LOS ANGELES -- The U.S. Air Force has awarded three companies a combined $2.3 billion in contracts to help fund the development of new launch vehicles under the Air Force's Launch Service Agreement (LSA) program. Under contracts announced on October 10, 2018, United Launch Alliance was awarded $967 million to develop the Vulcan Centaur launch system, Northrop Grumman was awarded $791.6 million to develop the OmegA launch system, and Blue Origin was awarded $500 million to develop the New Glenn launch system.
Each contract calls for the development of a launch system prototype for the Evolved Expendable Launch Vehicle program. The contracts are part of an Air Force plan to leverage commercial launch solutions in order to have at least two domestic, commercial launch service providers that meet National Security Space requirements, including the launch of the heaviest and most complex payloads.
As a sign of its intent to leverage commercial developments in the market, the Air Force will not cover the entire development costs for any of the rockets. Instead, it will share costs with the three companies. Each company will attempt to get a return on its investment by developing a commercially competitive launch vehicle that will be able to win contracts to carry both government and commercial payloads into orbit.
One notable absence from the contract winners was SpaceX. SpaceX's role in LSA was always a bit of a mystery. SpaceX was involved in an earlier round of the program, which funded rocket motor development, so their involvement in the latest round was expected. However, SpaceX's current lineup of launch vehicles did not align with the goals of the program, which is meant to fund development of new launch vehicles. SpaceX already has two launch vehicles - the Falcon 9 and Falcon Heavy - that are certified to carry national security payloads.
SpaceX is developing a new launch vehicle, called the BFR. However, it's possible that the BFR was not a good fit for the program either, likely because it is further behind in the development curve than other launch vehicles. New Glenn is expected to launch in 2020, while Vulcan and OmegA are scheduled to begin flying in 2021. BFR is not scheduled to begin orbital flights until 2022 or 2023, and even those dates are considered ambitious.
Ultimately, SpaceX will survive the lack of a contract. SpaceX already has two launch vehicles that are certified to carry national security payloads. These launch vehicles will continue to compete for government contracts, even after new launch vehicles from other companies enter the market.
Still, a lack of a contract award could hurt SpaceX in indirect ways. First, SpaceX will not receive funds to help fund development of the BFR, which SpaceX CEO estimates will cost $5 billion to develop.
Second, the program will result in at least two new competitors for DoD business for SpaceX. The Hawthorne, Calif. company currently competes against ULA's Atlas V and Delta IV for DoD contracts. Those are reliable, but expensive launch vehicles. The October 10 awards will result in at least two new competitors, which will operate launch vehicles that are cheaper and more flexible than the Atlas V and Delta IV. That will make competition more intense to win DoD launch contracts, while giving the Air Force more options to carry its payloads into orbit.
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