.” (That report was completed prior to OneWeb’s Chapter 11 bankruptcy filing in March, putting the company’s future in question.)

RAND argued that Telesat’s constellation would not generate new demand since the company already operates communications satellites in geostationary orbit and “has simply shifted its historical demand to a new orbit,” although Telesat has not given any indication it will entirely abandon its existing GEO satellite business. Neither Amazon’s Project Kuiper nor SpaceX’s Starlink will generate new demand for launches open to commercial competition, the report concluded, since the launches of those constellations will be “self-provisioned,” meaning that the same company is both the launch provider and the customer.

While that is true for SpaceX—the chance of a Starlink satellite launching on anything other than a SpaceX rocket is virtually nil—that is not necessarily the case for Project Kuiper. “We hope to compete for their business,” said Clay Mowry, vice president for sales, marketing, and customer experience at Blue Origin, during a panel discussion at the Satellite 2020 conference in Washington in early March. Telesat, he noted, plans to launch at least part of its constellation on New Glenn.

He emphasized that while Blue Origin is owned by Amazon CEO Jeff Bezos, the two companies are separate, with Amazon publicly traded and Blue Origin privately held. “We are not the same company and there is no connection there,” he said. “We have to compete vigorously for that business and we plan to do so.”

Blue Origin is more confident about the growth of the launch market than the RAND report based on its own market analysis. Mowry said that, over the last ten years, there was an average of 36 launches per year that were addressable to the company or any other US launch provider. “You look forward for the next ten years, and the projections are from anywhere from 40 to 80 missions per year,” he said, depending on what happens to the satellite megaconstellations. “We think there is a robust market that could support multiple providers on the US side.”

In a panel earlier that day at the same conference, Tory Bruno, CEO of ULA, offered a more pessimistic assessment in line with the RAND report. “There’s going to be about 30, 35 a year for the next several years,” he said of addressable launches. “We all need 8 to 12 launches a year, at least, to be a sustainable, viable business. That makes room for four.”

Bruno, reiterating past assessments of the market, expected that one of those four companies will be Russian, with Arianespace claiming another spot. “Thank goodness that leaves two for the US, because we want to have assured access via two providers,” he said. “That is the right number. It’s why the Air Force will select two here shortly, this summer.”

Charlie Precourt, vice president of propulsion systems at Northrop Grumman, took a similar view on the same panel. “You need to take a look at history to make sure we don’t repeat what the Air Force went through way back” in the EELV program, he said, “which was the idea that they could ride on the commercial market that was going to expand and then didn’t materialize.”

Precourt said Northrop is designing OmegA to exist “on the margins of a number of other businesses that we have,” leveraging capabilities such as the use of solid-rocket motors that are based on those the company is making for the boosters of the Space Launch System. “We’re doing synergies so that we can sustain very, very low flight rates, lower than traditionally you could see in a launch vehicle provider.”

In an ironic twist, SpaceX, once the disruptive new entrant that had to file a lawsuit against the Air Force in 2014 to be able to bid on national security launches with its Falcon 9, is the most established of the competitors in the Phase 2 competition. Unlike the other companies, SpaceX is not offering a new vehicle but instead its existing Falcon vehicles. It is proposing some modest upgrades like a larger payload fairing for the Falcon Heavy and a new vertical payload processing facility at Florida’s Launch Complex 39A, a requirement for some national security payloads that aren’t compatible with the horizontal processing SpaceX traditionally does.

Gwynne Shotwell, SpaceX president and chief operating officer, was on the same panel ad Bruno and Precourt, and said she was hopeful SpaceX would be selected. “We fought hard to enter this market and we really hope that we can continue,” she said.

She played up the company’s diverse customer base, which includes NASA and commercial customers, as well as its own Starlink satellites. She estimated that the company would launch, on average, twice a month this year (it has performed six orbital launches so far this year, all of Starlink satellites with the exception of a NASA cargo Dragon launch in March.) “I think we’re doing the right things. We certainly have happy customers,” she said.

One “x factor” is the emergence of new demand for commercial launch services beyond traditional markets, largely overlooked in the RAND report. Human spaceflight might be one such market, and Shotwell noted in her remarks on the panel that SpaceX had recently won contracts from Axiom Space and Space Adventures for commercial flights of its Crew Dragon spacecraft, one to the space station and the other a free flight. Those contracts, she said, “are important to see whether there will be a marketplace to fly private folks around low Earth orbit and around the Moon.”

“It’s really exciting. Lots going on,” she added. “Lots of market areas to explore. But yeah, I hope that we’re a winner.”

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