Which of America’s space agencies will return American astronauts to the moon? The short answer is SpaceX, which won a $2.9 billion contract from NASA in April to build the space agency’s new Human Landing System, defeating Blue Origin and its partners Lockheed Martin (NYSE: LMT) and Northrop Grumman (NYSE: NOC).
However, the longer answer to that question may be: Not just SpaceX. Blue Origin still has a chance to win one of the most lucrative government space contracts. As you may recall, the losers on the Human Landing System (HLS) contract – Blue Origin and its friends, as well as a third team led by Leidos subsidiary Dynetics – protested the award to the Government Accountability Office.
The GAO considered both of the aggrieved parties’ complaints for three months before rejecting them late last month. According to the GAO, NASA’s April decision was “reasonable and consistent with applicable” law. Furthermore, “SpaceX submitted the lowest-priced proposal with the highest rating,” while Blue Origin and Leidos bids were “significantly higher in price” – reportedly $5.9 billion and $8.5 billion, respectively.
At those prices, “NASA… lacked the necessary funding to make more than one award,” according to GAO, so it chose the highest-quality and lowest-priced bid, SpaceX’s.
But here’s the catch: Blue Origin clarified just before the GAO’s decision that its real objection to SpaceX winning the award was that it wasn’t given the opportunity to revise its bid and lower its price to fit within NASA’s budget, once it became clear that there wasn’t enough money to fund a second HLS from a different provider.
Bezos also offered to conduct “a pathfinder mission to low-Earth orbit of the lunar descent element to further retire development and schedule risks” at no cost to NASA. Of course, that letter was sent to NASA rather than the GAO. The GAO issued its ruling four days after it was sent, dismissing Blue Origin’s (and Dynetics’) protests.
But Bezos is unfazed. Despite not receiving a response from NASA on its offer to reduce its bid price, and despite losing its protest before the GAO, Blue Origin still has one card to play – one last chance to re-enter the space race.
Blue Origin filed a lawsuit against the GAO’s decision in the United States Court of Federal Claims last Monday, claiming that the space agency conducted a “illegal and improper” review of the HLS bids. Although the details of Blue Origin’s challenge are hidden within a “sealed complaint,” the crux of the company’s objection appears to be that NASA overlooked the “immensely complex and high risk” of SpaceX’s plan for sending astronauts back to the moon, and that entrusting NASA’s moon dreams solely to SpaceX – without a backup provider by the name of Blue Origin – puts the entire manned space program at risk.
Although the Federal Claims Court will review this case from the ground up, unconstrained by the GAO’s previous decision, the facts of the case will be the same as those that convinced the GAO to uphold NASA’s award to SpaceX. All else being equal, you have to figure the odds favor SpaceX winning its case again (although, Blue Origin could appeal this loss as well). For that matter, even if Blue Origin wins, it’s unclear the company would walk away with a contract, as NASA has stated it doesn’t have the funding to buy two separate HLS systems right now.
Furthermore, by deciding to sue NASA, Blue Origin risks causing significant ill will, which could cost it a chance at future moon contracts. After all, when NASA awarded the first HLS contract to SpaceX in April, it made it clear that other companies, such as Blue Origin, would be able to bid on future awards. NASA stated that it will “implement a competitive procurement for sustainable crewed lunar surface transportation services that will provide human access to the lunar surface using the Gateway on a recurring basis beyond the initial crewed demonstration mission” (emphasis added).