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GAO sides with Blue Origin in dispute over Air Force’s multibillion-dollar launch contract process

Alan Boyle
An artist’s conception shows Blue Origin’s New Glenn rocket. (Blue Origin Illustration)

The Government Accountability Office is agreeing with Amazon CEO Jeff Bezos’ Blue Origin space venture that the Air Force needs to amend its rules for deciding who’ll get future contracts for national security space launches.

Today’s GAO decision comes in response to Blue Origin’s pre-award protest over the Air Force’s National Security Space Launch Phase 2 Launch Service Procurement, which was filed in August when Blue Origin and three other companies submitted their bids for future procurements.

The launches covered by the process would be executed between 2022 and 2026, and are sure to bring billions of dollars to the companies that are selected.

Blue Origin wants the Air Force to consider its yet-to-be-built New Glenn rocket. SpaceX is proposing its Falcon 9 and Falcon Heavy rockets. United Launch Alliance is offering its next-generation Vulcan rocket, with the current-generation Atlas 5 rocket as a backup. And Northrop Grumman is offering its planned OmegA rocket.

Get the details: Read the GAO’s full statement on Blue Origin’s protest

The Air Force said it would to select two of those companies to provide launch services, based on which combination offers the best value to the U.S. government.

Blue Origin objected to the process on several counts. For example, it said that there’s no justification for picking just two companies, and that the rules as written would unfairly favor the two companies that are already launching the rockets they’re proposing — that is, United Launch Alliance and SpaceX.

The GAO focused on the best-value criterion for picking the winners. “This methodology … does not provide a reasonable, common basis on which offerors will be expected to compete and have their proposals evaluated,” Kenneth Patton, managing associate general counsel for procurement law at the GAO, said in a statement. “GAO recommends that the agency amend the solicitation.”

Challenges to other provisions of the solicitation were turned aside, because the GAO found those provisions “reasonable and in accordance with applicable procurement law.”

The GAO said the decision was issued under a protective order because it may contain proprietary or otherwise sensitive information. It called on the parties in the dispute to review the decision and quickly identify which information should be held back, so that a public version of the decision can be released via GAO.gov.

In an emailed statement, Blue Origin CEO Bob Smith said that his team would work with the Air Force to address the GAO’s recommendations:

“We want to thank GAO for their careful consideration of these serious issues, thoroughly reviewing the facts of the case, and recognizing the importance of ensuring evaluation criteria that are unambiguous and comply with federal procurement statutes and regulations. This is an important mission to Blue Origin, and we remain committed to our long-term partnership with the Air Force and to working with them as they address the GAO’s recommendations. We look forward to continuing our participation in this process and working with the Air Force as they incorporate the GAO’s feedback during the LSP source selection.”

Space News quoted Air Force spokeswoman Ann Stefanek as saying that officials plan to review the GAO’s recommendations and resolve the watchdog agency’s single concern “definitively and expeditiously.”

“The Air Force remains confident in its acquisition strategy and Phase 2 contract award in the third quarter of FY20,” Stefanek was quoted as saying.

Separately, SpaceX filed a federal lawsuit in May to challenge the Air Force’s procurement process. The lawsuit focused on the financial support that Blue Origin, Northrop Grumman and United Launch Alliance received from the Air Force last year during Phase 1 of the process. SpaceX said the fact that it was passed over in Phase 1 put it at a disadvantage for Phase 2.

That lawsuit is under consideration in U.S. District Court in Los Angeles.

Update for 11:26 a.m. Nov. 21: An Air Force acquisitions executive is quoted as saying that the rules of the procurement process will be changed to make clear that offerings will be evaluated independently rather than in combination. That addresses the GAO’s objection that the original rules said two offerings would be selected based on what would provide the best value for the federal government “when combined.” The request for proposals didn’t specify which criteria would be used to evaluate different combinations of proposals.

Space News quoted Will Roper, the Air Force’s assistant secretary for acquisition, technology and logistics, as saying the words “when combined” would be removed from the request for proposals. Presumably, Blue Origin and other launch companies would be given the chance to revise their offerings. However, the Air Force is still likely to end up selecting only two companies for future launch contracts.

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