Engineering Exec Departs ULA After SpaceX Comments

In this handout provided by the National Aeronautics and Space Administration (NASA), the United Launch Alliance Atlas V rocket with NASA's Magnetospheric Multiscale (MMS) spacecraft onboard launches from the Air Force Station Space Launch Complex 41 on March 12, 2015 in Cape Canaveral, Florida.
Photograph by NASA/Getty Images

A top executive at United Launch Alliance, a joint venture between Lockheed Martin (LMT) and Boeing (BA), is no longer in his post after commenting on ULA’s inability to compete with competitor SpaceX.

Brett Tobey, vice president of engineering at ULA, told a group of students at the University of Colorado-Boulder on Tuesday that the company can’t compete with newcomer SpaceX on price.

According to Tobey, ULA’s corporate structure isn’t well-adapted to survive in the so-called “new space” economy. Elon Musk and SpaceX have changed the game, he continued, and it’s not immediately clear how ULA could cut costs enough to compete. He also suggested it wouldn’t hurt the legacy space launch giant to capture some of SpaceX’s cool.

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Speaking candidly to students about the challenges of being incumbent in a rapidly-transforming industry, Tobey broke down the uphill battle the rocket maker faces and the changes it will have to make to remain viable.

Never mind that much of what Tobey said is generally accepted by the commercial space industry to be obviously true. By Wednesday night, Tobey had submitted his resignation. Furthermore, ULA had disavowed his comments.

“The views, positions and inaccurate statements Mr. Tobey presented at his recent speaking engagement were not aligned with the direction of the company, my views, nor the views I expect from ULA leaders,” said ULA CEO Tory Bruno, in a statement. “Mr. Tobey’s resigned his position at ULA effective immediately.”

What likely got Tobey into trouble with the rest of the ULA brass was a fairly explicit admission as to why the company refused to bid in a December competition for Air Force contract to launch a GPS III satellite in 2018.

The competition was the first U.S. defense-related launch contract for which SpaceX was allowed to compete. At the time, Bruno said that ULA could not submit a compliant bid because of changes to the contract requirements and restrictions Congress had placed on the import of the Russian RD-180 engines that power its Atlas V rockets. Yet, some saw it as a way to strong-arm Congress into lifting those restrictions.

Tobey offered a different explanation on Tuesday, which was that ULA simply couldn’t compete with SpaceX on cost. “ULA opted to not bid that,” he revealed, adding later, “We saw it as a cost shootout between us and SpaceX. So now we’re going to have to figure out how to bid these things at a much lower cost.”

Tobey went on to explain in some detail that while SpaceX can offer space launches for something like $60 million, the lowest ULA can offer is closer to $125 million. If the company loses an $800 million annual subsidy it receives to maintain on-demand launch-readiness—money that SpaceX does not receive—the cost of a ULA launch is more like $200 million, Tobey explained.

This cost disparity is well-understood by both industry and government, and it is the primary existential threat to United Launch Alliance at the moment. (The RD-180 engine ban is another.)

But as ULA moves ahead with plans to develop and build its newer, cheaper “Vulcan” rocket as well as a made-in-USA rocket engine to power it, the company has avoided openly talking about just how difficult it’s going to be to turn a one-time monopoly with high built-in overhead into a lean, low-cost option that can compete with SpaceX on cost.

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Tobey also talked a bit of trash about Senator John McCain’s relentless campaign to keep the RD-180 engine ban—a response to Russia’s invasion of Crimea two years ago—in place. He also weighed in on which contractor would likely win an ongoing competition to supply ULA with a new homegrown rocket engine to supplant the now-banned RD-180. In the latter case, Tobey used a somewhat awkward metaphor to describe the chances of Aerojet-Rocketdyne’s AR-1 engine beating out Jeff Bezos’ Blue Origin and its BE-4 engine as slim.

“Compare it to having two fiancées, two possible brides,” Tobey suggested. “Blue Origin is a super-rich girl, and then there is this poor girl over here, Aerojet Rocketdyne. But we have to continue to go to planned rehearsal dinners, buy cakes and all the rest with both. We’re doing all the work on both, and the chance of Aerojet Rocketdyne beating the billionaire is pretty low. Basically we’re putting a whole lot more energy into BE-4 for Blue Origin.”

That last point is also well-understood within the industry. Tobey didn’t say anything that rings patently untrue or even anything that would be particularly controversial if he hadn’t said it publicly to a room full of people—at least one of whom was recording his remarks.

But in speaking so candidly, he managed to cross his CEO and potentially anger both a powerful U.S. Senator and a ULA contractor. That’s maybe not the best way to keep one’s job, which is something else that probably doesn’t need to be said out loud.

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