Cheap Space Launch Optional: The Truth about Cheap Rockets for the USAF

In a recent article at DoD Buzz, Oriana Pawlyk asked: “Why Doesn’t the Air Force Use Cheap, Re-Usable Rockets?”[1] Air Power Strategy even re-tweeted her article because it is a spectacular question, one that requires more analysis. It is debatable whether cheap access to space is a good thing. After considering the history, budget, policy decisions, and strategic implications of space launch, ask that question again. Why doesn’t the Air Force use cheap, re-usable rockets?

The USAF has never needed to use cheap rockets, as launch costs are currently irrelevant to USAF space operations.

From the beginning, the only customers for rockets were the government. The German V-2 was designed by Peenemünde Army Research Center, a military organization, and built by Mittelwerk GmbH, a government controlled and run Limited Liability Corporation. The first Soviet rockets were designed by the Special Design Bureau, a government design bureau that later became Energia, a private company that only works on Russian space projects. The industry was only military and government. There was no outside influence. No competition. No market forces.[2]

The US rocket industry did not mature in the same way. All US rockets trace their lineage to ballistic missiles. When the US government decided to get into the ballistic missile business, it went to the industries that could help, namely the aircraft and automobile industries. The Air Force, in need of a strategic missile system, went to Convair for the ATLAS. The Army, in need of a tactical missile, went to Chrysler for REDSTONE. [3] These were publicly-traded companies with shareholders and stock prices. The US did not have the ability to build closed market industries from the ground up like Germany and Russia. The Army tried to develop its own missile ordnance factory at the Redstone Arsenal in Alabama, but Washington preferred commercial contractors for the manufacturing and assembly due to the compressed timeline.

In the 1950s-60s, the space launch market was hurriedly attempting to convert ballistic missiles into launch vehicles. The race against the Soviets caused a rush leading to many failures and high launch costs. In 1960, launch to lower low earth orbit (LEO) was $35,000 per pound, while higher LEO checked in at $200,000 per pound. By 1990, those costs had come down to $8,000 per pound to low LEO and $30,000 per pound to high LEO. At the same time, the launch performance to those orbits has increased a thousand fold, while reliability rose from less than 50% to over 95%.[4]

The USAF relied on those ICBM designs all the way through the 1980s when it finally realized that it needed a purpose-built, standardized launch vehicle. Around this same time, President Reagan was looking for an alternative to Mutual Assured Destruction (MAD), despite the stability it appeared to provide.[5]  To abandon MAD, the US needed to enact wide-band ballistic missile defense. Retired Lieutenant General Daniel O. Graham’s organization High Frontier pursued an idea of global ballistic missile defense as a constellation of satellites loaded with missiles, essentially a forward-based defense in space.  He created the Strategic Defense Initiative (SDI). The Reagan Administration loved it, but Graham and the USAF knew SDI would require thousands of launches to create a system capable of intercepting hundreds of Soviet nuclear reentry vehicles.  The cost of SDI would be unprecedented unless launch costs could be reduced.  Reducing launch costs by a few percentage points was insufficient. Single-Stage-To-Orbit (SSTO) would have to be cheaper by orders of magnitude. The Air Force, NASA, and industry threw themselves into the X-30, the National Aerospace Plane, and many other SSTO technologies. SSTO was a great gamble, one that the US lost.

By 1995, SDI was dead, and the US market had lost its monopoly in the western world as European launchers became more cost-effective and more attractive to commercial entities. Commercial launches up to this point existed in the margins, but by 1995 they had a significant amount of the market share to influence policy. The National Space Transportation Policy in 1995 gave us the Evolved Expendable Launch Vehicle (EELV) program, designed to reduce launch costs 25-50%.[6]

EELV was supposed to achieve dual use for government and commercial launch services. The same rocket for both should be cheaper, and the increased volume of commercial launches would amortize the total program costs. The perceived demand for government and commercial launches had a substantial influence on space acquisition policy in the 1990s. Commercial launches were expected to average 30‑40 launches to geosynchronous transfer orbit (GTO) per year. In other words with the death of SDI, commercial launches were expected to outnumber government launches 3 to 1. As a result, the USAF adjusted its policies to allow two contractors and two launchers. We got DELTA IV and ATLAS V.

Even without SSTO and SDI, this gambit would have worked except for one critical factor: the commercial launch demand never materialized. The remaining commercial launches were serviced by ARIANE (European) and PROTON (Russian) who could operate at a loss because they were heavily subsidized. Rockets do not become cheap unless they can operate with a specific volume. The USAF (and all of the other government organization (NRO, CIA, NOAA, etc.) launches USAF handles) can never achieve the amount of volume in space launch to make space launch cheap.

The key to cracking cost in these types of markets is volume. Cars are actually expensive, but because the development of automobiles is spread across millions and millions of automobiles, the average person can afford one.  Operationally, it costs about $0.05 per pound to travel across town by car.  Planes are much more expensive but still produced in the thousands and amortized over many thousands of flights.  It costs approximately $2 per pound to travel across the country.  The Space Shuttle, at its apex, cost $10,000 per pound to LEO.  Today, launch costs to LEO average $80 million per launch or $6,000 per pound.^[7] Those prices came way down from their start in the 1960s because of volume. Because of the lack of commercial launch volume, cheaper launches for the USAF never happened, and EELV is operating as a government launch program instead of a competitive commercial service.

Jeff Foust argues there are three separate space sectors, and each sector has two distinct markets.  While all sectors could benefit from lower launch costs, only two markets seek lower launch costs, Operationally Responsive Space (ORS) and entrepreneurial commercial.  All other sectors value reliability, safety, or schedule over costs. [8]

Sector	Market	Examples	Priority
Security	Exquisite	Spy, GPS, Communications	Reliability
	Responsive	ORS, ATRR, SBSS	Cost
Civil	Civil Robotic	Meteorology, Exploration	Schedule
	Civil Human	Manned Space Flight	Safety
Commercial	Established	Telecommunications	Cost
	Entrepreneurial	Tourism, Industrial, Manufacturing	Cost

Source: Foust, “Space Launch Capabilities,” 203-210

Up until now, the Air Force has operated exclusively in the exquisite market of the security sector. That market values reliability, while cost is irrelevant when it comes to certain government satellites. The Air Force doesn’t want cheap. It wants reliable. The launch cost of an NRO satellite is in the margins. From the USAF perspective, they literally do not care how much it costs to launch a billion dollar satellite. They are not buying a service from ULA; they are buying a guarantee. Yes, the DELTA IV and ATLAS V are relatively expensive, but they also sport nearly flawless track records.

Those who believe SpaceX can shatter the paradigm for the USAF are right and wrong. The exquisite space market does not values cost; reliability is paramount. In this area, rockets cost what they cost. SpaceX’s Falcon 9, at half the cost per pound to LEO over DELTA and ATLAS, will have disruptive effects on the other markets that prioritize cost. Resupply of the ISS and manned scientific spaceflight is civil, not commercial. NASA probes and experiments rely on a schedule. Manned missions must prioritize safety. Cost matters in these markets, only because NASA is a government entity with a shrinking budget.  The USAF will respond to SpaceX’s disruption in the launch market the same way because of its shrinking budget, but until SpaceX gets its reliability over 95%, the USAF must pay for reliability.

The USAF has no choice in their launch policies because of the payload. The exquisite space market is populated by strategic national assets. These large, monolithic, gold-plated satellites are both the cause and effect of the past 50 years. Lower launch costs can only enable the USAF to shift to the Operationally Responsive Space market, something long overdue. That shift does not exist at $1,000-$2,000 per pound. It needs $100 per pound costs to be effective. In this way, lower launch costs will have a dramatic and sweeping effect on how the USAF executes all of its space missions, reduces its vulnerabilities, and becomes more flexible to the needs of Combatant Commanders.

SpaceX and better competition in the launch market will certainly help other players in space, but the USAF will not be capable of taking advantage of this competition until it produces paradigm-shifting cost decreases by orders of magnitude. SpaceX is on the right track, but Operational Responsive Space is still a ways off.

 

 

NOTES

[1] Oriana Pawlyk, “Why Doesn’t the Air Force Use Cheap Reusable Rockets?” DoD Buzz, 24 Oct 2016. http://www.dodbuzz.com/2016/10/24/why-doesnt-air-force-use-cheap-reusable-rockets/

[2] These markets while they seem un-American also exist in America. For example, the nuclear weapons market is a closed market. By necessity, this industry is entirely government controlled (Department of Energy) from design to production to deployment to disposal. This industry is composed of private Limited Liability Corporations on single source contracts to single customers with no outside influence or stock trading.

[3] Interesting side story about Chrysler and its missile division: In April 1952, the Army acquired the funds necessary for a cost-plus, fixed-fee contract. It had a list of 9 contractors that it believed were capable of acting as prime contractor for this type of project. The Army courted automotive and locomotive manufacturers and purposefully avoided aircraft manufacturers. The Air Force was also going down the ballistic missile path, and the Army knew any contract to any company in the aviation industry would be built to Air Force specs, regardless of the customer. Surprisingly, no one got the contract. After more analysis, three of the companies were found to be inadequate to perform the work. The other six companies, including Chrysler, turned down the work. No one wanted the contract. However, shortly thereafter, the US Navy canceled a jet engine contract with Chrysler. Chrysler initially rejected REDSTONE because they did not have the capacity to do the work. With the Navy contract gone, Chrysler found itself with excess capacity and eagerly went back to the Army with a proposal. Lacking any other options, the Army awarded the REDSTONE contract to Chrysler to the tune of $24.5M FY53 ($221.8M FY16). It was fortuitous, Chrysler delivered spectacularly and REDSTONE was an enormous success.

[4] Randy Kendall and Pete Portanova, “Launch Vehicles Then and Now: 50 Years of Evolution,” Crosslink Magazine, Aerospace, Spring 2010. http://www.aerospace.org/crosslinkmag/spring-2010/launch-vehicles-then-and-now-50-years-of-evolution/

[5] Mutually Assured Destruction (MAD) was both military doctrine and national security policy.  It assumed that both sides had enough nuclear weapons to destroy each other and any use of nuclear weapons would result in the complete annihilation of both sides. Reference the work of John von Neuman and especially that of Herman Kahn, On Thermonuclear War, (New York: Transaction Publishers, 2006), 145.

[6] Kendall and Portanova, “Launch Vehicles Then and Now: 50 Years of Evolution,”

[7] “Space Transportation Costs: Trends in Price Per Pound to Orbit,” Futron Corporation.

[8] Jeff Foust, 2013. “Space Launch Capabilities and Strategic Considerations.” In Space Strategy in the 21st Century: Theory and Policy, edited by Eligar Sadeh. New York: Routledge, 207.