With the advent on NASA COTS (commercial orbital transportation services) and CRS (commercial resupply services), the taxpayer has been getting a break. NASA invested some money for the development of two launch vehicles and spacecraft from two different companies; SpaceX and Orbital Sciences. These companies paid the rest of the development and own the risk for each launch. In contrast, United Launch Alliance owns no risk to the Atlas V launches. NASA deems the COTS and CRS programs successful and successful at reducing launch costs. Will Atlas V survive in such a stark contrasted means of doing launch business?
Now, the Antares rocket is in a similar predicament with its main engines as Atlas V, though for different reasons. The Antares main rocket engines are from the old Russian N-1 rocket, and those are of limited supply. So Orbital Sciences is seeking a new rocket engine as well. The difference is that they are flipping the bill themselves. After all, they own the rocket.
So we can see the inconsistencies for the taxpayer. On one hand we have the old way of paying for the rockets as in Atlas V's case (the so called Cost Plus contracts). That is, taxpayers pay for the launcher development, the launch service, and the launch risk. Doing things the COTS and CRS way (services contracts), taxpayers only partially paid for initial development and for each launch service. They don't pay for further development nor for the launch risk.
If the USAF got on board with paying only for launch services, they could save a lot of money, have companies competing for launches, and have national security all at the same time. Sounds like the holy grail for the Department of Defense. In my opinion, this would require a major change to EELV or even a replacement. My reasoning is that the word 'expendable' might become a thing of the past since SpaceX is actively developing reusable multistage rockets.
I highly doubt that Atlas V could be converted to take on contracts for launch services only. The reason is that it was developed under the attitude of limited savings as opposed to the drastic savings now sought after by the US. No, Atlas V would have to be retired. Of course engineers are pretty crafty guys. If, by chance, Atlas V becomes reusable then I will rethink my position. Otherwise, you really need to design a rocket with cost effectiveness in mind like Falcon 9 and Antares.
Now, SpaceX's Falcon 9 and Orbital Sciences' Antares do not have the lifting capabilities on Atlas V. So for now, the USAF and NASA needs Atlas V. Future developments from SpaceX and Orbital Sciences could change all that. SpaceX is planning to make the Falcon Heavy which will eclipse the Atlas V by a factor of __ in launch capability. Orbital Sciences is creating the rocket for Startolaunch that will go after the Delta II payload market. Could there be any more developments in affordable launch vehicles? I would say yes as long as the market holds up and funds become available. In such a case, we may see the end of the Atlas family. Atlas V still needs to get over a couple of hurdles. One is, as mentioned before, getting new main rocket engines made in the United States. Another hurdle is the Commercial Crew Development for NASA. Atlas V is slated to carry one of two crewed vehicles to space: Dream Chaser lifting body by Sierra Nevada, and CST-100 capsule by Boeing. What would the pricing be to take these to orbit by Atlas V? Will such pricing be competitive? Will such pricing be acceptable by NASA? In other words, can Atlas V compete with Falcon 9 in the market?