Judge rules Russian engine purchases can continue
BY STEPHEN CLARK
Posted: May 8, 2014
A federal judge ruled Thursday that United Launch Alliance could resume Russian engine purchases, lifting an injunction prohibiting the rocket-maker from buying engines from Russia for the Atlas 5 rocket.
SpaceX did not explicitly request action to prevent ULA from purchasing RD-180 engines from Russia, but the company raised concerns money for the engines could benefit Russian deputy prime minister Dmitry Rogozin, who is charged with overseeing Russia's space and defense industries.
Rogozin was listed with other top Russian officials in sanctions announced by the White House in March outlawing business with certain individuals.
In its April 28 complaint submitted to the federal claims court, SpaceX claimed the Air Force was sending millions of dollars to an entity controlled by Russia and to an industry led by Rogozin, who is subject to sanctions.
The court has not ruled on the Air Force's sole-source procurement from ULA but issued the preliminary order April 30 halting engine purchases from Russia.
The temporary injunction was the first action taken by the court. The order barred ULA or its suppliers from making fresh purchases or payments to NPO Energomash or any entity subject to the control of Rogozin, who was sanctioned by the U.S. government in the wake of Russia's takeover of Crimea.
NPO Energomash is the Moscow-based builder of the RD-180 engine used on the first stage of the workhorse Atlas 5 launcher. The RD-180 engines are supplied to ULA by RD AMROSS, a Florida-based company jointly owned by NPO Energomash and United Technologies Corp.
U.S. military satellites, government spy payloads and NASA scientific probes regularly launch on Atlas 5 rockets.
Formed in 2006 by the merger of Boeing's Delta and Lockheed Martin's Atlas rocket programs, Colorado-based ULA said in a statement Thursday that a letter from the Treasury Department "makes clear that ULA's purchase of the RD-180 engines from our suppliers and partners, RD AMROSS and NPO Energomash, complies with the sanctions against Russia."
Judge Braden wrote the April 30 order would stand "unless and until" the court received the opinion from the Treasury, Commerce and State departments that the engine purchases do not contravene sanctions against Rogozin.
Representatives of the Treasury and State departments submitted letters to the court, writing they have not determined NPO Energomash is subject to restrictions listed in a March 17 executive order that sanctioned senior Russian officials. The Commerce Department sent a letter deferring to the opinion of Treasury officials.
"Therefore, to the best of our knowledge, purchases from and payments to NPO Energomash currently do not directly or indirectly contravene Executive Order 13661. We will inform you promptly through the Department of Justice should this situation change," a Treasury official wrote in a letter dated May 8.
Justice Department lawyers representing the U.S. government, which is named as the defendant in the SpcaeX suit, filed a motion Tuesday to dissolve the court's injunction stopping ULA's engine purchases from Russia.
The motion said the letters from the State and Treasury departments demonstrate that transactions with NPO Energomash do not violate sanctions against Rogozin.
Braden concurred and dissolved the injunction after a hearing Thursday.
"If the government receives any indication, however, that purchases from or payment of money to NPO Energomash ULS [United Launch Services, a ULA subsidiary], ULA, or the United States Air Force will directly or indirectly contravene Executive Order 13661, the government will inform the court immediately," Braden wrote.
SpaceX backed up its lawsuit in a statement Thursday: "The U.S. Court of Federal Claims has taken steps toward understanding whether United Launch Alliance's current sole-source contract violates U.S. sanctions by sending taxpayer money to Russia for the RD-180 engine.
"That question, combined with the others specifically raised in the SpaceX complaint, relating to the risks posed by dependence on Russian-made engines and the need to open competition for the Air Force space launch program, are timely and appropriate."
ULA disagreed, calling SpaceX's lawsuit "frivolous" and saying it "caused unnecessary distraction" of U.S. government officials and heightened tensions with Russia.
"SpaceX's actions are self-serving, irresponsible and have threatened the U.S.'s involvement with the International Space Station and other companies and projects working with the Russian state entities," ULA said in a statement.
"We continue to hope that SpaceX will revisit their underlying lawsuit and the merits of their case," ULA said. "The fact remains, even today SpaceX is not certified to launch even one mission under the block buy contract -- a contract that was authorized and announced more than two years ago, without objection by SpaceX, and is saving the U.S. taxpayers over $4 billion."
Air Force officials say the "block buy" of 36 rocket cores from United Launch Alliance saved $4.4 billion from the cost the Pentagon would have had to pay if it ordered rockets in smaller batches.
"A lot of people want to dispute that, and a lot of people want to reaccount for that money, but in fact from an Air Force budget perspective there's $4.4 billion in difference," said Gen. William Shelton, head of Air Force Space Command, in a congressional hearing in March.
SpaceX says it could execute most of the 28-launch allotment for 75 percent less cost than ULA.
The deal includes 36 rocket cores, but four of the launches will use the Delta 4-Heavy, which is powered by three cores each. SpaceX's Falcon 9 rocket is not powerful enough to launch those missions, plus some payloads which require strap-on solid rocket boosters on the Atlas 5 and Delta 4 launchers.
The Atlas 5 and Delta 4 were developed in a public-private partnership between the Air Force and industry in the 1990s under the Evolved Expendable Launch Vehicle program.
SpaceX has completed four successful launches of an upgraded version of its Falcon 9 rocket. The Air Force requires three successful flights of one variant of a launch vehicle for certification to launch the Defense Department's most critical national security satellites.
But myriad technical exchanges and engineering reviews have not been completed to fully certify the Falcon 9. The Air Force expects to finish those milestones by March 2015, said Lt. Gen. CR Davis, military deputy to the Air Force's head of procurement, in a report by Aviation Week.
Gen. Davis said SpaceX could bid for military launches now but would not win a contract without being certified by the Air Force.
Follow Stephen Clark on Twitter: @StephenClark1.
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