Thursday, May 22, 2014

(BN) The Musk Show in Washington Roils Rivals as Fans Applaud

(Bloomberg ) It's been quite a show since Elon Musk arrived in Washington, picking fights with competitors, suing the world's largest military and jumping into a U.S.- Russia dispute that may risk international space cooperation.

The chief executive officer of Space Exploration Technologies Corp., which is seeking to break into a roughly $70 billion Pentagon satellite launch market, operates outside the traditional ways of seeking influence and building relationships in the nation's capital.

While Musk might be in danger of alienating federal contractors and agencies, the 42-year-old billionaire's efforts to spur competition and cut government costs have won support among lawmakers and an advocacy group.

"A lot of people would look at that and say, 'You're biting the hand that feeds you,'" said Scott Amey, general counsel at the Project on Government Oversight, a Washington-based nonprofit group. "But he's been shut out of the launch business. I applaud them for thinking out of the box and taking any advantage possible to break into the government's launch business.

SpaceX, based in Hawthorne, California, became the first to dock a private, unmanned supply ship at the International Space Station in 2012. It is one of several companies developing vehicles capable of transporting astronauts, which is designed to end the U.S.'s reliance on Russia for those rides.

'Wrong Time'

Musk's push into the military launch market helped ignite one of the biggest public feuds between contractors in years.

In March, Musk, who's also the CEO of Tesla Motors Inc. (TSLA), told members of Congress that military satellite launches may be at risk because a joint venture of Lockheed Martin Corp. (LMT) and Boeing Co. (BA), the top two federal contractors, relies on Russian rocket engines.

Musk criticized both the venture, United Launch Alliance LLC, and the Air Force. "In light of international events, this seems like the wrong time to send hundreds of millions of dollars to the Kremlin," he told reporters April 25 at the National Press Club.

At the same time, he announced that SpaceX would sue the Air Force. The lawsuit, filed three days later, accused the service of creating an illegal monopoly.

Rocket Engines

The Air Force's top uniformed acquisition official said the service is spending about $60 million and using as many as 100 people to certify SpaceX for the launches. "We've got folks busting their butt to get SpaceX certified despite what everything in the media seems to say," Lieutenant General Charles Davis said in a May 8 interview.

Matthew Stines, an Air Force spokesman, declined to comment on Musk, citing the lawsuit.

Russia said last week it will no longer export rocket engines to the U.S. for military launches. Russian Deputy Prime Minister Dmitry Rogozin also said the country will withdraw cooperation from the space station after 2020.

Rogozin was among the Russian officials singled out for U.S. economic sanctions over his country's takeover of Crimea from Ukraine.

United Launch Alliance, which has spent the past several months defending itself, went on the offensive after Rogozin's comments were reported May 13.

'Big Boys'

"If recent news reports are accurate, it affirms that SpaceX's irresponsible actions have created unnecessary distractions, threatened U.S. military satellite operations, and undermined our future relationship with the International Space Station," its spokeswoman, Jessica Rye, said in an e-mail last week.

Musk's actions may hurt SpaceX's relationships with big contractors, the Defense Department and the National Aeronautics and Space Administration, said James Thurber, director of the Center for Congressional and Presidential Studies at American University in Washington.

"When you start pushing big boys around, people may not get mad, but they'll get even," Thurber said. "Doors will close, and it will make it much more difficult for him in the advocacy world."

In federal contracting, though, SpaceX may be able to afford to make a few enemies. It builds its own rockets, engines and spacecraft -- and doesn't need to partner with big contractors, said Jeff Foust, a senior analyst at Futron Corp., a Bethesda, Maryland-based consulting firm specializing in aerospace and technology.

Business Relations

"Among the big aerospace companies, the company you're competing against today you might be partnering with tomorrow," he said. "SpaceX isn't like that. They're not jeopardizing any conceivable business relationship that they might have."

Musk has a history of needling those who stand in his way.

In a blog post, Musk criticized New Jersey Governor Chris Christie after the state said in March it wouldn't allow Tesla to sell electric cars directly to the public.

"The rationale given for the regulation change that requires auto companies to sell through dealers is that it ensures 'consumer protection,'" Musk wrote. "If you believe this, Gov. Christie has a bridge closure he wants to sell you!"

Musk has suggested that Orbital Sciences Corp. (ORB) deserves fewer missions to supply the space station. Unlike SpaceX, Dulles, Virginia-based Orbital delivers cargo to the station using a one-way spacecraft that burns up on its return.

"They take up less than we do and they take nothing down, and they get paid twice as much per mission as we do," Musk said in an April presentation at the U.S. Export-Import Bank's annual conference in Washington.

'Discover Unicorns'

As for Blue Origin LLC, founded by Inc. (AMZN) CEO Jeff Bezos, Musk said last year he didn't believe the company would develop a spacecraft capable of carrying astronauts within five years. "Frankly, I think we are more likely to discover unicorns dancing in the flame duct," he told the Space News website in a September 2013 e-mail.

When asked about Musk's comments, Orbital CEO David Thompson said in an April interview that his company would be competitive with SpaceX, especially after its pending merger with Alliant Techsystems Inc. (ATK)

Brooke Crawford, an account director for Griffin Communications Group, which coordinates Blue Origin's media relations, declined to comment. A NASA spokesman also declined to comment for this article.

'Certainly Entertaining'

Most big contractors aren't accustomed to fighting battles publicly, said Jim Maser, a former SpaceX president and former vice president of Rancho Cordova, California-based GenCorp Inc. (GY), which owns Aerojet Rocketdyne, a maker of rocket engines.

"The traditional organizations are trying to learn quickly and trying to adapt," Maser said. "I don't know how it's going to play out, but it's certainly entertaining."

SpaceX is spending more for Washington influence, with its lobbying almost doubling to $1.1 million last year from 2010, according to the Center for Responsive Politics, a Washington-based research group.

In his fight for the military launches, Musk has found allies among U.S. lawmakers who want competition in the market.

"It's very clear they made a commitment to increase competition, and then the Air Force reversed itself," Arizona Senator John McCain, the top Republican on the Homeland Security and Governmental Affairs investigations subcommittee, said in an interview. "It just doesn't seem right to me."

Asked whether Air Force officials might retaliate against Musk following SpaceX's lawsuit, McCain said that one of his jobs is "to make sure they don't."

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