U.S. Government Seeks Dismissal of SpaceX Suit

U.S. Government Seeks Dismissal of SpaceX Suit

The U.S Government responded yesterday to the lawsuit filed by SpaceX against the Air Force and the United Launch Alliance (ULA).   Lawyers for the Justice Department and the Air Force requested that the U.S. Court of Federal Claims dismiss the lawsuit because SpaceX does not have “standing” to file such a protest.

SpaceX filed suit in April arguing that the Air Force should not have awarded a sole-source contract to ULA in December 2013 for 36 rocket cores for the Evolved Expendable Launch Vehicle (EELV) program, but instead have opened the contract for bid.  ULA builds and launches the Delta IV and Atlas V rockets, which are used primarily for launching national security satellites, but also spacecraft for NASA and NOAA.

The legal arguments are complex, but the bottom line of the government’s “Motion to Dismiss” seems to be that SpaceX does not have standing to file a protest because, in legal terms, it is not an interested party and does not have a direct economic interest.

Citing case law to support its arguments, the government asserts that companies cannot successfully argue after the fact that they could have competed for a contract and won if they were not a qualified bidder when the contract was open and did not indicate at the time that they intended to bid.  In this case, SpaceX had not completed its certification flights at the time the request for proposals was issued in 2012 or when the contract was awarded in 2013.  it completed its third certification flight only in 2014 and is still in the process of being certified by the Air Force to bid for launch service contracts.  The government stresses that SpaceX did not file any complaints while the contracting process was underway in 2012-2013 even though it had opportunities and access to the necessary documentation to do so.

The government argues that SpaceX must show both that is an interested party and that it has a direct economic interest in order to have standing to file a protest. 

To be an interested party, SpaceX would have to be either an actual or prospective bidder.  To be an actual or prospective bidder, it would have had to have notified the government that it wanted to compete by submitting a statement of capability before the deadline, which it did not.  The government cites SpaceX’s own legal filing in this case as saying that it “could be a bidder for future contracts,” not for past contracts.

The government also argues that SpaceX did not have a “direct economic interest” because to “prove a direct economic interest, a party must show that it had a ‘substantial chance’ of winning the [challenged] contract.”   Since SpaceX did not submit a statement of capability, it could not have had a substantial chance of winning the contract, therefore does not have a direct economic interest, and consequently does not have standing.

In short, the government contends, SpaceX “failed to submit a capability statement in response to the March 2012 solicitation. … Nor … did it indicate any dissatisfaction with the Air Force’s intent to procure the launches sole-source” from ULA, and “took no steps to get involved in the procurement at the time the agency was planning its course.  It is too late for SpaceX to try to bring a challenge to that procurement now.” 

The government makes a series of other arguments as well, all leading to a request that the court dismiss the case.  (It is somewhat more complicated than that because the government complains that the SpaceX lawsuit is “amorphous” in that it protests any sole-source EELV award, not just the one issued in December 2013.  The government asks the court to narrow the scope of the proceeding to the December 2013 contract, FA8811-13-C-0003, and therefore its filing is a Motion to Dismiss “portions” of the SpaceX lawsuit.)

Michael Listner, founder and principal at Space Law & Policy Solutions in New Hampshire, analyzed the government’s Motion to Dismiss in a series of tweets (@ponder68) today and concluded it is “substantive, focused and confident.”  While SpaceX may object, “they will have a difficult time overcoming this Motion,” he predicts.

For more SpacePolicyOnline.com coverage of this issue, see these previous articles:

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