McCain rejects Pentagon push for more Russian rocket engines

By Andrea Shalal
U.S. Defense Secretary Ash Carter speaks at a news conference at the Pentagon in Washington May 7, 2015. REUTERS/Yuri Gripas

By Andrea Shalal

WASHINGTON (Reuters) - U.S. Senate Armed Services Committee Chairman John McCain on Wednesday rejected a request by U.S. officials for changes in federal law to let the two largest U.S. arms makers use more Russian rocket engines to compete for military satellite launches against privately held SpaceX.

McCain’s comments reflect frustration among some lawmakers about the Pentagon’s failure to halt purchases of the RD-180 Russian engines after Russia’s annexation of Crimea.

As SpaceX becomes a potential competitor to current monopoly launch provider, United Launch Alliance (ULA), a joint venture of Lockheed Martin Corp and Boeing Co , billions of dollars of orders are at stake and both sides are lobbying lawmakers hard.

U.S. Defense Secretary Ash Carter and Director of National Intelligence James Clapper urged McCain in a letter dated May 11 to amend federal law so the Pentagon can retain "assured access to space". This is a legal requirement that mandates availability of two satellite launch vehicles so the U.S. military can always get satellites into space, even if one of the rockets is grounded due to a catastrophic failure.

McCain said the letter ignored NASA's role in providing assured access to space, and the law did not prevent NASA from continuing to use the Russian rocket engines. That meant NASA could always step in to help in the event of a crisis, he said.

"What Section 1608 does is prevent over $300 million of precious U.S. defense resources from subsidizing Vladimir Putin and the Russian military industrial base," he said.

McCain, whose committee is marking up the 2016 defense authorization bill this week, has raised concerns about extending use of the Russian engines amid reports that Russia is benefitting from inflated prices for the engines.

The letter and McCain's terse response are the latest twists in the drama involving ULA and Space Exploration Technologies, or SpaceX, set up by PayPal cofounder and Tesla Motors CEO Elon Musk.

The Air Force has said it expects to certify SpaceX to compete for some military and spy satellite launches by June.

The current dispute centers on a clause in the 2015 defense authorization law banning use of Russian engines that were not paid for before Russia's annexation of Crimea last year.

The Air Force - and now Pentagon leaders - have asked Congress to change the law to include engines that ULA had ordered, but not paid for, at that time.

ULA is seeking the relief because it is phasing out most of its U.S.-powered Delta 4 rockets because they are too costly, and its new Vulcan rocket won't be ready until 2022 or 2023.

The House Armed Services Committee has already proposed a change to Section 1608 of the 2015 National Defense Authorization Act to allow ULA to use more Russian engines.

Air Force Secretary Deborah James last month said changing the law would allow ULA to compete against SpaceX for 18 of 34 launches between 2015 and 2022, versus just five launches.

Carter and Clapper said that even if the Air Force certifies SpaceX soon, losing access to the Atlas 5 and Delta 4 rockets could leave the Air Force with "a multi-year gap where we have neither assured access to space nor an environment where price-based competition is possible."

ULA says the proposed change would preserve meaningful competition and avert a potential gap in capability.

SpaceX executives argue ULA should have focused long ago on lowering the cost of its Delta 4 rockets.

(Reporting by Andrea Shalal; Editing by Chizu Nomiyama and Andrew Hay)