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Jeff bezoss's space startup tp supply Boeing Lockheed rocket Venture
Blue Origin LLC, the space-transportation company run by Jeff Bezos, has won a contract to provide engines for a potential rival's next-generation rocket, according to people familiar with the matter, vaulting Mr. Bezos into the lucrative market for Pentagon satellite launches.
United Launch Alliance LLC--a joint venture between Boeing Co. and Lockheed Martin Corp. that launches U.S. military and spy satellites into orbit--is set to announce Thursday it has picked Blue Origin's BE-4 engine for its Vulcan rocket, these people said. United Launch declined to comment.
The long-term, potentially multibillion-dollar agreement could provide a boost to Blue Origin's eventual goal of becoming a major military launch provider itself. The company plans to use the same engines to power its own heavy-lift launcher, called New Glenn, which is currently under development.
The Vulcan rocket's maiden flight is slated for 2020, but many industry experts expect that deadline to be extended; regular operations could start before the middle of the next decade. Even if everything goes smoothly, testing and final certification of the New Glenn booster is also expected to take roughly that long.
The Blue Origin engines have strategic importance for the Pentagon because they are intended to end the use of Russian-built RD-180 engines, which now provide primary propulsion on United Launch's workhorse Atlas V rockets.
Competition in the satellite-launch business is heating up. The Air Force is considering how to divvy up hundreds of millions of federal dollars to develop a fleet of lower-cost, more versatile rockets. Blue Origin, United Launch, Elon Musk's Space Exploration Technologies Corp. and Northrop Grumman Corp.'s Innovation Systems unit, formerly known as Orbital ATK, are all in the running. The Air Force is preparing to shortly announce the first-stage winners.
Blue Origin is financing and developing the BE-4 engine almost entirely with its own funds. Mr. Bezos, founder and chief executive of Amazon.com Inc., has said he invests roughly $1 billion of his personal fortune into Blue Origin annually.
Negotiations between United Launch and Blue Origin dragged on for months, with both sides bargaining hard over price, delivery schedules and production reliability. Other hurdles, according to two people familiar with the details, included United Launch's concerns about relying on a prospective rival for its most important engine supply. It couldn't be learned what provisions were hammered out.
Blue Origin beat out Aerojet Rocketdyne Holdings Inc., which had sought to sell its AR1 engine to power the Vulcan. Aerojet didn't respond to a request for comment.
The selection highlights some of the tough choices stemming from President Trump's national defense strategy. Unveiled earlier this year, the strategy favors attracting more high-technology companies--with little or no military background--as Pentagon contractors.
While Blue Origin fits that bill, analysts said it leaves Aerojet--one of two legacy suppliers of domestic rocket and missile engines--in a seemingly difficult position with fewer opportunities. Northrop Grumman Corp. recently completed its $9.2 billion purchase of the other big rocket-engine maker, Orbital ATK, a deal that analysts said made Aerojet a potential takeover target for companies such as Boeing.
Boeing and Northrop Grumman are competing for a contract worth as much as $120 billion to replace the current arsenal of land-based nuclear missiles, with Northrop's new unit and Aerojet set to provide one or both companies with engines. The Pentagon is expected to make a decision late next year, but losing the Vulcan contract is likely to weaken Aerojet's competitive stance, according to Wall Street analysts.