(Adds SpaceX declined to comment, details on engines affected by ban)
By Andrea Shalal
WASHINGTON, Oct 9 (Reuters) - The Pentagon on Friday declined to waive a U.S. law banning the use of Russian rocket engines for military and spy satellite launches, rejecting an urgent request from United Launch Alliance, a joint venture of Lockheed Martin Corp and Boeing Co.
ULA, the monopoly provider of such launches since its creation in 2006, has said it needs the waiver to compete against privately held Space Exploration Technologies Corp, or SpaceX, in a new U.S. Air Force competition for satellite launches. Bids are due for the competition by Nov. 16.
The U.S. Defense Department said it would continue to monitor the situation, and was looking at a range of options, including possible sole-source contract awards, to keep both companies in business and ensure more than one supplier was available in the event of failures.
Prompted by Russia's annexation of Crimea last year, U.S. lawmakers banned the use of Russian RD-180 rocket engines for military and spy satellite launches after 2019.
ULA and SpaceX declined to comment on the decision.
Pentagon spokeswoman Lieutenant Commander Courtney Hillson said the department remained committed to maintaining two sources of launch services. But she said its approach could evolve, given market conditions, a desire to move away from the Russian RD-180 rocket engine as soon as possible, and the possibility that only one competitor could survive in the U.S. space launch market.
She said the Pentagon also remained committed to competition as a way to control cost "to the maximum extent possible."
ULA Chief Executive Tory Bruno last week said his company would be unable to compete for any new national security launches until 2019, without some relief from the ban on use of the Russian RD-180 engine on its workhorse Atlas 5 rocket.
SpaceX, which has invested heavily to develop its own rocket and engine, told Defense Secretary Ash Carter in a letter this week that federal law already allowed ULA to use "a substantial number" of the Russian engines.
SpaceX founder and CEO Elon Musk said ULA's threat to skip an upcoming Air Force competition was "nothing less than deceptive brinkmanship" aimed at subverting the will of Congress.
The ban affects nine of 29 engines that ULA ordered but had not paid for before Russia annexed Crimea. Bruno said five other engines approved for ULA's use by Congress last year were needed for commercial or civil missions, and were unavailable for use in a bid for the new GPS launch.
A defense policy bill passed by both the House and Senate would allow ULA to use four of the nine remaining engines, but the legislation faces a veto threat and is unlikely to go into force before bids are due for the Air Force launch competition.
She said Frank Kendall, the Pentagon's chief arms buyer, was developing a long-term acquisition strategy with the U.S. Air Force to reduce reliance on the RD-180 engine. Kendall is due to brief top Pentagon officials by the end of the year. (Reporting by Andrea Shalal; Editing by Bill Rigby and Richard Chang)