SpaceX Launch Contract With U.S. Air Force Reduced Costs by 40%

  • Reusable rockets provide pivotal savings for missions
  • Musk's company awarded $82.7 million pact; 1 of 2 bids

Space Exploration Technologies Corp.’s $82.7 million contract to launch a satellite for the U.S. Air Force gives Elon Musk’s closely held company military revenue to go with what it earns serving NASA and the satellite industry -- and saves the U.S. government millions.

QuickTake Space Taxis

“This allows the government to save taxpayer dollars while increasing access to space,” said Air Force Lieutenant General Samuel Greaves, during a press conference Thursday. “The price was 40 percent cheaper than government estimates for previous missions.”

SpaceX aims to drive down costs by reusing the first stage of its Falcon 9 rocket. Earlier this month, it landed one on a drone ship for the first time -- an important step toward re-launching on a regular basis. When asked if the Air Force would consider flying the mission on a re-used first stage, Greaves declined to comment.

This contract will include launch-vehicle production, mission integration, and launch operations for a global positioning system satellite. The Hawthorne, California-based company is expected to conclude the work by July 31, 2018, the Department of Defense said Wednesday in a statement. The U.S. received one other bid, but Greaves declined to say who submitted it.

New Competition

United Launch Alliance, a joint venture between Boeing Co. and Lockheed Martin Corp., had been the sole supplier of sensitive satellite launches, a market estimated by the U.S. Government Accountability Office to be worth about $70 billion through 2030.

SpaceX sued the Air Force for the right to compete, and the two parties ultimately settled. In May 2015, SpaceX won Air Force certification for national security launches, breaking ULA’s decade-long hold. ULA has said that the terms of the contest kept it from submitting a qualifying bid. The Boeing-Lockheed company charges $160 million or more for launches of its Atlas V rocket, powered by Russian-made engines, according to Teal Group estimates. The next competitive bid will be in June.

“Our relationship with SpaceX is outstanding,” said Greaves. “I believe we’re working through issues together as we continue to do with United Launch Alliance. SpaceX continues to demonstrate successful, positive performance and that leads to increased confidence on both sides.”

Musk, who is also the chief executive officer Tesla Motors Inc., founded SpaceX in 2002 with the goal of revolutionizing spacecraft and making interplanetary travel possible. SpaceX plans to send an unmanned Dragon spacecraft to Mars as soon as 2018.

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