SpaceX handed loss in challenge over Air Force contract

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By Joey Roulette

(Reuters) - A federal judge plans to deny SpaceX's challenge to U.S. Air Force contracts awarded to its rivals, writing in a Thursday court filing that the Pentagon properly assessed the development of SpaceX CEO Elon Musk's Starship rocket system as "too risky and expensive."

Musk's Space Exploration Technologies Corp in its year-long lawsuit had accused the Air Force of unfairly awarding development contracts to Jeff Bezos' Blue Origin and other competitors for new rocket systems in 2018.

But in a ruling that was briefly posted online by the court before being sealed, the judge found no wrongdoing by the Air Force in denying the company funds to help develop Starship, a reusable rocket system that Musk envisions will send satellites to orbit and one day ferry humans to the moon and Mars.

Judge Otis D. Wright II gave the parties a week-long window to change his mind before entering judgment.

The Air Force declined to comment. SpaceX did not return requests for comment.

The $2.3 billion in awards served as seed investments in nascent rocket systems, with United Launch Alliance (ULA), a joint venture of Boeing Co and Lockheed Martin Corp, receiving the biggest chunk of $967 million.

SpaceX brands Starship as a two-stage fully reusable rocket system that stands at the center of the Hawthorne, California-based company's goal to normalize human space travel. Early prototypes of the rocket have flown in short "hop" tests at SpaceX's south Texas test site.

According to the order, part of SpaceX's pitch to the Air Force included a previously unreported less-reusable version of Starship whose upper stage would not return to Earth after delivering a payload into orbit - a "substantial" design change to the rocket's fully reusable architecture that the Air Force considered too complex of a challenge.

In August, the Air Force awarded much bigger, multibillion-dollar launch contracts to SpaceX and ULA.

SpaceX received a 40% share of missions to launch Pentagon payloads using its fleet of Falcon rockets, with ULA receiving a 60% share using its upcoming Vulcan rocket.

SpaceX that month opted to continue the lawsuit against the Air Force over the Starship bid, saying "substantial harm to SpaceX remains."

(Reporting by Joey Roulette in Washington Editing by Greg Mitchell, Matthew Lewis and Aurora Ellis)