On Monday, US aerospace companies submitted their final bids to capture some of the $1.2 billion on offer from the Air Force over the next five years to develop new launch systems for military purposes. The “Launch Services Agreement” competition has been closely watched in the aerospace industry, because the winners will help determine the future of US rocketry.

Through the competition, the Air Force seeks to end its dependence on Russian-made engines to get its spy and communications satellites into space. It wants commercial companies to provide two US-manufactured launch systems that can meet all of the national security requirements, including the launch of complex and heavy payloads.

Previously for this program, the Air Force has invested in technology development, and in 2016 it provided rocket engine development awards to SpaceX, Orbital ATK, United Launch Alliance, and Aerojet Rocketdyne. In future awards, the Air Force is likely to eventually winnow the number of participants. But which way would it go?

The recently passed National Defense Authorization Act provides Congressional direction for these funds—and potentially some answers to this question. The language in Section 1605 of the bill offers the Air Force some flexibility in its deliberations but should also raise concerns for some bidders.

Specifically, the language allows the Air Force to spend additional funds for the development of a domestic “rocket propulsion system"; the interface to, or integration of new rocket engines into planned or existing rockets; and capabilities such as vertical integration of payloads that are required by national security missions. Further, the bill defines “rocket propulsion system” as a main booster, first-stage rocket engine, or motor. The term does not include a launch vehicle, an upper stage, a strap-on motor, or related infrastructure.

Future of ULA

United Launch Alliance (ULA) probably has the most at stake with the Air Force launch competition. The Colorado-based company has two venerable launch systems that presently serve the military’s needs, the Delta and Atlas fleets. But Delta rockets are expensive to fly and will be retired within the next decade. The Atlas rockets are more cost-effective, but they use Russian-made engines. Therefore ULA must develop a new, lower-cost rocket made with US engines to have a meaningful future in the US launch industry.

The company has put forward the Vulcan rocket as the solution to this problem. The Congressional language appears to offer both good news and bad news for the company. On the plus side, it continues funding for the US-built engines the rocket needs and costs to integrate those engines into a new rocket. However, the bill does not include funding for the development of a whole launch system, which had been sought by ULA’s parent companies, Lockheed Martin and Boeing.

Nevertheless, according to one Capitol Hill source involved in developing the language, the company is OK with this compromise. “ULA and the Air Force both seem good with the language,” this source said. “Boeing and Lockheed Martin will make significant investments if they know the government will be supplying the bulk.”

Blue Origin a winner

Another provision in the bill relates to the engines under development for Vulcan. This language states that the Air Force may terminate funding for other rocket propulsion systems when “the Secretary of the Air Force certifies to the congressional defense committees that a successful full-scale test of a domestic rocket engine has occurred.” Three sources interpreted this to Ars as a provision that could benefit ULA and Blue Origin, the spaceflight company founded by Jeff Bezos.

To power the new Vulcan rocket, ULA has said it prefers to use Blue Origin’s BE-4 rocket engine but will consider Aerojet’s AR1 engine as a fallback option. (Both engines are in development). The new language appears to allow the Air Force to end funding for the AR1 engine after the BE-4 undergoes a successful hot fire test. Blue Origin may have already met this requirement, with a full-scale test at 50-percent power in October.

This seems like a significant change as, in the past, Congress has pressured the Air Force to support Aerojet. In 2016, the Air Force agreed to invest as much as $536 million in the development of the AR1 engine as a domestic engine. As of August, according to a report in Space News, the Air Force has invested only about one-quarter of that funding, allowing it to save a considerable amount of money if its officials and ULA are satisfied with the performance of the Blue Origin engine.

“I was really surprised to see that specific language, and as a matter of fact I haven’t heard from any of the Aerojet folks, which is also surprising,” the congressional source told Ars. “In fairness, that termination is 100 percent the right thing to do, though. There is no need for the federal government in my opinion to be spending money if ULA won’t use it.”

And SpaceX?

The language in the compromise bill also appears to favor SpaceX, because it doesn’t give ULA or Orbital ATK a blank check to develop a full-scale commercial rocket that would directly compete with the Falcon 9 or Falcon Heavy rocket. In addition, this restriction may free up Air Force funding for the Falcon Heavy, a high-energy upper stage, or infrastructure to allow the SpaceX heavy lift rocket to meet all of the government’s desired orbits.

Recently, the president of SpaceX also suggested the company may bid for some Air Force funding to develop its Big Falcon Rocket (BFR) and Big Falcon Spaceship (BFS). “I do anticipate that there is residual capability of that system that the government will be interested in,” Gwynne Shotwell said earlier this month, in Luxembourg. “I do see that we would likely get some funding from the government for BFR and BFS.”

Overall, the congressional guidance appears to be supportive of the Air Force’s efforts to seek lower-cost solutions from the commercial industry as well as enable investment in reusable launch systems. Now comes the hard work of actually selecting the winners of the bid process, which likely will be revealed next year.