By Patrick Seitz
United Space Alliance executives expect to hit $2.5 billion in annual sales by 2002, thanks to additions to a mammoth space shuttle operations contract awarded to the joint venture company two and a half years ago.
The Houston-based company, a joint venture of Lockheed Martin Corp., Bethesda, Md., and Boeing Co., Seattle, took in nearly $1.5 billion in revenue in 1998 from NASA. All of the joint venture's business is related to the shuttle operations contract, which was awarded by NASA in September 1996. The six-year contract, valued at $7 billion, contains options that would make it worth $12 billion over 10 years.
Because of this NASA work, the alliance earned the No. 2 spot on Washington Technology's 1999 Top 100 list of federal prime contractors, the same rank as last year.
While information technology plays a role in nearly everything the alliance does for the shuttle program, pure IT work accounts for about 25 percent of the alliance's overall revenue, said Russ Turner, president and chief executive officer of United Space Alliance.
"We do a wide range of IT work, from simple business systems to real-time flight software," said Turner, who took the reins of the company in June 1998 and previously served as vice president and general manager of Rocketdyne Propulsion & Power, a unit of Boeing.
NASA already has awarded the alliance additional work because it met or exceeded safety and efficiency goals in the shuttle operations contract, Turner said. That work includes a flight software contract and two shuttle maintenance contracts let last July, Turner said. The flight software contract alone is worth $140 million over four and a half years.
When United Space Alliance took over space shuttle operations in October 1996, it was responsible for about one-third of the dollars spent on the shuttle program, which then totaled about $3.2 billion. By 2001, its share will hit two-thirds, Turner said.
The alliance agreed that NASA would see a "significant amount of savings" from turning over responsibility for its shuttle operations, Turner said. "From a financial perspective, we've exceeded expectations."
The alliance estimates it will save the government nearly $1 billion by 2002, Turner said. And the alliance already has saved NASA $165 million beyond the $400 million in savings built into the original contract, he said.
As prime contractor for NASA's space shuttle program, United Space Alliance is responsible for day-to-day operation and management of the shuttle fleet. Its tasks include mission design and planning; software development and integration; integrated logistics; vehicle processing, launch and recovery; flight operations; payload integration; and astronaut and flight controller training.
The top priority for United Space Alliance is to maintain or improve the safety of operations for the nation's astronauts and shuttle maintenance crews, Turner said. The safety issue was a primary concern of government officials before the contract award.
The company has allayed those fears with its record, said Jack Boykin, NASA's assistant manager for the space shuttle program and liaison with the United Space Alliance. Boykin credits the wording of NASA's contract with settling initial concerns over safety. The contract provides for award fees based on meeting performance and safety goals, he said.
Boykin described NASA's Space Flight Operations contract with the United Space Alliance as a "very innovative concept," especially for its scale. He said the alliance was able to transition seamlessly more than a dozen separate contracts under one operation.
In addition to safety, United Space Alliance is working to improve the reliability and performance of the shuttle orbiters. For example, the company has helped reduce shuttle processing times and launch delays, Turner said.
The alliance can now accommodate the five-minute windows for shuttle launches carrying equipment for the International Space Station, Turner said. The space station, now under assembly in low Earth orbit, is scheduled for completion in 2004.
Space station construction also has boosted the number of shuttle flights planned over the next few years. The flight rate will increase from five annual launches in 1998 and 1999 to eight or nine in 2000, he said.
The United Space Alliance would like to conduct 15 launches a year, Turner said, but that would require upgrades to the shuttles. The alliance has invested $90 million in improvements to the fleet beyond the several hundred million dollars NASA spends annually to upgrade the orbiters.
In June, NASA and the United Space Alliance are cosponsoring a two-day national conference in League City, Texas, to identify emerging technologies and concepts for next-generation improvements to the shuttles.
United Space Alliance executives hope to parlay the company's shuttle work into other government space business, such as operating the International Space Station and the planned crew return vehicle that would be used to ferry astronauts back to Earth in an emergency.
Also, the alliance wants to add commercial satellites as secondary payloads to future shuttle launches, but that would require a change in U.S. policy. The company is aiming for two such launches, one each in 2001 and 2002, Turner said.
United Space Alliance, which employs about 9,000 at key NASA facilities in Alabama, California, Florida and Texas, plans to add 800 people in October when it absorbs an additional NASA contract, Turner said.
Lockheed Martin and Boeing have worked to minimize job reductions as NASA turns to outsourcing and privatization of its operations, Turner said.
When Lockheed Martin won the prime role in September 1998 on NASA's Consolidated Space Operations Contract, Lockheed Martin hired 350 of 500 government workers, and United Space Alliance hired the rest, Turner said. That 10-year pact, worth more than $3 billion, involves consolidating mission and data services operations at five NASA centers.
1150 Gemini Ave. * Houston, Texas 77058 * www.unitedspacealliance.com * $1,480,308,000
