Author Topic: United Launch Alliance joint-venture agreement expires  (Read 4396 times)

Offline Space Ghost 1962

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United Launch Alliance joint-venture agreement expires

Quote from: Pat Host
The 2005 joint-venture master agreement between Boeing and Lockheed Martin that created the United Launch Alliance (ULA) expired this month, according to a key US Air Force (USAF) official.

Quote from: Pat Host
The agreement, dated 2 May 2005, hammered out simple issues such as the name of the company, where it would be based, and that each company would control 50% of membership interests. It also gets into details such as how the board of directors would be filled, who would serve as board chairman, a non-compete agreement, and dispute resolution.

At this point, they don't necessarily do revenue sharing, one side could buy out the other.

And perhaps this has consequences for Vulcan?

add:

So I'm out visiting near ULA and hear this, thinking "WTF?", because, yes, I know its supposed to be one thing ... but then one also hears these additional items ... which is why this got posted ...
« Last Edit: 05/11/2017 03:45 PM by Space Ghost 1962 »

Offline Chasm

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Re: United Launch Alliance joint-venture agreement expires
« Reply #1 on: 05/11/2017 04:24 AM »
\_(ツ)_/

There will be consequences all around.
Questions is if it just ran out or if the the next steps were already agreed on.

The name change rumors fit into a planned scenario, however that may play out.

Offline joek

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Re: United Launch Alliance joint-venture agreement expires
« Reply #2 on: 05/11/2017 04:53 AM »
Might be some confusion between two very different items...

The FTC Consent Order was issued 1-May-2007 and expired 1-May-2017.  That contains all of the conditions related to government oversight etc. which were required to make ULA a going concern.

The Joint Venture Master Agreement was inked on 2-May-2005 between Boeing and LM.  That is strictly between Boeing and LM[1] and is unrelated to conditions imposed by the government (it could not as it was two years prior to the FTC Consent Order).  As far as I know it has no expiration.


[1] There is a signature line for an unnamed representative from the "to be formed" joint venture.

Offline FutureSpaceTourist

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Re: United Launch Alliance joint-venture agreement expires
« Reply #3 on: 05/11/2017 06:38 AM »
Yes, the key line (to me) from the Janes piece is:

Quote
the Pentagon no longer has oversight duties now that the agreement has expired.

So presumably LM & Boeing are now free(r) to do what they want with ULA, provided as joint owners they agree?
« Last Edit: 05/11/2017 06:54 AM by FutureSpaceTourist »

Online GWH

As far as I understand it Boeing were the ones who were vocal about squashing the Aerojet buyout of ULA in 2015.

From every number I've ran based on available data for Vulcan ACES with distributed lift it is an equally capable (or marginally close to) and far more cost effective alternative to SLS for payloads to beyond LEO. This isn't really talked about by ULA, and the vague mentions of in orbit prop and prop as a secondary payload has a pretty dubious business case without some kind of market for large payloads beyond LEO. Prop depots as I understand are very much a taboo subject for ULA.

So if there were to be a buy out of Boeing's share and ULA's ownership no longer had a vested interest in SLS, one might wonder what that might mean for Vulcan.

Offline Space Ghost 1962

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Re: United Launch Alliance joint-venture agreement expires
« Reply #5 on: 05/11/2017 06:02 PM »
Might be some confusion between two very different items...

The FTC Consent Order was issued 1-May-2007 and expired 1-May-2017.  That contains all of the conditions related to government oversight etc. which were required to make ULA a going concern.
It does unlock certain things. It is also where ULA got its name.

And those who brought this to my attention had a read on it that made it seem non-trivial.

Quote
The Joint Venture Master Agreement was inked on 2-May-2005 between Boeing and LM.  That is strictly between Boeing and LM[1] and is unrelated to conditions imposed by the government (it could not as it was two years prior to the FTC Consent Order).  As far as I know it has no expiration.
But it does have a termination clause.

add:

Couple other things occur to me. Now is a lot different then when both of these agreements were signed.

First, we have another provider, sort of proven in that an NRO launch just occurred with them. So you had two as a backstop then, one is minimally flying now (and a burden going forward). Also, we've got a SHLV capacity with its central core just tested. So you wonder about posture for NSS right now, what does it mean absent the Consent Order?

And ... both Boeing and LockMart don't see this as the same for each other.  Boeing will likely compete launches for its originally Hughes comsats, while those deep space missions (and NSS) will prefer Atlas/Vulcan for some time to come.

Where is the business headed?

It is also unfortunate that BE-4 tests haven't resolved Vulcan futures as of yet.
« Last Edit: 05/11/2017 08:46 PM by Space Ghost 1962 »

Offline yg1968

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Re: United Launch Alliance joint-venture agreement expires
« Reply #6 on: 05/13/2017 02:54 PM »
Might be some confusion between two very different items...

The FTC Consent Order was issued 1-May-2007 and expired 1-May-2017.  That contains all of the conditions related to government oversight etc. which were required to make ULA a going concern.

The Joint Venture Master Agreement was inked on 2-May-2005 between Boeing and LM.  That is strictly between Boeing and LM[1] and is unrelated to conditions imposed by the government (it could not as it was two years prior to the FTC Consent Order).  As far as I know it has no expiration.


[1] There is a signature line for an unnamed representative from the "to be formed" joint venture.

Good info, here is the relevant clause:

Quote
Section 2.09 Term. The term of the Company shall be perpetual unless earlier terminated in accordance with the provisions of the Operating Agreement.

This essentially means that the company, ULA (a LLC), survives until it is liquidated (the word terminated is used for LLCs).
« Last Edit: 05/13/2017 03:04 PM by yg1968 »

Offline Space Ghost 1962

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Re: United Launch Alliance joint-venture agreement expires
« Reply #7 on: 05/13/2017 03:04 PM »
Might be some confusion between two very different items...

The FTC Consent Order was issued 1-May-2007 and expired 1-May-2017.  That contains all of the conditions related to government oversight etc. which were required to make ULA a going concern.

The Joint Venture Master Agreement was inked on 2-May-2005 between Boeing and LM.  That is strictly between Boeing and LM[1] and is unrelated to conditions imposed by the government (it could not as it was two years prior to the FTC Consent Order).  As far as I know it has no expiration.


[1] There is a signature line for an unnamed representative from the "to be formed" joint venture.

Good info, here is the relevant clause:

Quote
Section 2.09 Term. The term of the Company shall be perpetual unless earlier terminated in accordance with the provisions of the Operating Agreement.

This essentially means that the company (a LLC) survives until it is liquidated (the word terminated is used for LLCs).

Liquidating a JV usually means wholesale sales of parts that cannot be returned to each of the parents.

Generally you cannot operate such as an ongoing basis. It is possible with a termination agreement (additional) that you can keep activities going while you determine disbursements/etc. Or you can "spin out" in whole, and have equity shares, but likely there would have to be passive involvement given the prior Consent Agreement.

Offline joek

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Re: United Launch Alliance joint-venture agreement expires
« Reply #8 on: 05/13/2017 07:28 PM »
So presumably LM & Boeing are now free(r) to do what they want with ULA, provided as joint owners they agree?

They (LM and Boeing) have always been free to "do what they want with ULA", subject to their JV agreement; expiration of the FTC consent order does not change anything with respect to LM-Boeing's JV agreement.

Offline joek

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Re: United Launch Alliance joint-venture agreement expires
« Reply #9 on: 05/13/2017 07:48 PM »
Thus, one asks, which of the parents is it in the interest of, to continue the agreement? Or not?

Likely both.  Unless one thinks they can develop an independently competitive LV offering (specifically a USG offering, which was proscribed by the JV).  Doubtful either would choose to go independent vs. remaining with JV/ULA unless one of them thinks ULA is a lost cause and they can do much better independent of ULA  (again, doubtful--they put all their eggs in the ULA basket years ago--cost to bring those eggs back home would be extremely high).
« Last Edit: 05/13/2017 07:51 PM by joek »

Online cppetrie

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Re: United Launch Alliance joint-venture agreement expires
« Reply #10 on: 05/13/2017 07:54 PM »
Thus, one asks, which of the parents is it in the interest of, to continue the agreement? Or not?

Likely both.  Unless one thinks they can develop an independently competitive LV offering (specifically a USG offering, which was proscribed by the JV).  Doubtful either would choose to go independent vs. remaining with JV/ULA unless one of them thinks ULA is a lost cause and they can do much better independent of ULA  (again, doubtful--they put all their eggs in the ULA basket years ago--cost to bring those eggs back home would be extremely high).
Unless one of the two companies believes the writing is on the wall and want to sell out in order to get its value out while the gettin's good. All indications are that is not the case, but who knows what sort of boardroom conversations have occurred in both parent companies behind closed doors.

Offline Space Ghost 1962

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Re: United Launch Alliance joint-venture agreement expires
« Reply #11 on: 05/13/2017 08:00 PM »
Thus, one asks, which of the parents is it in the interest of, to continue the agreement? Or not?

Likely both. 
Interesting. In the past I'd heard no end of carping about this from both at the highest levels.

Quote
Unless one thinks they can develop an independently competitive LV offering (specifically a USG offering, which was proscribed by the JV). 

The economics of such are debatable given competitive landscape. If you abandoned SLS, which was never designed for the frequency/cost of launches, yes, you could create a near term competitive case, by sacrificing the under 40T capability.

But I'd think this is even more farfetched than the other options I suggested above. ULA as currently run doesn't seem like the means for such, because they don't have the necessary autonomy.

Quote
Doubtful either would choose to go independent vs. remaining with JV/ULA unless one of them thinks ULA is a lost cause and they can do much better (again, doubtful).
Agreed. They don't have the stomach for it. They never did.

Thus my wildass ideas above.

Unless one of the two companies believes the writing is on the wall and want to sell out in order to get its value out while the gettin's good. All indications are that is not the case, but who knows what sort of boardroom conversations have occurred in both parent companies behind closed doors.

They stand to lose more in loss of control, loss of effective access to IPR that injures other business (spacecraft) than the cash value of it. And equity is somewhat stupid for them to retain, as ETF's trade better.

Offline joek

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Re: United Launch Alliance joint-venture agreement expires
« Reply #12 on: 05/13/2017 08:12 PM »
Unless one of the two companies believes the writing is on the wall and want to sell out in order to get its value out while the gettin's good. All indications are that is not the case, but who knows what sort of boardroom conversations have occurred in both parent companies behind closed doors.

Both companies will have the same nominal information; whether it's good for them is their decision.  Would Boeing sell to LM because they think they can obtain greater profitability taking their share and investing elsewhere?  Or vice-versa?  Who knows.

But if I were either of them, I'd suggest getting out of the launch services market ASAP--unless, given the expiration of the FTC consent order, they can show that they can achieve additional profitability by bundling their offerings (e.g., Boeing or LM satellites) with launch services.

Don't see that happening.  ULA is a USG-centric service offering.  While that will demand a premium, anything beyond that will not.  In short, if ULA-Boeing-LM want to compete in the USG space, they may stand a chance; otherwise not.
« Last Edit: 05/13/2017 08:19 PM by joek »

Offline Space Ghost 1962

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Re: United Launch Alliance joint-venture agreement expires
« Reply #13 on: 05/13/2017 08:36 PM »
In short, if ULA-Boeing-LM want to compete in the USG space, they may stand a chance; otherwise not.

With the AF mentality of "buying tickets to space" for payloads, perhaps where this is headed with disaggregated payloads is generic launch services, and your replacement for mission assurance is multiple duplicate payloads.

That certainly fits with the recent "fast space" threat profile, which makes the argument for asset restoration over asset preservation.

Offline sdsds

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Re: United Launch Alliance joint-venture agreement expires
« Reply #14 on: 05/14/2017 12:09 AM »
That certainly fits with the recent "fast space" threat profile, which makes the argument for asset restoration over asset preservation.

You call it "recent" but isn't fast space just operationally responsive space with a new name and a shiny new coat of paint?

E.g.:
allow a President to defend the
United States and coalition interests, signal commitment, and establish assured
overwatch in hours

http://cdn.defensedaily.com/wp-content/uploads/post_attachment/157919.pdf

that doesn't sound like a "recent" idea!

And even if not, how could that concept possibly relate to ULA as it exists today?
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Offline joek

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Re: United Launch Alliance joint-venture agreement expires
« Reply #15 on: 05/14/2017 02:23 AM »
You call it "recent" but isn't fast space just operationally responsive space with a new name and a shiny new coat of paint?

Yes, kinda-sorta.  Responsive space was oriented towards smaller payloads ("get [mission-specific smallish] payloads up fast").  That is closely related to, but very different from, "disaggregation" mentioned by SG, which is a more systemic approach intended to avoid few large high cost "blue-printed" targets in favor of smaller low cost targets--while increasing the robustness and flexibility of the system. Still lots of debate occurring in the NSS community as to which approach is better.

Offline Kansan52

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Re: United Launch Alliance joint-venture agreement expires
« Reply #16 on: 05/16/2017 06:26 PM »
Could ULA offer to buy themselves?

Online AncientU

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Re: United Launch Alliance joint-venture agreement expires
« Reply #17 on: 05/16/2017 06:55 PM »
I went to lunch with a couple buddies still working at ULA today (most have left over last 6 months). 
I learned:
- The final layoff tally is approaching 1000 people across all sites for this year (450+ last year).  Denver is being hit hard and they are still performing mandatory unpaid overtime. 
- The senior leader for the analysis group I worked under has calculated "natural" attrition (people leaving) to be 12% over the last 6 months.  This doesn't count any layoffs, just people quitting.

Employees are worried how all the work is going to get done.  Vulcan has been returning money to the parents because they cannot spend it all given the resource limitations.  Add on another 1000 layoffs and most everyone has given up keeping to any schedules.

Does that mean head count is heading for 2,500 instead of 3,000 discussed earlier?

Sounds grim -- they risk falling below 'critical mass' in staffing... returning Vulcan money to parents is a very bad signal that indicates they may be past this point of no return.

In an all hands meeting towards the end of 2016 Bruno stated their were three times the parents nearly "harvested" the company within the last year and ULA was walking a fine line.  The parent companies see it from a purely business stand point, therefore, they are always weighing the revenue it is generating vs. the value they could "harvest" it for.
...

This, plus the earlier staffing cuts/sending Vulcan money back to parents, indicate that 'harvesting' might be in progress.   Keep staff necessary to collect ELC monies and send maximum to parents,  fly the lucrative NSS and NASA flights on the manifest, then bail.   If they do this, parents risk endangering their SLS/Orion contracts -- might be holding the marriage together.

These are totally grim news items; hopefully you're not trolling NSF...
Hard to make this stuff up.
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Offline IanThePineapple

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Re: United Launch Alliance joint-venture agreement expires
« Reply #18 on: 05/16/2017 07:04 PM »
This is worrying, what are the current predictions of the company's future?
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Online edkyle99

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Re: United Launch Alliance joint-venture agreement expires
« Reply #19 on: 05/16/2017 08:35 PM »
This is worrying, what are the current predictions of the company's future?
Here's my perspective, for what it is worth. 

Downsizing is not fun, but in this case it is necessary to get down to fighting weight.  The company plans to shut down three launch vehicles (Delta 2, Delta 4, and Atlas 5) and replace them with one (Vulcan).  It is going to shelve most of the subcontractors involved in those programs in favor of one, likely lower-cost chain.  This is not an easy maneuver.  People are going to be disaffected no matter how it is done, and not just at ULA.  Pulling this big switch off requires lots of money in the short term, but then again ULA's competitors are also spending lots of cash on new developments.

ULA's advantage is that it is highly proficient at this business.  It knows how to roll off success after success for year after year.  It knows its Pentagon customer better than any competitor.  That is where it must continue to excel.

 - Ed Kyle
« Last Edit: 05/16/2017 08:39 PM by edkyle99 »

Online gongora

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Re: United Launch Alliance joint-venture agreement expires
« Reply #20 on: 05/16/2017 09:04 PM »
Downsizing is not fun, but in this case it is necessary to get down to fighting weight.  The company plans to shut down three launch vehicles...

Right now all of those vehicles are still flying, the slowdown in the government launch rate hasn't arrived yet, but they're already cutting a large percentage of their workforce.

Online AncientU

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Re: United Launch Alliance joint-venture agreement expires
« Reply #21 on: 05/17/2017 12:54 AM »
This is worrying, what are the current predictions of the company's future?
Here's my perspective, for what it is worth. 

Downsizing is not fun, but in this case it is necessary to get down to fighting weight.  The company plans to shut down three launch vehicles (Delta 2, Delta 4, and Atlas 5) and replace them with one (Vulcan).  It is going to shelve most of the subcontractors involved in those programs in favor of one, likely lower-cost chain.  This is not an easy maneuver.  People are going to be disaffected no matter how it is done, and not just at ULA.  Pulling this big switch off requires lots of money in the short term, but then again ULA's competitors are also spending lots of cash on new developments.

ULA's advantage is that it is highly proficient at this business.  It knows how to roll off success after success for year after year.  It knows its Pentagon customer better than any competitor.  That is where it must continue to excel.

 - Ed Kyle

Appreciate your perspective. 
Your last paragraph is all true, and these proficiencies aren't questioned by anyone. 

Unfortunately, the first paragraph is the business at which they must demonstrate proficiency to survive... downsizing, reducing to a lean supply chain, cutting three vehicles and developing one.  Spending lots of money to make the transition... and get costs down.  If they fall short on proficiency with these demands imposed by a competitive market, they won't have the opportunity to roll off success after success for year after year.

It's really an IF, THEN situation.
« Last Edit: 05/17/2017 12:55 AM by AncientU »
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Online oldAtlas_Eguy

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Re: United Launch Alliance joint-venture agreement expires
« Reply #22 on: 05/17/2017 02:20 AM »
This is worrying, what are the current predictions of the company's future?
Here's my perspective, for what it is worth. 

Downsizing is not fun, but in this case it is necessary to get down to fighting weight.  The company plans to shut down three launch vehicles (Delta 2, Delta 4, and Atlas 5) and replace them with one (Vulcan).  It is going to shelve most of the subcontractors involved in those programs in favor of one, likely lower-cost chain.  This is not an easy maneuver.  People are going to be disaffected no matter how it is done, and not just at ULA.  Pulling this big switch off requires lots of money in the short term, but then again ULA's competitors are also spending lots of cash on new developments.

ULA's advantage is that it is highly proficient at this business.  It knows how to roll off success after success for year after year.  It knows its Pentagon customer better than any competitor.  That is where it must continue to excel.

 - Ed Kyle

Appreciate your perspective. 
Your last paragraph is all true, and these proficiencies aren't questioned by anyone. 

Unfortunately, the first paragraph is the business at which they must demonstrate proficiency to survive... downsizing, reducing to a lean supply chain, cutting three vehicles and developing one.  Spending lots of money to make the transition... and get costs down.  If they fall short on proficiency with these demands imposed by a competitive market, they won't have the opportunity to roll off success after success for year after year.

It's really an IF, THEN situation.
They already reduced one supply chain the SRB contracts. Instead of two, one for Atlas and one for DIV there is now only 1 for both. It involves a change to the DIV to accommodate the different SRB. That is if they don't already have enough existing SRBs to fly out the planned last DIV medium.

Online Lars-J

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United Launch Alliance joint-venture agreement expires
« Reply #23 on: 05/17/2017 07:45 AM »
They already reduced one supply chain the SRB contracts. Instead of two, one for Atlas and one for DIV there is now only 1 for both. It involves a change to the DIV to accommodate the different SRB. That is if they don't already have enough existing SRBs to fly out the planned last DIV medium.

Isn't it the opposite that they are actually doing? Atlas V is being modified to use Delta IV solids, which will carry over to Vulcan.

It would make little sense to modify the Delta IV to use different boosters, since there are so few flights left.

Unless I am mistaken...

EDIT: my recollection seems right:
http://www.ulalaunch.com/ula-selects-orbital-atk-solid-boosters.aspx
(Although the boosters will not be the GEM-60 of the Delta IV but instead larger GEM-63?)
« Last Edit: 05/17/2017 08:08 AM by Lars-J »

Offline Chasm

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Re: United Launch Alliance joint-venture agreement expires
« Reply #24 on: 05/17/2017 11:03 AM »
Orbital ATK boosters are in use on both Delta II and IV and will replace the AJ-60A on Atlas V.

GEM-40 on Delta II, GEM-60 on Delta IV, GEM-63 on Atlas V.
Vulcan will use a stretched GEM-63XL.

On a catalog drawing drawing GEM-63 and GEM-63XL had the same mount points so there may or may not be another reduction in the future.

Offline baldusi

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Re: United Launch Alliance joint-venture agreement expires
« Reply #25 on: 05/17/2017 01:25 PM »
Downsizing is not fun, but in this case it is necessary to get down to fighting weight.  The company plans to shut down three launch vehicles...

Right now all of those vehicles are still flying, the slowdown in the government launch rate hasn't arrived yet, but they're already cutting a large percentage of their workforce.

Please remember that USG launches usually start at T-5 years. We are probably seeing, in part, the reduction on the 2020-3 manifest.

Offline Space Ghost 1962

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Re: United Launch Alliance joint-venture agreement expires
« Reply #26 on: 05/17/2017 06:11 PM »
Downsizing is not fun, but in this case it is necessary to get down to fighting weight.  The company plans to shut down three launch vehicles...

Right now all of those vehicles are still flying, the slowdown in the government launch rate hasn't arrived yet, but they're already cutting a large percentage of their workforce.

Please remember that USG launches usually start at T-5 years. We are probably seeing, in part, the reduction on the 2020-3 manifest.

Correct. People forget that its the accumulated expense ahead of the activity, paying for staffing in place that's the expense being reduced.

Also, when you've got competition (especially for USG contracts), you need to fit/function like your rival. What this might mean for ULA appearing against their rival, is a drastically reduced workforce that has to somehow learn to do multiple jobs per person that they didn't do before.

Online brickmack

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Re: United Launch Alliance joint-venture agreement expires
« Reply #27 on: 05/21/2017 05:26 AM »
If Boeing/ULA could have fitted Delta IV with GEM-63 (or any larger GEM), wouldn't they have already done it? Wouldn't have been much more expensive than GEM-60 and should give a nice performance boost (on a rocket with severely underperforming core and upper stage). Yet we've never heard this option discussed, and it wasn't included in the original design either. Adding additional SRBs, various engine upratings or replacements, moving to Al-Li tankage, densified propellants, ACES, etc etc have all been presented at various times as possible upgrade paths, but never new SRBs (which should be cheaper both to develop and build than any of that). I don't know what the reasoning is, but there must be some good explanation why not one single study I've found suggests it.

Offline russianhalo117

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Re: United Launch Alliance joint-venture agreement expires
« Reply #28 on: 05/22/2017 08:40 PM »
If Boeing/ULA could have fitted Delta IV with GEM-63 (or any larger GEM), wouldn't they have already done it? Wouldn't have been much more expensive than GEM-60 and should give a nice performance boost (on a rocket with severely underperforming core and upper stage). Yet we've never heard this option discussed, and it wasn't included in the original design either. Adding additional SRBs, various engine upratings or replacements, moving to Al-Li tankage, densified propellants, ACES, etc etc have all been presented at various times as possible upgrade paths, but never new SRBs (which should be cheaper both to develop and build than any of that). I don't know what the reasoning is, but there must be some good explanation why not one single study I've found suggests it.
GEM-63 did not exist as an option when ULA chose to consolidate and later wind down Delta programmes (DII and DIV). Aerojet being pushy and trying to takeover ULA led to ULA implementing cost cutting by handing over the latest AV solid contract to OA's in development GEM-63 family to replace AR's AJ-60 family. There are other reasons to.

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