WASHINGTON — A US tactical rocket motor producer is again attempting to get in on business it lost several years ago through proposed legislation submitted as an amendment to the House fiscal 2017 draft defense policy bill.
Last year as part of the 2016 House version of the bill, Rep. David McKinley, R-W.Va., inserted a measure into the House Armed Services Committee's defense policy bill without public debate that would "ensure" that every Defense Department tactical missile program that uses solid propellant as the primary propulsion system has "at least one rocket motor supplier within the national technology and industrial base."
But the proposed legislation could have shut out a Norwegian company from the US Air Force missile program that it essentially saved. Nammo, a manufacturer of ammunition and missiles, provides the rocket motor for Raytheon's Advanced Medium-Range Air-to-Air Missile (AMRAAM), a critical missile within the service and also used by dozens of foreign nations.
Opponents to the proposed policy circulated a memo last year that called it an "earmark" and argued the language had no basis other than a US producer was seeking a political solution to a business problem. The measure identified one area of weapons acquisition and singularly expands current policy into law benefiting only two domestic rocket motor producers — Orbital ATK, based in West Virginia, and Aerojet Rocketdyne, based in California.
A similar attempt to insert language in the Senate's version of the 2016 defense policy bill failed, and the House language did not survive in conference committee.
It was Nammo that helped turn around the AMRAAM missile program when the Air Force discovered reliability issues during tests with ATK-manufactured rocket motors in 2010. The problems got so bad that the Air Force didn't receive deliveries of the missile for two years, severely reducing its AMRAAM supply. Raytheon and ATK sued each other in 2013 over the rocket engine issue and reached a confidential settlement.
Nammo invested over $12 million of its own money in an alternative rocket motor for AMRAAM and got the Norwegian Air Force to fly the motors to Raytheon's production facility in Tuscon, Arizona, at no charge to the US government in 2011. Nammo turned around a two-year production lag and put the missile program ahead of schedule.
McKinley, along with Reps. John Delaney, D-Md., Paul Cook, R-Calif., John Garamendi, D-Calif., and Andy Harris, R-Md., have again submitted an amendment to the policy bill that would require, in the event where a rocket motor is supplied by a foreign company, that tactical missile programs using solid propellant as the primary propulsion be required to have at least two fully certified rocket motor suppliers.
According to a memo obtained by Defense News with both Orbital ATK and Aerojet Rocketdyne's logos stamped across the top, the legislation is necessary to help a suffering solid rocket motor industrial base in the US.
"Limited new tactical motor programs, coupled with few planned upgrades to existing tactical missile programs, have placed the domestic industrial base of [solid rocket motors] at risk, a situation made worse by outsourcing rocket motor production to foreign suppliers," the memo said.
The number of domestic producers of such rocket motors has dropped since the 1980s from five suppliers to two due to a "significant" reduction in the number of new tactical missile programs and the tendency by the Pentagon to cut missile procurement in order to pay other bills, according to the memo.
The memo noted that the US industrial base is further affected by missile prime contractors choosing foreign solid rocket motor suppliers. It specifically pointed to AMRAAM relying "solely" on a "Norwegian" supplier for rocket motors and said that the Evolved Sea Sparrow Missile for the US Navy also uses a foreign supplier (also Nammo). Additionally, Raytheon's Sidewinder and Lockheed's Hellfire missile programs are considering foreign suppliers, according to the memo.
The memo said that "increased support of a shrinking SRM industrial base is warranted given the limited number of new and planned upgrade missile programs that are identified in the out-year budget. To that end, it is recommended that a policy be adopted that ensures that at least two solid rocket motor suppliers be required in the event that one of the suppliers is foreign."
"Such a policy will provide US suppliers the opportunity to compete and win," the memo said.
But according to a Raytheon memo obtained by Defense News, the proposed legislation would actually restrict competition for domestic motor vendors "in the guise of promoting a new industrial policy."
Proponents of the amendment, "may suggest that they have altered the approach this year, and are not mandating domestic production explicitly, only requiring two sources for every tactical motor," according to the Raytheon memo. "But the proposed amendment is implicitly a requirement on domestic sourcing, as there is only a single qualified international rocket motor vendor for US tactical motors today (Nammo).
"Mandating two vendors is merely a clever effort to erect the same protectionist barrier, just as proposed last year."
Raytheon also argued that dividing production cost across multiple suppliers increases the unit price as motor production costs are "very sensitive" to quantities.
The amendment also "sends a troubling signal" to international partners "erecting a trade barrier" through the defense bill, according to Raytheon's memo.
The Air Force appears to be siding with Raytheon and Nammo, according to a short memo from the Air Force legislative affairs office to the HASC: While the service's "preference is to maintain acquisition flexibility and to promote industrial base competition," it is concerned with the amendment because it could restrict competition, impose additional costs and present schedule risk to the programs.
The Air Force argues that putting a second vendor into the mix would require "significant" investment in order to qualify a domestic rocket motor for a "relatively inexpensive" part.
And there will be times when there isn't sufficient, forecast quantities to split procurement between two vendors at minimum sustainment rates, the service added.
However, if directed to maintain two qualified sources, the Air Force requested that it "we request that we would not be limited to using US-only vendors."
The Norwegian ambassador also sent identical but separate letters on May 2 to both HASC Chairman Rep. Mac Thornberry, R-Texas, and ranking member Rep. Adam Smith, D-Wash., expressing concern with the amendment.
"This legislation would counter decisions that are empowered by the DoD program manager and would effectively result in compromising our longstanding cooperation," Kare Aas wrote. "Further, this type of legislation risks compromising the NATO Smart Weapons Program that both of our nations signed."
It remains to be seen if similar legislation will make its way into the Senate's version of the bill, which is now being assembled behind closed doors.