Space News reports that a Pentagon analysis has found multiple causes for the sharp rise in cost for the U.S. Air Force’s Evolved Expendable Launch Vehicle (EELV) program, which includes United Launch Alliance’s (ULA) Atlas V and Delta IV launch vehicles:

The Pentagon’s acquisition czar cited a contracting arrangement that offers little incentive to control costs as a contributor to soaring prices on the program that launches the vast majority of U.S. government satellites. In a July 12 letter to lawmakers, Frank Kendall, U.S. undersecretary of defense for acquisition, technology and logistics, said the projected cost of the U.S. Air Force’s Evolved Expendable Launch Vehicle (EELV) rocket program over 150 missions has more than doubled since 2004, to nearly $70 billion. The primary drivers of the cost growth are unstable demand, international market vagaries and industrial base issues, he said…. Citing a Pentagon analysis, the documentation says the EELV program’s problems stem from three main causes, two of which are beyond its control. “Nothing can change the inherently unstable nature of the demand for launch services since it is driven by space program execution and national priorities. The international space market and industrial base issues are also causal and likewise immutable,” the document says. But the EELV program itself is not without blame, the document states. “The final cause is poor program execution in which little incentive for cost control, or threat of termination, exists for the vast proportion of EELV’s content which is not tied to the fixed infrastructure for space access,” the document says.

The Air Force earlier attempted a large bulk buy of EELVs in an effort to keep prices down. That effort was nixed after critics said the Air Force had based the decision on inadequate analysis.

ULA currently has a monopoly on national security satellites and launches most large spacecraft launched by civilian agencies. NASA, the National Reconnaissance Office and the Air Force announced last October that they would work together to develop clear criteria to certify new launch vehicles from SpaceX, Orbital Sciences Corporation and other providers.

In July, NASA selected SpaceX to launch the National Oceanic and Atmospheric Administration’s Jason-3 spacecraft aboard a Falcon 9 rocket from Vandenberg Air Force Base in California. The launch, set for December 2014, was SpaceX’s first award under the new policy.

NASA elected to go with a rocket that has only flown three times to date (all successfully) and whose manufacturer is still making significant changes to its Merlin engines. The brief flight history and the changes make the rocket riskier from a statistical basis. However, the stakes are relatively low because it is an Earth science satellite. The cost of failure won’t be all that high.

The decision to go with other providers is much trickier for the Air Force. Military spacecraft are extremely expensive, usually much more so than the rockets they launch on. Most of them are also vital to national security. Although ULA’s Atlas V and Delta IV rockets are costly, they are well proven and extremely reliable with many more launches to their credit.

Thus, the Air Force will wait until the Falcon 9 has many more successful flights before awarding any national security launches to SpaceX. It also will start out with spacecraft whose loss would have far less consequences on military readiness.

The rise in EELV costs has serious implications for NASA’s commercial crew program, which is aimed at producing cheaper rides to orbit for America’s astronauts. Two of the three funded providers — Boeing and Sierra Nevada Corporation — would fly their spacecraft on modified versions of ULA’s Atlas V rocket.

Additional production of the Atlas V to serve the needs of the International Space Station and private orbital facilities would bring down units costs for the booster. These reductions would be offset as NASA and the military begin to use other rockets for their launches.

ULA is working with XCOR of Mojave, Calif., to develop a new upper stage engine that would be cheaper to build and operate than the one currently used on its rockets. The new engine is designed to allow ULA to better compete with other companies. It would also be reusable, forming the foundation for space tugs and orbital fuel depots.