Stuck in a High-Priced Box

The United Launch Alliance just got an Air Force launch contract for 159 launches, which I guess means that they didn’t get the 40-launch block buy they were hoping for, and that SpaceX (and the General Accountability Office) has been fighting. The price? FifteenOne and a half billion bucks.

It doesn’t take advanced mathematics to come up with a number of over a billion and a halfhundred fifty million dollars per flight.

Their problem is a classic one of the launch industry — fixed costs too high, and flight rate too low, resulting in high cost per flight, which in turn makes it harder to get more business to increase the flight rate to bring down their prices, particularly when they have a disruptive competitor (SpaceX) who is rewriting the rules of the game. The only thing keeping them alive is that, for now, they have a monopoly sustained by the government because it can’t afford to lose the capability for satellite delivery, but if Falcon Heavy becomes reality, and builds up a reliability record, at a price of $120 million a flight ULA will be in a world of hurt. They aren’t helped by the fact that Congress refuses to consider allowing NASA to use them for its human exploration activities, instead insisting that the agency build its own ridiculously large rocket for which no one else will have a use, or be able to afford (assuming that the program actually survives to an operations phase).

They have two options: continue to lobby the government to subsidize them, or to use some of the money they’re getting for this purchase to invest in reducing their costs to compete. Presumably, as one example, that’s why they’ve been working with XCOR to develop a replacement for the RL-10 upper-stage engine (which if they succeed will in turn put a lot of pressure on another high-cost aerospace company, Pratt & Whitney-Rocketdyne). But ultimately, real competition is the only way that we’re going to reduce the costs to the levels we need to do useful things in space.

[Update a few minutes later]

OK, it’s nowhere near as bad as I thought. The original story had misplaced the decimal point — it’s actually $1.5 billion, so that’s more like a $170 million a launch (a number that’s much more reasonable, but will still be uncompetitive with Falcon Heavy if the Air Force develops confidence in it. And even at an order of magnitude less, my point still stands.