Friday, May 13, 2016

How Elon Musk exposed billions in questionable Pentagon spending

Ten years after a joint operation of Boeing and Lockheed Martin was born, the FTC’s direst warnings have come true, along with outcomes even the skeptics did not predict.

By Matthew Nussbaum, Politico.com
05/13/16 11:31 AM EDT

Elon Musk’s SpaceX had to sue before it got access to the Pentagon — but now, as it promises to deliver cargo into space at less than half the cost of the military’s favored contractor, it has pulled back the curtain on tens of billions in potentially unnecessary military spending.

The entrenched contractor, a joint operation of Boeing and Lockheed Martin called the United Launch Alliance, has conducted 106 space launches all but flawlessly, but the cost for each is more than $350 million, according to the Government Accountability Office. SpaceX promises launches for less than $100 million.

Yet despite the potentially more cost-effective alternative, taxpayers will be paying the price for ULA’s contracts for years to come, POLITICO has found. Estimates show that, through 2030, the cost of the Pentagon’s launch program will hit $70 billion — one of the most expensive programs within the Defense Department. And even if ULA is never awarded another government contract, it will continue to collect billions of dollars — including an $800 million annual retainer — as it completes launches that were awarded before Musk’s company was allowed to compete. That includes a block buy of 36 launches awarded in 2013.

Meanwhile, ULA is under investigation by the Pentagon for possible corrupt bidding practices and is preparing to lay off 25 percent of its workforce. Its long-term viability is in doubt.

Even the Pentagon’s acquisition chief grants that the creation of ULA — a monopoly criticized by the Federal Trade Commission when it was formed at the government’s behest a decade ago — may have been a mistake.

(More here.)

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