DEPUTY
SECRETARY OF
DEFENSE
1010
DEFENSE PENTAGON WASHINGTON
DC
20301-1010
The Honorable John McCain Chairman Committee on Armed Services United States Senate Washington, DC 20510 Dear Mr. Chairman:
J N
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Thank you for your December
8
2015, letter regarding the Evolved Expendable Launch Vehicle (EEL V) Program. I am responding on behalf
o
Secretary Carter. The Department is committed, as I know you and the Committee are, to ensuring assured access to space for the United States. That access should ideally be provided by commerciallyviable, competitive, domestic launch service providers, without the use
o
Russian engines. Furthermore, the Department strongly desires competition between launch service providers as a way
o
controlling cost and spurring innovation. We have already seen significant savings derived from just the mere fact
o
impending competition. We therefore view competition as the key to our success and dominance in space now and for the future. However, irrespective
o
the launch engine or provider, reliable launch capability remains a prerequisite for all
o
our critical national security space capabilities including global awareness, communications, strategic missile warning and indications, and position, navigation, and timing information vital to land, air, and sea operations. History proves that launch service cannot be taken for granted. You may recall a string
o
launch failures in the late 1990's that resulted in the loss
o
three national security payloads and more than 5.0 billion worth
o
hardware. At that time, national security launches were suspended for nearly eight months while failure investigations were conducted. This experience demonstrated the importance
o
having multiple pathways to space. As such, the Department's number one priority in space launch is Assured Access to Space, as codified in
10
U.S.C. § 2273. This imperative requires that we preserve redundancy in our launch system by maintaining access to two highly reliable launch systems. At the same time, the Department recognizes that we need to end our current dependency on Russian engines
as
quickly as possible. Consistent with our plan to transition away from the use
o
Russian RD-180 engines, the Department intends to work with the commercial launch industry through tailored public-private partnership agreements that will ensure the Department has at least two viable launch service providers for the foreseeable future. Our Fiscal Year (FY)
201
7 budget request will reflect this approach, which we believe is the most economical and quickest way
o
removing the dependency on the RD-180. The results
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our requests for information to industry confirm the viability
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this approach. Developing a specific propulsion system or engine would, in all likelihood, only benefit one launch service provider and will likely be more expensive than our planned approach. We plan to release draft requests for proposal (RFPs) for public private-partnership arrangements to industry for comment in the next few months.
 
In the meantime, due to congressional limitations placed on program funding and in order to provide for technical progress on future propulsion systems, we are in the process
of
awarding multiple research and development Other Transaction Agreements (OTAs) designed to mature the rocket propulsion system (engine) technology base. Two OT As for prototype systems have been awarded already and more will be awarded shortly using rocket engine development appropriations. We expect that some
of
this work will transition into the launch service provider public-private partnership arrangements we intend to award in FY 2017. To avoid transition delays and to introduce new domestic launch capabilities without the RD-180 engine as soon as possible, the Department must shift from propulsion development to launch capability development as soon as possible. Accordingly, the Department would greatly appreciate your committee's support for our planned launch service development activities. We do not believe that our space launch capability can realistically transition completely
off
of
the RD-180 prior to the 2021-2022 timeframe. Therefore, the Department has continued to seek to preserve our assured access to space even
if
doing so requires the use
of
RD-180 engines, subject to any restrictions placed in law. Furthermore,
if
it is deemed necessary in order to maintain two viable sources
of
launch services, sole source allocation
of
some launches will be one
of
the options examined. We would need to be confident an allocation was required, and it would be the minimum number
of
launches required to keep a second launch service provider viable during the transition period. With this as background, your letter raised a number
of
serious concerns. The primary one centered on the purported reasons underlying the publicly announced decision by the United Launch Alliance L.L.C. (ULA) to decline to submit a proposal in response to a competitive RFP issued on September 30, 2015, by the U.S. Air Force (Air Force) for the launch
of
the Global Positioning System Satellite
111-2
(GPS
111-2 .
ULA s
decision not to submit a proposal was based on its internal business and management deliberations, and the Department has no way to compel ULA to bid. Nevertheless, your letter mentioned several reasons that you understand ULA gave for not proposing and asked for
DoD s
views
ofULA s
ability to continue to perform its current space launch service contract and compete for future contracts. Our responses to the specific points identified in your letter are set forth below. Your letter questioned
ULA s
claim that it could not submit a proposal that complied with the RFP because it did not have the cost accounting systems needed to certify that funds from other government contracts would not benefit the GPS III-2launch mission. The GPS
111-2
launch service RFP included a certification requirement that, except for a portion
of
the allowable costs associated with the EELV Launch Capability (ELC) line item under
ULA s
current sole source space launch service contract, none
of
the costs
of
the effort required in the performance
of
[the GPS
111-2]
launch service contract will be charged to any other Government contract. This was to provide assurance that no potential offeror, including ULA, had an unfair competitive pricing advantage. We disagree with any statements made by ULA that it did not have the accounting systems in place needed to make this certification. The DoD and Air Force met with ULA several times, both before and after the solicitation was issued, regarding the use
of
the certification provision and
ULA s
accounting treatment
ofELC
costs. We have always contended that ULA had the ability to provide the required certification, and believe that ULA would now be willing to make this certification, presuming it will be a requirement in future EEL V competitions.
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