Dynetics HLS protest argues NASA should have revised competition after budget shortfall

WASHINGTON — NASA should have revised its approach to the Human Landing System (HLS) program or withdrawn the solicitation entirely once it was clear the agency didn’t have the funding to support two companies, one of the losing bidders argues in its protest of the award.

Dynetics, who filed a protest April 26 with the Government Accountability Office over NASA’s decision to make a single HLS “Option A” award to SpaceX, argued NASA chose “the most anti-competitive and high risk option available” when it decided to proceed with a single award despite receiving only about one fourth of the $3.3 billion it requested for the program in fiscal year 2021.

“In light of this new budget constraint and schedule change, the HLS program as originally conceived and as set forth in the Solicitation is no longer executable,” Dynetics said in its protest, a copy of which was obtained by SpaceNews. “Accordingly, NASA had several reasonable (and lawful) alternatives to choose from in connection with this acquisition.”

Those alternatives, the company argued, included amending the solicitation or withdrawing it entirely and starting over “given its incompatibility with the severe budget constraints” NASA faced. The agency could also have opened discussions with the bidders and allow them to revise their proposals, something NASA did only with SpaceX.

One option, sources familiar with the protest told SpaceNews, was for NASA to make multiple awards for a particular contract line item number, or CLIN, in the request for proposals for “sustaining requirements and preliminary design.” That would have allowed companies to work on concepts for a lander for the later, more sustainable phase of the Artemis program.

“This whole mechanism was set up to be very flexible, and they didn’t really use the flexibility they had,” a source said.

NASA’s decision, Dynetics argues, effectively locks SpaceX in as the lunar lander provider for the foreseeable future. “In making this decision, NASA walked away from the ground rules for the HLS program, effectively converting this Option A award into a lowest-priced, technically acceptable (‘LPTA’) competition and eschewing any future competition for the HLS program,” the protest states. “Indeed, the anti-competitive impact and downstream effect of NASA’s changed acquisition strategy cannot be overstated.”

NASA has said it will pursue competition in a later competition for follow-on lunar lander services. The agency released a request for information (RFI) April 28 asking companies for feedback on a future Lunar Exploration Transportation Services (LETS) contract. That would allow companies to sell to NASA “routine transportation services” for astronauts in the Artemis program.

“We’re still a few steps away from being able to issue the LETS contract request for proposals,” Lisa Watson-Morgan, NASA HLS program manager, said in a statement about LETS. “We are continuing our quest to refine acquisition strategies to ensure government-industry partnerships are streamlined for companies that want to become providers — to the government and other clients — in the emerging lunar marketplace.”

However, industry sources say they don’t understand why NASA didn’t take advantage of the flexibility in the HLS solicitation to allow it to support other providers now through the sustainable lander option in the HLS solicitation. “There are knobs that NASA can turn to keep competition now,” a source said. “Putting out an RFI for something that’s a couple years from now, well, there’s not going to be anybody left.”

“Two years from now, other than billionaires who can choose to keep things around, you’re not going to have others left in the game that are going to give you real competition,” the source added.

The other aspect of Dynetics’ protest was NASA’s evaluation of its proposal. The company complained that NASA used “unstated evaluation criteria” to downgrade its proposal. It cited as evidence of that several attributes of its lander rated a “significant strength” by NASA when receiving its base period HLS award a year ago that were only rated a “strength” in the Option A competition, despite not changing.

“The Dynetics design was not altered, only refined — what must have changed were NASA’s technical and programmatic evaluation criteria,” the company stated in its protest.

Many of the specific technical arguments it made are redacted in the version of the protest obtained by SpaceNews. The same is true for its price, which NASA said only that it was “significantly higher” than Blue Origin’s bid of $5.99 billion. Sources familiar with the protest noted that NASA did consider Dynetics’ price to be “fair, reasonable, and balanced,” as the agency noted in its source selection statement.

Dynetics also claimed that NASA overlooked weaknesses in SpaceX’s proposal. “NASA failed to consider the risks inherent in SpaceX’s technical approach and, more specifically, information too close at hand for NASA to ignore — i.e., that four SpaceX Starships have exploded at various stages of their tests flights in recent months,” the protest states. “NASA has given SpaceX a pass on its demonstrable lack of such systems engineering.”

In its protest, Dynetics requested NASA “immediately implement an automatic stay of the awardee’s contract performance pending the resolution of this protest.” NASA Acting Administrator Steve Jurczyk said April 27 that it was still to be determined if NASA needed to halt work on SpaceX’s contract. The agency did not respond to a request for comment April 29 on if it had decided it needed to stop work on the HLS award to SpaceX.

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