The Government Accountability Office on Monday sustained a protest by Jeff Bezos’ Blue Origin space company to a Pentagon decision that essentially barred the company from participating in a lucrative contract to launch national security satellites.
Blue Origin filed the legal challenge in August, alleging that the Air Force was “pursuing a flawed acquisition strategy” that discriminated against new bidders and limited competition. (Bezos also owns The Washington Post.)
That policy said only companies that had been through the Pentagon’s rigorous certification process could compete for the launch contracts, worth billions of dollars. Only two companies qualified under that restriction: United Launch Alliance (ULA), a joint venture of Lockheed Martin and Boeing; and SpaceX, Elon Musk’s space company.
The Air Force later awarded contracts to help ULA, Northrop Grumman and Blue Origin develop rockets that meet the Air Force’s requirements but said it would select only two companies to compete for the next batch of launch contracts.
The GAO did not make its full findings public Monday, because it “may contain proprietary and source selection sensitive information,” Kenneth Patton, the managing associate general counsel for procurement law at the GAO, said in a statement.
But he added that the Air Force’s methodology for picking the winners “does not provide a reasonable, common basis on which offerors will be expected to compete and have their proposals evaluated.”
Blue Origin challenged other parts of the solicitation, he added, but those were denied.
“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,” Blue Origin chief executive Bob Smith said in a statement. “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.”
An Air Force spokeswoman says the military branch “values GAO’s role in helping ensure the fairness and integrity of the procurement process.”
“The Air Force is reviewing the single ground of protest sustained by the GAO and expects to resolve this issue definitively and expeditiously,” Ann Stefanek said in a statement. “The Air Force remains confident in its acquisition strategy,” she added.
In announcing the protest in August, before any contracts were even awarded, Blue Origin said in a statement that “unless the Air Force changes its approach, this procurement will perpetuate a market duopoly in national security space launch well into the next decade, causing 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.”
It’s the second large-scale Pentagon contract that has drawn a legal challenge from Bezos.
Earlier this month, Amazon said it would challenge the award to rival Microsoft of a contract to provide cloud computing services to the Pentagon worth as much as $10 billion. Amazon, whose Amazon Web Services subsidiary has deep experience in cloud computing, said the Pentagon decision was tainted by “unmistakable bias” and “political influence.”
Unlike AWS, one of the nation’s largest cloud providers, Blue Origin is a relative newcomer to the national security launch industry. Its New Glenn rocket isn’t expected to fly until 2021, and it is only beginning to enter the market and line up customers.
For a decade ULA had a virtual monopoly on the contracts until SpaceX came along. Musk sued the Air Force in 2014 for the right to compete. The parties settled, and SpaceX has competed for several missions.