NASA says it remains on track for a February selection of the space transport company it considers most deserving of the $175 million the agency is ready to spend to help the recipient demonstrate the delivery of cargo to the international space station. But whether NASA actually makes the award next month depends on circumstances largely beyond the agency’s control.

That is because the omnibus spending bill U.S. President George W. Bush signed into law Dec. 26 contains a provision barring NASA from making a new award under its Commercial Orbital Transportation Services (COTS) demonstration program until it settles a dispute with one of the program’s original awardees, RocketplaneKistler of Oklahoma City.

RocketplaneKistler was one of two firms selected by NASA in mid-2006 to share nearly $500 million in subsidies for the development and demonstrations of their proposed space station re

solutions. Last October, NASA terminated its agreement with RocketplaneKistler after development of the company’s K-1 reusable rocket all but came to a halt amid a series of financial setbacks.

Kistler appealed to NASA to reinstate its award – a non-traditional contract called a Space Act Agreement – and when that tactic failed, the company protested to the U.S. Government Accountability Office (GAO) challenging NASA’s plan to dole out the $175 million to a new COTS contender through another Space Act Agreement rather than a traditional government contract.

After filing its protest in late October, RocketplaneKistler’s attorneys wrote NASA to renew an earlier threat to sue NASA unless the agency reinstated its COTS award or gave the company $10 million for progress it had made prior to termination. In parallel, one of RocketplaneKistler’s attorneys, former Senate staffer Kevin Kelly of Van Scoyoc-Kelly PLC, had begun pushing legislative language in Congress that would bar NASA from making a new COTS award.

According to sources close to the situation, Kelly asked his former boss, Sen. Barbara Mikulski (D-Md.), to sponsor language that would limit NASA to funding its two original COTS awardees, namely RocketplaneKistler and Hawthorne, Calif.-based Space Exploration Technologies Corp. Mikulski chairs the Senate Appropriations subcommittee that takes the lead in drafting NASA budget bills.

The final language that ended up in the report accompanying the omnibus bill is not that explicit. But it does “note that one of the two COTS contract is currently in dispute” and directs NASA “not to select a new contractor until all challenges are decided.”

“In doing so, NASA could potentially create a liability to fund three proposals instead of two as originally envisioned, increasing the costs of this program to the taxpayers,” the language states. The bill also cuts a little over one-third of NASA’s $236 million COTS request and directs the Government Accountability Office to conduct a full review of the COTS program.

NASA spokeswoman Beth Dickey said Jan. 4. that the agency “understands the congressional language and will comply with it. The NASA administrator has been very clear on this point.”

In late December, NASA Administrator Mike Griffin told Space News the agency would “of course comply with the laws that are passed, but we will certainly redress this issue with Congress.”

He added: “NASA will fight for this program, which is critically important to America’s future as a space


Kelly declined in mid

November to confirm or deny pushing COTS language on his client’s behalf and has not responded to numerous phone calls and e-mails from Space News since then seeking comment.

In late December, RocketplaneKistler sent Space News a written statement from its chief executive officer, George French, saying he was “very disappointed that Congress decided not to direct NASA to reinstate [RocketplaneKistler’s]

funded agreement under the COTS program in the recently concluded Omnibus Appropriations bill” but that he “has no plans to pursue a Federal Court challenge of NASA’s termination of [RocketplaneKistler’s]

funded agreement under the COTS program.”

However, French said RocketplaneKistler would continue to pursue its challenge of NASA’s plan to award a new Space Act Agreement, noting that the Government Accountability Office is required to render a decision by Feb. 7.

“A GAO decision in B-310741 favorable to

[RocketplaneKistler] would allow all vendors a fair opportunity to compete for NASA’s COTS program requirements,” French said. “[RocketplaneKistler’s]

has always supported the commercial space industry and a robust COTS program with the ability to attach potential commercial contracts to any COTS’ awards.”

Eight companies, including Space Exploration Technologies, submitted proposals in late November for the $175 million freed up by terminating RocketplaneKistler’s award.

Dickey would not say whether NASA officials had yet scheduled promised face-to-face meetings with any of the eight contenders to discuss their proposals. But she said NASA is on track to make a February selection pending the resolution of RocketplaneKistler’s GAO protest. “[The] GAO has said it expects to resolve the question by Feb.7,” she said. “A resolution by this date would not affect the planned awards.”

Whether a GAO dismissal of RocketplaneKistler’s complaint would constitute a resolution, however is not clear.

Legal experts who did not want to be named


Kistler could choose to drag the matter out by taking its challenge to the U.S. Court of Federal Claims if the GAO issues a ruling next month that it does not like. If RocketplaneKistler does not find satisfaction there, legal experts said, it can file a law

suit challenging NASA’s use of Space Act Agreement for COTS.

Asked to clarify what NASA could or could not do in such a situation, a spokeswoman for Sen. Mikulski referred Space News to the omnibus language.

“As the language in the omnibus states, NASA must resolve its disputes before moving forward. The nature of any dispute outcome does not affect the language one way or the other,” Mikulski spokeswoman Melissa Schwartz wrote in an e-mail.

“As you saw in several cases in the [Commerce, Justice, Science] bill, Chairwoman Mikulski exercised congressional oversight to demand accountability from the [Commerce, Justice, Science] agencies. We are not micromanaging NASA’s disputes or contracts, we are looking for them to make a wise use of taxpayer dollars.”