The competition for the next round of U.S. military–satellite launch contracts has been delayed at least until the summer due to the ongoing suspension of one of the two bidders and concerns about the growing cost of the rockets involved.

The third-round launch competition under the U.S. Air Force Evolved Expendable Launch Vehicle (EELV) program had been slated to open in late 2003. But that schedule has gone out the window because Chicago-based Boeing Co. remains barred from the military launch business due to contracting improprieties.

An Air Force investigation concluded last summer that the company improperly obtained and used proprietary information from rival Lockheed Martin Corp. of Bethesda, Md., in the first-round EELV competition in 1998. In addition to stripping Boeing of roughly $1 billion in launch business, the Air Force barred the company from the U.S. military launch business until further notice.

Meanwhile, the EELV program may face a U.S. Defense Department review that by law is required of all programs whose costs grow by 25 percent or more, Air Force officials acknowledged. The review is another factor in the procurement delay and could lead to program termination, although such an outcome is highly unlikely, officials said.

The EELV program originally was supposed to reduce the Pentagon’s launch costs by 25 to 50 percent by consolidating all military launch activity under one contractor who would employ a family of rockets based on common components. Amid a boom in the commercial space industry in the late 1990s, the Air Force decided to fund competing families of rockets, reasoning that commercial demand would help defray the cost of supporting two suppliers.

Lockheed Martin and Boeing were awarded the EELV development and initial launch contracts in October 1998.

But the space boom went bust in the ensuing years, leading to depressed launch prices and prompting Boeing to withdraw its EELV rocket, dubbed the Delta 4, from the commercial launch market. Lockheed Martin’s competing Atlas 5 rocket remains available commercially, although there were no Atlas 5 sales in that market last year.

In November, Peter B. Teets, undersecretary of the Air Force and director of the National Reconnaissance Office, told Congress that the next batch of EELV missions could cost 20 to 50 percent more than previous missions due to the lack of commercial business for the Delta 4 and Atlas 5. That admission raised the specter of a so-called Nunn-McCurdy breach.

Under a 1982 law known as the Nunn-McCurdy Act, named after its two main sponsors, Pentagon programs whose costs grow by 25 percent or more must be certified for continuation based on several criteria, including the lack of a viable alternative and a credible plan for bringing the costs under control.

In a written response to questions, Air Force Col. John Insprucker, the service’s EELV program office director, acknowledged that the program appears headed for a Nunn-McCurdy review. But he said the Air Force is “confident of recertification since the technical, management and schedule aspects of the program are strong and did not directly contribute to the cost growth.”

Robert Dickman, Air Force deputy for military space, said if the service determines that the EELV program is in breach of the Nunn-McCurdy Act, the breach will have to be reported to Congress before the end of January. That report would trigger the recertification review.

Some Pentagon officials have suggested dropping one of the two rocket families from the EELV program to save money, according to Dickman, a retired Air Force major general. But Teets and other top Air Force officials are adamant about retaining two suppliers, despite the cost, to maintain the ability to launch satellites if one vehicle is grounded, he said.

Meanwhile, the Air Force is preparing cost estimates for the next EELV procurement, which could involve 15 to 20 missions, Insprucker said. “Prerequisites [for the competition] include lifting of the suspension on the affected Boeing Co. business units and approval of a revised acquisition strategy,” he said.

If the competition is delayed beyond this summer, the Air Force has the option of awarding some contracts for launches whose schedule requires that work begin before the end of the year, Insprucker said. He would not comment on whether the Air Force is seriously exploring that option.

Boeing, for its part, continues to provide information to the  Air Force to demonstrate that it has fulfilled the requirements for getting its contracting suspension lifted, said Dan Collins, the company’s Delta program manager.

The Air Force had hoped to end Boeing’s suspension as soon as 60 to 90 days after its imposition in July. But a separate scandal involving the company’s actions during a competition to provide aerial refueling tankers to the Air Force service threw a wrench in that timetable.