Blue Origin, ULA and Northrop Grumman weigh in on multibillion-dollar SpaceX rocket lawsuit

Alan Boyle
Blue Origin’s BE-4 rocket engine, shown here during a test firing in Texas, is being developed for use on Blue Origin’s New Glenn rocket as well as United Launch Alliance’s Vulcan rocket. (Blue Origin Photo)

Amazon billionaire Jeff Bezos’ Blue Origin space venture and subsidiaries of United Launch Alliance and Northrop Grumman are intervening in a SpaceX lawsuit protesting $2.3 billion in rocket development awards to those three companies.

In a redacted version of the lawsuit, originally filed last Friday and made public today, SpaceX says it was unfairly passed over when the awards were made last October — and disparages the three companies’ rocket projects.

According to the court documents, government lawyers informed Blue Origin and United Launch Services on Monday that they were interested parties in SpaceX’s lawsuit. As a result, Blue Origin and United Launch Services filed motions in the U.S. Court of Federal Claims to intervene in the suit on Tuesday. Northrop Grumman’s subsidiary, Orbital ATK, followed suit.

All three companies said neither SpaceX nor the government objected to their taking part. Today the judge in the case, Lydia Kay Griggsby, granted the motions from Blue Origin and United Launch Services to intervene, and laid out a schedule for filing briefs that runs through Sept. 18. “Oral arguments, if warranted, shall be held at a time and date to be determined in consultation with the parties,” Griggsby wrote. Update for May 23: The judge granted Northrop Grumman’s motion to intervene as well.

Read motions filed by SpaceX, Blue Origin, United Launch Services and Orbital ATK.

SpaceX’s bid protest has to do with a series of Air Force contracts that support the development of Blue Origin’s New Glenn rocket, ULA’s Vulcan rocket and Northrop Grumman’s OmegA rocket for future national security launches.

The maximum allotments for work through 2024 are $500 million for Blue Origin, $967 million for ULA, and $791.6 million for Northrop Grumman (through the subsidiary formerly known as Orbital ATK). Each company was allotted $109 million from funds for fiscal year 2018.

SpaceX was left out of the contract awards. In an ethics report filed last month, the Pentagon’s inspector general noted that the issue came up during a chat that SpaceX CEO Elon Musk had with acting Defense Secretary Patrick Shanahan last December. At the time, Musk reportedly acknowledged that SpaceX wrote a poor proposal that “missed the mark.”

However, in the 79-page filing made public today, SpaceX says it was given short shrift by the Air Force and was more deserving of receiving an award than the other three companies. It said it could provide most of the services sought for national security launches at a significantly lower price, although the filing was redacted to conceal just how much lower.

SpaceX also said the three projects that received development funds were “paper” rockets that have not yet been built or flown. In contrast, SpaceX proposed using its Falcon 9 and Falcon Heavy rockets for most of the launches being planned. It said it could handle the heaviest rockets on the proposed manifest, in the Air Force’s Category C classification, with its Starship super-heavy-lift rocket starting in 2025.

According to the filing, the Air Force listed reasons why SpaceX was passed over, but SpaceX disputed the rationale. References to the specific reasons were blacked out in the redacted complaint. However, based on the context, those reasons may have had something to do with SpaceX’s ability to meet schedules, plus questions about Starship’s readiness. In recent months, SpaceX has accelerated its work on Starship prototypes — and last October’s decision may have had something to do with that.

SpaceX says that it has been working through an internal appeal process with the Air Force, which ended last month with a rejection of the appeal.

Now the Air Force is looking ahead to a new phase of the launch services program, which is aimed at following through on a congressional mandate to stop using rockets powered by Russian-built RD-180 engines. Such engines are used on ULA’s Atlas 5 rocket, and so the Air Force has to come up with a replacement.

In the next phase of the program, the Air Force plans to fund only two rocket programs. Blue Origin executives have already voiced concerns that the Air Force’s timetable puts their company at a disadvantage. Blue Origin’s BE-4 rocket engine, which is still going through testing, is destined to power its own New Glenn rocket as well as ULA’s Vulcan rocket. Northrop Grumman, meanwhile, has been selected to provide solid rocket boosters for the Vulcan.

SpaceX says the fact that it lost out in the first round of competition puts the company at a disadvantage going forward and would “impede Congress’ mandate to maintain assured access to space.” SpaceX also noted that all three of the companies that won funding are involved in ULA’s Vulcan rocket program.

The complaint asks the court to stop the federal government from paying out any more money under the terms of the existing contracts, re-evaluate the original bids and either make a new award decision under the existing criteria or revise the criteria and start from scratch with the contract competition.

On the other side of the argument, Blue Origin, United Launch Services and Northrop Grumman’s Orbital ATK subsidiary say they need to be in on the case because their interests aren’t necessarily the same as the federal government’s interests. Their concern is that a decision in SpaceX’s favor may result in financial losses for them.

Now that the legal battle has been joined, the dispute could go on for months.

The case parallels a bid protest that SpaceX filed in the same court back in 2014, alleging that United Launch Services was unfairly favored in the Air Force’s projected purchase of rocket cores for national security launches.

That lawsuit was dropped after nine months of legal wrangling when the Air Force agreed on a plan to certify SpaceX for national security launches. SpaceX conducted its first launch for the Air Force’s Evolved Expendable Launch Vehicle program last December when a Falcon 9 rocket put an Air Force GPS satellite in orbit.

Update for 12:28 p.m. PT May 22: In an email to GeekWire, ULA spokeswoman Jessica Rye confirmed that her company is intervening in the case and referred further inquiries to the Justice Department, which has declined to comment. For what it’s worth, ULA and its United Launch Services subsidiary are both 50-50 joint ventures between Boeing and Lockheed Martin.

SpaceX provided this statement: “SpaceX respectfully disagrees with the Air Force’s LSA [Launch Services Agreement] award decision. While we support the Air Force moving forward with its Phase 2 acquisition strategy for national security space launches as currently planned, we are formally challenging the Air Force’s LSA decision to ensure a level playing field for competition.”

Blue Origin declined to comment, but if Northrop Grumman has anything to say, we’ll pass it along.

Update for 9:35 p.m. PT May 22: We’ve noted that the judge in the case granted the motions to intervene from Blue Origin and ULA. The judge’s order lays out a months-long schedule for back-and-forth filings by the federal government, SpaceX, Blue Origin and ULA. Judge Griggsby also granted SpaceX’s request for a protective order, which means all filings will be redacted to black out sensitive information before they’re released to the public.

Update for 1:32 p.m. PT May 23: Today Judge Griggsby granted Northrop Grumman’s motion to intervene.

This report was originally published at 8:01 a.m. PT May 22.

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