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Elon Musk, CEO and chief designer of Space Exploration Technologies, testifies during the Senate Appropriations Subcommittee on Defense hearing on March 5. / Mark Wilson, Getty Images

WASHINGTON - The federal government saves money by asking companies to bid on contracts for all sorts of work, such as cleaning, consulting and construction.

Elon Musk, who runs SpaceX, wants to add launching national security satellites to the list.

The California-based company that's made an international splash delivering cargo to the International Space Station wants a piece of the Pentagon's business, too. And the Defense Department wants to at least explore the idea of opening up competition in the face of tight budgets and soaring launch costs.

Since 2006, each of 68 space launches for the U.S. Air Force has been handled by one entity: United Launch Alliance, formed as a joint venture of Lockheed Martin and Boeing.

Over that period, the money Congress has approved for launching national security hardware into space has jumped from $613 million a year to $1.63 billion in fiscal 2014. The Pentagon projects it will cost another $70 billion through 2030.

Sen. Dianne Feinstein, D-Calif., called the increase "startling" during a hearing Wednesday before the Senate Appropriations Subcommittee on Defense.

Michael Gass, president and CEO of United Launch Alliance, said the current setup works. Each of the 68 launches has been successful, and the way the contract is structured means United Launch Alliance is always available should the Defense Department need an emergency launch.

That kind of flexibility could be lost under a more competitive arrangement, he told committee members. And while he said he would welcome competition, he also said it's not clear any other aerospace companies are truly prepared to take over the work.

"I believe leveraging the demand of the commercial sector is smart," Gass said. "But relying on commercial demand to enable national security carries huge risks, both to the rocket supplier and to its government customers."

Gass also noted that Boeing and Lockheed Martin formed United Launch Alliance because there wasn't enough business at the time to support competition.

Musk countered that SpaceX could do the job just as efficiently, and for no more than $100 million per launch, far less than the $380 million United Launch Alliance charges. Gass disputed Musk's math, saying United Launch Alliance's charge reflects overhead costs that any competitor would also have to factor in.

The large savings promised when United Launch Alliance was formed haven't been realized, and the "monopoly providers" have forced the Air Force to overpay, Musk said. As for his own company's readiness, he pointed to the successful launches his Falcon 9 has made to the space station.

"If our rockets are good enough for NASA, why are they not good enough for the Air Force?" he asked committee members. "It doesn't make sense."

Wednesday's hearing underscored the simmering tensions between old-guard companies such as Boeing and Lockheed Martin, which have spent decades methodically sending people and hardware into space, and smaller upstarts, such as SpaceX and Richard Branson's Virgin Galactic, which have a more entrepreneurial vision of the future.

As they sat next to each other at the hearing, Musk and Gass each suggested the other was overstating his company's success with launches.

Some of those divisions showed up on the dais, too.

While Feinstein was criticizing United Launch Alliance's soaring costs, Sen. Richard Shelby of Alabama, the top Republican on the panel, said he wasn't sure cheaper would necessarily be better.

"The wise stewardship of taxpayers' resources is essential in all government programs and oftentimes, competition is key," said Shelby, whose state is where United Launch Alliance performs its engine assembly work. "In this case, the safety and security of our national security payloads is paramount."

Gass also told committee members that United Launch Alliance's launch costs have gone down since 2011, when the Pentagon modified its contract requirements. Cristina Chaplain, director of acquisition and sourcing management for the Government Accountability Office, confirmed that.

The Air Force's decision to open up competition ultimately will depend on its scope, said Scott Pace, a former NASA associate administrator who now directs the Space Policy Institute at George Washington University.

"Can the critical need for mission assurance be achieved at lower cost than the way we do it today?" he asked at the hearing. " This certainly seems desirable, even plausible, but careful thought needs to be given as to what responsibilities and capabilities ought to remain within the government. In short, how much is the government willing to pay for price and how much is it wiling to pay for performance?"



Copyright 2014 USATODAY.com

Read the original story: Panel debates bidding process for satellite launches

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