Evolved Expendable Launch Vehicle Program

The federal government currently uses a fleet of expendable launch vehicles-Delta, Atlas, and Titan-to transport a variety of national security and civil satellites into space. According to DOD, these vehicles (which are acquired by DOD), currently operate at or near their maximum performance capability. Also, DOD and congressional sources consider these vehicles to be very costly to produce and launch. Since 1987, the government has made several attempts to develop a new launch vehicle system, but these attempts were canceled either because of funding issues, changing requirements, or controversy regarding the best solution. In 1994, by congressional direction, DOD developed a space launch modernization plan that led to the initiation of the EELV program. Currently, two contractors-Lockheed Martin Astronautics and McDonnell Douglas Aerospace-are competing in a pre-EMD phase, and one is to be chosen for the EMD phase. Of the total planned $2 billion investment, the EMD phase is expected to cost about $1.6 billion and take approximately 6 years. Concurrent with the EMD decision, DOD plans to authorize the start of EELV production. An initial quantity of 29 launch vehicles is estimated to cost about $1.5 billion. In addition, toward the end of the EMD phase, a decision is to be made on whether to produce a significantly larger quantity that would cost several billion dollars.

In 1994, the National Space Transportation Policy laid the framework for appropriate government agencies to maintain strong launch systems and infrastructure while modernizing space transportation capabilities and encouraging cost reductions. More than a decade later, through combined Department of Defense (DoD) and industrial investment, the two Evolved Expendable Launch Vehicle (EELV) families of U.S. rockets (Atlas V and Delta IV) have proved to be maturing, reliable state-of-the-art technologies. In 2004, Congress directed the Secretary of Defense to establish a panel of experts with extensive space launch and operations background to address the future National Security Space launch requirements and the means of meeting those requirements. DoD selected RAND to facilitate and support this panel in its deliberations between May 2005 and May 2006. This report analyzes the National Security Space (NSS) Launch Requirements Panel's major findings and recommendations. In short, the Panel concludes that, because basic rocketry principles, use of chemically derived thrust, and multiple expendable stages seem certain to remain the design of choice for operational space launch vehicles, the EELV can satisfy all known and projected NSS requirements through 2020.

The DoD plans to spend $27 billion acquiring launch services through the Evolved Expendable Launch Vehicle (EELV) program over the next 12 years. It uses 2 families of commercially owned and operated vehicles to launch satellites. The EELV program has undergone significant changes, including: adoption of a new acquisition strategy that sought to ensure the viability of the two EELV launch vehicle providers, Boeing and Lockheed Martin; the subsequent decision by those two co. to form a joint venture, the ULA; and a 10-year increase in the life of the program. This report: determines what uncertainties DoD faces in the EELV program and in the transition to ULA; and assesses how DoD is positioned to manage and oversee the effort. Illustrations.

The Department of Defense's Evolved Expendable Launch Vehicle (EELV) program is the primary provider of launch vehicles for U. S. military and intelligence satellites, as well as some civil and commercial satellites. The Department of Defense (DOD) and the National Reconnaissance Office (NRO) plan to spend about $15 billion to acquire launch services from fiscal year 2013 to fiscal year 2017; however, the life-cycle costs for the program are unknown. In 2009, the Commander Air Force Space Command and the Director of the National Reconnaissance Office (NRO) determined that the current approach for acquiring EELV launch vehicles was likely not the best business model and decided that a new acquisition strategy needed to be developed. In March 2011, the Secretary of the Air Force created a new executive position, the Program Executive Officer (PEO) for Space Launch, responsible for, among other things, spearheading the effort to finalize the new EELV acquisition strategy. To inform the strategy, DOD conducted or commissioned various studies to evaluate alternatives to the current program structure, assessing the U. S. government's access to space, analyzing options to leverage commercial and foreign capabilities, identifying possible cost reductions in the program, and evaluating the current business model. The new PEO for Space Launch states he is leading several recent and ongoing efforts to gain additional knowledge to inform the new acquisition strategy. Given anticipated changes in the acquisition strategy and potential changes in the broader launch landscape, we were asked to report on 1) whether DOD has the knowledge it needs to develop a new EELV acquisition strategy and 2) issues that could benefit future launch acquisitions. To address these objectives, we reviewed and analyzed information contained in five recent launch studies, and interviewed study leaders or participants in three of the five studies; we analyzed historical launch data and expected launch vehicle demand, and reviewed pas launch industry studies of the U. S. industrial base. We assess a supplier survey conducted by the EELV prime contractor of its subcontractors. The survey was used by the government to gauge the health of the U.S. industrial base. We reviewed the survey questionnaire, comparing methods to GAO sound survey development practices, comparing summary data to the questions asked, and interviewing and obtaining information and summary data from the surveyors. We also interviewed or obtained perspectives from launch officials in various military, intelligence, and civilian government agencies, as well as the EELV prime contractor and two commercial launch companies. Through our review of DOD launch studies and other relevant government and industry reports, our interviews with DOD, NASA, and contractor officials, and information obtained from NRO, we identified issues that may be important to current and future government launch acquisitions. We conducted this performance audit from September 2010 to September 2011 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

DOD began the EELV program in 1995 to provide a new generation of launch vehicles to ensure affordable access to space for government satellites. It resulted in two families of commercially owned and operated launch vehicles Boeing's Delta IV and Lockheed Martin's Atlas V.

While the previous two-contract structure of the Evolved Expendable Launch Vehicle (EELV) program met Department of Defense (DOD) needs for unprecedented mission success and an at-the-ready launch capability, the scope of its capability contract limited DOD's ability to identify the cost of an individual launch, as direct launch costs were not separated from other costs. Minimal insight into contractor cost or pricing data meant DOD may have lacked sufficient knowledge to negotiate fair and reasonable launch prices. Through DOD's development of a new acquisition strategy in 2011, and in preparation for contract negotiations with United Launch Alliance (ULA), DOD undertook significant efforts to obtain better contractor and subcontractor cost or pricing data. The December 2013 contract modification with ULA includes line items for both the fixed-price and cost-reimbursement portions funded under the previous two-contract structure, and DOD officials say the administrative burden of renegotiating new contracts every year will be substantially lessened due to the new contract's simplified structure. The new contract is also expected to provide DOD with a better understanding of individual launch costs than it had under previous contracts, as some costs are now directly attributable to specific launches. ULA periodically sells launch services to customers outside of the EELV program. Because DOD pays for ULA's fixed costs, DOD receives compensation for the use of ULA facilities on a per-launch basis for launches ULA sells to non-DOD customers. Under the new contract, compensation is based on some actual costs, and is approximately three times the dollar amount per-launch of reimbursements under previous contracts. If DOD requires all offers to contain both fixed-price and cost-reimbursement features for launch services and capability, respectively, similar to the way it currently contracts with ULA, there could be benefits to DOD and ULA, but potential burdens to new entrants. Alternatively, if DOD implements a fixed-price commercial approach to launch proposals, DOD could lose insight into contractor cost or pricing. DOD could also require a combination of elements from each of these approaches, or develop new contract requirements for this competition.