Atlantic Council

Endless Possibilities for the Future of Space Launch

Intro: Magnus Nordenman,
Deputy Director,
Brent Scowcroft Center

Jeffrey Roncka,
Renaissance Strategic Advisors

Salvatore “Tory” Bruno,
President and CEO,
United Launch Alliance

1030 15th Street, NW,
12th Floor (West Tower),
Washington, D.C.

Time: 4:30 p.m. EST
Date: Thursday, November 13, 2014

Transcript by
Federal News Service
Washington, D.C.

MAGNUS NORDENMAN: Good afternoon, everyone, and welcome to the – to the Atlantic Council. Lots of familiar faces in the audience, and it’s good to see everyone back. And for those who haven’t been here before, again, welcome to the Atlantic Council. Good to have you.

I’m Magnus Nordenman. I’m the deputy director for the – for the Scowcroft Center here at the Atlantic Council. And I’m standing in for Steve Grundman, who is the director of our Emerging Defense Challenges initiative and the producer of this – of this series. But unfortunately, he was delayed in his travel back to Washington, so Steve sends his apologies.

So we’re all here for the 10th edition of the Council’s Captains of Industry series, which is our public speakers’ forum for senior leaders in the defense and aerospace industry. And we are pleased to have with us today Tory Bruno, who’s president and CEO of the United Launch Alliance. And what we’re hoping to do here is to engage business leaders in order to form practical solutions to the challenges found at the nexus of policy and industry. And previously, we have hosted, among others, Textron CEO Ellen Lord, Tom Enders of Airbus and former DEPSECDEF and now Finmeccanica CEO Bill Lynn. So we’re thrilled to now add Tory to that impressive lineup.

I really can’t think of a better time to host Tory here at the Council for his thoughts on the – on the endless possibilities for the future of space launch. And as – space launch is obviously one of the – one of the most talked about sectors in the defense and aerospace industry today, and ULA is very much at the center of that – of that conversation. And in fact, just recently, ULA announced a new partnership with Jeff Bezos’ Blue Origin venture to develop new rocket engines that will be powered by liquid oxygen and liquefied natural gas, which is an exciting development. So I very much look forward to Tory’s remarks and thoughts on the future of space launch and the broader industry.

Before I go ahead and introduce Tory and our – and our evening’s moderator, Jeff Roncka, I just have a few housekeeping items – the standard list to keep in mind. This event is public and on the record, and we are live-streaming it over our website, so please, everyone, be on their best behavior. If our moderator calls on you for a question, please wait for the microphone and identify yourself and your affiliation before asking your question. And third and final, we are tweeting this event, and we can take questions through that channel as well. So please use that – the hashtag #ACCOI – #ACCOI if you would like to use that medium for questions to our moderator and our speaker.

So now it’s my pleasure to introduce Tory, who you’re actually here to listen to. And before becoming president and CEO of United Launch Alliance, he served as vice president of Lockheed Martin strategic and missile defense systems, and before that he has a long and distinguished career within Lockheed in a – in a wide range of engineering and program management positions related to, among others, the Trident system and THAAD. He’s also, perhaps most interestingly, the author of two books on the organization of the Knights Templar from the perspective of modern business management.

And he will be – he will be moderated by Jeff Roncka, who’s a close friend of the Council and a managing partner of Renaissance Strategic Advisors here in Washington. And before joining Renaissance, he was the vice president of Charles River Associates, and he’s also served as the vice president at Global Technology Partners and as an industrial analyst in the office of the undersecretary of defense for acquisition and technology.

With that, I want to turn over the podium to Tory. Tory, many thanks for coming to the Council. It’s great to have you here and the podium is yours. (Applause.)

SALVATORE “TORY” BRUNO: Well, thank you for all having me here and turning out. I’m very excited to be in front of you. And, you know, before I start, I just want to say I’m always really feeling at home when I’m with a group like this – aerospace professionals and space enthusiasts – you know, it’s – this is home for me.

And, you know, the reason that I am always so comfortable with a group like you all is because you understand a lot about our industry, and you understand it in a way that other people do not – because the missions that we do are so critically important for the country and for the world and that’s something that you all grasp. You know, when – you know, when that kid in Afghanistan is climbing up a hill with 90 pounds on his back and he knows what hill he’s on, it’s because of space. And he knows what’s on the other side of the hill and whether it’s safe to go there because of space. And if they get into trouble, they can call for help because of space. So lives are at risk and are protected by the work that we all do.

And the work that NASA does in science – I mean, it’s just – it’s revolutionizing our understanding of the sun, of the effect on our climate. And they are now about to go out and do the rest – and the same for the rest of the solar system. And if you’re closer to my age, I’ve got some bad news for you: Everything they taught you about the sun in school is wrong. It’s all been changed and it’s because of the work that NASA has done; that has been possible only because of the observatories that they have been able to put into space.

And so these missions are more than important. I mean, they’re transcendent. And the job that we do is really not just a job; it’s a calling. And so all of us in this community have answered that calling. And so that’s why I’m always at home with a group like this and why I’m at the same time, you know, sort of humbled to be in the presence of such luminaries as all of you.

And so I thought, you know, I would talk a little bit about our industry. But, you know, as I stand here in front of you today, I just have to tell you that I am – I am gripped by a sense of irrational optimism. You know, despite everything that’s going on in the world – you know, sort of the darkening security environment and the – and the budget constraints that we all operate under and things like sequestration and all those challenges that we have to get up every morning and go in and deal with when we work in this industry, I just know – I know deep down – I feel it every day that we on – are on the very verge of a new era of space exploration, and it’s going to change everything. And so we’re going to go through these challenges, and we’re going to find that we’re about to head on this great adventure of a – of a greatly expanded human presence in space. And the accessibility of space is going to be so much more widespread than it ever has been before that will change, you know, what we do there. There will be missions that we have never conceived of in the past. It’s going to be a completely new thing. And of course, now, you know, I’m proud to say, with our partners at Boeing, we are about to start returning Americans to the space station on American rockets, and I’m very proud of that and very proud of our teammates. So I’m really thrilled to be at ULA at this – at this moment, which I think is really, you know, an important moment in human history, when all this is about to happen.

And, you know, I’ll tell you I have been building rockets my entire life – and I literally mean that. I built my first rocket when I was probably 12 or 13 years old. And I know some of you are thinking, well, that’s not that remarkable; lots of boys and girls build rockets when they’re kids. But, you know, the smart ones went to their parents, and they got them to buy them, you know, the Estes rocket kits, and they built those rockets and they flew them. I was not one of those smart kids. I found a box of moldy old dynamite about 80 years old in the back of my grandmother’s barn. And being a dumb kid, I didn’t know why it was all wet. You know, I later learned that it was because it had sweated out the nitroglycerine. So I took my pen knife and I cut open to sticks and I pulled out the powder and I pulled out the paper and the cloth and I built my own rocket engines and I built my own rockets. And, you know, I’m proud that I can tell you a couple of them actually got off the pad before they exploded. But I’m more pleased to tell you that I survived it, and I’m here with you now. So I feel that I was spared to be with you here at the Atlantic Council tonight.

But, you know – you know, those of us in the industry who built rockets for a living and have done it all their lives know that they are very different kinds of machines. A rocket is a complex, powerful and unforgiving machine and every time we take a fragile, tiny spacecraft and we put it on top of one of these devices and we light that off and there’s a million pounds of thrust coming out the bottom and we blast that thing on a fountain of fire up into space at impossible velocities, we are defying mother nature. It takes very special people to do that kind of work. It takes experience, it takes dedication, an incredible attention to detail and an ever-present awareness of what is at risk when we do that. The missions we lift are vitally important to our country and to mankind at large. Lives are at stake. When we launch a science mission and you sit there with the principal investigator, who is perhaps one of the world’s leading experts in some topic – he’s designed this experiment, he’s done this research, he or she is now there in the room with you – probably their entire career has come to a focus at that moment when you put their experiment into space to find out if it’s true or not, or to close that loop. And it’s a heavy responsibility, when you think about it, all of that put together.

And so we have done – you know, at ULA – what we have been asked to do by our country. We have provided a capability that will go from Leo to Pluto. We can do it all. Tiny payloads, large payloads, a full mission spectrum that has not really been performed by anyone else. And we have done that with absolute certainty. We’re at now 89, a perfect record of mission success. We’ll be in the 90s before the end of the year, and on to a hundred and wherever.

When a customer comes to us and we take on that heavy responsibility, they know it will work. It will be on the pad when it’s needed. And it will cost what it was agreed to cost. And so that’s a great heritage. And we’re very proud of that. But as we stand now on this verge of this important moment in human history when space is going to become so much more accessible and the missions have expanded to great, great bounds, we’re going to have to change because now the country demands of us new things.

And so we’re going to do what we need to do in order to enable that future that I just talked about a moment ago. And so as the leader of that organization, I’ll share with you that I am going to transform this company. We’re going to cash in some of that experience we have now over those years – nearly a hundred flights, if we count the heritage platforms before them, a thousand – cash in that experience so that we can make our processes faster and more agile and more streamlined and more affordable, because now we know what matters, what doesn’t matter, what’s along for the ride, what really adds value. We have the experience to now make those choices and those judgments.

And I’m going to reorganize our company to make it so much more agile. We’ll be introducing a new business model for how we interface with our customers and sell our launch services that will make it so much more accessible for commercial customers and commercial-like missions out of NASA, but also so much more empowering for our traditional government customers.

We’ll have a basic product line offering and a basic set of services that they know what that will cost, and then they will be able to add value to that where they have unique needs and make their own cost rates and their scheduled choices and do something that they have really not been able to do in the past. It’s really going to revolutionize the way both sets of customers are able to come to us.

You know, forming the ULA was important for our country. You know, from then, you know, till today, we’ve really cut the cost of launch in half. We’re going to go cut it half again. Then we’re going to cut our cycle time to launch in half so that it will be much more easy to come to the range and have a slot and put your important mission or your important payload into space. And we will transition off of our venerable RD-180 Russian rocket engine onto an American engine and offer an American solution as part of an entirely new next-generation launch system for our company.

Those trade are nearly done. And I promise that when they are complete, I will be back with all of you in whatever forum to let you know what that new system looks like very soon. And so I – you know, just to make the remarks brief, I see a very bright future for our industry. Don’t be distracted by these daily, you know, challenges that we have, because this is a very, very exciting time. And ULA will be here to answer that call.

And on a personal note, again, you know, I feel that I was spared. I am so fortunate to have survived my early rocketeering attempts to be able to see that happen. And I’m really humbled to be here with all of you because as – you know, as professionals and enthusiasts in our space community, it’s really all of us that are going to do this. You know, I mean, ULA is America’s ride to space. It’s going to continue. But all of us together are going to create this tremendous, bright future. And I’m just so excited.

Thank you all. I appreciate your attention. (Applause.)

JEFFREY RONCKA: Well, Tory, I think sit down.

MR. BRUNO: Oh, thanks.

MR. RONCKA: So, hello, everyone. For those of you who have been here before, you know I am not Steve Grundman, the typical moderator, but I do have my little reporter’s notebook that he typically carries.

So this opens the public Q-and-A session of the event. And I would like to remind you all of two things and, Tory, one in particular for you is that since this is an on-the-record session, everything you say can and may be used against you. (Laughter.) And secondly, we have some council members walking with microphones, I believe. And so when you want to ask a question, I’d ask you to please stand, wait for the microphone, identify yourself and the ask the question, so that way we have a complete record of the event.

Before turning it over to the sort of – the general session, I guess I wanted to share a few remarks. And we were talking before we came out that I actually first heard and started working on the EELV program, which of course is what ULA is built around, back in 1995 when I was just entering government service in OSD and the in the acquisition community.

And this was, of course, they heyday of commercial dual use, taking advantage of a lot of the cutting-edge investments that were going on in the telecom technology area, and really figuring out how to leverage that in a period of constrained budgets – not too different than some of the constrained environments we’re in today.

And the EELV program was always identified as really kind of an innovative model for prime contractors sharing their investments – right, so going to invest significant money, the government will match it. But the idea really was to think about space as an integrated market and build a solution that would both satisfy the government requirement and also allow the companies to take advantage of what was expected to be significant commercial opportunities.

And I see that really as sort of the beginning of a lot of the attempts to sort of better integrate and leverage the government-specific and the commercial space industry. And so, you know, I look back almost 20 years, you know, now and I think about how has that been? And there’s a tremendous amount of success – everything from, as you mentioned, really the unrivaled launch success of the ULA – the EELV systems, launching some of the most critical payloads.

You think about on the commercial space imagery side, there have been successes where the government has used a similar model, the Space Act, really sort of the government working with new starts like SpaceX, and not to mention on the whole communication architecture side things like worldview. So there’s been great successes.

But I’m also troubled when I think about it, from sort of a policy perspective there’s some issues that would trouble me if I were in the government today thinking about this. And that is the fragility of the U.S. rocket motor industrial base, the cost issues that have been associated – not just on the launch side, but on the spacecraft side – that continue to be challenging, and, frankly, the dependence on non-U.S. sources of supply which, in a globalized world we need, but on the other hand can be tricky in certain circumstances.

So I’d ask you, Tory, you know, having spent your career in the space sector, as you noted, what should people have learned from this 20-year history of successes and challenges? And in looking at that, you know, how does that still make you an optimist?

MR. BRUNO: Sure. Well, you know, back in ’95 things were different. I had a full bushy head of hair. (Laughter.) And I think I might have had a ponytail. I’m not sure. At least, I remember it that way. But you know, really that vision that existed then was just ahead of its time. And what we’re seeing today is that that industry has finally matured.

And that time is actually with us right now. And enlightened government customers I think embrace the economics of that and they understand that they can play a role in enabling commercial applications of space. And in doing it in the right way, can make space more affordable for everyone, including the government customer.

You know, like all businesses, you know, the more activity there is and the higher the volume through our factories, the more affordable this can be. And right now, you know, the – our – you know, our policy leaders and our customers are actually kind of excited about that possibility. And I think they’re a little bit afraid because, you know, it’s a big challenge.

But you know, they’re really up to it and they’re asking the right kinds of questions and they’re engaging, certainly, with us and I imagine other members of the lift industry about, you know, how can they do that? How can they remove obstacles and facilitate us sort of adding to that government activity with, you know, commercial access or commercial-like models that can be applied to government work and really open up that future. So I – you know, just today I was in the Pentagon and on the Hill talking to policymakers and some of our representatives, and that was the subject of the conversation. And I think there’s a very clear path around some of these challenges, and I sense that people today, in a way that they have not been in the past, are really ready to embrace that.

MR. RONCKA: And I think one of the things that occurred to me as – listening to you speak is that there is oftentimes – would appear to be conflicting or mutually exclusive agendas. So competition – we want to lower prices, open things up to competition, global source – with yet at the same time the need to have security of supply – after all, our critical overhead architecture relies on launching sometimes very unique sized and configured things that have to go on a U.S. platform with a desire to leverage commercial investments. So how all those play into the development of an acquisition strategy? What does the contracting officer thing when you’re negotiating with partners? Who has the rights to IP? On the one hand, it seems like this opportunity space that we have today – and it’s really wonderful, the amount of private investment – creates sort of a Wild West atmosphere. How do you integrate those things? And can they truly be win-win for everyone?

MR. BRUNO: I think they can. You know – you know, a lot of folks look at that landscape that you described, and they think of those as mutually exclusive kind of objectives. And I don’t see them that way at all, actually.

You know, IP is an interesting topic, you know, and when the government looks at intellectual property, you know, there is a – there is a tendency to say, well, you know, we want to own that in the government so that should we need to move a particular task or a particular activity to another company, they’re able to do that. You know, the reality in my experience over the years is that, you know, having – you know, having a spec or having a drawing package is really half of what it takes to do something. You know, the experience, the know-how, the things you can’t put down on paper are just as important. And so that IP is not of the same – really not of the value I think some people associate it with.

And, you know, what I’ve – what – and so when companies put in their own investment, they’ll do the same thing. They’ll say, well, you know, we’re going to reserve rights, and that’s fine. But sometimes they go as far as to say we’re not going to share, we’re not going to provide access, even, to the government to understand what’s going on. And I’ve never found that to be a good policy, you know. You know, our policy at ULA and the way I’ve done business my whole career is to be transparent with our customers. You know, I talked about this when I was at the podium. The missions are vitally important. And even though – you know, even commercial activities, commercial telecommunications satellite, you know, maybe it’s not a lifesaving mission, but it could be the lifeblood of that company. I think they have a right to know and have access and that providers should be completely transparent. And sometimes we just get wrapped around these, you know, issues of proprietary information a little too tightly.

You know, you got to remember that as I said a minute ago, there’s more to it than just, you know, the paper knowledge of what it is. And there’s also where you are in the life cycle. You know, all proprietary technology is perishable. All of those advantages only have a certain amount of time. If you were already doing this, and you’re well ahead of your competition, chances are, either A, they’ve already fallen in love with their solution, and they wouldn’t change even if they knew all about yours, or B, they couldn’t get to your level of maturity fast enough to make a difference before you’ve moved on to the next competitive advantage. And so I tend to be a little bit more liberal about what things are protected and what are not.

MR. RONCKA: OK. And the last question before I’ll open it up, so get your questions ready – you are CEO of an interesting entity in many ways. So if I think about joint venture – so there is shared ownerships, and at some point in the life cycle of joint venture, interest may or may not change – you sit atop of an absolute product that is critical to national security, and you are the systems integrator for that, so you have a very strong and tight relationship with your government customers, sort of mutual dependence. And yet here we sit at sort of a policy and technological issue of changing out some of the boost phase, the rocket motors and trying to address national security concerns and political concerns. You have a choice as a systems integrators in some respects to answer and solve that in different ways.

So it seems like the blue origin approach is proposing an innovative way of saving the government money and working to address that. But it moves down a particular path that is a little bit more vertically integrated than – there might be other options. How do you as a CEO sort of balance these things and think about sort of addressing the challenges of what – in this kind of an environment, your risk of being the sort of welcoming all technology open, I can integrate these into my system (device ?), hey, I have a really good solution, and I now have to get a little bit more vertically than the past. How do you balance those things? Because each one could work very well for the customer.

MR. BRUNO: Sure. Well, you used the right word. It’s about balance. You know, companies that are really heavily outsourced and are what we call in industry thin integrators, over time, you know, their technology skills to integrate atrophied by their lack of knowledge of those technologies. On the other hand, you know, if you are too heavily integrated, you’re going to end up over time losing innovation. Good ideas come from all over. Nobody’s got a monopoly on them. I mean, that’s why the government encourages and I support, you know, inclusion of small businesses, for example. You know, we really want that diverse set of ideas brought to the table. I mean, these are America’s most challenging technological problems. So you want to get that mix. So you want to have enough – you know, enough in-house content that your technologists are sharp and they’re informed buyers when they work with their supply chain, and they know enough about, you know, the technology to make informed decisions that don’t go all the way down. I find that always to be a mistake.

MR. RONCKA: Right. Right.

OK. So now, let’s take some questions from the floor, and I’ll – we’ll start with this gentleman here.

Q: Hi, I’m Pat Host with Defense Daily. Tory, I kind of have a stupid question. Do you bring any unique insight to a launch company from your experience in missile defense? Obviously, rockets are rockets. I’m just wondering if that’s a unique transition or if many people just stay in, like, a space organization.

MR. BRUNO: Well, I think I do. (Chuckles.)

So there is a couple of things that I bring from my prior experiences. I mean, the first is an understanding of high consequence technology and the importance of mission. You know, the work that we do is so vitally important, and you have to feel that in your boots, I mean, all the way down, and understand the consequences of the decisions that you make. You know, lives can be at risk. So you bring all of that over.

Now, the other thing I’ll talk about is maybe a little specific to the – you know, to the government work and the military work that we do. You know, one of the things you do when you’re a private contractor and I think in a way that sometimes the government is not able to do is to be able to step back from the daily fray and try and look far down the road, a decade, two decades; that’s part of our responsibility in this government industrial partnership is to be looking way out and trying to anticipate these enduring trends. What is going to be demanded of us by our customers in the future? Because it takes a very long time to develop some of these technologies and to position the product to be able to support them.

And so from the side of the business I came from, I have a lot of knowledge and experience and things I can’t talk about that inform me about the – you know, the future needs of our government and what will be required, you know, really to ensure the security of the country going out another decade or so. And so that’s a perspective that is added to what we already have on ULA, and unique in a lot of respects. So we’ve been able to kind of lean into that mission space.

MR. RONCKA: Let me – let me have a little follow up, if I may, that you mentioned sort of the unique requirements and insights into things. When you look to a new supplier or new provider of engine technology or what have you, particularly with some of the very stringent mission assurance requirements levied by customers like NRO, how do you – how you do manage that process and vet them when it’s a largely sort of independent development effort?

MR. BRUNO: Sure. Well, the same thing I said I provide our customers I demand from our supply chain: complete transparency. And, you know, Blue is a great example. We had been working with them for quite some time, and one of the things that appealed to us about them was their seriousness about how they’ve gone about this work. They’ve been at it for years. A lot of people didn’t know that company existed. They didn’t know what they were doing if they did know they existed. And they had their head down, focusing on the rocket science, doing it in the right sort of way.

And so that lack of hype, you know, and sort of flamboyance that we’ve seen in some new entrants in this industry was really absent there. These were very serious people. And we got inside and really got to know them and we started recognizing a lot of faces that we knew. Some of the best rocket scientists in the country had found their way over there, and, you know, because it matters not just what they’re doing and the technology that they’re exploring but how they go about the work.

MR. RONCKA: Sure. Sure.

MR. BRUNO: It’s a serious business.

MR. RONCKA: We had a question in the back.

Q: Good afternoon. My name is Royce Dalby. I’m with Avascent. I have two questions, if I may.

The first one feeds off of the initial comments that you made, Tory. You were talking about the transparency in your pricing. And unless I heard you wrong, it sounded like you were saying as well that partly that was for potentially commercial clients. And I wanted to understand – my understanding is that the provenance of commercial sales has always been with Boeing and Lockheed, and ULA has only sold to the U.S. government. So my first question is, are you going to start doing commercial sales via ULA?

The second question is, especially in light with your partnership with Blue, what is your view of an independent DOD procurement for a new rocket engine? Thank you.

MR. BRUNO: Sure. So let me start with the commercial thing. You know, it really doesn’t matter who the prime is. You know, the types of things we’re going to do with this very innovative business model are going to enable that activity for everybody. So that’s really not an important issue to us one way or the other.

I’m sorry, what was the second part of your question?

Q: The second question was about the DOD procurement of an independent rocket engine.

MR. BRUNO: Certainly. So, you know, I think it’s important to stay focused on the big picture if you’re the government. And, you know, what are you buying? You’re buying launch services, OK? You’re not – you’re not buying an engine. You’re not buying a fairing or a tank. You’re buying access to space. You know, you have a valuable payload that might represent, you know, a significant portion of the nation’s treasure. It’s one of a kind. You know, its – you know, lives are dependent upon it. That’s what you need done.

And so I – you know, my recommendation is not necessarily to overly focus on a specific component on the rocket; you know, enable industry to develop the launch service that will satisfy the national need. You don’t want to go off in a corner and develop a rocket engine that maybe is sort of a one size fits no one. Rockets are integrated systems.

And so, you know, what I have been advising is that they enable those investments to happen by private industry with their own funding and their own policy changes so that we can provide the right solution for the country, all of us, in whatever that solution might be.

MR. RONCKA: OK, in the front here and then we’ll go to the back.

Q: Hi, Tory. Adam Marks with Thales –

(Cross talk.)

Q: Hi there. Adam Marks with the Thales Group. Thank you for your contributions to national security.

So my question is about the component in a key technology, which is rocket fuel. And you mentioned your partnership with Blue Origin. What’s your – I’d be curious to your insights on, you know, the future for solid state rocket fuel versus other types, both for rockets – and then whereas solid state propellant has been the de facto choice for missiles as well, do you see that course changing in any fundamental way?

MR. BRUNO: I don’t. You know, physics are really physics. And see, now you did it. You’ve got rocket scientists up here and you’re asking us to talk about rocket science, so you’ve got to cut me off when it’s too long.

MR. RONCKA: Will do. I’ve got the watch on.

MR. BRUNO: OK. All right. (Chuckles.)

So, you know, we go to solid propellants because they’re always ready to go. That’s why you see them in, you know, missile applications, and why some of the countries that are sort of entering the scene now, some of them not necessarily friendly, you know, they start with liquids but as they develop that mature technology they’ll move to solids for their promptness and their readiness. And they have tremendous energy density and they work very well when the application is, you know, relatively small in terms of the payload that it’s lifting.

As we get larger and larger, we start becoming more interested in the higher performance of liquid propellants. The problem is, on the top of every liquid rocket engine is this giant set of turbo machinery that pumps all those high, you know, volatile fluids around. And it’s heavy and it’s expensive to make. So the trades, the engineering trades, tend to favor solids for little things or for incremental adjustments.

You’ll notice that many people, like ULA for example, have solid strap-ons and configurations for our rockets. We can add or subtract them. But, you know, for a small launch vehicle that’s fixed, the turbo machinery doesn’t – it eats up too much weight. And so, no, I don’t see a fundamental change, certainly in those physics or the technology that would enable a change.

What’s interesting about the Blue Origin engine and its propellant choice is it’s moved to methane via liquefied natural gas. Now, that’s a propellant that’s been around a long time and been used in rocketry but not on this scale. And so, you know, increasing to that size rocket engine with that propellant is very attractive because it’s inexpensive, it’s easily, you know, accessible and it burns very clean.

So it enables, you know, reusability of the engine. It makes testing simpler because you can fire the same engine several times to test different, you know, situations, different environments without having to completely tear the engine apart and rebuild it. So there’s a lot of attractive things about it.

MR. RONCKA: The gentleman in the back.

Q: Thank you. My name is Ivan Lebedev. I am with the Russian News Agency TASS and my question is about RD-180. And the question is, how many engines do you have in stock now? How many are you going to receive according to the current contract with RD-AMROSS? How many will you need to fulfill all your obligations according to the agreement with the Air Force? And is there the possibility that you will need the new contract with RD-AMROSS on these engines?

And one more, if I may. You said –

MR. BRUNO: You may have to keep track of all of –

MR. RONCKA: I was going to say – (laughter).

Q: You said in an interview with the Space News published this week that you are talking to them to get eight engines next year instead of five. And I’m just wondering, what’s the reason to try to accelerate their acquisition if you have a firm contract and you know that you can – you can get them? Thank you so much.

MR. BRUNO: Certainly. So, you know, let me say first the RD-180 is a – you know, I mean, it’s a great engine. We have it underneath our Atlas Launch Vehicle. It’s there because the U.S. government asked us, at the end of the Cold War, if we would not take a look at that engine and consider using it because, you know, they understood it was some of the latest technology coming from the old Soviet Union and it was advanced. And it was a great engine. It’s a great engine today. It’s very reliable and it has terrific performance.

The reason we are moving past that engine is because – for two reasons. As we look down into the marketspace, we can see that now is an opportune time for us to have an engine of higher performance and update the technology from the ’70s and ’80s to now, you know, this era, and incorporate additive manufacturing and things that allow us to, you know, build the engine lighter and with higher thrust and more easily produced. So that’s why we’re changing.

You know, the question about, well, how many do I have: I have inventory for a couple of years’ worth of launch. And the reason we’re accelerating the production rate of our current contract deliveries is because we’re anticipating the need for Atlas to increase in the near term, and so we want to make sure we have adequate assets on hand so that we have the flexibility to do that. And there must have been another part or two in there that I missed.

MR. RONCKA: It was about the RD-180 though.

MR. BRUNO: It was indeed.

MR. RONCKA: Let me follow that up a little bit, if I may, with – again, this gets back to the intersection, sometimes challenge of managing a program like yours when you have political changes both in Congress and the international scene. You know, there’s language up on the Hill talking about incentivizing companies to find other sources, if I can put it that way, the 1623 provision. Sometimes the arcanery of a small provision like that can have massive implications, potentially, on not just the company but the way the industrial base responds and the time in which it needs to respond. So maybe you might want to expand on that a little bit.

MR. BRUNO: Certainly. I can talk about that. So you’re referring to Senator McCain’s amendment to the authorizations act, 1623. And as it was originally drafted – and, you know, in government they work on, you know, translating policy into law and they work on the language. And, you know, they’re informed by industry sometimes. We give them the data so that they can make good decisions. As it was originally drafted, it was a very harmful set of language, I think in a way that the drafters did not intend. It was very anti-competitive, really. It would have created a ban on ULA from, you know, really participating in national security lift. Simply because we had, you know, the RD-180 in our product line, we would not even have been allowed to offer the Delta, which has not – you know, does not have an RD-180 in it. I don’t think that was the intention. And so, you know, when we saw the language, you know, we – you know, we understood it. We went up to the Hill and we shared with folks what this would really do to the industry and how it would sort of, you know, really take, you know, the premier provider of lift in the world, really, off the table at a time before, you know, other companies were certified or had the technical capability for the full range of payloads and leave our country with a gap in lifting national security payloads that are already planned and manifested. And so they’ve been off to try and rework that language to, you know, satisfy the original intent of it without creating that unintended consequence. And I understand the conferees are off, you know, doing government’s work right now, and we (anxiously ?) await, you know, how that turns out.


Question here.

Q: Mike Malino (ph) with Lydos (ph). You spoke briefly about the perfect launch record you have and then going to – now looking at costs and cutting out costs. Do the two recent accidents cause any pause in that shift and change the way you’re going to go about that?

MR. BRUNO: So, you know, as I said when I was standing up a moment ago, this is difficult work and, you know, tragedies like that are not something that you wish on anyone. It puts stress on the customer. It’s hard on the industry. You know, I happened to be friend with Dave Thompson. We’ve worked together for years. You know, I reached out to him and said, hey, you know, I know what it’s like, and it’s tough. You know, hang in there.

No, it really doesn’t because, you know, sort of the intellectual pause that you talk about is really built into the way we do business already. You know, you’ll never hear us say 89 consecutive launches. We launched 89 one at a time. No one is ever more than one defective part, you know, one loose o-ring away from, you know, what you’ve seen happen. It just takes incredible attention to detail. You know, anyone on the assembly line at our company, at our factory, anyone at the launch pad can raise their hand and stop the whole operation. You know, if there’s anything in question, if you’re not certain what’s going on, we stop and we make it right before we move on.

And when I talked about streamlining those processes, you know, I referenced our experience, and so let me give you an example of what I really mean by that. You know, when you do this kind of work and you start a new, you know, rocket or you start a new process, you make very conservative decisions, and so some of our components are tested many, many times as they go through the assembly of the rocket. They’re tested at when they’re –say it’s an electronic part. It might be tested as a card and then it might be tested as a card within a box at the box level. It might be tested as a subsystem and it might go through our simulation integration laboratory. It’ll be tested a couple more times as the rocket continues to, you know, get built up. Why are we testing it so many times? Well, we’re not always sure when we start which pieces of technology are going to be the least likely to survive to the end, so we test them early so that if they’re going to fail or have an issue, we can extract them early in the process before we’ve invested a lot of money and it’s difficult to, you know, remove them from a fully assembled rocket and have to do retesting just because we took it apart. Eighty nine later, we understand that technology much better and we have a very mature record of saying, you know what, that card never fails, and so I’m going to test that card, but I’m not going to test it at the card level. I’m willing to wait further downstream, because the odds of us having to have – you know, pull it out later and spend the money and schedule to do that are pretty low. So it’s a pretty good risk. We haven’t lessened the reliability. We have not ceased testing the item. We’ve just made smarter decisions about how efficiently to do it. So there’s a whole host of things like that that are really about our product and our experience with it and not, you know, things that have happened with other people.

MR. RONCKA: OK, we had in the back, and then we’ll come forward in the front here.

Q: (Name inaudible) – with CSIS. Both the Atlas 5 and the Dafor (ph) are the same – (inaudible) – engine. Do you have any thinking about upgrading this engine as well?

MR. BRUNO: I’m sorry, could you repeat your question.

Q: I’m talking about the Arrow 10 engine, which is a common engine on both (launcher ?), which is very old but very reliable.

MR. BRUNO: The Arrow 10.

Q: Do you have any plans to upgrade it?

MR. BRUNO: Oh, OK. So for everyone else in the room, so, you know, the RL-10 is the engine on our upper stage of both vehicles – another great engine and another engine whose technology is from a few years ago. And the question was, do I have any plans to upgrade that engine. I’ll just say that we have a complete vision of where this launch vehicle ends up, starting with, you know, the American engine replacing (under ?) the first stage and then a whole set of trays just now finishing on what that new launch system will look like. And we are absolutely studying that upper stage, but I’m not ready to tell you what it all looks like yet. But I will soon.

MR. RONCKA: OK. Maybe in the front?

Q: Hi, Jacob Markish (ph), Renaissance Strategic Advisors. Just to follow that thread a little bit about looking out to the future, the next generation of systems, if you look a little bit farther out, 10, 20 years out, going back to the technology theme as well, could you tell us how you think about the potential and the value of investing and in developing reusable launch systems – you know, a concept that’s been tried a number of times – (inaudible) – different things. How do you – how do you view that area?

MR. BRUNO: Sure. So you’re asking the expendable launch vehicle guy what he thinks about reusables. OK. (Laughter.) Well, their time will come. I’m absolutely convinced of that. It’s not here yet. And, you know, again, I’ll give you an overly simplistic answer just to kind of, you know, wrap that in sort of some foundational physics. You know, depending on what the return to Earth approach is – and let’s say it’s powered flight to Earth, not necessarily re-entry flight – a whole bunch of fuel goes up that you don’t use to get, you know, the job done, which is to put a payload at a specific orbit. And when you build a rocket, if you’re doing a good job, 90-plus percent of what is sitting on the paid before you light that monster is propellant. And if it isn’t something that burns, it’s not payload. It’s waste. And that’s how rocket engineers see the world. So if you’re carrying a bunch of propellant so that you can fly yourself back to the Earth, that’s all energy you could have used to put a bigger payload, you know, in the same orbit or, you know, the same payload further up.

So that means, you know, really you’re going to have to fundamentally change the technology so that that math changes if it’s powered back to Earth. If it’s re-entered to Earth, there are a whole, you know, set of technical challenges on large bodies that have to be overcome. That will be the technology we see first.

And I have some insight there. In my prior life I did an awful lot of hypersonics. So I sort of understand that. And we see people moving in the direction now, and it’s very exciting. That’s what we’ll see first. Then we’ll see the other technology later. But for the near term expendable is going to be the most practical and cost-effective access to space.

MR. RONCKA: So we have a question from our Twitter crowd, so technology in action, although I would note that of course it had to be handed to me on a piece of paper. (Laughter.) So technology does have limits.

The question is, with the BE-4 boosters – so this is the Blue Origin proposed engine – be human rated from the start, or will the Atlas V with the RD-180s on it remain for a potential man-rated space applications?

MR. BRUNO: Sure.

MR. RONCKA: So it’s an astronaut fan out there or something.

MR. BRUNO: Yeah. What a great question. And the answer is I don’t know. It depends on, you know, when we get there – and we’re going to be ready to work on certification flights in about 2019 – you know, what are the first demands upon us. And if it is a, you know – you know, crew mission to the International Space Station, then we would certify for that. If it’s not, then we would certify for nonhuman flight first and then later do that.

MR. RONCKA: Right. OK.

So we’re coming up towards the end of the Q-and-A session, but I would say that the left side has asked far more questions than the right, so is there anyone who would like to get in a last question or two? Yeah, Judy.

Q: (Just ?) trying to hold up the right side. (Laughter.)

Hi. I’m Judy Miller. I’m on the Executive Committee of the Atlantic Council. I’m curious about how you perceive the rocket science base, actually, the people who are working in this area. I mean, it’s been a constant refrain for a number of years more broadly in the defense sector that we’re losing the human talent we need.

MR. BRUNO: Sure.

Q: But I sounds like a lot is happening, so I’m just curious what your take on that is.

MR. BRUNO: Well, there is a lot happening, but the character of, you know, the rocket scientist base, the human talent, is different now than it was in past years. And it’s really important in our industry to understand that this business really is all about our people. We’re not one of those industries where, you know, the thing that differentiates you from your competitor is some gigantic, you know, capital investment you made first. You know, we’re not like that at all. It’s all about the rocket scientists and the technicians and the planners and all those people who have, you know, all that experience and that dedication and the skill and the knowledge. And so today is different than the early ’90s and eras before in that the industry’s smaller.

And so in those days you didn’t – there – you know, there was so much activity everywhere. You didn’t have to manage knowledge. You know, the – every department in every company was a big institution unto itself. And so today we actually manage it. And that has been a passion of mine for a number of years in various positions I’ve had, where we have refined over the time really at least knowledge management programs that provide great opportunity for people entering into the industry to sort of accelerate the development of their careers and to, you know, take on responsibility much earlier than they would have in years past or in the absence of that.

And so, you know, what we do is we come in and we look at our business and what’s asked of us, and we figure out sort of the core capabilities that a company like ours has to have. And then, you know, I’m always embarrassed when I have human resource professionals around, because we see everything as a systems engineering problem, even people. (Chuckles.) And so we break those things down into specific skills, and we find out who experts are, and then we pair them as a – as a mentor with a protégé, and we boil their knowledge down to sort of a checklist of education – and by the way, mostly experience – and then that person’s manager and that mentor come together, and they over time create opportunities and assignments for those people to work down that checklist. And at the end of that journey and where I’ve done this in the past, it – we can accelerate a person to becoming an expert two to three years. They get certified and recognized and anointed. You are now the expert of high-speed turbo machinery.

MR. RONCKA: Clearly not me, but – (laughter) –

MR. BRUNO: And so that’s how we approach it. It’s absolutely a doable do. You just have to put the energy in.

MR. RONCKA: So I have one final question and maybe ask if you had any closing remarks. But this last question really comes from an Atlantic Council perspective, a global perspective. I’ll call it the oceanic council, given the global source of supply and talent.

You mentioned that the industry is smaller than it used to be. Perhaps here, but I think about the global technology base, and I look at some of the space launch or also spacecraft activities that people are doing in countries like Nigeria with active space capabilities and developments and everywhere else. There’s a massive pool of talent and energy and money to take advantage of, and the question is, how does a company or the U.S. government do that? So I’m going to ask you to for the moment take off your CEO hat –


MR. RONCKA: – and think more broadly from a policy perspective. What should the United States government be doing or stakeholders like yourselves to really improve the ability to cooperate across that and really leverage that?

MR. BRUNO: Sure. You know, what – you got to start with first principles, which are that, you know, this nation has a vast network of friends and allies. It’s one of the things that has contributed to global security in the – in the by and large pervasive state of peace that exists, you know, across the planet today.

And bearing that in mind, it’s important for friends and allies to be more capable and more prosperous. If you’ll just, you know, excuse me for being patriotic for a moment, I mean, I will tell you that this country has done more to advance the state of human dignity than any other institution in the history of mankind. I believe that firmly. And if you don’t think that’s true, you don’t understand history very well.

And so when we look about technology overseas, sometimes there’s a knee-jerk reaction around regulations, about export control, for fear of providing technological advantage to nations who are not a member of this community, who are bad actors. And that’s an absolutely important concern, and I support it wholeheartedly, and you know I do, based on what I used to do before I came here. But everybody else – let’s take an active interest in building their capability.

And most of those countries, in my experience, because I have done business overseas in my prior role with our allies, around primarily defensive systems and others, what they’re really looking for is to partner with American industry and to build over time, you know, domestic capability, to improve their economy and to, you know, bring prosperity to their people. And if we – you know, if the government will take that posture and make intelligent choices about export control and expedite the process – there are times when it can be very, very slow, because it’s simply not a priority for the specific agency that’s been tasked to go be the front person for that, and those – you know, and they can be so slow that those opportunities –

MR. RONCKA: Go away.

MR. BRUNO: – go away. And the country in question either goes to another solution, maybe one we wouldn’t like, or they perhaps give up and they try and do something else that would not be as impactful and as beneficial for their people.


Last call for any questions. Tory, any last remarks?

MR. BRUNO: Boy, I think we’ve covered anything, you know, or – and everything. You know, I think that I just want to thank you all for coming out and asking such great questions and giving me a chance to talk to you. Thank you.

MR. RONCKA: Thank you for coming. (Applause.)