Blue Origin files protest in controversial rocket competition

The rocket manufacturer protested Monday, saying the contract solicitation the Air Force issued in the spring is unfair

Jeff Bezos, owner of Blue Origin, speaks about outer space before unveiling a new lunar landing module called Blue Moon, during an event at the Washington Convention Center, May 9, 2019 in Washington. Blue Origin filed a complaint Monday, saying the contract solicitation the Air Force issued in the spring is unfair. (Mark Wilson/Getty Images)

In a move that will reverberate in Congress, a top U.S. rocket manufacturer formally protested on Monday the terms of a multi-billion-dollar Air Force competition for launching America’s future national security satellites.

Blue Origin of Washington state, one of four likely bidders for the work, filed its protest with the Government Accountability Office, citing concerns that the contract solicitation the Air Force issued in the spring is unfair.

[Fly me to the moon … before China does]

“Current and future competition is unnecessarily and detrimentally limited by” the solicitation, Blue Origin said in its protest, a redacted copy of which CQ Roll Call obtained.

The solicitation currently “includes evaluation criteria that are ambiguous and fail to comply with federal procurement statutes and regulations,” Blue Origin, founded by Amazon CEO Jeff Bezos, said in a separate statement. “Unless the Air Force changes its approach, this procurement will perpetuate a market duopoly in national security space launch well into the next decade.”

The result, the company argued, would be “higher launch prices, less assured access to space, and a missed opportunity to expand our national security interests and bolster U.S. leadership in space.”

At issue is an Air Force plan to pick two companies for heavy-lift rocket launches — essentially, to define who will be the U.S. government’s rocket contractors for the foreseeable future.

Bids for the program are due Monday. The bidders are expected to be Blue Origin, which will offer its New Glenn rocket; SpaceX of California, whose founder and CEO is Tesla maker Elon Musk and which will offer its Falcon rockets; Northrop Grumman of Virginia, which is pitching a rocket called OmegA; and United Launch Alliance, which has headquarters in Colorado, with its Vulcan Centaur.

The competition has spawned a fierce lobbying campaign among the contending companies, and many of the most senior members of the Pentagon oversight panels in Congress are actively engaged in the issue. The program itself was a creation of Congress, which has sought to wean the Air Force off rockets propelled by Russian-made engines.

Blue Origin has a major benefactor in Washington Democrat Adam Smith, the chairman of the House Armed Services Committee, in whose district the company is headquartered.

On the other side of the ledger, Senate Appropriations Chairman Richard C. Shelby of Alabama, among others, is a longtime supporter of United Launch Alliance, one of the government’s two incumbent launch service providers. ULA has a large factory in his state. SpaceX and Northrop Grumman also have powerful champions on Capitol Hill.

Many of these lawmakers have weighed in with letters to the Air Force in recent months in attempts to try to gain a competitive advantage for their favored company.

Protest roils competition

The first award under the program will cover up to 25 launches from 2022 through 2026, though industry experts say the winners would arguably have a leg up on netting subsequent launches too.

The Air Force has been expected to announce the winners in March 2020. Now, the Blue Origin protest could put a kink in that plan. The Government Accountability Office’s response to Monday’s protest could affect how the competition unfolds. And depending on how long GAO takes to adjudicate the protest, it could delay the program’s schedule.

GAO is required by law to resolve protests within 100 days regardless of when in the procurement process the protest is filed, said Ralph White, GAO’s managing associate general counsel for procurement law.

The Air Force has argued that it is critical the program’s schedule be maintained to ensure that a made-in-the-USA fleet of rockets can be fielded by 2022, a target Congress required in the fiscal 2017 defense authorization law.

Air Force spokesman Maj. Will Russell on Monday said the service “cannot comment on further details regarding specific evaluation determinations as they are source selection sensitive.”

Congress has wanted to end U.S. reliance on the Russian-built RD-180 engines that have powered United Launch Alliance’s Atlas rockets.

ULA had maintained a monopoly on heavy-lift launches for about a decade until 2015, when the Air Force also certified SpaceX’s Falcon 9 medium-lift rockets.

Blue Origin’s concerns

SpaceX, like Blue Origin, was known to have concerns about what SpaceX’s advocates in Congress consider the unfairness of the Air Force’s competition. But Blue Origin appears so far to be the only company to have formally protested the solicitation as defective.

Blue Origin contends that excluding the losing companies from the first five years of launches will make the losing bidders uncompetitive for future competitions because the losing companies will not be certified and will not have the required launch infrastructure.

In addition, Blue Origin’s executives contend the Air Force solicitation is vague in key ways. The Air Force has told bidders it will select two companies that — in combination — provide the government with the best value. According to Blue Origin’s information paper, because the Air Force has not made clear to any of the bidders which combination of attributes it will value, the service has made it impossible for companies to divine how to structure their bids.

Lastly, Blue Origin has taken issue with language in the solicitation that says if a company does not have a preferred rocket ready in time, then a backup can be used. That is a disadvantage to the three companies that will have only one rocket capable of meeting requirements and an advantage to United Launch Alliance, which still has its Atlas rockets as backup options, Blue Origin has argued.

Live legislative issue

The fiscal 2020 defense authorization and appropriations bills show lawmakers have been mostly supportive of the Air Force’s approach to the program and unpersuaded by Blue Origin’s arguments, which the company has previously articulated to the Air Force, the defense panels and the press.

But the defense bills are far from done. Armed Services staff are working on defense authorization conference issues ahead of a formal conference. On the defense appropriations side, the House has finished its work and the Senate is hoping to do so in September before the fiscal year starts on Oct. 1 — a goal that will be challenging to achieve.

However this plays out in the fiscal 2020 process, it will not mark the end of the back-and-forth as the program moves forward in the coming years.

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