Senate Armed Services Committee (SASC) member John McCain (R-Ariz.) wants Defense Secretary Chuck Hagel to explain why the Pentagon didn’t halt business between launch provider United Launch Alliance (ULA) and rocket engine manufacturer NPO Energomash in light of recent economic sanctions issued by President Barack Obama.
“I am greatly concerned that it took legal action by a potential competitor in the Evolved Expendable Launch Vehicle (EELV) program–a private company–to ensure the EELV program’s compliance with the president’s sanctions against select Russian individuals and organizations,” McCain said in a Tuesday letter. “Why the DoD did not do so in this case adds to my concerns that served as the basis of my April 25, 2014, request to the DoD inspector general to review recent developments in the program.”
President Barack Obama in March issued Executive Order 13661, blocking business between the United States and select Russian government leaders and businesses. A federal judge last week issued a temporary injunction halting business between ULA and NPO Energomash because ULA officials couldn’t guarantee money wasn’t ending up in the hands of Russian Deputy Prime Minister Dmitry Rogozin, who is alleged to have a controlling interest in NPO Energomash. Rogozin is on the president’s sanctions list.
The federal government Tuesday filed a request in the U.S. Court of Federal Claims to dissolve the temporary injunction, claiming Commerce, Treasury and State Department letters show business between the ULA and NPO Energomash doesn’t violate sanctions. NPO Energomash is also alleged to be a state-owned company. The Air Force and ULA use the NPO Energomash-developed RD-180 engine in launches.
Of the questions posed to Hagel, McCain wants answers for:
* Why DoD did not block the transfer of the RD-180 in compliance with Executive Order 13661 before the preliminary injunction was issued;
* Would costs associated with reported accelerate deliveries of engines to ULA be passed to taxpayers? If not, how would DoD ensure costs wouldn’t be passed on to taxpayers in light of the Government Accountability Office (GAO) finding ULA has limited visibility in its cost and pricing;
* When DoD was first notified of the intent by ULA or any subsidiary to accelerate the delivery of engines from NPO Energomash.
DoD spokeswoman Maureen Schumann said the department received the letter and would respond accordingly.
The injunction was spurred by the lawsuit Space Exploration Technologies Corp. (SpaceX) v. United States, where SpaceX sued the Air Force to force it to open its sole sourced block buy of 36 launch cores to competition. The Air Force had awarded 35 launch cores to ULA, but had left 14 cores open for competition, before deciding to reduce the 14 competed cores to seven, spurring SpaceX’s lawsuit.
ULA is a joint venture of Lockheed Martin [LMT] and Boeing [BA]. The RD-180 is distributed in the U.S. by RD AMROSS, a joint venture of NPO Energomash and Pratt & Whitney of United Technologies Corp. [UTX]