Elon Musk's Space Exploration Technologies Corp. has engaged in a lobbying battle to push the Pentagon to open more space launches to competition. United Launch Alliance LLC (ULA), a joint venture of Boeing Co. and Lockheed Martin Corp., has held a near-monopoly on military and intelligence contracts since 2006.
Mr. Musk's SpaceX claims that it can launch a typical Pentagon satellite for under $100 million, compared with between $300 million and $380 million for ULA's Evolved Expendable Launch Vehicle (EELV), which has come under fire for cost overruns. SpaceX's core competency has always been low costs; its reusable booster rocket is much cheaper than a traditional rocket. Using such innovative technology, SpaceX now aims to reduce national military expenditure. Elon Musk's claims to low costs may be radical but he has earned enough credibility in the space of alternative technologies through Tesla's growing success for people to take him seriously.
In addition to cost, another stimulus for the Pentagon to open up military contracts to competition comes from concerns that rising tensions with Russia could leave some U.S. military and spy satellites grounded if ULA can't get spares or new rocket engines. This is because the ULA's EELV relies on Russian-made RD-180 engines to provide the main thrust for Atlas V rockets developed by Lockheed. The engines are supplied by RD Amross LLC, a joint venture between the Russian company NPO Energomash OAO and a unit of United Technologies Corp.
SpaceX is expected to secure regulatory approval this year to launch smaller military payloads, and the first contest with ULA could take place next year. The firm is developing a rocket for larger payloads that would allow it to pursue all available Pentagon contracts. Additionally, the company has made a series of successful orbital launches for NASA and has an international backlog of more than four dozen civilian and commercial launch contracts valued at about $5 billion total. Elon Musk is heading another company that is certainly on a growth trajectory and definitely one for investors to look out for.