After negotiations, Space Development Agency was able to get reduced pricing for national security launch

SDA Director Derek Tournear said initially he did not want to use NSSL because it’s significantly more expensive than commercial launches but worked out an agreement with the Space Force to get the cost reduced

COLORADO SPRINGS — The Pentagon’s Space Development Agency is all about lower costs and getting the best bang for its buck. So when it needed to procure launch services to deploy a batch of 28 satellites in late 2022, it sought competitive bids and SpaceX won the contract. 

That decision did not go over well with the U.S. Space Force office that oversees the National Security Space Launch (NSSL) program, which needs DoD to use its services to make the program cost competitive. United Launch Alliance and SpaceX are the NSSL Phase 2 launch providers and missions are split 60/40 between the two. 

The Space Development Agency (SDA) — which is building a large constellation of small satellites in low Earth orbit — last month announced that it will no longer procure launches commercially and will buy launch services through the NSSL program. 

SDA Director Derek Tournear said initially he did not want to use NSSL because it’s significantly more expensive than commercial launches. The NSSL customers pay for additional administrative cost, mission assurance and other markups. 

But after extensive negotiations, the Space Force agreed to remove some of those additional markups and gave SDA a better deal, Tournear said Aug. 24.

During a news conference at the 36th Space Symposium, Tournear said SDA did get pushback for booking a commercial launch with SpaceX outside the NSSL program. He said SDA argued that there was a “significant difference” between commercial pricing and NSSL Phase 2 costs and that it made sense to save taxpayer money.

In response, the NSSL program office under the Space Force’s Space Systems Command agreed to negotiate a better deal for SDA, Tournear said. “They worked very well with us and we worked closely [to identify] things that are included in those NSSL costs that don’t necessarily need to be included for our launch, and they were actually able to remove a lot of those.”

Tournear said he could not provide specifics of what costs were taken out but said it amounted to “multiple tens of millions of dollars per launch” off what would be typically charged for NSSL launches. “They removed a lot of activities that we didn’t require.”

With the reductions, the difference between what SDA would pay for commercial launches and for NSSL is “marginal,” said Tournear. There is a difference, but it’s justified because it helps NSSL book more rockets and get better pricing from providers. “Now the department has more rockets in total that is buying under NSSL, so they can use that to shift things around within that 60/40 split they’re bound to.”

As a customer of the NSSL program, SDA will have to work with the rocket providers and integrators “to make sure that we can match the spacecraft vendors with the launch vehicles,” said Tournear. “That is something we can certainly do” but was hoping to not have to take on.