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Assessing the Impact of US Air Force National Security Space Launch Acquisition Decisions

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C O R P O R A T I O N BONNIE L. TRIEZENBERG, COLBY PEYTON STEINER, GRANT JOHNSON, JONATHAN CHAM, EDER SOUSA, MOON KIM, MARY KATE ADGIE Assessing the Impact of U.S. Air Force National Security Space Launch Acquisition Decisions An Independent Analysis of the Global Heavy Lift Launch Market For more information on this publication, visit www.rand.org/t/RR4251 Library of Congress Cataloging-in-Publication Data is available for this publication. ISBN: 978-1-9774-0399-5 Published by the RAND Corporation, Santa Monica, Calif. © Copyright 2020 RAND Corporation R® is a registered trademark. Cover: Courtesy photo by United Launch Alliance. Limited Print and Electronic Distribution Rights This document and trademark(s) contained herein are protected by law. This representation of RAND intellectual property is provided for noncommercial use only. Unauthorized posting of this publication online is prohibited. Permission is given to duplicate this document for personal use only, as long as it is unaltered and complete. Permission is required from RAND to reproduce, or reuse in another form, any of its research documents for commercial use. For information on reprint and linking permissions, please visit www.rand.org/pubs/permissions. The RAND Corporation is a research organization that develops solutions to public policy challenges to help make communities throughout the world safer and more secure, healthier and more prosperous. RAND is nonprofit, nonpartisan, and committed to the public interest. RAND’s publications do not necessarily reflect the opinions of its research clients and sponsors. Support RAND Make a tax-deductible charitable contribution at www.rand.org/giving/contribute www.rand.org Preface The U.S. Air Force (USAF) today stands at a crossroads with respect to its space vehi- cle launch acquisition strategy. For years, it has relied on Atlas V and Delta IV rockets to launch heavy National Security Space (NSS) payloads—typically those weighing 5,000 pounds or more—for defense and intelligence clients. However, the Atlas V is powered by Russian engines. Under U.S. law, the USAF is prohibited after 2022 from purchasing rockets with engines designed or manufactured in Russia. Moreover, the Delta family will be retired from service over the next few years. Despite these retire- ments, the USAF is nevertheless required to sustain at least two viable launch vehicle providers for NSS payloads, and those payloads must be launched from U.S. soil. With 30-plus unprocured NSS launches forecasted for the 2022–2025 period and replace- ment launch vehicles still in development, the USAF’s ability to fulfill vital NSS mis- sions has come under substantial congressional scrutiny. The USAF asked RAND Project AIR FORCE to independently analyze the heavy lift launch market to assess how decisions the USAF might make in the near term could affect domestic launch providers and the market in general. The research reported here was commissioned by the Air Force Space and Missile Systems Center and conducted within the Force Modernization and Employment Program of RAND Project AIR FORCE as part of a fiscal year 2019 project entitled Space Launch Market Research and Assessment. The intended audience for this report includes the U.S. Department of Defense, USAF leader- ship, and the U.S. Congress. RAND Project AIR FORCE RAND Project AIR FORCE (PAF), a division of the RAND Corporation, is the U.S. Air Force’s federally funded research and development center for studies and analyses. PAF provides the Air Force with independent analyses of policy alternatives affecting the devel- opment, employment, combat readiness, and support of current and future air, space, and cyber forces. Research is conducted in four programs: Strategy and Doctrine; Force Mod- ernization and Employment; Manpower, Personnel, and Training; and Resource Manage- ment. The research reported here was prepared under contract FA7014-16-D-1000. Additional information about PAF is available on our website: www.rand.org/paf/ This report documents work originally shared with the U.S. Air Force on July 9, 2019. iii Contents Preface ................................................................................................. iii Figures .................................................................................................vii Tables .................................................................................................. ix Summary .............................................................................................. xi Acknowledgments ...................................................................................xv Abbreviations ....................................................................................... xvii CHAPTER ONE Introduction .......................................................................................... 1 Launch Capability and National Security .......................................................... 2 Two Launch Markets: Global Commercial and NSS-Certified Launch ........................ 5 National Investments in Improving Heavy Lift Launch Capabilities ........................... 7 National Investments in Launch Capability Affect the Global Commercial Launch Market .............................................................................................. 8 Understanding the Addressable Commercial Launch Market ...................................11 CHAPTER TWO Understanding U.S. National Security Space Launch .......................................15 Current Launch Vehicles Competitive in the Heavy Lift Launch Market .....................15 Near-Term Need for U.S. NSS-Certified Providers of Heavy Lift Launch ....................16 Future Launch Vehicles Planned to Be Competitive in the Heavy Lift Launch Market .....19 Status of Efforts to Certify Providers for NSS Launch .......................................... 20 CHAPTER THREE Understanding the Addressable Commercial Launch Market ..............................25 Dynamics of Supply in the Addressable Commercial Launch Market .........................25 Dynamics of Demand in the Addressable Commercial Launch Market ...................... 28 RAND’s Forecast of Global Demand for Heavy Lift Launch Services Addressable by U.S. Firms .....................................................................................35 Factors Commercial Buyers Consider when Selecting a Launch Service Provider ........... 38 Factors Launch Service Suppliers Consider When Assessing Competition in the Market .. 40 v vi Assessing the Impact of U.S. Air Force National Security Space Launch Acquisition Decisions CHAPTER FOUR Strategic Choices Faced by U.S. Heavy Lift Launch Providers ............................ 43 Strategy A: Specialize in Commercial Heavy Lift Launch Only ................................45 Strategy B: Specialize in Commercial Heavy Lift Launch but Maintain Availability for NSS Launch ..................................................................................45 Strategy C: Specialize in Nonaddressable Heavy Lift Launch .................................. 46 Strategy D: Diversify Launch Vehicle Portfolio .................................................. 46 Evidence of Strategic Choices in the Heavy Lift Launch Market ...............................47 The Number of U.S. Firms the Launch Market Can Support Is Dependent on Firms’ Strategic Choices ................................................................................47 CHAPTER FIVE Assessing the Impact of USAF NSS Launch Acquisition Decisions on the NSS Market ......................................................................................49 Supply Uncertainties ................................................................................. 50 Demand Uncertainties ...............................................................................52 Significant Risk of Supply Shortages, Beginning in 2022 ...................................... 54 Characterizing the Risk of Insufficient Supply on U.S. Warfighters ...........................55 CHAPTER SIX Assessing the Impact of USAF NSS Launch Acquisition Decisions on the Global Heavy Lift Launch Market ..........................................................59 U.S. Firm Market Share Is Expected to Drop as Arianespace and Russia Field New Launch Vehicles Better Suited to Heavier Launch.................................... 60 Supporting Three Versus Two Providers May Reduce the Probability of Additional Nations Entering the Market but May Accelerate Eventual U.S. Firm Consolidation .....................................................................................61 Factors USAF Should Consider When Deciding Whether to Support Two Versus Three U.S. Launch Service Providers ..........................................................63 CHAPTER SEVEN Observations and Recommendations ............................................................67 Number of U.S. Launch Service Providers the Global Heavy Lift Launch Market Can Support ......................................................................................67 Impact of Near-Term Acquisition Decisions ...................................................... 68 Risks Identified by Our Study .......................................................................69 Recommendations for the USAF ....................................................................69 APPENDIXES A. Data Sources ......................................................................................71 B. Methodology ....................................................................................
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