GAO Denies HLS Protests by Blue Origin and Dynetics

The Government Accountability Office today denied protests by Blue Origin and Dynetics against NASA’s award of a Human Landing System contract to SpaceX in April. GAO determined NASA did not violate procurement laws or regulations and its evaluation of the bids was reasonable. Blue Origin vows to continue its efforts to secure a second contract nontheless.

NASA is procuring Human Landing Systems (HLS) to take astronauts from lunar orbit down to and back from the lunar surface as part of its Artemis program through Public-Private Partnerships (PPPs). NASA used the PPP model to procure commercial cargo and commercial crew services to support the International Space Station and in both cases picked two companies to reduce risk and ensure competition. That was the plan for HLS, too, but Congress provided only 25 percent of the funding requested for FY2021, $850 million instead of $3.4 billion.

SpaceX, Dynetics and Blue Origin (with its National Team members Lockheed Martin, Northrop Grumman and Draper) were selected by NASA last fall for “Option A” base period contracts to refine their HLS designs with the idea it would pick one or two in February 2021 to proceed to the next phase. With the change in administrations and significantly less money than planned, it made no-cost extensions to the base period contracts while it assessed its options.

The answer came on April 16 when it picked just one — SpaceX, the lowest bidder at $2.9 billion.  Blue Origin and Dynetics protested the award to GAO, which had 100 days to issue a ruling. That would have been August 4, but it finished early and issued its decision today.

The full text was not immediately released because some of the data may be proprietary. GAO directed the companies to “promptly” identify information that cannot be released so it can issue a redacted version. [UPDATE: The final redacted copy is now available.]

In a press release, GAO summarized its findings:

• GAO first concluded that NASA did not violate procurement law or regulation when it decided to make only one award.  NASA’s announcement provided that the number of awards the agency would make was subject to the amount of funding available for the program.  In addition, the announcement reserved the right to make multiple awards, a single award, or no award at all.  In reaching its award decision, NASA concluded that it only had sufficient funding for one contract award.  GAO further concluded there was no requirement for NASA to engage in discussions, amend, or cancel the announcement as a result of the amount of funding available for the program.  As a result, GAO denied the protest arguments that NASA acted improperly in making a single award to SpaceX.
• GAO next concluded that the evaluation of all three proposals was reasonable, and consistent with applicable procurement law, regulation, and the announcement’s terms.
• Finally, GAO agreed with the protesters that in one limited instance NASA waived a requirement of the announcement for SpaceX.  Despite this finding, the decision also concludes that the protesters could not establish any reasonable possibility of competitive prejudice arising from this limited discrepancy in the evaluation.

NASA said the decision “enables NASA to award the contract that will ultimately result in the first crewed demonstration landing on the surface of the Moon under NASA’s Artemis plan. Importantly, the GAO’s decision will allow NASA and SpaceX to establish a timeline for the first crewed landing on the Moon in more than 50 years.”

The Biden Administration adopted President Trump’s deadline of 2024 to return astronauts to the lunar surface, but many are skeptical that is achieveable budgetarily or technically. This statement that NASA and SpaceX will be able to establish a timeline seems to be the first formal acknowledgment by NASA that only now is it in a position to pick a date.

Congress has been pressing NASA to present a plan for how the Artemis program will play out. It added today that it will do so soon, but safety is paramount.

“NASA is moving forward with urgency, but astronaut safety is the priority and the agency will not sacrifice the safety of the crew in the steadfast pursuit of the goal to establish a long-term presence on the Moon.

“As soon as possible, NASA will provide an update on the way ahead for Artemis, the human landing system, and humanity’s return to the Moon. We will continue to work with the Biden Administration and Congress to ensure funding for a robust and sustainable approach for the nation’s return to the Moon in a collaborative effort with U.S. commercial partners.”

Blue Origin said in a statement that it is not giving up in its quest to get an HLS contract under this current solicitation.

“We stand firm in our belief that there were fundamental issues with NASA’s decision, but the GAO wasn’t able to address them due to their limited jurisdiction. We’ll continue to advocate for two immediate providers as we believe it is the right solution. We’ve been encouraged by actions in Congress to add a second provider and appropriate additional resources to NASA’s pursuit to return Americans to the Moon. We’re also very encouraged by Administrator Nelson’s comments over the past week that reaffirm NASA’s original intent to provide simultaneous competition. The Human Landing System program needs to have competition now instead of later – that’s the best solution for NASA and the best solution for our country.”

On Monday, Blue Origin founder Jeff Bezos offered to waive up to $2 billion in payments for FY2021-2023 if NASA awards it a contract under this solicitation in order to “bridge the HLS budgetary funding shortfall.” Its bid was $5.9 billion so the offer represents a reduction of one-third of its bid.

NASA argues the contract with SpaceX is only for the first Artemis landing, hopefully in 2024. It anticipates additional HLS systems built by other companies through its Lunar Exploration and Transportation Services (LETS) program for “sustainable” lunar operations over the long term. A solicitation for LETS concept studies was issued at the beginning of this month.

Blue Origin does not want to wait. It insists two competitors are needed now. A company spokesperson told SpacePolicyOnline.com via email that the no-cost extension to the base period contract expires on August 9 and it is now asking NASA to further extend it to November 1 to allow more time to work something out.

Because we believe in this mission, we submitted an additional extension request to NASA through November 1, 2021, and we’ve extended our proposal’s validity through then as well. We want to make sure NASA has every possible chance to award a second provider and restore competition to HLS without delay. We’re talking with NASA about next steps and appropriate actions.

Dynetics issued a statement in early evening saying that while disappointed, it respects GAO’s decision. It intends to continue developing its HLS design and compete through the new LETS solicitation, also known as “Appendix N.”

Our focus for the HLS program from the beginning has been the development of a sustainable capability that enables a long-term lunar presence and helps fuel a future Cislunar economy. To that end, we have continued to evolve our HLS design with a focus on sustainability. We are excited about the opportunity presented by NASA’s HLS Next-STEP Appendix N competition that provides funding for continued design and risk reduction activities for a sustainable lander. We also plan to compete for NASA’s announced Lunar Exploration Transportation Services opportunity. We believe healthy competition is necessary to maintain the industrial base required to achieve the important strategic goals of space exploration and national security. We will continue to pursue these opportunities with a team that helps strengthen the broader industrial base that includes international partnerships. Again, we appreciate the GAO’s review of the decision and we look forward to working with NASA on the future HLS opportunities.

SpaceX did not respond to a request for comment, but founder and CEO Elon Musk issued this tweet.

GAO ?

— Elon Musk (@elonmusk) July 30, 2021

This article has been updated.