SpaceX presses on with legal fight against U.S. Air Force over rocket contracts

SpaceX has taken its protest of the Air Force Launch Service Agreement contracts to a California court

WASHINGTON — SpaceX has asked the U.S. District Court of the Central District of California to hold a hearing on March 2 to consider the company’s eight-months-long protest against the U.S. Air Force.

A request for a hearing and for the court to rule on the case was filed Jan. 8 by SpaceX as the company presses forward with a protest originally filed in May with the U.S. Court of Federal Claims. SpaceX is challenging the Air Force’s decision in October 2018 to award rocket development contracts to Blue Origin, Northrop Grumman and United Launch Alliance.

The U.S. government and the three companies that received Air Force contracts filed motions on Jan. 17 opposing SpaceX’s request.

SpaceX contends that the Air Force made an unfair decision in awarding $2.3 billion in so-called Launch Service Agreements to the three launch providers and excluding SpaceX.

The U.S. Court of Federal Claims in August dismissed the protest on grounds that the court lacked jurisdiction and agreed to transfer the case to the California District court. The Court of Federal Claims ruled that LSAs are cooperative agreements that cannot be legally challenged like standard procurement contract awards.

SpaceX filed the complaint with the California court on Sept. 13 and filed a supplemental complaint on Dec. 23.

The outcome of the case could have significant implications as the three LSA winners and SpaceX are all competing for two contracts to provide launch services to the Air Force for five years starting in 2022. The Air Force plans to select two providers in 2020 for the National Security Space Launch Phase 2 Launch Service Procurement.

The LSA contracts awarded in October 2018 to Blue Origin ($500 million), United Launch Alliance ($967 million) and Northrop Grumman ($762 million) are to help the companies defray the costs of developing new rockets and infrastructure needed win a Phase 2 contract.

Without LSA funds, SpaceX has to pay for those costs. This has caused the company financial damage, SpaceX argued, and also “irreparable harm” because not being an LSA recipient means SpaceX does not get direct insight into the Air Force’s design priorities and technical requirements for the Phase 2 competition.

Supplemental complaint

The supplemental complaint and motion filed Jan. 8 is a heavily redacted document that rehashes the same arguments laid out in the original bid protest but adds a few twists. The introduction leads off with remarks made in 2016 by the late Republican Senator John McCain — expressing frustration about the United States’ reliance on the Russian RD-180 rocket engine and chastising the Air Force and ULA for not doing enough to end the use of that engine.

SpaceX in pointed language explains why it believes the Air Force made an unlawful and unreasonable call to deny the company LSA funds. According to the complaint, the Air Force made its decision on grounds that the company’s LSA proposal sought government investment in the next-generation Starship rocket and the Air Force considered Starship “too risky for an LSA award.”

SpaceX proposed the Falcon 9 and Falcon Heavy for the bulk of the required national security missions — known as Category A/B — and Starship for the less frequent Category C missions that require lifting the heaviest payloads to more stressing orbits.

Starship is a reusable vehicle that SpaceX is developing to carry crew and cargo to Earth orbit and for interplanetary exploration. It combines the Starship spacecraft and Super Heavy rocket booster.

For the Phase 2 launch services procurement, SpaceX is offering the Falcon 9 and Falcon Heavy rockets for all mission categories. It did not propose Starship, the company confirmed last month.

In the protest, SpaceX says Air Force evaluators considered the “technologies and capabilities of the Starship greatly exceed those of the other offered launch systems” and “would be game changing for national security space.” But the Air Force concluded that SpaceX required the greatest government investment in order to make Starship suitable for Category C launches. SpaceX argues in the complaint that Starship is no riskier than the other vehicles being developed by the LSA winners which SpaceX calls “conceptual launch solutions that have not been built, tested, launched or certified for any missions.”

In portions of the complaint that were heavily redacted because they contained companies’ proprietary information, SpaceX contends that Falcon 9 and Falcon Heavy would be less risky options for Category A/B missions than its competitors’ new rockets. But the Air Force excluded SpaceX from LSA funding because it did not believe Starship was an adequate Category C offering.

SpaceX makes the case that having ready vehicles to fly Category A/B missions is a far more pressing priority than Category C vehicles. The Phase 2 procurement requires Category A/B missions to fly by 2022 whereas Category C missions don’t fly until 2025. SpaceX said this is a case of the Air Force letting “the proverbial tail wag the dog.”

“Had SMC [Space and Missile Systems Center] announced in the RFP that Category C mission risks would drive the LSA investment decisions, SpaceX would have proposed differently,” says the supplemental complaint.

What comes next?

Although SpaceX successfully sued the Air Force in 2014, it is hard to predict how this LSA case might turn out, said attorney Michael Listner, founder of Space Law & Policy Solutions.

“The Air Force had a solid argument in the Court of Federal Claims and SpaceX is looking to take another shot in a different venue,” Listner told SpaceNews.

Listner noted that SpaceX is putting forth the same arguments it has made for years about the Air Force making decisions that favor ULA and not giving SpaceX credit for the capabilities it brings to the national security launch market. “Whether it works this time I don’t know,” he said. “What I tell clients is there’s always a 50/50 chance.”

A SpaceX spokesperson told SpaceNews the company will continue to make the same case in the California District court that was made to the Court of Federal Claims. When it filed the bid protest in May, SpaceX said the company “respectfully disagrees with the Air Force’s LSA 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.”

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