United Launch Alliance (ULA) let an exclusivity agreement with Russian rocket engine provider RD AMROSS expire two-and-a-half years before renewing it in the late 2000s, a direct reaction to
Orbital Sciences’ [ORB] attempts to compete in the medium-class launch market, Orbital alleged in its lawsuit against ULA filed Thursday.
Orbital alleges in its suit, Orbital Sciences v. United Launch Alliance and RD AMROSS, that the company, RD AMROSS and United Technologies Corp.’s [UTX] Pratt & Whitney Rocketdyne division reached an agreement to supply RD AMROSS’ RD-180 engine to Orbital so that with its Antares launch vehicle, it could remain a long-term competitor the medium-lift market, which as of now ULA holds a monopoly on. Orbital said by the spring of 2009, the parties were exchanging technical data and analyzing logistics issues, such as export licensing.
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| Orbital’s Antares medium-lift vehicle launches. Photo: Orbital. |
Orbital said it understood that Pratt & Whitney Rocketdyne and RD AMROSS planned to take that proposal to sell the RD-180 engine to Orbital to RD AMROSS’ board of directors for approval in mid-2009.
But in a June 24, 2009, letter, Orbital said Leonard Dest, former president and CEO of RD AMROSS, informed the company in a letter that RD AMROSS was backing out of the deal and instead proposing selling the RD-180 through ULA via a booster offering. In previous discussions between Orbital and ULA, a joint venture between Lockheed Martin [LMT] and Boeing [BA], Orbital said it rejected a ULA offer to provide its entire first stage of its existing Atlas V intermediate-class rocket, which incorporates the RD-180 engine, for use on Antares.
Orbital said it rejected the deal, among alternatives, because to gain access to the RD-180 engine, it would have had to procure ULA’s first stage booster and utilize other aspects of ULA’s launch services, which Orbital says was not economically viable. Orbital also cited its dissatisfaction with ULA as a direct competitor for medium-lift launch services.
Orbital said Lockheed Martin entered into a 10-year exclusivity agreement with RD AMROSS on Aug. 30, 1996, which wasn’t renewed or extended after it expired. Orbital said that a telephone meeting of RD AMROSS’ board of directors to consider the sale of RD-180s to Orbital was attended by ULA President and CEO Michael Gass, who Orbital said had no valid reason to participate in the call as that RD AMROSS’ economic interest, as an engine provider, is to sell as many RD-180 engines to as many buyers as possible.
It was after that meeting that RD AMROSS backed out of its agreement to sell RD-180s to Orbital, the company alleged. With no alternatives, it was forced to buy 20 AJ-26 engines from GenCorp Aerojet, Orbital said.
Orbital also alleged that shortly before Dest sent his June 2009 letter to Orbital, backing out of the deal, ULA told RD AMROSS that selling its RD-180s to Orbital would violate their exclusivity agreement. Orbital questioned how ULA could take this position when the agreement had already expired. Orbital alleged ULA said that a so-called “protocol” commitment between the two RD AMROSS joint venture partners and ULA purportedly caused the exclusivity period to continue after the agreement’s expiration.
Subsequently in 2010, Orbital said ULA and RD AMROSS executed an extension of the expired exclusivity agreement, extending it through July 31, 2016. Orbital said it then requested to buy RD-180s after the exclusivity agreement ended in 2016, only to have RD AMROSS reject the deal once again and extend its agreement with ULA through 2018.
RD AMROSS is a joint venture between UTC and Russian engine manufacturer NPO Energomash. GenCorp’s [GY] Aerojet, which recently acquired Rocketdyne from UTC’s Pratt & Whitney division, is awaiting Russian regulatory approval of its acquisition of UTC’s 50 percent stake in RD AMROSS (Defense Daily, June 19).
Orbital wants access to the RD-180 because it currently relies on the AJ-26 engine, an upgraded version of the Russian NK-33 engine developed by Russian manufacturer Kuznetsov, which isn’t in production and is in low quantity. Orbital said the RD-180 is the only engine in the world that can help it compete in the medium-lift market.
ULA spokeswoman Jessica Rye said yesterday the company is aware of the suit and that ULA’s contracts to purchase the RD-180 engine are lawful and designed to provide the most reliable launch vehicle possible for critical United States government launch missions. Rye declined to comment on specifics.
UTC spokesman Ian Race said yesterday the company is disappointed Orbital took this action against RD AMROSS and it intends to support RD AMROSS in defense of the suit. Race declined further comment.
Orbital said in the lawsuit it has suffered damages of at least $515 million and is asking for treble punitive damages of more than $1.5 billion. The
The Federal Trade Commission (FTC) is also investigating the exclusivity agreement (Defense Daily, June 24). The lawsuit was filed in U.S. District Court Eastern District of Virginia.