Claims court punts SpaceX’s LSA bid protest to California court

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WASHINGTON — The U.S. Court of Federal Claims ruled Monday that it lacks jurisdiction to hear SpaceX’s complaint that the Air Force has put it at a disadvantage to win future launch service contracts by denying it a share of the $2.2 billion it awarded rivals Blue Origin, Northrop Grumman and United Launch Alliance to prepare new rockets for the competition.

In a decision filed under seal Aug. 26 and unsealed Aug. 28, Judge Lydia Kay Grigsby granted the U.S. government’s motion to dismiss SpaceX’s bid protest but granted the Hawthorne, California-based company’s motion to transfer its complaint to U.S. District Court for the Central District of California.

“Judge Grigsby’s decision to transfer the case enables us to now proceed to the merits of our protest, to receive a legitimate and fair opportunity by an independent party to review the Air Force’s LSA award decision, and ultimately to ensure a level playing field for competition,” SpaceX said in a statement to SpaceNews.

SpaceX filed its bid protest with the U.S. Court of Federal Claim in May seeking to stop its rivals from receiving any more of the Launch Service Agreement money the Air Force awarded Blue Origin, Northrop Grumman and United Launch Alliance in 2018 to help the companies defray the costs of meeting the government’s launch requirements for the upcoming launch procurement competition known as National Security Space Launch Phase 2 Launch Service Procurement. SpaceX, the only competitor not developing a new rocket to compete for the forthcoming launch contracts, said the Air Force’s decision has unfairly tilted the playing field.

Blue Origin, Northrop Grumman and ULA joined the U.S. government in urging the U.S. Court of Federal Claims to dismiss SpaceX’s protest.

The full decision can be read here.  

A key reason cited by the court for dismissing SpaceX’s protest is that LSAs are cooperative agreements that cannot be legally challenged like standard procurement contract awards. The judge noted that SpaceX made a persuasive case that the Air Force’s LSA decisions are related to the Phase 2 procurement because the LSA awards will lead to the development of launch vehicles to be bid during the Phase 2 procurement, but she still concluded that the Air Force’s evaluation and portfolio award decisions during the LSA competition were not “in connection with” the Phase 2 procurement.

The ruling noted that the LSA competition involved a solicitation that was separate and distinct from the Phase 2 procurement, and the Phase 2 procurement was not the subject of the dispute.

SpaceX argued that the LSA competition “was the third step in a multi-stage procurement process” designed by the Air Force to procure domestic launch services. But the facts of the case “show that the LSAs at issue are not procurement contracts and therefore, the Air Force’s decisions related to the award of these agreements may not be reviewed by the Court pursuant to the bid protest provision of the Tucker Act,” said the ruling. The 1887 Tucker Act is the federal statute that gives jurisdiction to the Court of Federal Claims.

During oral arguments, SpaceX acknowledged that it will compete for the award of a launch services contract during the Phase 2 procurement, even though SpaceX was not awarded an LSA agreement, the ruling said. “Given this, the record evidence makes clear that the Air Force’s portfolio award decision during the LSA competition will not dictate the outcome of the Phase 2 procurement, as Space X suggests.”

Another reason the complaint was dismissed is that the LSA competition and the Phase 2 procurement involve separate and distinct solicitations, and have different acquisition strategies. “It is a well-established tenet of procurement law that a selection decision made under one procurement or solicitation does not govern the selection under a different procurement or solicitation,” the ruling said. One important distinction the ruling pointed out is that the LSA competition was not subject to the requirements of the Federal Acquisition Regulations, whereas the Phase 2 procurement will be a FAR-based competition.

A SpaceX spokesman said transferring the case to the federal court in Los Angeles “does not impact the merits of our LSA award decision protest or our intent to serve as the Air Force’s long-term provider for space launch.”

In its ruling, the court said that transferring the matter to the United States District Court for the Central District of California “would be in the interest of justice.” Although the court dismissed the complaint, it acknowledged that SpaceX “raises understandable concerns that it may be disadvantaged in the future by the fact that the Air Force is funding the development of launch vehicle prototypes by Blue Origin, ULA and Orbital.”

SpaceNews staff writer Sandra Erwin contributed to this story.