December 5, 2012 / 2:45 AM / 8 years ago

Pentagon opens rocket launches to competition

WASHINGTON (Reuters) - The Pentagon has approved a plan that will allow the U.S. Air Force to buy up to 36 rocket launches for government satellites from a joint venture of Lockheed Martin Corp (LMT.N) and Boeing Co (BA.N), while opening up to 14 launches to competition from other companies, the Air Force said on Tuesday.

The Pentagon has been moving aggressively to introduce more competition to defense procurement to help lower costs. Air Force officials have been particularly keen to introduce competition to the area of rocket launches — and adopt other reforms — given sharp increases in the cost of launches.

Under the new plan, the Air Force can buy as many as 14 launches over the next five years from possible bidders such as Space Exploration Technologies Corp, or SpaceX, and Orbital Sciences Corp ORB.N.

The service may also buy as many as 36 launches from United Launch Alliance, the Lockheed-Boeing venture, with an option to purchase the other 14 launches if the competitors haven’t been certified to launch military and spy satellites that can cost up to $1 billion each.

Frank Kendall, the Pentagon’s chief weapons buyer, signed a memorandum approving the revamped acquisition approach on November 27, an Air Force spokesman said.

United Launch Alliance has been the sole supplier of medium- and heavy-lift rockets for military and spy satellites under the Evolved Expendable Launch Vehicle (EELV) program since Boeing and Lockheed merged their rocket launch operations in 2005.

The program is estimated to cost $70 billion through 2030.

United Launch Alliance officials said the new approach would expand block-buying and help stabilize the industrial base and save money by allowing it to sign larger and longer-term contracts with its suppliers.

Without such action, Air Force officials say, the cost of one Atlas V rocket was expected to spike by 40 percent to over $250 million from around $180 million now.

The U.S. Air Force said on Monday it had selected SpaceX, Orbital Sciences and Lockheed to launch smaller military satellites on multiple missions through 2017 under a contract valued at up to $900 million.

Reporting By Andrea Shalal-Esa; Editing by Richard Pullin

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