Boeing-Lockheed Wins End to Ban on Russian Rocket Engines

A Boeing Co (BA).-Lockheed Martin Corp. (LMT) venture that launches satellites for the U.S. military won an end to a ban on buying Russian rocket engines as a federal judge said the purchases don’t violate sanctions stemming from Russia’s annexation of Crimea.

U.S. Court of Federal Claims Judge Susan Braden in Washington lifted the temporary order today, sidelining an issue that arose from an April 28 lawsuit by Elon Musk’s Space Exploration Technologies Corp. The company, claiming the Air Force illegally shut it out of the military launch business, is asking Braden to reopen bidding for the contracts.

While SpaceX didn’t ask Braden to block purchases of the Russian technology, its court filings highlighted links between rocket-engine maker NPO Energomash and Russian Deputy Prime Minister Dmitry Rogozin, who heads the country’s defense and space industries and is subject to U.S. sanctions.

Braden, who brought up the sanctions issue herself with her April 30 injunction, asked for opinions from the Treasury, State and Commerce departments regarding the rocket sales. Treasury’s sanctions unit reported May 6 that transactions with NPO Energomash “currently do not directly or indirectly contravene” sanctions against Rogozin.

Braden, accepting the views expressed in the three departments’ letters, ordered the government to report to her if the sanctions status of the transactions changes.

The Justice Department was joined by Boeing-Lockheed Martin joint venture, called United Launch Alliance, in seeking to have the injunction lifted. While the lawsuit is against the U.S., the judge allowed ULA to get into the case.

Sanctions Compliant

The information Braden received makes clear that the relationship “complies with the sanctions against Russia,” Jessica Rye, a spokeswoman for ULA, said in an e-mailed statement.

Emily Shanklin, a spokeswoman for SpaceX, didn’t reply to an e-mail requesting comment on the ruling.

SpaceX argued in a court filing that Treasury’s assessment was unpersuasive because “rather than make a determination one way or the other, Treasury’s letter only states that ‘as of today’ they have not yet done so,” according to a company court filing yesterday.

In urging that the ban remain in place, Hawthorne, California-based SpaceX said in court papers that Braden “raised obvious questions” about possible sanctions violations.

Captain Matthew Stines, an Air Force spokesman, didn’t immediately respond to an e-mailed request for comment on the ruling.

SpaceX, saying in its complaint it seeks only a chance to compete against a United Launch Alliance “monopoly,” asked the judge to order the Air Force to allow “full and open competition” for launch projects.

Competition for military satellite launches, which have an estimated value of $70 billion through 2030, could save taxpayers more than $1 billion a year, according to Musk.

Closely held SpaceX already provides launch services for U.S. agencies, including NASA, and is seeking Air Force certification to launch satellites.

The case is Space Exploration Technologies Corp. v. U.S., 14-cv-00354, U.S. Court of Federal Claims (Washington).

To contact the reporter on this story: Andrew Zajac in Washington at azajac@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net Fred Strasser

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