Why does the U.S. military rely on Russia for its rocket engines when there are plenty of U.S. companies, like, for example, SpaceX, which could supply them? That’s certainly a great question, and lawmakers are trying to figure out the answer. Of course there are numerous moving parts which are involved, including not only costs, but also security concerns and the idea that using U.S.-made rockets makes more sense than rockets from Russia, which faces sanctions in connection with the Crimea invasion.

SpaceX

SpaceX, Boeing, Lockheed Martin top competitors

For example, SpaceX is already approved to work with NASA, so why can’t it provide engines to the U.S. Air Force as well? It’s something that really doesn’t make sense, particularly because the company could potentially save taxpayers billions of dollars—if a few barriers can be overcome. Lawmakers met today and will also meet tomorrow to discuss this topic. In today’s hearing, California Sen. Dianne Feinstein was especially critical of how the U.S. military is limiting competition for its business.

“My view is there should be full and free competition, and the main competitor is SpaceX,” said Feinstein. “It is all an American rocket, that has a great deal of attraction to the US people and if it can come in competitively, what this says about American ability is enormous. So to lock them out by reducing the number of launches they can qualify for (what’s been done) is not the right thing.”

Feinstein is one of a bipartisan group of lawmakers who sent a letter regarding the issue to the Department of Defense. A spokesperson for SpaceX provided this statement in response:

“The bipartisan letter from Senator Feinstein and others points out the need for greater competition at the Department of Defense in the Air Force’s Evolved Expendable Launch Vehicle (EELV) Program. Increasing fair competition in the EELV program is a smart decision that would not only improve efficiency and optimize budgets, but also eliminate America’s reliance on Russian made engines which, in light of the crisis with the Russia, is a direct threat to our nation’s security.”

In addition to SpaceX, three other U.S. companies which could benefit if lawmakers decide to diversify the nation’s rocket engine suppliers are The Boeing Company (NYSE:BA), Lockheed Martin Corporation (NYSE:LMT) and Orbital Sciences Corp (NYSE:ORB).

Red tape bars SpaceX, others

Unfortunately there are several big problems facing SpaceX and other U.S.-based companies which not only make it difficult for them to compete, but also drives up their costs. National security expert August Cole with The American Security Project tells ValueWalk that government red tape is not only decreasing competition in the space, but also preventing anyone from knowing exactly how much it costs to launch a rocket. This flies in the face of good common business sense. All the red tape also means it costs far more for companies to sell to the government than it does to commercial customers, only compounding the problem.

“The larger issue is, the way government buys everything from fighter planes to this kind of launch capability,” Cole said, “it’s not in step with the way the commercial world works, and that gap between the financial accountability side and public sector side is as wide as it’s probably ever been because on the commercial sector, we’re seeing incredible price pressure as companies are working to hold down costs.”

In other words, buying only from Russia probably means that the Air Force is paying more than it needs to in order to launch its rockets into space. Unfortunately though, the Air Force doesn’t actually know how much it is paying per launch because of the way the contracts are done. What seems apparent though, is that SpaceX may be able to make rocket engines at a fraction of the cost of what the Russian engines in the Atlas and Delta rockets cost.

So why Russian rocket engines?

The decision to use only Russia for rocket engines dates back to the 1990s. At that time, the nation emerged as being the leader in rocket design. Jeffrey Harris is currently a consultant and has held a number of positions in the U.S. government, including as director of the National Reconnaissance Office. He told ValueWalk in an interview that their initial reliance on Russia for rocket engines wasn’t the long-term plan.

“What we were afraid of is that all the Russian engineers, in the absence of jobs, would go off and do something bad,” Harris said.

He also said Russia was willing to share some of its metallurgy with the U.S. at that time. So the plan was to eventually bring rocket making back to the U.S.

“At the time, I sort of said, ‘Hey, we could put a bit of a band-aid on this; we can get sort of the appropriate tech transfer going back to the United States and we can start to produce these engines in the U.S.,'” he told ValueWalk.

More competition = better prices

When Russia became the sole engine supplier, volume was a key issue because with higher volumes comes lower prices. However, it’s one issue that Harris says is no longer a problem. Of course it makes sense now that if there were more companies competing for business from the U.S. military that the prices would go down. So lawmakers are considering whether some of the red tape involved in becoming a rocket engine supplier should be cut.

“So the conversation I think should have been, the United Launch Alliance says, given the experience we now have, can’t we get rid of some of these unnecessary regulations to allow us to be more cost-effective,” Harris said. “So the value here is, can I get value per dollar and the bureaucracy has always had trouble shedding bad habits, but for us to be a space-faring nation in an international marketplace, we can’t have a set of regulations that are not competitive to the marketplace.”

However, Harris tells ValueWalk that it isn’t as simple as just switching engine suppliers. He says there are other considerations to make, like investments in infrastructure and testing new engines, and then weighing those costs with security concerns.

Relying on Russia creates security concerns

Tensions with Russia after the invasion of Crimea have only been growing. Some would say we could be facing a Second Cold War. The big concern right now is that if the U.S. continues to rely only on Russia for rocket engines, that supply could be cut off suddenly. This week’s meetings highlight just how important it is becoming for the U.S. to rely less on other countries for its security needs.

“America’s ability to reliably launch military satellites using its own rockets is going to be one of the most important national security advantages that it could have in the coming decades,” Cole said.

Currently the U.S. has a two-year supply of rockets, but if the military was to switch to one or more U.S. suppliers, a decision will have to be made soon because the testing phrase tends to take a long time. Harris says the Russian rocket engines have a long history of success, which engines from SpaceX and other U.S. companies just don’t have—at least not

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