SpaceX, Air Force Settle Lawsuit over ULA Blockbuy

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Updated Jan. 24 at 8:38 a.m. EST

WASHINGTON – SpaceX will drop its lawsuit against the U.S. Air Force in exchange for the service making more national security launch missions available for competition, the two parties announced Jan. 23.

The Air Force would also move faster on its efforts to certify SpaceX to launch military satellites as part of the agreement.

The move comes less than two weeks after the sides entered mediation over an $11 billion sole-source contract the Air Force gave United Launch Alliance of Denver.

SpaceX filed a lawsuit last April asking the U.S. Court of Federal Claims to void a large portion of the deal, under which the Air Force ordered 36 rocket cores from ULA.

Original plans for the Air Force’s block buy called for the service to purchase those cores from ULA on a sole-source basis while putting another 14 missions up for bid, thereby giving so-called new entrants such as SpaceX a crack at the market.

But in March 2014, the Air Force deferred roughly half of the launches to be put out for competition. Many of those missions were to loft GPS satellites, which SpaceX had offered to launch for as little as $80 million each in an unsolicited bid.

SpaceX filed suit shortly thereafter.

“This is not SpaceX protesting and saying that these launches should be awarded to us,” Elon Musk, SpaceX’s founder, said here in April when the suit was filed. “We’re just protesting and saying that these launches should be competed.”

New entrants like SpaceX must earn certification to launch national security missions. The Air Force announced earlier in January that SpaceX is expected to earn certification no later than the middle of 2015, some six months later than originally thought.

While the Air Force said engineering analysis remained, Musk said service officials had slowed the certification effort in the hopes of later landing jobs at Lockheed Martin or Boeing, the parent companies in the ULA joint venture.

Despite the public bickering between Musk and the Air Force, SpaceX and the service worked a deal behind closed doors and under a court-imposed gag order.

In a Jan. 13 order, Susan Braden, the judge overseeing the case, said SpaceX and the Air Force would begin mediation this month, a path she had first suggested last July.

With a former U.S. attorney general, John Ashcroft, serving as mediator, SpaceX and the Air Force were able to reach agreement.

“Under the agreement, the Air Force will work collaboratively with SpaceX to complete the certification process in an efficient and expedient manner,” the statement from the two parties said. “The Air Force also has expanded the number of competitive opportunities for launch services under the EELV program while honoring existing contractual obligations.”

The statement did not make clear how many competitive launch opportunities would be available or when. The Air Force has committed to seven launch awards by late 2017, but has said that number could grow to at least eight.

Each additional launch contract the Air Force puts out for competition gives SpaceX or ULA another opportunity to win about $100 million or more in business.

As a result of the agreement, the Air Force would not break its current contract with ULA, the statement said. Defense Department officials had estimated that changing the contract could lead to $370 million in costs.

ULA Chief Executive Tory Bruno commented via Twitter on the outcome.

 

The agreement also appears to aid future new entrants going through the certification process. As part of the agreement, the Air Force said it would hold future competitions “consistent with the emergence of multiple certified providers.”

That likely means the service would follow a certification process closer to NASA’s where bidders can win launch contracts as long as they are certified before the launch date, but not necessarily before the contract award.

Orbital Sciences Corp. of Dulles, Virginia is widely expected to become the next company to seek certification.

Here’s the joint statement SpaceX posted on its website Friday (Jan. 23) evening:

The Air Force and SpaceX have reached agreement on a path forward for the Evolved Expendable Launch Vehicle (EELV) program that improves the competitive landscape and achieves mission assurance for national security space launches.  Under the agreement, the Air Force will work collaboratively with SpaceX to complete the certification process in an efficient and expedient manner.  This collaborative effort will inform the SECAF directed review of the new entrant certification process.  The Air Force also has expanded the number of competitive opportunities for launch services under the EELV program while honoring existing contractual obligations.  Going forward, the Air Force will conduct competitions consistent with the emergence of multiple certified providers.  Per the settlement, SpaceX will dismiss its claims relating to the EELV block buy contract pending in the United States Court of Federal Claims.