Elon Musk Beats Jeff Bezos To U.S. Air Force Contract As Billionaire Space Race Blasts Off

Elon Musk’s SpaceX has scored an early win in the billionaire race to space after the U.S. Air Force announced his Falcon rockets as one of two winners of a multibillion-dollar competition to replace Russian rocket technology.

Jeff Bezos’s Blue Origin lost out in the results announced by the U.S. Air Force late last week, and CEO Bob Smith later admitted it was “disappointed” in the decision, claiming that Blue Origin had made a “compelling offer” for the contract.

The competition marks what could be one of a number of billionaire vs. billionaire space contract dust-ups, pitching two or more of the world’s best known entrepreneurs against each other in a space race for public money that could in years be worth billions. A partner at a  venture capital fund focused on space exploration told Forbes that the “Musk vs. Bezos battles” could well “rage” for many years to come.

Taxpayer Money, In Space

On Friday, Musk’s SpaceX and United Launch Alliance-a joint venture between Lockheed Martin and Boeing- won two contracts for National Security Space launch services worth a combined $653 million for “launch services” starting in 2022 for a 5-year period.

Formally called the National Security Space Launch Phase 2 Launch Service Procurement, the contract gives United Launch Alliance (ULA) and SpaceX a 60-40 split on approximately 30 missions for the Department of Defense and the National Reconnaissance Office.

The competition was launched in 2018 after the U.S. decided to stop using Russian rockets against a backdrop of rising geopolitical tensions, namely the threats to stop industrial exports following Russia’s annexation of Crimea in 2014.

The U.S. Department of Defense will not be allowed to buy Russian Atlas 5 rockets after December 31, 2022 according to a Senate amendment in June 2016, throwing the door open to space-savvy big business and billionaires like Musk and Bezos, both of whom are ushering in the latest chapter of entrepreneurs and space rockets.

With U.S. government departments increasingly leaning on entrepreneurs to drive down the price of doing business in space, Dr. William Roper, assistant secretary of the Air Force for acquisition, technology and logistics, said a statement announcing the competition awards on Friday, that “Maintaining a competitive launch market, servicing both government and commercial customers, is how we encourage continued innovation on assured access to space. Today’s awards mark a new epoch of space launch that will finally transition the Department off Russian RD-180 engines.”

In the statement, Lt. Gen. John Thompson, Commander of the Space and Missile Systems Center at the Los Angeles Air Force Base, said the announcement that SpaceX and ULA carrying National Security Space payloads kicks off “the dawn of a new decade in U.S. launch innovation.”

Analysis

James Bruegger, managing partner at venture capital fund Seraphim Capital, a London-based firm that invests in companies operating in the space ecosystem, told Forbes that despite the setback for Bezos, both SpaceX and Blue Origin will likely have a major impact on the launch market in the next few years. He expects the two companies to be competing “head-on” in a number of different areas. Bruegger tells Forbes that with both SpaceX and Blue Origin planning to launch satellites offering cheap broadband coverage around the world, “Musk vs. Bezos battles are likely to rage for many years to come,” he adds.

Bruegger was not surprised to see the selection of one established player ULA, with its connections to Lockheed Martin and Boeing, and a new face from the billionaire entrepreneurial class in Elon Musk and SpaceX. Awarding the contract to two new players, Bruegger says, might well have seemed “too risky.” 

SpaceX is also, for now, “more established” than Blue Origin, according to Bruegger, having fulfilled government missions for years. SpaceX has launched government satellites and resupplied the Space Station. “And of course,” he adds, “they’ve just recently completed the landmark mission for taking U.S. astronauts to the Space Station, marking the dawn of the era of commercial human space flight.”

Daniel Carew, principal at IQ Capital, U.K. based deep-tech venture capital firm, told Forbes, “Space connects everyone, in all markets, everywhere. As the U.S. Army puts it, [Space] is the ultimate high ground.”

Competition Costs

In a statement, Blue Origin said it was “disappointed” in the decision to reject its bid, which had  “unprecedented private investment of more than $2.5 billion.” Adding, “We submitted an incredibly compelling offer for the national security community and the U.S. taxpayer.” Blue Origin went on to argue that its rocket named New Glenn and built using its BE-4 engines demonstrated “heavy-lift performance … and a very competitive single basic launch service price for any mission across the entire ordering period.”

Bezos and Blue Origin can take some comfort that despite losing out on the contract, the company’s BE-4 engine technology was used in the ULA’s pitch.

Bezos described Blue Origin’s BE-4 engine in 2014 to CBS as a “remarkable machine” adding that it has 550,000 pounds of thrust, a very low “recurring cost” and “low life-cycle cost” using “commercially available fuel” in the form of liquified natural gas that’s reusable.“It’s built and tested and designed and engineered 100 percent in the United States,” he added.

SpaceX put forward its Falcon 9 and Falcon Heavy rockets for the contract. The win for Musk’s team follows the announcement in February 2020 that NASA selected SpaceX to provide launch services for the agency’s Psyche mission, targeted to launch in July 2022.

NASA hopes to explore the mineral-rich Psyche asteroid described by Lindy Elkins-Tanton of Arizona State University as “a giant mysterious metallic asteroid … that means the world to us.” NASA confirmed in a statement that it will pay SpaceX just $117 million to launch the Psyche mission, describing the asteroid as “unique” and “one of the building blocks of our solar system.”