Blue Origin Protests NASA’s HLS Award to SpaceX

Blue Origin filed a protest with the Government Accountability Office (GAO) today asserting that NASA’s decision to award a contract to SpaceX for a system to land astronauts on the Moon was “flawed.” It is asking GAO to impose an automatic stay and recommend that NASA rescind the award and recompete the contract.

Blue Origin, owned by Jeff Bezos, said in a statement that NASA’s process “moved the goalposts at the last minute.”

“NASA has executed a flawed acquisition for the Human Landing System program and moved the goalposts at the last minute. In NASA’s own words, it has made a ‘high risk’ selection. Their decision eliminates opportunities for competition, significantly narrows the supply base, and not only delays, but also endangers America’s return to the Moon. Because of that, we’ve filed a protest with the GAO.”  — Blue Origin

On April 16, NASA suddenly announced that Elon Musk’s SpaceX, and only SpaceX, was the winner of a contract to build a Human Landing System (HLS) for the Artemis program to return astronauts to the lunar surface.  The decision was a surprise not only because of the timing, but because NASA had been insistent that it wanted two contractors, not one, to ensure redundancy.

Bezos and Musk are the two richest people in the world. Both are passionate about expanding humanity’s presence into space and are investing their own billions to achieve it while also seeking partnerships with the government.  Bezos envisions “rezoning” Earth for residential and light industry purposes only and moving heavy industry off Earth to the Moon and cislunar space. Musk wants humanity to become a “multi-planet species” living on both Earth and Mars in case a natural or human-induced catastrophe destroys Earth, but in recent years has also embraced sending humans back to the Moon.

NASA initiated the Artemis program to return astronauts to the Moon by 2024 during the Trump Administration.  President Biden supports Artemis, though it is not clear if 2024 is still the deadline.  NASA’s plan is to launch crews on its Space Launch System (SLS) rocket and Orion spacecraft to a Gateway in lunar orbit. Once there, they will board an HLS to get down to and back from the lunar surface. The goal is not just to land on the Moon, but for long-term sustainable lunar exploration and utilization with commercial and international partners.

NASA is procuring HLS through a Public-Private Partnership (PPP) similar to its “commercial cargo” and “commercial crew” systems to service the International Space Station (ISS).  In a PPP, the company and the government both invest in developing the system, but the company retains ownership and the government is just one of many customers for the services provided.

NASA purchases services from SpaceX and Northrop Grumman to deliver cargo to ISS, and from SpaceX and Boeing to deliver crew, although Boeing’s system is still in the testing phase.

In both of those acquisitions NASA insisted on having two suppliers to help ensure that at least one would follow through and build the system. If both succeeded, competition would keep prices in check.

That was the plan for HLS.

SpaceX, Dynetics, and Blue Origin with its “National Team” including Lockheed Martin, Northrop Grumman and Draper, were selected last year for initial contracts to further design their HLS systems. NASA is choosing from among them for an “Option A” contract to deliver astronauts to the lunar surface in 2024.

For FY2021, NASA requested $3.4 billion for HLS, part of what it estimated was $16 billion needed through FY2025.  Congress appropriated only 25 percent of that — $850 million.

NASA cited the reduction in FY2021 funding and anticipated future funding as the reasons it picked only one rather than two companies for the Option A contract. Kathy Lueders, NASA’s Associate Administrator for Human Exploration and Operations and the Source Selection Authority (SSA) explained the decision.

“… when considered in conjunction with the Total Evaluated Prices for each Option A offeror, NASA’s fiscal year 2021 appropriations and appropriations indications for future fiscal years that span the Option A period of performance are incongruent with NASA’s Option A acquisition strategy.” — Kathy Lueders, NASA SSA

Therefore, in “light of the three HLS Option A offerors’ evaluation results and in consideration of NASA’s available funding, it is my determination that the award of a single Option A contract is in the best interests of the Agency.”

Lueders previously was program manager for commercial crew so is quite familiar with this acquisition model.

Lueders went on to emphasize in the Source Selection Statement (SSS) that the award to SpaceX was only for the first Artemis landing and other companies could compete for future missions.

SpaceX’s bid was $2.89 billion. Lueders acknowledged the agency had gone back to SpaceX after a preliminary determination that it would win the award to ask for a best and final offer. SpaceX did not change the price, but adjusted when payments were due.

NASA did not go back to Blue Origin or Dynetics, however.

“While it remains the Agency’s desire to preserve a competitive environment at this stage of the HLS Program, at the initial prices and milestone payment phasing proposed by each of the Option A offerors, NASA’s current fiscal year budget did not support even a single Option A award. Working in close coordination with the [Contracting Officer] it was therefore my determination that NASA should, as a first step, open price negotiations with the Option A offeror that is both very highly rated from a technical and management perspective and that also had, by a wide margin, the lowest initially-proposed price—SpaceX.”  Kathy Lueders, NASA SSA

Lueders characterized Blue Origin as the “second most highly rated offeror.”  The SSA did not reveal how much Blue Origin bid, only that it was “significantly higher” than SpaceX and Dynetics’ offer was significantly higher than Blue Origin.  She praised many attributes of Blue Origin’s offer and made clear if NASA had more money for HLS, it also would have gone back and asked for an updated quote.

“However, given NASA’s current and projected HLS budgets, it is my assessment that such negotiations with Blue Origin, if opened, would not be in good faith. After accounting for a contract award to SpaceX, the amount of remaining available funding is so insubstantial that, in my opinion, NASA cannot reasonably ask Blue Origin to lower its price for the scope of work it has proposed to a figure that would potentially enable NASA to afford making a contract award to Blue Origin.”  Kathy Lueders, NASA SSA

She noted Blue Origin’s proposal required “two instances of proposed advance payments,” a condition not allowed by the solicitation and thereby rendering it “ineligible,” but added the issue could be addressed through negotiations if the proposal overall was a good value to the government.

In its protest today, Blue Origin said its bid was $5.99 billion, about twice that of SpaceX.  A redacted version of the protest provided by the company cites five reasons NASA’s decision on the Broad Agency Announcement (BAA) is flawed.

a) the Agency evaluation and award decision failed to allow offerors to meaningfully compete for an award when the Agency’s requirements changed due to its undisclosed, perceived shortfall of funding for the multi-year program lifecycle; (b) the Agency performed a flawed competitive acquisition in contravention of BAA rules and requirements; (c) the Agency’s evaluation of Blue Origin’s HLS proposal was flawed and unreasonable and conflicted with BAA evaluation provisions; (d) the Agency improperly and disparately evaluated SpaceX’s Option A proposal; and (e) the Agency’s evaluation changed the weight accorded to evaluation factors to make price (cost to the Government) the most important factor because of perceived funding limitations. — Blue Origin

GAO has 100 days to make a decision.

Dynetics also has filed a protest.

A NASA spokesperson said in a statement that the agency was notified of the protests, but cannot comment “due to pending litigation.”

 

Note: This article has been updated.