Morton Thiokol Inc. was actively negotiating with the National Aeronautics and Space Administration for a new $1 billion space shuttle contract when senior company executives overruled objections by the firm's engineers and recommended approving the Challenger launch Jan. 28, according to NASA and company officials.
The contract talks, including a session canceled on the day Challenger lifted off and exploded, were being supervised by the same Thiokol officials, including vice presidents Jerald Mason and Joe C. Kilminster, who ultimately decided to overrule the engineers on the evening of Jan. 27, the officials said.
Those two and other company officials were known to be seriously concerned about losing Thiokol's lucrative 13-year monopoly on making solid rocket boosters for NASA, sources said.
Just a few weeks earlier, NASA had publicly announced that, because of "national security," it was considering competitive bidding on the solid rocket contract for the first time.
Emerging today as a potential focus of the Challenger explosion probe was the possibility that Thiokol officials changed their position about launching Challenger because of concerns about the firm's shuttle contracts.
"They had their contract up for renewal," William P. Rogers, chairman of the presidential investigating commission, said during one exchange today with Lawrence Mulloy, chief of NASA's rocket booster program. Rogers said he wondered if the company had been "under a lot of commercial pressure to give you the answer they thought you wanted."
Mulloy told Rogers that "I can't conceive" of Thiokol feeling pressure over the contracts because, as a sole-source supplier, "that contract was going to be renewed -- there was no alternative."
Company spokesman Tom Russell added: "There's no one else capable of building the booster. If you're going to have any more launches between now and 1991 . . . we're going to do them.
"I'm sure it [contract negotiations] would have been running through everybody's mind. But it was not something that would have created undue pressure."
Over the 15-year contract begun in 1973, Thiokol will receive $1.6 billion to build shuttle rocket boosters for NASA and make at least $127.9 million in guaranteed profits, according to NASA. The pact provides from $350 million to $450 million in annual revenue, about 20 percent of Thiokol's total, and work for more than 2,400 Thiokol employes in Utah.
While Thiokol is certain to receive an extension of its 15-year contract, its potential competitors are seeking future solid-rocket contracts for shuttle missions through the rest of the century that NASA officials say will be worth billions of dollars.
Over the last two years, the company's sole-source relationship with NASA came under attack in heavy lobbying on Capitol Hill by other aerospace companies.
Last August, more than 80 House members signed a letter asking space agency officials to consider allowing other companies to bid on such future contracts because, members said, it could save NASA money and improve shuttle technology and safety.
Thiokol was alarmed at the prospect that NASA would relent and argued that the cost to NASA of extended bidding would overwhelm long-term savings, according to congressional sources.
"There was mounting pressure on Thiokol because of the imminent possibility of real competition," said Rep. Robert G. Torricelli (D-N.J), of the Science and Technology Committee, who circulated the letter. "They had established themselves in a secure and highly profitable position, and they were defending that."
Torricelli said he was approached first on the matter by former Carter White House aide Stuart Eizenstat, a board member of Hercules Inc., one of four aerospace firms seeking part of the shuttle contract. Torricelli said he brought Hercules' chairman to a meeting with then-NASA administrator James M. Beggs.
Thiokol lost the first round Dec. 26 when NASA proposed to begin developing procedures for a second-source contract, a process that could last four years. But the battle was far from finished, according to NASA officials.
When they recently began negotiating a new contract to build rocket boosters for 60 shuttle launches, Thiokol officials were concerned that a second company would ultimately qualify to bid, according to Dan Clough, NASA's contract officer for solid rockets.
A new contract would bring the firm about $1 billion, Clough said.
"They knew there were some second-source considerations by headquarters," he added.
Contract talks had been very active throughout January, involving numerous meetings and phone calls among NASA and Thiokol officials, Clough said. A major negotiating session had been scheduled for the day Challenger was launched but was canceled after the explosion.
According to three Thiokol engineers, NASA officials Mulloy and George Hardy, deputy director for science and engineering at the Marshall Space Flight Center, had opposed Thiokol's initial recommendation not to launch, which was based on company engineers' concerns about the impact of cold weather on the rubbery O-rings that bind the solid rocket's segments.