Meanwhile, he is planning to wrap up talks with ULA for the 36-50-core deal by October, when fiscal 2014 begins. To date, the Air Force has bought launch vehicles from ULA singly, the most inefficient way possible. Under the new deal, ULA will buy the long-lead parts, shifting risk to the contractor but also allowing for much greater stability and predictability in production flow. “ULA is taking all of the risk. We are making all of the investment,” says CEO Mike Gass. “If we overrun, we will take it out of profit.” Gass says the proposal to the government submitted last summer was $7 billion below the anticipated price if the cores were each bought individually. Under significant cost scrutiny, Gass says he improved efficiency by reducing his workforce by 2,000—it is now at 3,700— since the 2006 merger.
Correll applauds ULA's management improvements, but says more can still be done for efficiency.
ULA plans for 12 launches this year and 14 next year, a rate that will support improved efficiency, Gass says.
One unanswered question, however, is whether a combination of government and commercial work will be enough to support multiple launch providers later in the decade when planned Pentagon work could taper off. It is around this time, Madden says, that the Air Force could embark on some demonstrations of disaggregated satellite architectures—such as one to follow on to the Space-Based Infrared System missile-warning mission. Without enough commercial activity to bolster the market, the Pentagon will be in the same position it was in the early 2000s that led to the decision to consolidate Lockheed and Boeing into a single company in search of reduced cost.
“I have to ask whether we are going back to where we were when we had Titan,” Correll says, referring to a costly, legacy Martin rocket family. At issue: Will there be enough launches to justify the high cost of multiple infrastructures? For ULA, those costs are now being handled by the government, which is unwilling to take on another bill for separate launch facilities. “Are we just going back to the future?” Correll asks.