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Pentagon sees doubled cost for rocket launch program

The X-37B Orbital Test Vehicle waits in the encapsulation cell of the Evolved Expendable Launch vehicle at the Astrotech facility in Titusvi
The X-37B Orbital Test Vehicle waits in the encapsulation cell of the Evolved Expendable Launch vehicle at the Astrotech facility in Titusvi

By Andrea Shalal-Esa

WASHINGTON (Reuters) - The Pentagon on Thursday told Congress that a recent restructuring of its heavy rocket launch program to add 60 more launches and extend the schedule for a decade would more than double the program's projected cost to $70.7 billion.

The Defense Department's annual report to Congress on major arms programs forecast an increase of $35.7 billion or 102 percent in the Air Force's Evolved Expendable Launch Vehicle (EELV) program, under which contractors provide launch services to lift big U.S. military, intelligence and NASA satellites into orbit.

A Pentagon spokeswoman said the increase reflected plans for a total of 151 launches, up from 91, and a 10-year extension of the current schedule from fiscal year 2018 through fiscal 2028.

Seeking to combat continued cost increases, the Air Force last year restructured the EELV program to allow for more block buys of larger numbers of satellite launches, and to inject more competition in the longer term. This is the first Pentagon cost report that reflects the restructured program.

The Government Accountability Office, a congressional watchdog agency, in March estimated the cost of the revamped program at $69.6 billion.

United Launch Alliance (ULA), a joint venture run by the two largest rocket launch providers, Lockheed Martin Corp and Boeing Co, has been the only provider of EELV launch services up to now, but the Air Force is trying to open the program to competition from other companies.

ULA spokeswoman Jessica Rye said the company was encouraged by the Air Force's innovative new acquisition strategy and would continue to work with the government to further reduce costs in coming years.

Elon Musk, founder and chief executive of privately owned Space Exploration Technologies, or SpaceX, said his company could save the Pentagon more than $1 billion a year by providing greater lift capability using its new Falcon Heavy rocket.

"Falcon Heavy can carry satellites that weigh up to twice as much as Delta IV Heavy, so there is the opportunity to do bigger satellites or multi-satellite flights," Musk said in a statement. For instance, he said, the company plans to launch 10 satellites per flight for satellite operator Iridium.

SpaceX had been hoping for years to break the monopoly on military rocket launches held by ULA. It landed its first launch contracts for the U.S. military last December, including one involving the Falcon Heavy rocket that is due to fly in 2015.

U.S. Air Force officials say they want to study the company's performance on smaller launches before awarding it a contract to launch an expensive national security satellite.

In its report to Congress, the Pentagon said the Air Force was continuing to implement cost-cutting strategies for the EELV program, by expanding its insight into the contractors' costs, and implementing better cost management procedures.

(Additional reporting by Irene Klotz in Cape Canaveral, Florida; Editing by Tim Dobbyn and Lisa Shumaker)

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