[CRS Issue Brief for Congress]

93062: Space Launch Vehicles: Government Requirements and Commercial Competition

Updated November 14, 1996

David P. Radzanowski and Marcia S. Smith
Science Policy Research Division





U.S. Launch Vehicle Policy
Clinton Administration National Space Transportation Policy
U.S. Launch Vehicle Programs
Space Shuttle
Future Launch Vehicle Development Programs
DOD: Evolved Expendable Launch Vehicle (EELV) Program
NASA: Reusable Launch Vehicle (RLV) Program
Space Shuttle Safety and Upgrades
Foreign Competition
Facilitation of the U.S. Commercial Launch Services Industry



Since the space shuttle Challenger accident, the United States has been reassessing its launch vehicle capabilities and needs for placing military, civilian, and commercial satellites into orbit. The United States has two types of launch vehicles: those that can be used only once ("expendable launch vehicles" or ELVs) and the reusable space shuttle. There currently are five families of U.S. ELVs; from smallest to largest, they are the newcomer Pegasus (built by Orbital Sciences Corporation), Scout (Loral Vought Systems), Delta (McDonnell Douglas), Atlas and Titan (Lockheed Martin). The U.S. space shuttle is the only operational reusable launch vehicle in the world.

In the 1970s, the United States decided that once the space shuttle was operational, all the ELVs except Scout would be phased out of use on the basis that the shuttle would be more economical than ELVs. In the early 1980s, production lines for the Delta and Atlas began to close down, although in 1984 the Air Force decided to develop a new version of Titan to "complement" the space shuttle and assure that the Department of Defense (DOD) could place satellites in orbit in the event the space shuttle was grounded.

DOD's concerns proved well founded following the Challenger tragedy in 1986, which ended shuttle flights for 32 months. In the wake of Challenger, U.S. policy changed to support a "mixed fleet" approach using both the shuttle and ELVs. DOD initiated a "Space Recovery Plan" for getting its satellites in orbit as expeditiously as possible, and assuring access to space in the future. In addition to the new version of Titan, it ordered new versions of the Delta and Atlas. Both DOD and NASA continue to study the need for new launch vehicles using more advanced technology and/or capable of lifting heavier objects into space.

Interest in facilitating the emergence of a U.S. commercial space launch industry, begun before Challenger, blossomed with the change in policy. Congress and the White House have taken steps to help commercial space launch services companies, for example, by requiring NASA to procure commercial launch services rather than the rockets themselves, which then are launched by the commercial company rather than the government, and by indemnifying launches. The main competitor to U.S. companies for commercial launch services is Europe's Arianespace, which launches the Ariane ELV. China, Russia, and Ukraine also offer commercial launch services, and Japan may do so in the future. Deciding whether to allow U.S.-made satellites to be exported to other countries for launch intermixes technology transfer, trade, and ballistic missile proliferation issues.

Among the issues facing the 104th Congress are: the use of foreign launch vehicles for U.S.-built satellites, what else could or should be done to facilitate the U.S. commercial ELV industry, the development of future U.S. launch systems and technology, and space shuttle safety and privatization. Given current budget constraints, issues relating to the space program and balancing funding between NASA and other national priorities are expected to be difficult to resolve.


On November 12, NASA cleared the space shuttle Columbia for launch on November 15 after deciding that heat damage to insulation on a solid rocket booster used on the most recent shuttle launch is not a safety threat. The problem was traced to processing of the composite material used for the insulation. Engineers determined that even with the problem the insulation would have protected to booster's nozzle longer than the burn time for the booster.


U.S. Launch Vehicle Policy

The National Aeronautics and Space Administration (NASA) was created in 1958 to conduct U.S. civilian space activities. Military space activities are conducted by the Department of Defense (DOD). During the early part of the space program, both agencies developed launch vehicles to satisfy their requirements. DOD developed the Atlas, Delta, and Titan families of launch vehicles from ballistic missile technology; NASA developed Scout and Saturn (the Saturn, used to send Apollo crews to the Moon, are no longer produced). A commercial company has developed a new air-launched vehicle, Pegasus. All these launch vehicles can only be used once, and hence are called Expendable Launch Vehicles (ELVs). Each version has a different capability to put satellites in orbit. From the least to the most capable, they are Pegasus, Scout, Delta, Atlas, and Titan. Government and commercial users utilize whatever vehicle they need based on the size, weight, and destination of the spacecraft, not on who sponsored the launch vehicle's development.

In 1972, President Nixon approved NASA's plan to create a reusable launch vehicle, called the space shuttle, and directed that it become the Nation's primary launch vehicle, replacing all the ELVs except Scout. This would make NASA and DOD dependent on a single launch vehicle; but, the resulting high launch rate for the shuttle was to significantly reduce the cost per flight. The shuttle was first launched in 1981, and was declared operational in 1982. The phase-out of the ELVs began; but, in 1984, concerned about having "assured access to space" if problems developed with the shuttle, the Air Force successfully argued that it needed a "complementary" ELV as a backup to the shuttle and initiated what is now known as the Titan IV program. Production lines for the Delta and Atlas were closed down, and it was expected that only the shuttle, Scouts, and Titan IVs would be in use by the end of the 1980s.

After 24 successful missions, the shuttle program suffered tragedy on January 28, 1986, when the space shuttle Challenger exploded after launch. In addition to the human loss, the accident deeply affected U.S. space launch policy, and demonstrated the vulnerability of relying too heavily on a single system. Many military and civilian satellites had been designed specifically to be launched on the shuttle, and could not have been transferred to ELVs even if they were not already being phased out. The few remaining ELVs had their own problems in 1986. A Titan exploded in April and a Delta failed in May, which also grounded Atlas because of design similarities. As a result of these failures, U.S. policy has been significantly revised from primary dependence on the shuttle to a "mixed fleet" approach. The country once again has a wide variety of launch vehicles from which to choose. The shuttle will be used principally for missions that require crew interaction, while ELVs will be used for other spacecraft. President Reagan also decided that commercial payloads could be flown on the shuttle only if they are "shuttle-unique" (capable of being launched only by the shuttle) or if there are special foreign policy considerations.

Since 1983, the White House and Congress have taken steps to facilitate the nascent U.S. commercial launch services companies. NASA's marketing of the space shuttle to commercial users had been viewed as a major obstacle to their success (the companies argued that the government was subsidizing shuttle launch prices). Removing the shuttle as a competitor to other launch services and other governmental actions (such as requiring NASA to purchase launch vehicle services, rather than launch vehicles) have helped U.S. launch services companies, although the Europeans already are strong competitors, the Chinese have won a few launch contracts, and Russia and Japan are viewed as potential threats. Congress continues to show interest in steps it could take to further assist U.S. commercial launch services companies.

Clinton Administration National Space Transportation Policy

On August 5, 1994, the Clinton Administration released a new National Space Transportation Policy. The policy has a two-track strategy of (1) maintaining and upgrading the current fleet of ELVs, and (2) investing R&D resources in developing and demonstrating next generation reusable space launch systems. Under the policy, DOD is to assume the lead responsibility for improvement and evolution of current expendable launch vehicles. NASA is to upgrade the space shuttle system as necessary and is to assume the lead responsibility for technology development and demonstration for a next generation reusable space transportation system, such as the SSTO concept.

The policy also sets guidelines for the use of foreign launch systems and components, the use of excess ballistic missile assets for space launch, and encourages an expanded private sector role in space transportation R&D. Unless exempted by the President or designee, U.S. government payloads will be launched by U.S. manufactured launch vehicles. The policy does not apply to the use of foreign launch vehicles on a no-exchange-of-funds basis to support scientific missions and government-to- government cooperative programs. The U.S. government, however, is allowed to take advantage of foreign components or technologies in upgrading U.S. launch systems or developing next generation systems. In addition, U.S. excess ballistic missiles eliminated under the START agreements are to be retained for government use or destroyed. Agency use of these missiles for launching payloads into orbit may be permitted if the payload supports the agency's mission, the use is consistent with international obligations, and if the use results in cost savings to the government relative to the use of available commercial launch services. Requests to use these excess assets will be considered by DOD on a case by case basis. Finally, the policy promotes private sector involvement in the development of space launch capabilities and encourages private sector financing in these undertakings.

On September 19, 1996, the Clinton Administration released its first comprehensive space policy, covering civil, military and commercial space activities. The policy includes a goal of moving commercial launch service competition with other countries from "negotiated trade" to a "trade environment characterized by the free and open interaction of market economies" once the existing launch services agreements expire. The policy also maintains the goals and guidelines of the Administration's 1994 National Space Transportation Policy.

U.S. Launch Vehicle Programs

Space Shuttle

The space shuttle is the sole U.S. means for launching humans into orbit. The 1986 Challenger accident and frequent delays of shuttle launches have led many to question the reliability of the shuttle system. The likelihood of additional shuttle delays in the future and the risk of another shuttle accident may have broad implications for future planned NASA programs, such as assembly and servicing of the planned international space station (see CRS Issue Brief 93017, Space Stations). Another issue of importance to the shuttle system is the potential development of future vehicles to replace the shuttle system for launching and returning humans to and from orbit. The shuttle program has seen a 24% cut in its budget over the past 4 years. Some shuttle observers are concerned that such a cut and associated personnel reductions could affect the safety of the shuttle program (see Issues). Eventual privatization of the program also has been raised both within NASA and by Congress.

The shuttle consists of four parts: the orbiter (built by Rockwell International) for crew and cargo; the large cylindrical external tank that contains fuel for the orbiter's main engines (Lockheed Martin); and two solid rocket boosters (SRBs), one on either side of the external tank (Thiokol), for additional thrust during the first two and a half minutes of launch. The SRBs and the orbiter are reusable; the external tank is jettisoned and not recovered. After the Challenger accident, the space shuttle returned to flight on September 29, 1988. With a fleet of four orbiters, NASA had planned to build up to a flight rate of 10 flights per year; however, budget constraints have limited the projected annual flight rate to seven per year. Launch manifests for the shuttle are dynamic, changing to reflect schedule delays and other circumstances. The most recent shuttle manifest shows seven shuttle flights planned for 1996. As of October 10, five have taken place.

On May 19, 1995, NASA released the results of its Zero Base Review with recommendations of how to achieve a $5 billion reduction in the agency's budget over the next 5 years. One of the recommendations is to restructure the space shuttle program by consolidating major shuttle contracts so that it is run by a single prime contractor. This would be the initial step in preparing the program for potential privatization. Moving to a single prime contractor was recommended in February 1995 by an independent shuttle review panel headed by Christopher Kraft. The "Kraft" report recommends that the agency should relinquish the majority of the operational responsibility of the shuttle to a prime contractor.

On November 7, 1995, NASA announced that it would non-competitively select United Space Alliance, a joint venture formed by Rockwell International and Lockheed Martin, as the single prime contractor for space shuttle operations. The agency made this decision asserting that there was no other company that could possibly meet the safety, manifest, and schedule requirements for the space shuttle program. On September 26, 1996, NASA signed a $7 billion, six-year contract with United Space Alliance for space shuttle operations. The contract initially consolidates 12 major existing contracts into one. It also includes two, two-year extension options that could bring the potential value of the contract to $12 billion over 10 years.

Future Launch Vehicle Development Programs

Since the decision in the early 1980s to rely upon the Space Shuttle as the sole access to space for the Nation, there have been costly accidents, significant policy and program changes, and countless studies on future needs and options. Operation of current U.S. launch systems is expensive, less efficient, and less reliable than DOD and NASA would like. In addition, these systems are seen as increasingly losing market share in the international commercial launch arena. Several efforts have been made to develop a new ELV system [such as the Advanced Launch System (ALS), the National Launch System (NLS), and Spacelifter], but all have been terminated. Other efforts to develop cutting-edge launch concepts have also been discontinued [the National Aero-Space Plane (NASP) and the Single Stage Rocket Technology (SSRT) program].

In response to the Administration's August 1994 National Space Transportation Policy, DOD and NASA initiated two new launch vehicle research and development programs. DOD began the Evolved Expendable Launch Vehicle (EELV) program and NASA initiated a Reusable Launch Vehicle (RLV) program. Both agencies also are continuing some work on hypersonic technologies for future high-speed cruise aircraft and launch vehicles.

DOD: Evolved Expendable Launch Vehicle (EELV) Program. In the past few years, several efforts have been made to develop a new ELV system. The most recent effort, to be initiated in FY1995, is known as the Evolved Expendable Launch Vehicle (EELV) program.

In 1991 the Bush Administration's National Space Launch Strategy began a joint DOD/NASA ELV development program known as the National Launch System (NLS). The NLS concept was based on a series of DOD studies initiated in 1985 as the Space Transportation Architecture Study. This study was supplemented by studies on the Shuttle-C performed by NASA from 1987 to 1990, and the joint DOD/NASA Advanced Launch System (ALS) program. Originally conceived as an evolutionary family of increasingly capable launch vehicles to be available in the early 1990s, ALS changed into a technology development program (called the Advanced Launcher Development Program -- ALDP) with no specific launch vehicle. The subsequent NLS program consisted of three launch vehicles (NLS-1, NLS-2, and NLS-3 in declining payload capabilities) and supporting launch infrastructure. DOD and NASA estimated NLS costs through the year 2005 at $15 billion. In its FY1993 budget deliberations, however, Congress directed DOD to terminate the NLS program.

A launch capability study released by the Bush Administration's National Space Council in November 1992 recommended that the Air Force instead develop a new medium-sized ELV, dubbed "Spacelifter." This new launch vehicle was similar in capability to the envisioned NLS-3 vehicle. However, in the spring of 1993, DOD underwent a "Bottom- Up Review" to evaluate its programs in order to meet long-range budget reduction targets. The review did not support starting the acquisition process for Spacelifter because of the estimated $6-10 billion cost of the program and the availability of current ELVs that already met DOD's needs.

During its FY1994 budget deliberations, Congress did not provide any funds to begin Spacelifter. Nevertheless, the FY1994 DOD Authorization Act (P.L. 103- 160) did require DOD to develop a Space Launch Modernization Plan to upgrade its space launch capabilities. This plan, known as the Moorman study, was submitted to Congress in April 1994. Later in 1994, the Administration's National Space Transportation policy directed DOD to assume the lead responsibility for improvement and evolution of current expendable launch vehicles.

For FY1995, Congress authorized $50 million to initiate a competitive "evolved" ELV program to replace existing launch capabilities. The FY1995 DOD Appropriations Act (P.L. 103-335), also appropriated $30 million to begin development of a new family of medium- and heavy-lift launch vehicles evolved from existing technologies. For FY1996, in response to the FY1995 congressional direction and the Administration's Space Transportation Policy, DOD requested $39.2 million for what it is calling the Evolved Expendable Launch Vehicle (EELV) program. Full funding for FY1996 is appropriated (P.L. 104-61). The U.S. Air Force Space and Missile Systems Center in Los Angeles, CA, awarded four $30 million contracts on August 24, 1995, for 15-month studies of EELV concepts to Lockheed Martin Astronautics, Boeing Defense & Space Group, Alliant Systems, and McDonnell Douglas Aerospace. Following the studies there will be a down-select to two contractors for a 13-month engineering and manufacturing development (EMD) phase. At the conclusion of this phase, the Air Force intends to select a single contractor to perform a second EMD phase which includes the EELV production program.

DOD requested $44.46 million for EELV in FY1997. The DOD FY1997 authorization act (P.L. 104-201) recommends authorizing the full request. The FY1997 DOD appropriations act (P.L. 104-208) also provides the full EELV request.

NASA: Reusable Launch Vehicle (RLV) Program. The Clinton Administration's National Space Transportation Policy gave NASA the lead responsibility for technology development and demonstration for a next generation reusable space transportation system, such as the single-stage-to-orbit (SSTO) concept. In response NASA is initiating the Reusable Launch Vehicle (RLV) program to develop experimental RLVs and associated technology to form the basis for next-generation vehicles to replace the space shuttle system and ELVs. The SSTO concept is where a rocket could be launched, carry a crew or cargo payload to orbit, return to Earth, be serviced quickly, and fly again shortly thereafter. Proponents believe that RLV, particularly SSTO, technology could dramatically lower the cost of accessing space. Lower launch costs could increase the future competitiveness of the U.S. commercial launch industry.

A noteworthy feature of the RLV program is that NASA wants industry, not government, to eventually lead this program. NASA would like to establish new forms of cooperation with private industry by sharing the costs of developing RLV technology with NASA. NASA then hopes that industry would take over the development, operation, and financing of the next-generation system after the year 2000. The RLV program includes ground based development and testing of reusable launch technologies and experimental flight vehicles known as the Clipper Graham (DC-XA), the X-33, and the X-34. The program is estimated to cost NASA $1.25 billion over the next 5 years.

The DC-XA is a refurbished experimental flight vehicle developed in the DOD's Ballistic Missile Defense Organization's (BMDO's) Single-Stage Rocket Technology (SSRT) program. Under contract to DOD, the McDonnell Douglas Corporation built a 1/3 scale suborbital prototype rocket called the Delta Clipper Experimental (DC-X) that takes off and lands vertically. Several flight tests were conducted successfully in 1993. During a flight test in June 1994, the rocket was damaged by an explosion but landed safely. There were two successful test flights of the repaired DC-X. Because of NASA's designated role in the National Space Transportation Policy and BMDO's reluctance to fund continuation of DC-X testing because it did not fit the role and mission of BMDO, the DC-X was transferred to NASA. After finishing its test flights in 1995, the DC-X was upgraded with thermal protection systems and new cryogenic tanks to begin a NASA-sponsored flight test program called Clipper Graham (DC-XA). NASA is spending $31 million on the DC-XA program. Four test flights of the DC-XA occurred in 1996. On July 30, the Clipper Graham was severely damaged when it tipped over and burned upon landing after its fourth test flight. NASA is investigating the accident. One more test flight had been scheduled in the project.

In January 1995, NASA released a cooperative agreement notice (CAN) inviting industry to develop plans for a two-phase X-33 project. The X-33 is a large demonstration vehicle for reusable launch technologies and an SSTO vehicle. As a technology demonstrator, the X-33 will not need to demonstrate on-orbit performance. As part of phase-1 of the project, on March 29, 1995, NASA signed three cooperative agreements with industry to design the X-33. The X-33 cooperative agreements were signed with Lockheed Advanced Development Co., McDonnell Douglas Aerospace, and Rockwell International Corp. NASA provided approximately $7 million each to the participants during this design phase, with each approximately investing a matching sum.

A CAN for phase-2 was released April 1. On July 2, Vice President Gore announced that NASA had selected Lockheed Martin to build the X-33 test vehicle. Lockheed Martin is to design, build, and conduct the first test flight of the X-33 by March 1999 and conduct at least 15 test flights by December 1999. NASA has budgeted $941 million for the project through 1999. Lockheed Martin is to invest $220 million in its X-33 design. Called VentureStar, the Lockheed Martin design is based on a lifting body shape with development of a new aerospike engine. The vehicle would be launched vertically like a rocket and launch horizontally like an airplane.

If the X-33 proves the SSTO concept technically and appears to be cost effective, NASA would then work to devise a funding arrangement with the private sector to build a small fleet of operational successors to the space shuttle in the 2007-2012 timeframe. NASA's decision to proceed with actual development of a next-generation RLV is to be made after the turn of the century. This is considered the timeframe when the agency must decide whether to replace the shuttle or begin a major overhaul of the shuttle system to extend its operational capability beyond the year 2012.

NASA also released a CAN in January 1995 for a smaller RLV demonstrator called the X-34. In large measure because the X-34 was a two-stage-to-orbit demonstrator (which is less technically complex than an SSTO rocket), the X-34 was on a faster track to completion than the X-33. On March 30, 1995, NASA signed a cooperative agreement with Orbital Sciences Corp. (OSC), teamed with Rockwell International Corp., to jointly develop the X-34. OSC, however, issued a stop work order to its contractors on January 24, 1996. This action was taken because of design problems and weight and cost growth of the X-34. On February 15, OSC announced that it was formally dropping out of the X-34 project. One week earlier, Rockwell International also decided to leave the partnership. NASA officials decided to continue the X-34 project by using the $65 million remaining for the project and build a scaled-down version of the X-34. A NASA Research Announcement (NRA) was released in March 1996 for a revised X-34 demonstrator that would fly in 1998. On June 10, NASA announced that it had selected OSC to undertake the revised X-34 project. The contract was finalized August 30. The 30-month contract is valued at $50 million with an additional $10 million that will be spent by NASA in direct support of the project. A total of 2 flight tests are scheduled to begin in the fall of 1998 at White Sands Missile Range in New Mexico. NASA may exercise a contract option for up to 25 additional test flights, if required, during a 12-month period after the initial contract is complete.

For FY1996, the agency requested and received $159 million for the program (P.L. 104-134). In a hearing held before the House Space and Aeronautics Subcommittee November 1, 1995, industry participants, although not unhappy with the program, testified that they would like to see more of the NASA funding earlier in the program rather than later as is currently the case. NASA responded to this concern by requesting $266 million for the program in FY1997. Congress is appropriating the full request in FY1997 (P.L. 104-204). No NASA authorization bill passed for FY1997, but the House (H.R. 3322) and the Senate (S. 1839) both recommended authorizing the full request.

Since NASA is the lead agency for RLV development, no DOD funds have been requested for the program. Despite this, Congress has shown interest in providing DOD funds for the program. The Clinton Administration is against DOD funds for the program, since Administration policy makes NASA responsible for the program. Many Members, however, see additional DOD funds as a way to accelerate work in the program. For FY1996 DOD appropriations, Congress provided $25 million for Air Force involvement in the RLV program (P.L. 104-61). The FY1997 DOD authorization act (P.L. 104-201) authorizes $25 million for DOD involvement in the RLV program. The FY1997 DOD appropriations act (P.L. 104-208) also provides $10 million for Air Force RLV involvement.


Space Shuttle Safety and Upgrades

For FY1996 Congress appropriated $3.15 billion for the space shuttle program ($2.49 billion for shuttle operations and $663.4 million for safety and performance upgrades). The program has now had a 25% cut in its budget over the past 4 years. Some shuttle observers are concerned that such a cut and associated personnel cuts could affect the safety of the shuttle program; however, NASA Administrator Dan Goldin believes that the cuts will not reduce shuttle safety, but instead could enhance safety by making the system more efficient. NASA also is embarking on several shuttle system upgrades to increase reliability and extend the life of the shuttle system. The shuttle program plans to maintain the capability to fly a maximum of seven to eight flights every year.

Effective January 31, 1996, NASA's Johnson Space Center (JSC) was designated the Lead Center for the space shuttle program. The JSC Director is now responsible for all shuttle program implementation activities. According to press reports, space shuttle director Bryan O'Connor protested this shift in management. When the decision was made to proceed with the change, O'Connor announced his resignation. In February 1996, NASA's Aerospace Safety Advisory Panel released its annual report on safety in NASA's human spaceflight program. Although the panel praises NASA for running a safe shuttle program, it is concerned that management changes and contract consolidations could increase risk in the program.

On May 31, NASA announced that it has asked the Aerospace Advisory Panel to undertake a focused review of the space shuttle program, concentrating on the safety of the shuttle in light of management changes, planned shuttle upgrades, and flight rates to build and support the International Space Station. The safety review is being conducted at the request of the White House and is to be completed by late November 1996. A May ASAP trip report voices concern about shuttle safety stating "the multiplicity of changes and uncertainty -- transition to a single contractor, downsizing, reinventing NASA, increased workload, loss of significant personnel capabilities and low-morale have bred an environment which is ripe for human error."

On July 12, NASA announced it was delaying its July 31 space shuttle Atlantis launch until mid-September in order to replace the reusable solid rocket motors on the shuttle. The rocket motors were replaced because the motors on a previous mission, which used a new adhesive, had hot gas seepage in some joint areas. Use of the new adhesive was required to comply with Environmental Protection Agency (EPA) regulations to reduce ozone depleting substances. The launch occurred September 16.

Two significant shuttle upgrade programs include the Alternate Turbopump (ATP) program and the super lightweight external tank. The most challenging and potentially troublesome components of the shuttle's main engines are the high pressure turbopumps. The ATP program is to address the shortcomings of the current turbopumps and includes development of an ATP liquid oxygen (LOX) pump and the ATP fuel pump. The July 1995 flight of Discovery included the new LOX pump in an upgraded main engine. Current LOX pumps on the main engines have to be removed for inspection after every flight. The new pumps are designed to not need any detailed inspection until they have flown ten times. The new fuel pump is scheduled to first fly on the shuttle in FY1997.

Development of the super lightweight external tank for the space shuttle began in FY1994. Since NASA decided to place the international space station at a 51.6 degree inclined orbit, the agency began the lightweight external tank project to increase the lift capability of the shuttle in order to place the heavier space station payloads in the higher inclination orbit. The super lightweight external tank project would fund development of an external tank using an aluminum-lithium material that would increase the lift capability of the shuttle by 3,600 kilograms (8,000 pounds). In March 1995, NASA allotted $172.5 million to Martin Marietta (now Lockheed Martin) to develop and produce the super lightweight tank.

Foreign Competition

Congress and the Administration have taken many steps to facilitate the success of U.S. commercial launch services companies, including attempts to limit foreign competition and/or ensure a level playing field in the international launch services market. Europe, China, Russia and Ukraine offer commercial launch services in competition with U.S. companies, and Japan plans to do so. The United States has negotiated trade agreements with China, Russia and Ukraine on "rules of the road" for participating in the commercial launch services market. The September 1996 Clinton space policy states that once those agreements expire, it is a U.S. goal to move from negotiated trade to a "trade environment characterized by the free and open interaction of market economies." How this will affect countries that continue to have non-market economies at that time is unclear.

Europe. The European Space Agency (ESA) developed the Ariane family of launch vehicles. Ariane was first test-launched in 1979, and began operational launches in 1982. ESA continues to develop new versions of Ariane (the first test flight of the new Ariane 5 failed on June 4, 1996), while operational launches are conducted by the French company Arianespace, which is owned by the French space agency (CNES) and 51 European aerospace companies and banks. Arianespace is the main competitor to U.S. launch services companies. Ariane 4 is the only version currently operational. Separately, Arianespace, as part of a French-Russian joint venture called Starsem, will market Russia's Soyuz launch vehicle for commercial launches.

In 1985, a U.S. company (Transpace Carriers Inc.) filed an unfair trade practices complaint against Arianespace, asserting that European governments were unfairly subsidizing Ariane. The Office of the U.S. Trade Representative (USTR) investigated and found that Europe was not behaving differently from the United States with regard to pricing commercial launch services (then offered primarily on the government-owned space shuttle). The incident did raise the question of what "rules of the road" to follow in pricing launch services. In the fall of 1990, USTR and Europe began holding trade talks to establish such rules of the road and to look at how the United States and Europe should respond to the entry of non-market economies into the launch services business. The only formal negotiating session was held in February 1991. (Originally, Europe was represented at the talks by ESA, but it was later decided that the European Community would be a more appropriate counterpart to the USTR, with ESA serving an advisory role.)

Each side has been concerned about how much the respective governments subsidize commercial launch operations, but another controversial topic (not formally part of the talks) is whether Arianespace should be able to bid for launches of U.S. government satellites, which now must be launched on U.S. launch vehicles as a matter of U.S. policy. Arianespace wants that restriction lifted. France and other European governments do not have written policies requiring the use of Ariane for their government satellites. However, to support the Ariane program, the member governments of ESA agreed from the beginning to pay a surcharge of as much as 15- 20% if they did choose Ariane. In 1992, the ESA member governments also passed a resolution strongly encouraging their governments to use Ariane (but not requiring its use). Nevertheless, the surcharge led some cost-conscious European governments to buy launch services from other (notably U.S.) suppliers. In the fall of 1995, ESA's member governments reached agreement with Arianespace to reduce the surcharge to encourage use of Ariane. (ESA itself does give preference to launching on Ariane.)

China. The Peoples Republic of China offers several versions of its Long March launch vehicles commercially. China poses special issues because of its non- market economy, meaning it can offer comparatively low prices. Technology transfer and political concerns have been raised as well. The majority of satellites requiring commercial launches are made by U.S. companies, or contain U.S.-made components. While U.S. launch services companies might welcome a decision not to allow Chinese launches, U.S. satellite manufacturers could be adversely affected if their customers choose to have satellites built by foreign firms to avoid U.S. restrictions.

Launch services are offered through China Great Wall Industry Corp. (CGWIC). In the fall of 1988, the U.S. government agreed to grant 3 export licenses for satellites manufactured by Hughes Aircraft to be launched by CGWIC. Two were Optus communications satellites (formerly called AUSSAT) built for Australia and the third was Asiasat 1, owned by the Hong Kong-based Asiasat Co. (of which China's International Trust and Investment Corp. is a one-third owner). The Reagan Administration granted the export licenses on the conditions that China sign three international treaties related to liability for satellite launches and other subjects; agree to price its launch services "on a par" with Western companies; and establish a government-to-government level regime for protecting technology from possible misuse or diversion. China met the conditions and the two countries signed a 6-year agreement in January 1989. The Coordinating Committee on Multilateral Export Controls (COCOM) approved the licenses that March.

On June 5, 1989, after the Tiananmen Square uprising, President Bush suspended all military exports to China including the three satellites. Congress passed language in the FY1990 Commerce, Justice, State and Judiciary appropriations (P.L. 101-162) and the 1990-91 Foreign Relations Authorization Act (P.L. 101-246, Section 902) prohibiting the export of U.S.-built satellites to China unless the President reported to Congress that (1) China has achieved certain political and human rights reforms, or (2) it was in the national interest of the United States. In December 1989, President Bush notified Congress that export of the satellites was in the national interest and the licenses were reinstated. Asiasat-1 was launched in April 1990. The first Optus was launched in August 1992; the second in December 1992, though it did not reach orbit intact. (A Swedish satellite, Freja, which contains U.S. components and for which an export license was approved in 1991, was launched by China in October 1992.)

A different issue arose in 1990. China signed a contract to launch an Arabsat Consortium satellite for $25 million, much less than what many consider "on a par" with Western companies. The main competitor was Arianespace, which turned to both the French and U.S. governments to prohibit export of the satellite (the prime contractor for the satellite was French and it included American components). No formal action was taken by the United States. In 1991, the Arabsat Consortium terminated the contract with the Chinese and signed an agreement with Arianespace, so this case became moot, but the issue of what constituted "on a par" remained. China argued that because their costs are so low, they could offer lower prices and still adhere to international norms as to what costs are included in setting the price.

Yet another ingredient involved in exporting satellites to China arose on June 16, 1991, when the Bush White House announced that because of China's ballistic missile proliferation policies, it would be "inappropriate for the United States to approve any further export licenses for commercial satellite launches at this time." On July 17, the State Department identified CGWIC as one of two Chinese entities engaged in missile technology proliferation activities that require the imposition of trade sanctions in accordance with the Arms Export Control Act, including denial of license applications for export items covered by the Missile Technology Control Regime (MTCR). Although the MTCR does not cover satellites (only satellite launch vehicles, which are essentially interchangeable with ballistic missiles), the identification of CGWIC as a cause of concern to the U.S. Government complicated China's marketing plans. China then agreed to adhere to the MTCR, and the sanctions were lifted.

China's fortunes improved. In May 1992, the International Telecommunications Satellite Organization (Intelsat) agreed to launch at least one of its satellites on a Chinese launch vehicle. On September 11, 1992, the State Department notified Congress that it was waiving legislative restrictions on U.S. exports for six satellite projects with China: APSAT, Asiasat-2, Intelsat 7A, STARSAT, AfriStar, and Dong Fang Hong 3. The first five are satellites China wanted to launch; the sixth is components for a new satellite (Dong Fang Hong 3) that China itself was building (the satellite was launched in 1994, but failed once it was in orbit). Many observers saw the move as a conciliatory gesture in the wake of the U.S. decision to sell F-16s to Taiwan.

On August 25, 1993, however, the U.S. government again imposed sanctions against China for ballistic missile proliferation activities, and the State Department said that satellite exports would not be permitted. The State Department announced October 4, 1994 it would lift the sanctions after China pledged to abide by the MTCR. During this period of time, tensions were particularly acute in the United States between those who view the sanctions as harmful to U.S. business interests (notably satellite manufacturers Hughes and Lockheed Martin), and those who want to prevent sensitive technology from reaching China and/or to punish China for MTCR infractions. The debate centered on whether the satellites should be governed by export guidelines of the State Department (Munitions List) or the Commerce Department (Commerce Control List). These issues were discussed at House Science, Space and Technology hearings on September 29, 1994.

The 6-year agreement expired at the end of 1994. A new 7-year agreement was signed on March 13, 1995 allowing China up to 11 new launches for international customers to geostationary orbit (in addition to launch contracts already signed). China agreed to price launches no less than 15% below what Western companies charge or a U.S. review of the price would be triggered. For low Earth orbit (LEO) launches, it was agreed that as long as China and Russia combined do not win contracts to launch more than 50% of any particular LEO satellite constellation (such as Motorola's Iridium system), China will be assumed to be in compliance with the agreement. President Clinton approved the export of four satellites to China for launch (2 COSAT satellites, Chinasat, and Mabuhay) on February 6, 1996, despite concerns about China exporting nuclear weapons-related equipment to Pakistan. On February 14, a Long March 3B rocket carrying an Intelsat communications satellite malfunctioned seconds after liftoff, breaking apart in flight, then impacting the ground and spreading debris and toxic fumes over the launch site area. The Chinese reported 6 dead and 57 injured, but other reports suggested a higher casualty figure. This was the second Chinese launch failure involving fatalities (the other was in January 1995). Some customers (including Intelsat) subsequently canceled contracts with China, but what long term impact this accident and other recent launch failures will have is unknown. Meanwhile, pursuant to P.L. 101-246, on June 25, 1996, the President notified Congress that it is in the national interest to export another satellite (Asia Pacific Mobile Telecommunication, built by Hughes) to China.

Russia. Most of the former Soviet republics have agreed to cooperate in continuing the former Soviet space program. Russia, Ukraine, and Kazakhstan are the three most important former republics for the space program: the two major launch sites, Plesetsk and Tyuratam, are located in Russia and Kazakhstan, respectively; a major rocket production facility is in Ukraine (and Ukraine itself offers commercial launch services).

Following the collapse of the Soviet Union, interest developed in the possibility of loosening U.S. policy to permit export of U.S.-made satellites for launch on Russian launch vehicles (previously, U.S. policy flatly prohibited the export of satellites to the Soviet Union for launch). In June 1992, President Bush opened the door by announcing that he would not oppose Russia bidding for launch of an International Maritime Satellite Organization (Inmarsat) satellite; Inmarsat subsequently signed an agreement for such a launch for $36 million. He also stated that the United States would begin negotiations with Russia over "rules of the road" for future commercial launches. Discussions were held in the fall of 1992, and negotiations were held in Moscow May 5-6, 1993 where the U.S. and Russian governments reached agreement in principle whereby Russia could contract for up to eight launches to geostationary orbit (the largest segment of the market today) through the year 2000, plus three launches to low Earth orbit (potentially a large market in the future). Russia agreed to price its launch services no more than 7.5% lower than Western prices, or a U.S. review of the price would be triggered.

The U.S. government stressed that it would not sign the agreement unless Russia agreed to comply with the MTCR, specifically in a case involving a Russian company, Glavkosmos, that announced in 1992 that it would sell rocket engine technology to the Indian Space Research Organization (ISRO). The United States declared it was a violation of the MTCR and imposed 2-year sanctions against Glavkosmos and ISRO (the sanctions expired in May 1994). In June 1993, the United States threatened to impose sanctions against other Russian companies that do business with Glavkosmos. The two countries finally agreed that Russia would cease transferring rocket engine technology to India (the sale of engines themselves is not an issue, but rather the technology that would allow India to build its own such engines), paving the way for the agreement on launch services which was signed in September 1993. Lockheed Martin has a joint venture with two Russian companies to market Russia's Proton launch vehicle.

On January 30, 1996, the United States agreed to increase from 9 to 16 the number of geostationary launches Russia can conduct, putting Russia on a more even footing with China and Ukraine, and the price Russia can charge (like China) is now 15% below Western prices without triggering a review. There also is the potential to add 4 more launches to the 16 total if the right market conditions exist. The first Russian launch of a Western commercial satellite (Astra) occurred in April 1996.

Ukraine. Ukraine has a major rocket production facility (though some of the rocket engines are produced in Russia) and offers commercial launch services. The United States commenced negotiations with Ukraine in April 1995 and an agreement was signed in February 1996 that permits up to 20 Ukrainian commercial space launches to geostationary orbit through 2001. Since Ukraine has no launch sites, one proposal being promoted by a company called Sea Launch (created by Boeing, Ukraine's Yuzhnoye, Russia's Energomash, and Norway's Kvaerner) is to launch Ukrainian Zenit boosters from a mobile ocean oil rig that would be based in the Los Angeles area and towed out into the Pacific for launches. Of the up to 20 permitted launches, Sea Launch would get 11, with 3 more if the market grows. Five other launches of Zenit or Cyclone launch vehicles (also built by Ukraine) are allowed, with one more if the market grows. Separately, Ukraine has signed an agreement with the U.S. company Globalstar to conduct three launches of Globalstar low Earth orbit communications satellites on Zenit launch vehicles (12 satellites at a time). These launches are scheduled to take place from Baikonur. Also, Rockwell signed an agreement to market Ukrainian Cyclone launchers, which are used for low Earth orbit (LEO) launches. The market for LEO launches is still evolving and the Ukrainian agreement (like those for Russia and China) contains only general guidelines regarding LEO launches, not numerical limits.

Japan. On February 3, 1994, Japan successfully conducted the first launch of its H-2 launch vehicle. The H-2 is the first all-Japanese rocket capable of putting satellites in geostationary orbit. Previous rockets launched by Japan for this purpose were based on U.S. technology and the 1969 U.S.-Japan agreement that permitted Japan access to the technology prohibited launches for third parties without U.S. consent.

With the entry into service of the H-2 rocket, Japan is freed from that constraint and thus may become a competitor in the launch services market. Japan created a private launch vehicle company in 1990 (Rocket Systems Corp., or RSC) to offer commercial launch services. RSC also is negotiating with fishermen to allow more launches from the Tanegashima launch site. (Fishermen must evacuate the area near the launch site during launches and the existing agreement allows only two launches per year from each of the two Japanese launch sites, Tanegashima and Uchinoura.) The Japanese do not consider the current version of the H-2 to be cost competitive, and are working on a new version, the H2A. According to press reports, RSC is close to signing a contract with Hughes Space and Communications Co. for launching up to 10 satellites with the H2A. It would be the first Japanese commercial launch contract.

Facilitation of the U.S. Commercial Launch Services Industry

Congress continues to express interest in assisting the industry, both by attempting to protect U.S. companies from unfair pricing by foreign competitors (particularly China), and by increasing the market for commercial companies by forcing Government agencies to procure commercial launch services instead of buying the ELVs themselves.

On January 4, 1995, Representative Joel Hefley introduced the Launch Services Corporation Act of 1995 (H.R. 258) which would establish a non-federal, for-profit Launch Services Corporation for providing space launch services to the federal government and other domestic and international customers. The bill would have the Administration outline the Nation's space launch needs and then create a corporation to provide those services. On May 12, 1995, Representative Andrea Seastrand introduced the National Spaceport Act (H.R. 1631) to encourage the development of the commercial space industry by establishing State-run spaceports. The bill would establish a National Spaceport Office in the Department of Transportation to oversee a spaceport assistance program providing federal grants, use of excess federal property, or excess federal property for spaceport development. The Office would be authorized $20 million annually from FY1996 to FY2000 and would terminate October 1, 2000. The bill also would amend the Internal Revenue Code of 1986 to make bond financing for spaceports exempt from federal taxes.

On June 28, 1995, Representative Walker introduced the Space Business Incentives Act of 1995 (H.R. 1953). This bill provides tax incentives for individuals and firms who invest in commercial space activities. On August 1, 1996, Mr. Walker introduced the Space Commercialization Promotion Act of 1996 (H.R. 3936). This bill contains the following provisions: licensing of re-entry vehicles, requiring the federal government to procure commercial launch services, and establishing requirements for the use of excess intercontinental ballistic missiles as space launch vehicles. H.R. 3936 was passed by the House September 17. No further action was taken on these bills in the 104th Congress.


P.L. 104-201, H.R. 3230
DOD FY1997 Authorization Act. H.R. 3230 introduced and referred to Committee on National Security April 15, 1996; reported to House May 7 (H.Rept. 104-563); passed House, amended, May 15; struck all after the enacting clause and substituted the language of S. 1745, as amended, July 10; passed Senate July 10. S. 1745 reported as an original measure by Senate Committee on Armed Services May 13, 1996 (S.Rept. 104-267); referred to Committee on Select Intelligence May 15; reported to House by Committee on Intelligence June 11 (S.Rept. 104-278); passed Senate July 10; incorporated into H.R. 3230 as an amendment July 10. Conference report filed July 30 (H.Rept. 104-724); agreed to by House August 1 and by Senate September 10; signed into law September 23.

P.L. 104-204, H.R. 3666
FY1997 VA-HUD-IA Appropriations Act (includes NASA). H.R. 3666 reported as an original measure June 18, 1996 (H.Rept. 104-628); passed House, amended, June 26; reported by Senate Appropriations Committee July 11 (S.Rept. 104-318); passed Senate September 5. Conference report filed September 20 (H.Rept. 104-812); passed House September 24; passed Senate September 25; signed into law September 26.

P.L. 104-208, H.R. 3610
DOD FY1997 Appropriations Act. H.R. 3610 reported as an original measure by House Committee on Appropriations June 11, 1996 (H.Rept. 104-617); passed House, amended, June 13; referred to Senate Committee on Appropriations June 14. S. 1894 reported as an original measure June 20 (S.Rept. 104-286); incorporated into H.R. 3610 and passed Senate July 18. Conference report filed September 28 (H.Rept. 104-863); passed House September 28; passed Senate and signed into law September 30.

H.R. 258 (Hefley)
Launch Services Corporation Act of 1995. Introduced and referred to Committee on Science January 4, 1995.

H.R. 361 (Roth)
Omnibus Export Administration Act of 1995. Introduced January 4, 1995; reported to Committee on International Relations June 5 (H.Rept. 104-605, Part I); referred sequentially to Committee on Ways and Means June 5; reported by Committee on Ways and Means June 27 (H.Rept. 104-605, Part II); passed House July 16, 1995.

H.R. 1631/H.R. 1737 (Seastrand)
National Spaceport Act. H.R. 1631 introduced and referred to the Committees on Science, on Transportation and Infrastructure, and on Ways and Means May 12, 1995. An identical bill, H.R. 1737, introduced (with same referral) May 25, 1995.

H.R. 1953 (Walker)
Space Business Incentives Act of 1995. Introduced and referred to Committee on Ways and Means June 28, 1995.

H.R. 2405 (Walker)/S. 1048 (Pressler and Burns)
Omnibus Civilian Science Authorization Act of 1995 (contains NASA). H.R. 2043 reported from Science Committee August 4, 1995 (H.Rept 104-233); H.R. 2405 (contains all provisions of H.R. 2403) passed House October 12, 1995. S. 1048 reported from Senate Commerce, Science and Transportation Committee October 11 (S.Rept. 104-155); passed Senate October 19, 1995.

H.R. 3322 (Walker et al.)/S. 1839 (Pressler)
H.R. 3322, the Omnibus Civilian Science Authorization Act of 1996 (includes NASA), introduced April 25, 1996; referred to Committees on Science, Resources, Transportation and Infrastructure, and National Security April 25, 1996; marked up by Science Committee prior to its introduction April 24, 1996; reported by Science Committee May 1, 1996 (H.Rept. 104-550, Part I); passed House May 30. S. 1839, the FY1997 NASA Authorization Act, introduced and referred to Committee on Commerce, Science, and Transportation June 5; reported (S.Rept. 104-327) and placed on Senate Legislative Calendar (No. 506) July 22.

H.R. 3936 (Walker)
Space Commercialization Promotion Act of 1996. Introduced and referred to House Committees on Science and Government Reform and Oversight August 1, 1996; reported by Committee on Science (H.Rept. 104-801, Part I), discharged by Committee on Government Reform and Oversight, and passed by House September 17.