Main Engine Cut Off - T+24: ULA’s RapidLaunch and Commercial Market Competitiveness

Episode Date: October 5, 2016

After a few busy weeks of Blue Origin and SpaceX news, I spend some time talking about ULA’s RapidLaunch program and how they are working to get competitive within the commercial market. WeMartians Podcast Episode 13: Making Humans Multiplanetary (feat. Anthony Colangelo) - Live Now! | WeMartians | Follow humanity's journey to Mars OA-5 Schedule and Coverage Plans - Main Engine Cut Off ULA Branding Their Emptying Manifest - Main Engine Cut Off ULA says it could accommodate additional Atlas 5 launch next year - SpaceNews.com BE-4 Test, Decision on Vulcan Could Slip to 2017 - Main Engine Cut Off ULA, Air Force agree on Vulcan rocket certification process - SpaceNews.com Email feedback to [e-mail] Follow @WeHaveMECO Subscribe on iTunes, Overcast, or elsewhere Support Main Engine Cut Off on Patreon

Hello and welcome to Main Engine Cutoff, I am Anthony Colangelo and we are going to be talking about some United Launch Alliance news today. I guess it's not really news anymore since that was a few weeks ago that this happened, but we've been really busy recently. We had a lot of news coming out of Blue Origin with New Glenn and hearing about their upcoming in-flight abort test. And then we had a ton of news from SpaceX as they were doing their Mars architecture announcement. And I hope you enjoyed the episode last week talking with Jake from We Martians, giving a little bit of our initial reactions to the talk by Elon there. And I want to mention up front that if you haven't heard it yet, I appeared on the Wee Martians podcast this week, and Jake and I dove in a little more in depth on

a few topics from the talk. We took a few days to think about things, kind of mulled it over in our head, read what people were talking about online. And this was sort of our show where we dove in depth on a couple of topics. So if you haven't heard it yet, I really, really want you to go listen to that. Head over to WeMartians.com and listen to this week's show. I think you'll really, really enjoy the conversation that Jake and I had. We talked about a couple of technical pieces of information that we didn't really get into in the initial reaction show. And we also talked a lot about the way that SpaceX's plans would interact with NASA's plans and the way that NASA's plans might change with the upcoming administration change. And we got into a lot of topics that we didn't cover on that show last

week. So I really recommend going to check that out over at WeMartians.com. Before we dive into the topic for today, I just want to mention that I want to start incorporating some more listener feedback into the show. I've heard from a lot of you in email and on Twitter and things like that. I want to start bringing that into the show a little bit more as we have these topics that we'll talk about, you know, for weeks at a time. Like I'm sure we'll bring up SpaceX bits and tidbits here from the Mars architecture announcement over time as we keep hearing more and more out of them. So the first thing I want to ask to all of you, and I want these answers in email, but you know, don't worry, it's not gonna be anything too long. What I want to hear from you about SpaceX's announcement, I want to hear three things. I want to hear something good that you liked in the announcement. This could be

technical, strategic, some aspect of the announcement that you liked in the announcement. This could be technical, strategic, some aspects of the announcement that you were really happy to see in there, something you were hoping to see that made it into the architecture. I want to hear something good and positive from you about the announcement. And the second thing I want to hear is the exact opposite. What did you see in the announcement, either the strategy or the technical aspects? What did you see that concerns you that you were hoping to not see in the architecture but is in there and has you a little bit worried? And the third thing, what was missing from the presentation that you were really hoping to see Elon cover in that initial talk?

What was the biggest question mark coming out of that for you? Are you worried about not so much of talk about funding? Are you worried about the lack of talk about life support or power generation? What bit of it is most concerning to you? So email those answers to me, anthony at mainenginecutoff.com. Something good, something bad, and the biggest question mark you have coming out of that announcement. Now, the last piece of meta news that we have here, this is kind of news about the news. Upcoming next week, we have Orbital ATK's Antares return to flight with OA5 up to the ISS. This is the launch out of Wallops Island.

I will be driving down there for the launch. I talked about this a couple months ago on the show, but scrub after scrub and schedule change after schedule change, it hasn't happened yet. So, just wanted to mention again that I'll be heading down to that launch. I will be doing all the tours, everything surrounding that launch and we'll be there when that lifts off. So I will be tweeting a bunch. I'll be posting a lot of photos and videos.

I'll probably be doing some live streaming with Periscope or something like that. So make sure you're following the Twitter account at WeHaveMiko because I'll be posting everything there and I'm going to try to stream as much as I can as I'm doing the tours and walking around wallops and all of that. I'm going to do my best to bring you the best of what Orbital ATK and NASA have to show us. So follow at WeHaveMiko to get all of that. And that's happening next week, hopefully. There's a

hurricane on its way to the East Coast right now. So we'll see what that does in terms of plans. to the East Coast right now. So we'll see what that does in terms of plans. But in the next few weeks, we should be seeing Antares lift off again. So I'm very excited to see that and just wanted to mention that I will be there bringing you the best of what they have to show us. So with all that meta news out of the way, let's dive into the topic for today, which is United Launch Alliance Rapid Launch Service. This is something that they announced back, I guess it was midway through September. The Mars architecture announcement sort of made a hole in the news there for us. A lot of people were not announcing much surrounding that, but this was a little bit before that. And I posted about it on the blog over at

mainenginecutoff.com, but didn't talk about it much on the show. Rapid Launch is the new way that ULA is going to be selling Atlas V missions. And specifically, they're selling these missions to commercial partners. These are not intended to be a sales route for government launches, obviously. That's all part of their other wing of their business. But over the last few years, we've heard a steady stream of ULA leadership talking about the fact that they really need to start getting some commercial launches on their manifest if they want to stay in business and stay competitive over the next little bit of time here as they're in transition. This is a very big transition period for ULA right now. They're undergoing a lot of changes to keep up with the industry and keep themselves

competitive. So this is almost the backbone of that. This is the thing. I don't want to say it's make or break for them, but this is the biggest play that they can do to get commercial launches on their manifest. And that's what we're going to break down here, is how does this decision and this strategy play into their hopes of getting into the commercial market? And how does it play to their strengths to give them a little bit of leverage in the commercial market as others in the market, notably SpaceX, are having a little bit of trouble keeping up with their backlog and keeping up with their launch manifest? So that's what we're going to break down here. The basics here are that they have some openings on their schedule.

They're saying that they have one opening in 2017, but they're going to have a lot more openings going forward on their manifest. And they want to start selling those to commercial partners and rapid launches away to let commercial partners purchase a launch within three months of that actual launch date. So instead of the two or three year lead time that they typically have for a launch, someone could come to them in October and have a launch on the manifest for the end of the year or the beginning of the year or the beginning of next year, depending on how their launches fall. But the idea is to be able to purchase a

launch very, very quickly and get flying on a rocket as quickly as possible. So the way that they're handling this, it sounds like, you know, from the press release, there wasn't a lot of detail about what ULA was doing internally to manage this. But what it sounds like is that they're going to keep the assembly line for the core stages of the Atlas V, they're going to keep that rolling. They're not going to build them to order like they have done in the past. You know, they would build a core to order for a specific launch. So when they're starting construction on that core, they know what launch that's slated for. There's been a few times in history where they've shifted core to core. But, you know, typically they're building that core knowing what launch it's going to be on.

From the sounds of it, what they're doing now is going to keep the production lines rolling, keep the cores coming out, keep Centaurs coming in, keep solid boosters coming in, and they're going to move all of the customization points in the assembly to the last three months of rocket buildup. So instead of working on a rocket for a specific launch and working in all the customizations as you go, they're going to move all of that, every single piece of customization to the end of the integration, that last three months, once you have an order on the books for launch. So, you know, choosing which payload fairings are going to be used, choosing how many solid rocket boosters, etc, etc. All of that will be going on in the last three months, and they'll be customizing the launch vehicle to the payload that is going to ride on it.

And we sort of saw some of this in the way that Orbital ATK bought space on an Atlas V when Antares had its incident back in 2014. They were able to purchase two Atlas V flights for Cygnus to fly to the space station. So this was kind of the first inkling that we saw of this, that this is something that's coming soon, is that Orbit ATK was able to buy an empty launch slot on the Atlas V fairly quickly, you know, less lead time than a national security launch or something like that. So it was the first kind of intro to that. It was the first time we got to look at that way that ULA might be working in the future. Now, what this says to me is that ULA is figuring out how to brand and market the emptiness of their launch manifest. If you look at their history, the last four years from 2013 to this year, 2016,

they've had about eight to 10 launches of an Atlas V every single year. In 2017, they only have seven on the books, one of those being a Starliner flight that's probably going to get pushed either later in the year or even into 2018. So they might only have six launches next year on the books for Atlas 5. And beyond that, there's even less on the books for them. And this kind of matches up to what the ULA leadership has been saying over the last few years is that there's a national security launch slump coming in 2017-2018 time period that will last about five years. This is something they've talked about a lot. And that was compounded, you know, their issues with that were compounded by the

fact that SpaceX got certified for those national security launches. So, you know, this is something that Tori Bruno himself has been talking about for a while, that there's this slump they have to be aware of because they can't survive on a handful of launches a year. They can't survive on two or three launches a year. They need eight to 10. So what they're doing, what it seems to me, you know, I don't know, I don't have any inside sources on this, but just reading the tea leaves

and seeing the way they're playing this, I think their intentions are to keep the assembly line rolling, keep the production output of the Atlas assembly line rolling the same way it has been very consistently for the past five years. They've been having that 8 to 10 launch cadence for the past couple of years. So keep everything rolling at that and try to sell off the extra spots to people who need a

quick and reliable ride to orbit. So right now we have this issue going on with SpaceX, for example, and there were a few people on SpaceX's manifest for this year that really need to get their satellites up by the end of the year. They have certain deals going on where they need to have their satellites in operation by a very particular time, or in the case of Iridium, some of your satellites are failing, so you're going to have gaps in your coverage. So you need to get your new satellites up on orbit as quickly as possible to try to patch some of those holes in your coverage. There are instances like this where, you know, if a launch manifest falls behind schedule, in the instance of SpaceX with Amos 6, that pushed off, you know, their handful of launches that were going to happen this year,

that pushed them off into probably 2017. If one of those providers was in a make or break situation where they need to be launching by the end of the year, or they're kind of screwed for all intents and purposes, those are the people that ULA wants to attract with this by saying that they can do a three month turnaround. So if Iridium really, really needed to get up by December, you know, once the AMO6 incident happened, they could have called up ULA and said, we've got these satellites out at Vandenberg right now, and we need to have them up by the end of December. What can you do for us? They don't have a launch that quickly in this case. But just as an example, someone who's under the gun, who's feeling that pressure,

at that point in time, they would pay the money to ULA that it cost. ULA is substantially more expensive than a SpaceX launch. An Atlas V launch versus SpaceX launch is extremely costly comparatively. So they weren't attracting a lot of commercial customers in the same typical way that launch contracting typically works. When you're two or three years out, the difference in your checkbook at that point from $164 plus million to $64 million, you're talking a huge difference in price. So from the typical launch contracting standpoint, ULA did not have a lot of competitive sway in that way. But when you think about circumstances like this, ULA, their pride and joy over the years has been schedule certainty and reliability. That is what they've made their name on. They've got over 100 successful launches

in a row. Incredibly reliable. They've had a few instances where there's been something that didn't perform up to spec, but the robustness of their system was able to correct for that. They've had an incredible series of successes, and that's something that they're starting to talk a lot about as a competitive advantage. It is something that people do care about. It is something that you can charge a premium for. There's a reason that reliable products cost more, and that happens in other marketplaces, not just launch providers. But what this is from ULA is a way to capitalize on that. Because when you're under the gun for a launch, when you need to get it up fast and reliably, this is the perfect pairing for that.

That's that old saying where there's the triangle, you can have it quick, you can have it cheap, or you can have it good. This is exactly playing to that. You know, in the SpaceX case, they're saying you can have it cheap and good. In this case for ULA, they're saying you can have it quick, but it's not going to be cheap. So in a lot of ways, I think this is an amazing play for ULA, which is saying, you know, let's keep the production lines rolling. Let's capitalize on the gaps in our manifest by being able to charge a premium for these quick turnaround launches that are very reliable and that people can count on. And that is a point where they have a lot of competitive advantage

over everyone else in the industry. They might not even be close to competing on price yet. They're certainly doing things to bring down their prices. And Tori Bruno has said a lot over the past few months that they are doing a lot of optimizing of the overhead at ULA itself, but also in the sourcing that they're doing for all these different components. They're bringing costs down from the supply chain and everything like that. So they're making strides on the cost front, but they're nowhere close to competitive on cost yet. And they don't really have a lot of hope to be competitive until Vulcan is flying. And even then, they've got some problems they need to sort out. You know, anything with a solid rocket booster is going to be very, very expensive because those things are not reusable. They're very expensive. And that's a big cost driver in the heavier, more higher performance payload missions.

So in a lot of ways, this will not solve their long-term troubles that they may find themselves in. But over the next five years, this is a great idea for them because they're going to be able to charge that launch premium, that cost premium for reliability, for speed. Like I said, I'm not sure if I would say this is absolutely a make or break situation for ULA that if this doesn't work out, they're totally screwed. But it's damn close. It's damn close to one of those situations. Now, I've talked about it a bit before on the show where I've talked about Vulcan is going to have some tough times entering the industry. It is coming into the industry at a price that's already a little bit too high,

and it's not going to be able to be used as a national security rocket until it's certified. So it needs to find itself a few missions to get under its belt to get certified. And we saw this last week that ULA and the Air Force are working to certify Vulcan. They've, I guess, signed the agreements of what it will take to certify. And certainly they'll have an easier time certifying it because it's still going to fly with the Centaur upper stage. But that also means that it's still going to fly with the Centaur upper stage, which is going to drive their cost a little bit higher. You know, those are pretty expensive engines on the Centaur, and there's no reusability baked in like there is with Aces, if you want to call that reusable i i struggle

with calling aces reusable um but maybe it's it's multi-use upper stage i don't know i don't know what phrase to use but i wouldn't call that reusable whatever the case ula has a lot of uh strategic thinking to do on how vulcan is going to be able to enter the market garner the flights that it needs to to get certified to be the workhorse that they need it to be. So I'm not sure how the Vulcan gauntlet is going to play out because that's a tough entry to the market. They're coming in at 2020

and trying to capture some payloads and some flights that are going to be still somewhat expensive, you know? And by then, theoretically, SpaceX will have the reusability worked out, we'll be able to cut launch costs and hopefully prices a good bit. So that's even going to make it tougher for Vulcan. But looking right now in the short to medium term, the rapid launch idea is a really good way to get that little bit of competitive advantage to sell something unique into the market. And hopefully that plays out well for ULA

because it is very, very good to have competitiveness in the market and have something that is on the end of the market that is fully reliable. And the old sturdy, reliable player in the industry, there needs to be somebody occupying that spot. You can't have an industry full of all SpaceX's or anything like that. But there is something to it where you think of ULA, you think of a string of 100 plus successful launches. And the longer that SpaceX drags on this investigation with no cause identified yet, it's not going to be great if we go another month without hearing anything. That's going to's going to start to cause some concerns. We already see them saying we're maybe not going to make November and they're pushing that back till the end of the year or beginning of next year. So

tough times for SpaceX right now and a very, very good play from ULA on rapid launch. Now, relatedly, I don't think I could do this episode without mentioning the kind of political back and forth that has been happening with ULA over the past few weeks. We saw ULA request to extend the bid period for the GPS3 contract. And, you know, their big plea there was that this needs to not just be about straight up launch cost. This needs to be about launch cost plus reliability, plus schedule certainty, plus the things that ULA does well. Those things should have weight in the bidding process here. So that was the play that they made to the Air Force. They didn't say, or they said, no, just give us your bid.

I understand why they're doing it. It makes sense. It's what they need to do. If you consider all of these moves, you know, they're making this move to the commercial marketplace to say, we'll be quick and reliable, but we're not going to be cheap. And they are reinforcing that by saying to the Air Force, hey, why don't you take into consideration reliability and flight history instead of just raw cost? All of those things are really tied in together. And it's an overall push from ULA right now to market their reliability as a competitive advantage. And that is certainly something that they can do. It's certainly something that pieces of the market will respond positively to. But those pieces of the market know that they would

have to pay a premium for that reliability. And that's an ebb and flow that the people purchasing launch services really need to figure out where they want to be. Do they want to be buying two launches instead of just one? And they're buying two with the hopes that both will work out, but they're still saving money by buying two instead of one really expensive one. Do they want to put all their money into one really expensive one so they can get their satellite up ASAP and start getting operating money? That's a bunch of stuff that they have to do internally based on their business, but in ULA's case, they see that as their competitive advantage, and they're going to

market it like that, and that makes sense. Now, I'm not going to spend a lot of time talking about the politicking that's happening in Congress right now. We saw a bunch of congressmen and women from ULA's districts send a letter to the, I guess it was the FAA, NASA, and everyone that's involved with the AMO6 investigation and say that SpaceX shouldn't be running their own investigation. Then there was a whole response from congressmen and women in SpaceX's district, you know, sending letters back and forth. It's nothing that is really productive to talk about. It's nothing that really means anything in the long term. It's what's expected of people in Congress for their constituents. That's business as usual. I don't even think there's anything to talk about there. To be honest, it's not a big deal at all. It's not something you should be worried about. It's not something you should be thinking about.

If something were to come of it, if there were some action to be taken upon it, then we'll talk about it. But right now, there's absolutely nothing there to talk about. So that's pretty much all I've got for ULA. I just think it's a very interesting time for them right now. They're making a lot of the right plays. They're marketing their competitive advantages the best they can. I'll be interested to see if anyone does jump at that launch slot or two in 2017. We'll keep an eye on that. But I just kind of wanted to, after a few weeks of Blue Origin, SpaceX news hitting

you every week with them, just bring in a little bit of this ULA angle to things to kind of round out what we're talking about in the market right now. It's something we'll keep our eye on over the next few months as these launch contracts come in. And, you know, we'll see how Vulcan can run the gauntlet in the early 2020s. But short to midterm, it looks pretty good for ULA if this does pan out. And beyond that, it's yet to be determined. So before I'm out of here for the day, I just wanted to extend a special thank you to all of those supporting the show over on Patreon. Patreon.com slash Migo is

where you can go to help support the blog and the podcast. If you like what I'm doing here, head over to Patreon and give as little as $1 a month. I really, really appreciate it. And you will get a little bit of extra content over on Patreon. Don't forget, I want to hear from you about the SpaceX announcement. Anthony at ManagingCutoff.com is where you should send it. I want to hear the good, the bad, and the big question mark from you. So send those in and we'll be reading them out on a future show. So thank you very much for listening and I will talk to you next week.