DOD seeks authority to recoup more commercial space launch costs

By Tony Bertuca / April 17, 2023

The Defense Department is seeking congressional authority to recover additional costs from commercial space launches at DOD facilities, according to a new legislative proposal.

The Pentagon’s proposal would provide increased authority to military service secretaries to “support commercial launch activity on DOD launch ranges with necessary cost recovery authorities to match the current expansion by industry,” the proposal states.

Current law authorizes DOD to allow commercial activities to use its space related facilities, provided DOD is reimbursed for its direct costs accrued in supporting the commercial space activities.

But the department says a new provision is required as DOD is “not equipped to succeed as a commercial-like actor,” especially as government launch ranges require modernization to keep pace with the increasing level of commercial launch activity.

Central to the challenge, according to DOD, is the fact existing “reimbursable fund and contract authority the law provides are insufficient, inflexible, untimely and ineffective in the commercial environment.”

Under current law, DOD “is limited to providing launch services or property ‘otherwise not needed for public use’ for direct cost only and has no acceptable non-federal investment mechanism for improvements,” the proposal states.

The Pentagon said the reimbursement restriction to direct costs “was appropriate when the commercial activity was marginal and, in essence, occupied the unused time between government activities.” But now, DOD says with the growth of commercial space launch it is “subsidizing a commercial endeavor.”

“This may have been appropriate during the nascent beginnings of a vibrant commercial market for space launch services, but is now misaligned with the incredible growth in that industry and estimates for further expansion,” DOD states.

The Pentagon says average launch tempo over the last four years was approximately 30 launches per year from the east and west coasts combined, with the potential to grow to more than 125 launches annually by fiscal year 2026 and “no corresponding increase in appropriated funds to operate, maintain, sustain and improve the ranges.”

To match the pace of launch growth, DOD says it requires “additional contributions from commercial entities.”

The Pentagon also says the inability to recoup the costs to support commercial space launches has already had a “material impact” on the department and will “severely limit our ability to support the anticipated growth in commercial space launches.”

Therefore, DOD requests “increased authority and flexibility to the secretary concerned to support commercial launch activity on DOD launch ranges with necessary cost recovery authorities to match the current expansion by industry.”

A “resource impact” chart accompanying the proposal totaling direct and indirect space launch direct cost reimbursement projects a $95.5 million impact in FY-24, with slight increases leading to $104.3 million FY-28.

“Industry innovation and development has positioned the U.S. as the world leader in space launch activity,” DOD states. “If the department is to continue providing support to the commercial space enterprise to maintain our national advantage, it must have the legal authorities to succeed. Such authorities will enable the department to operate effectively, efficiently and in a sustained manner with commercial space launch entities; maintain and build facilities to meet commercial and department needs; and equitably leverage commercial funding sources to grow space transportation infrastructure and service capacity.”