SpaceX Could Steal $1 Billion in Business From Boeing and Lockheed Martin

February 19, 2018 – 11:51 am
For example, in September of last year, the Air Force awarded United Launch Alliance a contract worth 8.4 million to pay for "fiscal 2015 EELV launch capability, " ensuring that ULA would be ready and able to launch a rocket should the government so desire. Then, four months later, the Air Force gave ULA another contract - for $382.9 million this time, to pay for launch vehicle configuration on three rocket launches (one Delta IV and two Atlas Vs).

This ULA Atlas V rocket is the sum of its parts - one of which parts is a Russian-made RD-180 engine. Source: ULA.

That's $128 million per rocket, not counting the cost of the actual launch - and not counting the retainer. And if this sounds like a lot of money, it is. Because SpaceX can do the same job for less than $85 million.

At least, that's what SpaceX CEO Elon Musk told the U.S. Senate last year. Pointing to recent launch costs that averaged 0 million per rocket at ULA, Musk challenged an Air Force contract to hire ULA to conduct 36 space launches over the next five years, without giving SpaceX a chance to compete for the business. As Musk testified to the U.S.G Senate Appropriations Defense Subcommittee, SpaceX can do the same work for $100 million or less - saving taxpayers $11.6 billion over three dozen launches.

Turns out, the Air Force liked this idea. Earlier this year, the Air Force confirmed that rather than give all of its big launch contracts to ULA, as has been its practice, it will open up at least some "Evolved Expendable Launch Vehicle" (EELV) contracts to competitive bidding going forward. On Tuesday, the Air Force confirmed that it expects to have SpaceX "certified" to compete for these contracts by June.

What it means to investors
That's great news for taxpayers - potential savings of 74% or more on future U.S. government satellite launches. But here at The Motley Fool, we're more interested in how the Air Force's opening up government satellite launches to competitive bidding might affect investors' portfolios.


Source: www.fool.com

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