EELV Evolved Expendable Launch Vehicle
In May 1994, DoD's space launch modernization plan (known as the Moorman study) discussed the increasing hardware costs associated with DoD's medium- and heavy-lift launch vehicles, with particular emphasis on the heavy-lift Titan IV and its inefficient production rates. In addition, it discussed the manpower intensive aspects of launch system manufacturing and operations, also with particular emphasis on Titan IV, and the multiple launch complexes at Cape Canaveral and Vandenberg, the Air Force's two space launch ranges. The plan provided four options to alleviate these conditions:
- (1) sustain existing systems, including austere upgrades
- (2) evolve existing systems
- (3) develop a new expendable system
- (4) develop a new reusable system
DoD chose to pursue the second option as a cost-saving measure and to accommodate schedule opportunities when several satellite systems were to undergo design changes. In September 1994, the Congress provided the initial funds to develop a new family of medium and heavy-lift expendable launch vehicles evolved from existing technologies.
In November 1994, DoD developed an Evolved Expendable Launch Vehicle (EELV) implementation plan, stating that the program objective was to reduce total cost for medium and heavy-lift vehicle space launch. The plan summarized DoD's launch assets as including 11 launch pads, 5 launch teams, 3 launch vehicle production and processing industries, 2 launch ranges, and various support resources. It discussed an EELV program strategy to incorporate industrial competition, resulting in a single production contract that would both maximize common systems and components to reduce procurement costs, enhancing production rates, and decrease the number of launch complexes, launch crews, supporting requirements to reduce operation costs.
The Space & Missile System Center (SMC) released a Request for Proposal in May 1995, and four companies were awarded 15-month-long contracts on 24 August 1995 to elaborate their concepts for the EELV. The companies were: Alliant Techsystems Inc. of Magna, Utah, Boeing Defense and Space Group of Seattle, Washington, Lockheed Martin Technologies, Inc. of Denver, Colorado and McDonnell Douglas Aerospace of Huntington Beach, California. Each company's contract was valued at $30 million.
The guidelines for EELV development reflected recent reforms implemented by Air Force Materiel Command. Fewer detailed military standards and technical requirements were levied on the contractors. Instead, fundamental requirements were emphasized, and the contractors were encouraged to lay out the details themselves. On 18 October 1995, the EELV Program Manager, Mr. Robert Steele, briefed the program's guidelines during EELV Government Day. Among the many items covered in his presentation, Mr. Steele noted that the EELV Program Office (SMC/MV) would not provide design solutions.
Put simply, the Program Office would avoid technical leveling, technical transfusion of ideas or coaching. Unlike the Advanced Launch System (ALS), National Launch System (NLS), and Spacelifter efforts that never progressed past the study phase, the EELV initiative was designed to result in a real engineering and manufacturing effort with a family of bona fide vehicles at its conclusion. Affordability was the driving force behind the initiative, and Air Force Space Command hoped to reduce lifecycle costs between 25 and 50 percent below the $22.5 billion estimated for the then current generation of spacelifters. At a minimum, the government expected the EELV family to meet the reliability found in the current stable of medium and heavy spacelifters.
The initial phase of the EELV program, Low Cost Concept Validation (LCCV), was successfully completed in November 1996. The LCCV emphasized competition in preliminary designs and risk reduction demonstrations.
On 20 December 1996, two Phase I contractors, Lockheed Martin and McDonnell Douglas, were each awarded a $60 million contract to complete independent 17-month-long Pre-Engineering & Manufacturing Development studies (Phase II) for the EELV. The ultimate objective of the EELV program was to reduce space launch costs by at least 25 percent while improving the Defense Department's ability to meet "warfighter operability" requirements.
Boeing, having bought out McDonnell Douglas Aerospace in August 1997, proposed a new family of spacelifters based on a new Delta IV launch vehicle design. To create the Delta IV, Boeing planned to introduce a larger booster core equipped with a Rocketdyne RS-68 liquid hydrogen engine. A new upper stage based on the Single Engine Centaur design would be added along with varying numbers of new Delta III Graphite Epoxy Motors (GEMs) to handle a wide variety of medium class payloads. For heavier missions, three Delta IV core vehicles could be combined in a side-by-side arrangement similar to Lockheed Martin's Titan IV launch vehicle. Boeing intended to process the Delta IVs under an Integrate-Transfer-Launch (ITL) concept of operations that would not tie up the launch pad for extended periods of time. The Delta IVs would be launched from Complex 37.
At first, the government planned for these two contractors to compete for full scale development, but in 1997, it decided to keep two contractors over the life of the program because their products could be better sold to a larger commercial market than originally anticipated and because two available launchers would tend to maintain competition for individual launches.
In November 1997, the US Government announced the $1.6 billion contract that would have been awarded to the best contractor for the development, manufacture and deployment of medium and heavy EELVs would be awarded as two separate contracts to Boeing and Lockheed Martin in June 1998.
The Air Force announced it wanted both aerospace companies to invest their own money in the EELV program because there was a potential for substantial profits to be made by using EELVs to launch private communication satellites. The Air Force agreed to provide both Boeing and Lockheed Martin $500 million each for development costs associated with their respective EELV program, and both Boeing and Lockheed Martin agreed to pay any additional development costs.
On July 20, 1998, Boeing and Lockheed Martin submitted bids for 28 EELV contracts being awarded by the Air Force. The total value of the contracts was $2.03 billion. On October 16, 1998, based largely on price and risk assessment, Boeing was awarded 19 out of the 28 contracts, and Lockheed Martin received the other nine EELV contracts. Boeing received $1.38 billion, and Lockheed Martin received $650 million.
During the development phase, FY99 to FY02, the two contractors completed launch vehicle development, established manufacturing capabilities, constructed and modified launch site infrastructure and activated launch sites as Cape Canaveral Air Station, Florida, and Vandenberg Air Force Base, California.
EELV's innovative payload-to-launch vehicle integration design and standardization of booster cores earned the program office the 1999 Defense Standardization Program National Honorary Award.
Under the Development Agreements, the contractors completed engineering and manufacturing development of the launch vehicle system, launch pads, satellite interfaces, support infrastructure, as well as demonstrated that the system met all government requirements. The ILS contracts had been awarded to procure launch services for 28 Government missions between the two contractors (Boeing, 19; Lockheed Martin, 9) from 2002 - 2008.
Kenneth Branch and William Erskine, both residents of Cape Canaveral, Florida, were managers of Boeing's Evolved Expendable Launch Vehicle program, which was based in Huntington Beach, California, and had facilities in Cape Canaveral. Branch was a Lockheed Martin EELV engineer who in 1996 was recruited by Erskine, a Boeing EELV engineer, to bring proprietary Lockheed Martin EELV documents to Boeing. In exchange for the proprietary Lockheed Martin documents, Branch would receive employment at Boeing, as well as a higher salary. Branch left Lockheed Martin in January 1997 and began working at Boeing on Boeing's EELV project.
In mid-June 1999, Erskine told another Boeing employee that he had hired Branch because Branch, while still working at Lockheed Martin, came to Erskine with an 'under-the-table' offer to hand over the entire Lockheed Martin EELV proposal presentation to aid in Erskine's proposal work in exchange for a position at Boeing if Boeing won the United Sates Air Force EELV contract award."
Later in June 1999, a Boeing attorney assigned to interview Branch and Erskine regarding allegations that they possessed proprietary Lockheed Martin documents conducted a search of Erskine's and Branch's offices and, according to the affidavit, found a variety of documents marked "Lockheed Martin Proprietary/Competition Sensitive" in their offices.
In June 1999 Boeing informed Lockheed Martin and the Air Force that they had found a small amount of proprietary information with one of their employees and that it was not a particularly significant piece of data. Boeing sent a few pages of that data over to Lockheed Martin, and Lockheed Martin ultimately agreed that it was not very important.
In early August 1999, Branch and Erskine were terminated by Boeing. The wrongful discharge suit in Florida ultimately resulted in additional proprietary information being made known to Lockheed Martin.
The USAF EELV analysts determined that, had they known that Boeing EELV personnel had possession of proprietary Lockheed Martin EELV documents in 1997, they would have immediately suspended the competition and conducted a thorough investigation into whether the procurement competition should be terminated.
In September 2000, it was determined that softening in satellite launch demand no longer supported a need for two west coast launch providers. As a result, Boeing would continue development plans to provide launch services at both coasts, while Lockheed Martin would launch solely from the east coast, moving two of its originally awarded launches to Boeing. Both contractors would continue with Heavy Lift development and test programs, but as of the ILS contract, only Boeing had been awarded a heavy lift launch.
In 2002, upon learning about the loss of proprietary documents, Lockheed Martin alerted the Air Force, which, in turn, informed the Defense Criminal Investigative Service (DCIS). DCIS and the Air Force Office of Special Investigations (OSI) then launched an investigation into the theft and referred the case to U.S. Attorney Debra W. Yang for the Central District of California.
The extent of Lockheed Martin proprietary material in Boeing possession at the time of EELV Buy 1 source selection was extraordinary, approximately 25,000 pages. The quality of information was sufficient to provide great insight into Lockheed Martin's proprietary cost and pricing. Boeing was not forthcoming with the Air Force about the amount of Lockheed Martin data in its possession, and it took a period of approximately four years for them to provide them with all of it.
Air Force personnel familiar with the EELV competitive-bidding process eventually examined the Lockheed Martin's documents recovered from Branch's and Erskine's work spaces at Boeing. The investigation determined that:
- 141 documents, consisting of more than 3,800 pages, which appeared to belong to Lockheed Martin were recovered from the work spaces of Branch and Erskine in June 1999
- 36 of the documents were labeled "Lockheed Martin Proprietary or Competition Sensitive"
- 16 of the documents appeared to be related to the manufacturing cost of Lockheed Martin's EELV and, in the opinion of the USAF EELV staff, possession of these proprietary documents by a competitor could have had a "medium" or moderate chance of affecting the outcome of a competitive bid
- 7 of the documents appeared to be related to the manufacturing costs of the Lockheed Martin EELV and, in the opinion of the USAF EELV staff, possession of these proprietary documents by a competitor could have had a "high" or significant chance of affecting the outcome of a competitive bid
On 25 June 2003 Federal officials in Los Angeles charged the two former Boeing Company managers with conspiring to steal Lockheed Martin trade secrets concerning the EELV program for the United States Air Force. Kenneth Branch and William Erskine were each charged with conspiracy, theft of trade secrets and violating the Procurement Integrity Act.
In July of 2003, the Air Force suspended three Boeing integrated defense systems business units for unlawful possession of a competitor's proprietary information during the 1998 EELV source selection. The suspensions were issued against the Boeing Company's Launch Systems, Boeing Launch Services and Delta Program business units. These suspensions, the longest suspensions of a major defense contractor, effectively banned Boeing from competing for government launch contracts. In addition, the Air Force reallocated launches under an EELV launch contract which was awarded in October 1998, and was known as Buy 1. Under this reallocation, the total number of Boeing launches was reduced from 20 to 12, and those launches were awarded to Lockheed Martin. The Air Force also awarded three additional launches under the EELV Buy 2 procurement to Lockheed Martin. The estimate of the cost to Boeing from the reallocation of launches and the suspension was about $1 billion.
Of the 19 vehicles that were initially awarded to Boeing, only 7 had been ordered from Boeing. Generally speaking, the reason that the Air Force buys vehicles or orders these vehicles two years in advance of launch with the expectation that the contractor can then build it. Their build cycle, generally speaking, has been compatible with that two-year window.
Boeing had a clause in its contract that gave Delta IV the only West Coast launch capability. The Air Force ended Boeing's West Coast launch exclusivity, and permitted Lockheed Martin to develop a West Coast launch capability at Vandenberg Air Force Base. This would provide a second launch service capability on the West Coast for assured access to space. The Air Force planned to contract Lockheed Martin for the upgrade to Space Launch Complex 3 at Vandenberg in the same way that the service contracted to build pad 41 on the East Coast, namely Lockheed Martin would finance it, and the Air Force would, through either its own source or through a limited liability corporation, would lease services from that pad.
By mid-2004 program costs had increased over the approved 2002 program baseline estimate of $18.8 billion, resulting from the failure of the commercial market to materialize, additional access to space and mission assurance initiatives, and several other factors such as incorrect inflation assumptions and satellite weight growth. The original set of EELV launch prices were established at a time when both companies were planning on a very strong commercial marketplace, which would allow unit reductions in price. By that time the realities had changed. The commercial launch market was not robust and there was very little success in the commercial marketplace. In response to the reality by the contractors the costs for the program increased.
Furthermore, these cost increases triggered a requirement requiring the Secretary of Defense to certify that the EELV Program was critical to national security and that revised program cost estimates were reasonable. The certification process was completed on April 26, 2004, after the Secretary of Defense's certification group identified a potential cost increase of up to $13.2 billion. That figure differed from the $13.3 billion previously reported by the EELV System Program Office because it included some overlapping costs addressed in prior DoD acquisition reports and additional unrecognized costs such as the launch providers' infrastructure costs that would be incurred in FY05.
In late September 2004, as it seemed the Air Force might have been close to being able to lift the suspension on Boeing, new information surfaced in a rather rapid way. When Darleen Druyun was sentenced and her plea agreement was made public, in early October 2004, there were new revelations that came forth that required the Air Force to do some additional investigating.
On 4 March 2005 the Air Force announced plans to allow Boeing to bid on new rocket contracts after a two-year suspension. Boeing had been disciplined after the Air Force discovered the company stole documents from competitor Lockheed Martin. The Air Force wanted more companies to compete for upcoming contracts and said Boeing has improved its practice of ethics since the incident.
On 7 April 2005 it was announced that the Air Force would evenly split 24 satellite launch contracts between Lockheed Martin and Boeing under Buy 3. The government opted to split the launches, which may be worth $100 million each, to keep both companies healthy. The US Air Force planned to make sure one company was always available to launch satellites.
Buy 3 was not expected to be awarded until 2006, which would probably mean launches would likely start in 2008. There would be a significant number of launches acquired. It would probably be for a two or three-year period.
The EELV was reviewed as part of a larger Government Accountability Office report in March 2007. While the EELV program office had access to technology, design, and production maturity information, the data was treated as proprietary due to the commercial nature of the existing launch services contracts. Three launches occurred since the GAO's last assessment: one government, one NASA and one commercial bringing the total launches to 14. In May 2005, Boeing Launch Services and Lockheed Martin Space Systems announced an agreement to create a joint venture (United Launch Alliance, or ULA) that expected to combine production, engineering, test, and launch operations associated with US government launches of Boeing Delta and Lockheed Martin Atlas rockets. In October 2006, the Federal Trade Commission announced its acceptance, subject to final approval, of an agreement containing a consent order with Boeing, Lockheed Martin, and ULA.
To meet national security space needs, congressional mandates, and national space transportation policy requirements for assured access to space, the government had been sharing a level of risk with the launch providers through a new program strategy for EELV launches. Implemented in 2006, the strategy was expected to cover missions scheduled to launch starting in 2008. In 2005, the Air Force released requests for proposals for EELV launch services and EELV launch capabilities contracts. The Air Force awarded a cost plus award fee contract for launch capabilities to Lockheed Martin in February 2006 and to Boeing Launch Services in November 2006. The Air Force was at that time negotiating a firm fixed price contract with a mission success incentive with Lockheed Martin for EELV launch services. The launch services contract with Boeing was expected to follow.
As part of the proposed joint venture (ULA), the contractors expected to combine the Atlas V and Delta IV production at the Boeing plant in Decatur, Alabama, and engineering at the Lockheed Martin Facility in Denver, Colorado. The Federal Trade Commission provisionally accepted a consent order regarding the joint venture. The proposed consent order was placed on public record for 30 days and addressed ancillary competitive harms that DoD had identified as not inextricably tied to the national security benefits of the proposed joint venture between Lockheed Martin and Boeing Launch Services. The Federal Trade Commission set about reviewing public comments on the proposed consent order.
A 2006 congressionally mandated study on future launch requirements concluded that the EELV program could potentially satisfy the nation's military space launch needs through 2020. However, the study noted that it was important to revalidate the requirements for heavy lift capability, assured access to space, the RL-10 upper stage, and the use of the Russian-built RD-180 engines in parallel with cost and performance assessments. According to EELV program officials, the program office was continually engaged on these issues, which under the new contract structure and the ULA joint venture would be more easily addressed.
The US Air Force responded to the March 2007 Government Accountability stating that the program was transitioning from a commercial services program, with limited insight, to a more traditional government program with full cost and program oversight. According to the Air Force, the transition would be completed in 2007 when both providers were awarded the EELV launch services contracts.
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