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ULA to Retire Delta IV, Push for More RD-180s

March 15, 2015 (Photo Credit: US Air Force)

WASHINGTON — The United Launch Alliance (ULA) has decided to retire all but the heavy variant of the Delta IV space launch vehicle, a decision that will likely cause fireworks at a congressional hearing scheduled for this week.

The March 17 hearing of the House Armed Services Committee will feature SpaceX CEO Gwynne Shotwell and ULA President Tory Bruno testifying on "Assured Access to Space." And while their appearance will be followed by a panel of top US Air Force officials, the two industry voices are expected to be the most interesting as ULA is prepared to push for more freedom to buy a Russian-made engine that is key for one of its launch vehicles.

It's a pivotal time for ULA, which is facing two existential threats to its long-standing business model.

On the one side, SpaceX is expected to be certified for military space launch under the Air Force's Evolved Expendable Launch Vehicle (EELV) program by the middle of the year, providing the first competitor to ULA for EELV contracts.

At the same time, Congress banned future procurements of the RD-180, a Russian-made engine vital to ULA's Atlas V launch vehicle, following Moscow's aggression in Crimea. That, in turn, has forced the company to invest in a new engine program and a redesign of the Atlas, while working toward a new launch vehicle design.

However, Air Force Secretary Deborah Lee James last month raised concerns that the RD-180 replacement won't be certified before the supply of RD-180 engines run out.

"All of the technical experts with whom I have consulted have told me this is not a one- or two- or three-year deal," James said. "You're looking at six years, maybe seven years to develop an engine, and another year or two beyond that to integrate. This truly is rocket science. These are hard technical problems and so to have that 2019 date there is pretty aggressive, and I'm not sure we can make it."

James added that she would like to bring technical experts in to talk to Congress about this issue, because "I'm not sure 2019 is doable."

While the RD-180 engine issue is not related to SpaceX, the latter company clearly feels the Russian ties are a chance to turn public opinion against the legacy launch provider, with SpaceX founder Elon Musk quick to bring it up at any opportunity.

The Russian issue forces ULA to spend internal research and development funds on a new engine while relying on its more expensive Delta IV launch vehicle to compete with SpaceX once the RD-180 stash runs out, something that's projected to occur around 2019.

But ULA may have thrown a wrench into things with its decision to retire all but the Delta IV Heavy rocket configuration.

"We're looking to retire Delta around the 2018-2019 timeframe," Bruno told Defense News on March 3. "The only reason we have both platforms today is because the government policy was to have two, and we are the only guys so we have to have two. That policy has changed now and it says two providers, which is fine. Competition is good. I'm actually a big fan of it."

On average, Bruno said, the Delta is 30 percent more expensive than an Atlas V, and hence would not have a real chance versus the Falcon 9 in a competitive environment. Keeping the two lines going is a big cost for ULA, he added, which means it makes sense that once the Falcon 9 is certified, ULA would provide only the Atlas V and the occasional Delta Heavy launch.

Bruno did say the company would keep the Delta vehicle going if the Air Force requested it, but that the service would have to "be in a position to fully support the cost of the Deltas," something it would need to decide on shortly. He added the company is having discussions with the Air Force about that option, but "I think the most expedient path and the one that is least cost for the taxpayer is to let me have a few more RD-180s."

It's a bit of industrial jiu-jitsu: Backed into a corner by Congress on the Atlas V, ULA is trying to turn the pressure around onto the Hill to allow more engine purchases.

And that brings it back to the upcoming hearing. ULA will push for more RD-180 purchases, in order to bridge the gap between 2019 and when its next-gen engine comes online. And SpaceX will attempt to shoot that argument down, saying the Delta retirement is just a political ploy to force open more sales.

SpaceX supporters on the Hill will quote from statements made by former ULA head Michael Gass, who multiple times last year said the company could easily transition some launches off Atlas V onto the Delta IV. In particular, expect charges that the move is a political one by ULA, aimed at pressuring Congress to allow more RD-180 purchases.

Marco Caceres, an analyst with the Teal Group, says there is a strong business case for ULA to retire the Delta IV, as the cost for keeping two redundant lines is significant. But he also acknowledged that there is a smart political angle at work.

"If they were to cancel the Delta IV medium and all they have is the Atlas V, then there is a better argument to be made for preserving the RD-180 shipments," Caceres said. "No question about that. Have they thought about it? I'm sure people at ULA have considered it as a good strategic move."

But, Caceres said, there are many practical reasons for ULA to move away from the Delta IV, a largely redundant and expensive capacity. He notes that part of the reason Bruno was brought in to lead ULA last summer was to streamline the company in the face of SpaceX's competition.

"If the Air Force wants ULA to be more competitive on price, it has to become leaner, and it can't do that with two redundant systems," Caceres said.

Bruno, for his part, sees hope for more flexibility on the RD-180 issue.

"We're getting a lot of support as the folks in Congress are beginning to understand how complex this is, and saying that we want to do this right and not harm America's interests while we're trying to wean ourselves off of the RD-180 by doing this prematurely," he said. "So they're working on it, but we don't quite have the solution yet."


Twitter: @AaronMehta

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