Author Topic: ULA is getting green light  (Read 238370 times)

Offline Jim

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Re: ULA is getting green light
« Reply #20 on: 10/03/2006 10:51 am »
it depends on how detailed

Offline Dexter

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Re: ULA is getting green light
« Reply #21 on: 10/04/2006 04:39 am »
Lockheed concluded in March, Boeing has yet to strike a deal an we are in October.  Thats about seven months.  How much detail do you need?

Sounds more like a show-stopper in the negotiations.

Offline rocketmantitan

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Re: ULA is getting green light
« Reply #22 on: 10/04/2006 05:22 am »
Length of negotiations is due to the hideous complexity of converting the EELV contracts from 1998/Federal Acq Regulations part 12 (Acquisition of Commercial items) to the currently back in-favor FAR part 15 (Contracting by Negotiation).  Both contractors have made large capital investments in facilities, tooling, flight hardware (they bought lots of hardware in 98 when the commercial market looked robust), etc.  And all of this was done without the requirement to provide all the detailed cost accounting data that the new AF contracts require.  For example, if I bought a widget in 1998 and want to sell it to the AF as part of a Buy 3 launch award, how much is the widget worth?  What I paid for it then or what it costs now?  And what if I can't show you what all the small pieces that make up the widget cost.  I liken it to the AF deciding that after flying Airmen on United Airlines for 8 years, they now decide that they need to know how much of the airplane they really are paying for with each ticket fare - and oh, by the way -- show the Government how much the engine turbine blade cost on that 777 that United bought in 1998!  

The need to relook and apportion only the allowable contractor costs from the late 1990s would drive most people to go do something else.  On top of that, Pete Teets made it clear that the AF would also not allow the contractors to 'get well'/recover past business decisions on the two dozen or so launches awarded in 1998.  Imagine the difficulty in convincing auditors how much your company is going to lose on a rocket awarded in 1998 but not even launched yet!  

These are just two of the hurdles the negotiations have to get through.  When Boeing and Lockheed Martin corporately put in several billion dollars of shareholder/company money that they may never recover (given the launch market), you can bet the negotiations are going to be excruciating.  I think that Lockheed Martin got through negotiations faster because they made corporate decisions on what is important and what is something they can compromise on.  Boeing has its own decision process and requirements from their corporate structure, plus the Department of Justice and others have rolled back in this past summer with the buzz about the $650+ million dollar settlement.  I think lots of people want to look at the Boeing negotiations to make sure the penalty is real, prolonging the negotiations.

Finally, hideous is a good descriptive word for what the AF/contractor team is going through.  Most folks who get exposed to the details of the EELV contract restructure agree it is the most complex acquisition strategy change they have seen.  And while the AF is trying to get national security satellites launched while preserving two EELV booster families, that is not the mission statement for DOD agencies like the cost audit folks or the defense contract management folks.  Remember, it is always easier for a staff agency to ask for more data than make a decision that they could be held accountable for.  The 17 month ULA approval cycle by DOD and FTC is a prime example.

Offline Jim

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Re: ULA is getting green light
« Reply #23 on: 10/04/2006 11:44 am »
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Dexter - 4/10/2006  12:22 AM

Lockheed concluded in March, Boeing has yet to strike a deal an we are in October.  Thats about seven months.  How much detail do you need?

Sounds more like a show-stopper in the negotiations.

Boeing's agreement was in August

Offline edkyle99

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Re: ULA is getting green light
« Reply #24 on: 10/04/2006 09:36 pm »
This Washington Post article:

http://www.washingtonpost.com/wp-dyn/content/article/2006/10/03/AR2006100301365.html

quotes both FTC and Pentagon officials saying that the purported ULA savings will be more than offset by higher prices resulting from lack of EELV competition.

The article also says that ULA is expected to "generate" up to $2 billion per year from of the U.S. government, which seems a bit pricey to me since current plans show only eight EELV launches per year at most.

I suppose it was this or one of the EELVs dropped altogether.  In my opinion, one less EELV would have been a better result than the ULA compromise.

 - Ed Kyle




Offline R&R

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Re: ULA is getting green light
« Reply #25 on: 10/04/2006 10:13 pm »
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edkyle99 - 5/10/2006  3:19 PM

This Washington Post article:

http://www.washingtonpost.com/wp-dyn/content/article/2006/10/03/AR2006100301365.html

quotes both FTC and Pentagon officials saying that the purported ULA savings will be more than offset by higher prices resulting from lack of EELV competition.

Sounds more like a miss-quote or officials who have no clue.  Both companies now have the Launch Services contracts (Buy 3) which pays the overhead and a fixed price for each launch.  Without ULA there's no competition and regardless of it the costs are basically fixed so how does it go up?  Moving all Engineering to one site and all manufacturing to one site saves money.

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The article also says that ULA is expected to "generate" up to $2 billion per year from of the U.S. government, which seems a bit pricey to me since current plans show only eight EELV launches per year at most.

Probably includes that fixed cost I spoke of above.

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I suppose it was this or one of the EELVs dropped altogether.  In my opinion, one less EELV would have been a better result than the ULA compromise.

Dropping one doesn't mean the cost is cut in half in fact it could be almost as much since they would still need more than half the people to engineer, build and launch the extra rockets of the same kind.  The launch rate may be too much for one without at least some infrastructure upgrades.  And heaven forbid there's a failure, now there's no other option.

If it were Boeing that left just imagine the cost to get the A5 Heavy online in time to support what's already scheduled for D4.  One can only guess what it would have cost to get D4 people to stick around long enough to finish what's been started.  What did it cost to get Titan folks to stick around as long as they did?

 
Quote
- Ed Kyle




Offline edkyle99

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Re: ULA is getting green light
« Reply #26 on: 10/04/2006 10:48 pm »
Quote
R&R - 4/10/2006  4:56 PM

Quote
edkyle99 - 5/10/2006  3:19 PM

This Washington Post article:

http://www.washingtonpost.com/wp-dyn/content/article/2006/10/03/AR2006100301365.html

quotes both FTC and Pentagon officials saying that the purported ULA savings will be more than offset by higher prices resulting from lack of EELV competition.

Sounds more like a miss-quote or officials who have no clue.  Both companies now have the Launch Services contracts (Buy 3) which pays the overhead and a fixed price for each launch.  Without ULA there's no competition and regardless of it the costs are basically fixed so how does it go up?  Moving all Engineering to one site and all manufacturing to one site saves money.


The competition argument sounds good in theory, but it is implausible without commercial payloads in the mix.  Perhaps the officials expect that the commercial satellite launch market will improve in the future.

As for cost savings, even more money could be saved if an entire EELV production line and associated launch sites were shut down.

Quote

Quote
The article also says that ULA is expected to "generate" up to $2 billion per year from of the U.S. government, which seems a bit pricey to me since current plans show only eight EELV launches per year at most.

Probably includes that fixed cost I spoke of above.


Costs that should be included in the calculations.  It isn't pretend money. ;)

Quote

Quote
I suppose it was this or one of the EELVs dropped altogether.  In my opinion, one less EELV would have been a better result than the ULA compromise.

Dropping one doesn't mean the cost is cut in half in fact it could be almost as much since they would still need more than half the people to engineer, build and launch the extra rockets of the same kind.  The launch rate may be too much for one without at least some infrastructure upgrades.  And heaven forbid there's a failure, now there's no other option.


I believe that either launch system could support the full launch rate if needed.  That would only be maybe 4-6 launches per year from each site.  

Quote

If it were Boeing that left just imagine the cost to get the A5 Heavy online in time to support what's already scheduled for D4.  One can only guess what it would have cost to get D4 people to stick around long enough to finish what's been started.  What did it cost to get Titan folks to stick around as long as they did?


Atlas V Heavy would be a problem.  It would need yet another west coast pad.  But Delta IV might need some improvements too, I've read, to handle some heavy sun sync payloads.

Quote
- Ed Kyle

Offline bombay

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Re: ULA is getting green light
« Reply #27 on: 10/05/2006 03:10 am »
Also in the Washington Post article, the FTC acknowledged that creating the ULA monopoly "will probably lead to higher prices and lower quality".  In the WSJ, FTC staff stated the joint venture (ULA) likely would "reduce the rate of innovation" while raising prices to launch U.S. government satellites in coming years.

So the DoD recommended the joint venture based principally on improved national security stating that: "the unique national security benefits from the joint venture would exceed any anticompetitive harm."

Now for the twisted logic:
National security through the formation of ULA will be impoved by (1) less quality (2) less innovation (3) higher prices for launch services in coming years.

Therefore, more risk of launch failure at a higher price equates to "unique national security benefits".  

Huh!!!!

Offline Sphereion

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RE: ULA is getting green light
« Reply #28 on: 10/05/2006 03:26 am »
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Bruhn - 17/7/2006  1:59 PM

I was just in the plant on Friday.  There were about 10 Delta IVs and 6 Delta IIs on the floor.  While it certainly was spacious, I couldn't imagine having 40 Delta IV CBCs packed in there.  I'm sure its doable, but watch out when backing up.

Someone please say they have a picture of what that looks like. I can imagine it would be an awesome sight!

Offline general

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Re: ULA is getting green light
« Reply #29 on: 10/05/2006 03:32 am »
Quote
Jim - 4/10/2006  6:27 AM

Quote
Dexter - 4/10/2006  12:22 AM

Lockheed concluded in March, Boeing has yet to strike a deal an we are in October.  Thats about seven months.  How much detail do you need?

Sounds more like a show-stopper in the negotiations.

Boeing's agreement was in August

Boeing has not finalized their Buy 3 contract yet.  They have a "handshake" agreement with the AF, but still not completed.

Offline bombay

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Re: ULA is getting green light
« Reply #30 on: 10/05/2006 03:46 am »
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general - 4/10/2006  10:15 PM

Quote
Jim - 4/10/2006  6:27 AM

Quote
Dexter - 4/10/2006  12:22 AM

Lockheed concluded in March, Boeing has yet to strike a deal an we are in October.  Thats about seven months.  How much detail do you need?

Sounds more like a show-stopper in the negotiations.

Boeing's agreement was in August

Boeing has not finalized their Buy 3 contract yet.  They have a "handshake" agreement with the AF, but still not completed.

I wouldn't even say there's a handshake agreement.  Boeing is wanting to recover $2.5 Billion in EELV development/infrastructure costs at taxpayer expense.  Hopefully, the gov't won't cave in.

Offline Dexter

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Re: ULA is getting green light
« Reply #31 on: 10/06/2006 02:44 am »
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bombay - 4/10/2006  9:53 PM

Also in the Washington Post article, the FTC acknowledged that creating the ULA monopoly "will probably lead to higher prices and lower quality".  In the WSJ, FTC staff stated the joint venture (ULA) likely would "reduce the rate of innovation" while raising prices to launch U.S. government satellites in coming years.

So the DoD recommended the joint venture based principally on improved national security stating that: "the unique national security benefits from the joint venture would exceed any anticompetitive harm."

Now for the twisted logic:
National security through the formation of ULA will be impoved by (1) less quality (2) less innovation (3) higher prices for launch services in coming years.

Therefore, more risk of launch failure at a higher price equates to "unique national security benefits".  

Huh!!!!

Read it straight from the source from the undersecretary Krieg at the Pentagon:

http://www.ftc.gov/os/caselist/0510165/0510165dodletterkriegtomajoras.pdf

This is not journalistic speculation, this is the opinion of a top ranking official at the Pentagon.

He does not believe the savings will be realized, and the reliability will be reduced.  How does this benefit national security when a rocket blows up taking out a critical national security asset.

Anyone remember the Titan IV failures in the 1990s?

Offline bombay

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Re: ULA is getting green light
« Reply #32 on: 10/06/2006 04:28 am »
Quote
Dexter - 5/10/2006  9:27 PM

Quote
bombay - 4/10/2006  9:53 PM

Also in the Washington Post article, the FTC acknowledged that creating the ULA monopoly "will probably lead to higher prices and lower quality".  In the WSJ, FTC staff stated the joint venture (ULA) likely would "reduce the rate of innovation" while raising prices to launch U.S. government satellites in coming years.

So the DoD recommended the joint venture based principally on improved national security stating that: "the unique national security benefits from the joint venture would exceed any anticompetitive harm."

Now for the twisted logic:
National security through the formation of ULA will be impoved by (1) less quality (2) less innovation (3) higher prices for launch services in coming years.

Therefore, more risk of launch failure at a higher price equates to "unique national security benefits".  

Huh!!!!

Read it straight from the source from the undersecretary Krieg at the Pentagon:

http://www.ftc.gov/os/caselist/0510165/0510165dodletterkriegtomajoras.pdf

This is not journalistic speculation, this is the opinion of a top ranking official at the Pentagon.

He does not believe the savings will be realized, and the reliability will be reduced.  How does this benefit national security when a rocket blows up taking out a critical national security asset.

Anyone remember the Titan IV failures in the 1990s?

In addition, does anyone remember the Delta III failure of the 90's when the failure was attributed to the RL10 engine, which subsequently shut down Atlas.

Doesn't both the Boeing and Atlas EELV upperstages use the same P&W engine whereby an alternate vehicle option would be rendered null and void if a problem existed with the common upperstage engine?

The justification for ULA is an absolute farse.  The spin and contradicting statements regarding the joint venture that's available for all to read makes the regulatory process a joke.

Offline quark

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Re: ULA is getting green light
« Reply #33 on: 10/06/2006 05:22 am »
ULA was the lesser of the evils.  

Door number 1, DoD pays the complete cost of two independent providers each working at a fraction of capacity.

Door number 2, DoD forces a downselect (through competition or attrition), pays the exit costs of the loser and is left with a single source with no regulatory authority.

Door number 3, DoD approves ULA, gets to keep two independent systems, gets some cost savings through consolidation and has the regulatory authority provided by the consent decree.

On a separate note, why should Boeing or LM be precluded from recovering their investment in the EELV systems?  Is it right that the government should entice contractors to invest with the promise of huge sales in a winner-take-all competition, then change the rules halfway through to a winner-take-half.  Then renegotiate everything again to explicitly preclude any investment recovery?  The whole premise of a business model is that up front investments in product development are recovered in product sales down stream.  

It's like the USG going to Microsoft and insisting that it will buy Office but only pay the cost of burning the CD.

Offline Avron

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Re: ULA is getting green light
« Reply #34 on: 10/06/2006 05:34 am »
DOD paid for these two to get to where they are today in the LV business.. its also a matter of National security.. all other logic is out of the picture.. we don't have the full picture in respect to national security and will never have it.. the blessing has been given.. game over... wanna break this up or you dont like it.  support SpaceX or one of the other new players.. the need stated is two vehicle families.. there is no law that prevents BA or LM from getting out of the LV buisness  right now.. then the need would not be fulfilled.. and that cannot happen today...  not in todays world..

Offline Jim

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Re: ULA is getting green light
« Reply #35 on: 10/06/2006 09:45 am »
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bombay - 6/10/2006  12:11 AM

Doesn't both the Boeing and Atlas EELV upperstages use the same P&W engine whereby an alternate vehicle option would be rendered null and void if a problem existed with the common upperstage engine?

The justification for ULA is an absolute farse.  The spin and contradicting statements regarding the joint venture that's available for all to read makes the regulatory process a joke.


Both companies are addressing the RL-10 issue,  But they use different models.  WRT the standdown,Atlas could have flown but chose not to.

Your opinion.

Offline Dexter

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Re: ULA is getting green light
« Reply #36 on: 10/06/2006 02:36 pm »
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quark - 6/10/2006  12:05 AM

ULA was the lesser of the evils.  

Door number 1, DoD pays the complete cost of two independent providers each working at a fraction of capacity.

Door number 2, DoD forces a downselect (through competition or attrition), pays the exit costs of the loser and is left with a single source with no regulatory authority.

Door number 3, DoD approves ULA, gets to keep two independent systems, gets some cost savings through consolidation and has the regulatory authority provided by the consent decree.

On a separate note, why should Boeing or LM be precluded from recovering their investment in the EELV systems?  Is it right that the government should entice contractors to invest with the promise of huge sales in a winner-take-all competition, then change the rules halfway through to a winner-take-half.  Then renegotiate everything again to explicitly preclude any investment recovery?  The whole premise of a business model is that up front investments in product development are recovered in product sales down stream.  

It's like the USG going to Microsoft and insisting that it will buy Office but only pay the cost of burning the CD.

All you EELV/ULA supporters continue to point out how EELV was different from Titan IV for the following reasons:

Commercial Program
Commercial Contracting
Contractors's own their respective designs
Etc......

Both companies went into the program with a bad market forecast in hindsight.  Both companies chose to compete for this work.  Both companies accepted DOD funds in addition to their own investsments.

Except for the DOD funds it sounds a lot like Ford deciding to build giant SUVs right before gas hits $3.00 / gallon.  Both contractors made a bad business decision on a bad forecast and should be precluded from recovering their investment in a commercial program.  That's the real world.  

By the way, last time I checked, both companies reported profits.


What your options did not recognize is Mr. Krieg's assertions that there would be no cost savings realized and that reliability and quality would be reduced.   Seems like status quo is better than the ULA option.

That would be Door number 1.

Offline bombay

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Re: ULA is getting green light
« Reply #37 on: 10/06/2006 04:40 pm »
Quote
quark - 6/10/2006  12:05 AM

ULA was the lesser of the evils.  

Door number 1, DoD pays the complete cost of two independent providers each working at a fraction of capacity.

Door number 2, DoD forces a downselect (through competition or attrition), pays the exit costs of the loser and is left with a single source with no regulatory authority.

Door number 3, DoD approves ULA, gets to keep two independent systems, gets some cost savings through consolidation and has the regulatory authority provided by the consent decree.

On a separate note, why should Boeing or LM be precluded from recovering their investment in the EELV systems?  Is it right that the government should entice contractors to invest with the promise of huge sales in a winner-take-all competition, then change the rules halfway through to a winner-take-half.  Then renegotiate everything again to explicitly preclude any investment recovery?  The whole premise of a business model is that up front investments in product development are recovered in product sales down stream.  

It's like the USG going to Microsoft and insisting that it will buy Office but only pay the cost of burning the CD.

Your door number 3 choice is backed up by nothing but canned statements that have no foundation.  This is supported by the contents of the Krieg report that Dexter posted; I would suggest that you read it!  In doing so, you could only draw one conclusion, the rhetoric of "more reliable launch services", "cost savings", "better quality", "improved nat'l security", is shot down by numerous contradicting statements that would indicate the opposite to hold true.

The consent decree is hog-wash.  For example, the decree states: "the new joint venture must "promise" it will work with other companies without taking unfair advantage".  I guess if ULA breaks their "promise" they'll be yelled at and will have to go stand in the corner.  The consent decree has no teeth.

The Krieg report also addresses with great concern that "in order to ensure the Department achieves the national security benefits, the companies need to retain critical capabilities through the transition and relocation of "key employees".  I contend that ULA hasn't a clue whether or not "key employees" will make the transition or relocate.  Why would they if there's no incentive to do so!  Talk about consolidation all you want, if the right people aren't part of the consolidation effort you'll have manufacturing/engineering costs going through the roof and rockets dropping out of the sky.  


Offline bombay

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Re: ULA is getting green light
« Reply #38 on: 10/06/2006 04:57 pm »
Quote
Jim - 6/10/2006  4:28 AM

Quote
bombay - 6/10/2006  12:11 AM

Doesn't both the Boeing and Atlas EELV upperstages use the same P&W engine whereby an alternate vehicle option would be rendered null and void if a problem existed with the common upperstage engine?

The justification for ULA is an absolute farse.  The spin and contradicting statements regarding the joint venture that's available for all to read makes the regulatory process a joke.


Both companies are addressing the RL-10 issue,  But they use different models.  WRT the standdown,Atlas could have flown but chose not to.

Your opinion.

Wrong!
LM was "forced" to postpone the Atlas III launch after the Delta III failure pending the outcome of the RL10 engine failure investigation with the cost of delay in the 10's of millions.

The same scenario would hold true should a similiar situation occur relative to an upperstage engine snafu with either the Boeing or Lockheed versions.  The fleets would be grounded pending investigation.  What was that about two discreet launch options for nat'l security reasons?

Not my opinion - fact!

Offline Jim

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Re: ULA is getting green light
« Reply #39 on: 10/06/2006 05:00 pm »
Both Dexter and Bombay obviously never have worked in the space launch business.

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