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GAO rejects protests by Blue Origin and Dynectics over lunar lander award

The Government Accountability Office (GAO) today rejected the protests by Blue Origin and Dynectics against the award by NASA of its manned lunar lander contract to SpaceX’s Starship spacecraft.

In denying the protests, GAO first concluded that NASA did not violate procurement law or regulation when it decided to make only one award. NASA’s announcement provided that the number of awards the agency would make was subject to the amount of funding available for the program. In addition, the announcement reserved the right to make multiple awards, a single award, or no award at all. In reaching its award decision, NASA concluded that it only had sufficient funding for one contract award. GAO further concluded there was no requirement for NASA to engage in discussions, amend, or cancel the announcement as a result of the amount of funding available for the program. As a result, GAO denied the protest arguments that NASA acted improperly in making a single award to SpaceX.

GAO next concluded that the evaluation of all three proposals was reasonable, and consistent with applicable procurement law, regulation, and the announcement’s terms.

Finally, GAO agreed with the protesters that in one limited instance NASA waived a requirement of the announcement for SpaceX. Despite this finding, the decision also concludes that the protesters could not establish any reasonable possibility of competitive prejudice arising from this limited discrepancy in the evaluation.

This decision will likely allow NASA to proceed with the contract, and for SpaceX to begin work on the revisions it will need to make to Starship to make it a lunar lander.

The decision also puts companies like Blue Origin and Dynectics on notice: You need to prove you have the goods, or you won’t win customers. Commit some of your own funds to research and development, start building actual prototypes you can test, and the world will begin to beat a path to your door.

Genesis cover

On Christmas Eve 1968 three Americans became the first humans to visit another world. What they did to celebrate was unexpected and profound, and will be remembered throughout all human history. Genesis: the Story of Apollo 8, Robert Zimmerman's classic history of humanity's first journey to another world, tells that story, and it is now available as both an ebook and an audiobook, both with a foreword by Valerie Anders and a new introduction by Robert Zimmerman.

 
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"Not simply about one mission, [Genesis] is also the history of America's quest for the moon... Zimmerman has done a masterful job of tying disparate events together into a solid account of one of America's greatest human triumphs."--San Antonio Express-News

20 comments

  • Mark

    In 2019 the Harvard Business Review had an article with the title “The Era of “Move Fast and Break Things” Is Over”. Maybe it was for software engineering driven companies. But Elon and SpaceX raced ahead in Rocket engineering and production. I wonder what inspirational quote Bezos will have on the whiteboards at his Project Jarvis offices. I hope it’s motivational!

  • Mitch S.

    Maybe someone at ULA slipped the GAO a note reminding them that ULA is still waiting for flight ready BE4s.

  • Ray Van Dune

    Great news for SpaceX and sanity!

    I suppose this is as good a time as any to bring up something that has been nagging me… those huge propellent tanks at the new SpaceX tank farm. My understanding is that they are made using the same construction techniques as the Super-heavy and Starship themselves. Everyone has commended SpaceX for building its own tanks, but my impression is that they are less sturdy than the “industrial strength” tanks found in the existing tank farm. They are also a lot bigger. “A tank is a tank” did satisfying my worries, until I started wondering about whether the design standards are really the same, given the premium on low mass, high volume, and short lifespans of typical space-faring tanks, when compared to those found on a farm which is intended to provide service in a high-g environment for years, operated by non-rocket scientists.

    I just hope SpaceX appreciated that they were probably stepping out of their wheelhouse a little bit in designing, building and operating a “tank farm”. There is one hell of a lot of energy stored in those thins!

  • Ray Van Dune

    “…those thins! What a Freudian slip – they sure are!

  • Edward

    Now I know why NASA is not in much trouble. They said upfront that there was flexibility in the awards.

    Robert wrote: “The decision also puts companies like Blue Origin and Dynectics on notice: You need to prove you have the goods, or you won’t win customers. Commit some of your own funds to research and development, start building actual prototypes you can test, and the world will begin to beat a path to your door.

    The space industry has had a few mindsets ingrained into them for two thirds of a century. These mindsets need to change.

    1) Government is the customer. For some time, government was a virtual monopsony, but that is changing. There are more customers for space services than there used to be. SpaceX designed their Falcons to support non-government customers, and then started selling to the government, too.

    2) There is a limited pool of funds for space activities. This was true when government was a virtual monopsony. Everyone was competing for government contracts and the occasional commercial geostationary satellite construction and launch. However, NASA Administrator Bridenstine on the Ben Shapiro radio show on Monday 3 August 2020 pointed out that there is far more capital available outside of NASA for use by the commercial space marketplace than there is inside of NASA. Government’s virtual monopsony is fading.

    3) We can go to the Moon or to Mars, not both. This was true when government was the sole space explorer. We now have at least two commercial companies eager to explore space. Blue Origin has stated its goal of going to the Moon for exploration and for resource use, and SpaceX (Space Exploration Technologies, Corp.) has emphatically stated its goal of colonizing Mars, and is developing the ship that it announced will do the job. As the customer base grows for commercial space companies, the opportunities increase, and we can now plan (not dream) for expeditions to both the Moon and Mars.

    4) Get the contract then make the product. That worked for government’s monopsony, but we are now seeing that if you build it, they [the customers] will come. This latter philosophy has been the business paradigm for centuries, but somehow it changed with the space industry. SpaceX’s market research showed that the customer base would increase if launch costs were reduced, and the reality proved this to be true.

    5) Government will keep businesses afloat just to prevent the formation of monopolies in the space industry. This seems to still be true, but with the coming of large numbers of customers, Government will have less need to interfere with the free market. SpaceX is currently the company to beat, because it got a head start on winning the NewSpace business wars. However, in their rush to get their products to market, they left plenty of room for improvements that other companies could and should see as opportunities to beat SpaceX at its own success, just as Inmarsat is doing:
    https://behindtheblack.com/behind-the-black/points-of-information/inmarsat-to-launch-new-low-orbit-communications-satellite-constellation/

    6) You can get your Congressman and Senators to throw money your way. SLS shows that this is still true, and always will be. Well, free market capitalism can’t win them all. Government just can’t seem to keep its thumb out of the plumb pie, ruining it for everyone else. Fortunately, free market capitalism bakes apple pies, pumpkin pies, pecan pies, strawberry pies, banana cream pie, lemon meringue pie, and just for grins and profits: PieCaken (a take off of the Turducken):
    https://www.goldbelly.com/the-piecaken-shop/the-piecaken

    https://en.wikipedia.org/wiki/Turducken

    Thank goodness we have the freedom to be creative in our own businesses. Otherwise what would Thanksgiving be without a Turducken and a Piecaken on the table? Government does not tell us what products to make, the free market does. It should be that way in space exploration and expansion, too. That way we get what we want, not just what government is willing to pay for.

  • Jeff Wright

    The first good thing the GAO ever did

  • mkent

    Edward: I agree with your Turducken post with just one exception.

    For some time, government was a virtual monopsony, but that is changing. There are more customers for space services than there used to be. SpaceX designed their Falcons to support non-government customers, and then started selling to the government, too.

    I disagree that this is a recent thing or that it started with SpaceX. Private companies have been investing their profits in comsat R&D, thereby designing better comsats for the open market since the 1960s. NASA had one last hurrah in comsat R&D with the Advanced Communications Technology Satellite (ACTS) in the 1990s, but even by then the commercial market was outpacing NASA. The government has been not much more than a side gig for these companies since the 1980s.

    While the Delta II, Atlas II, and Delta IV Heavy were built for the government market with commercial launches on the side, the Delta III, Delta IV Medium, and Sea Launch were built specifically for the commercial market in the 1990s. The government launches were the side business.

    Not to mention the earth observation and LEO constellation businesses that came about in the 1990s as well. OrbImage, OrbComm, Digital Globe, Iridium, and Globalstar all targeted the commercial market. That changed somewhat after the NASDAQ crash of 2000, but it was commerce, not government, driving those buses.

    All this was happening 30 years ago, years before SpaceX. As I said before, I like SpaceX. With their Falcon 9, Falcon Heavy, Dragon, and Starlink, they’re taking things to the next level. But by acknowledging what came before we can get a better picture of the long-term trends in the industry. It’s not just one man or one company. It’s an industry, and a long-established one at that.

  • mkent: While it is true the earlier companies were trying to cater to the commercial market they failed in one important way that SpaceX has not. They failed to lower the cost to orbit in any significant way, thus not widening their customer base so that commercial space would grow.

    That failure is why SpaceX gets so much credit. Fortunately, it appears others besides SpaceX are now beginning to follow in its footsteps.

  • mkent

    While it is true the earlier companies were trying to cater to the commercial market they failed in one important way that SpaceX has not. They failed to lower the cost to orbit in any significant way, thus not widening their customer base so that commercial space would grow.

    That’s a nice theory, but neither statement in the latter sentence above is true. The commercial launchers have been lowering the cost to orbit since the get-go in 1989. I remember a press conference before the first flight of the Delta II in which the Air Force officer was asked by a reporter to justify turning the intellectual property for the Delta II — paid for by the taxpayer — over to McDonnell Douglas and buying launches instead of rockets. He responded “The Air Force is not an efficient organization. We save about $1 million per launch by having the contractor do it.”

    The savings in the heavy category were even more dramatic. The AF was using the Shuttle in the 80’s and early 90’s to launch their large spy satellites at a cost to the government of about $1.6 billion per flight in today’s dollars. They replaced the Shuttle with the Titan IV for that purpose at a cost of about $800 million per flight in today’s dollars — about half as much. Today the Delta IV Heavy launches those payloads for about $400 million per launch, and soon the Falcon Heavy and the Vulcan Centaur Heavy will do it for about $200 million per launch. Each generation is about half the cost of the previous generation.

    In the small category, today you can launch a full Pegasus payload on a LauncherOne for 1/3 the cost of a Pegasus and launch a 1/2 Pegasus payload on an Electron for 1/6 the cost of a Pegasus. The EELVs saved money from the previous generation as well, but that’s hidden because of the way that the government paid for overhead costs.

    Each launch vehicle generation runs about half the cost per flight of the previous generation. Admittedly, SpaceX got the jump on their competitors by coming to market mid-cycle, but their cost advantage is eroding. Now that they have to meet all of the same requirements for NSSL that ULA does, their cost is nearly as much as ULA’s.

    But despite lowering the cost to orbit, SpaceX did not grow the market in an appreciable way. I believe there are two Falcon 9 payloads where the customer said they could only afford to launch with SpaceX and would have to forego the launch if forced to launch with anyone else (Thaicom 6 and Turkmensat if I recall correctly). All of their other market share was taken from Proton, Sea Launch, Ariane, or ULA. That’s not necessarily a bad thing, mind you, but it’s not growing the market.

    We long suspected that the launch market is largely inelastic at current prices, and it turns out we were right.

  • mkent

    Put another way, if SpaceX never existed, what would the market look like today? Most of SpaceX’s payloads would still be flying but on Proton, Sea Launch, Ariane V, or Atlas V. Internet junkies would be drooling over OneWeb instead of Starlink. Cargo would be flying to the ISS on Cygnus and DreamChaser, and crew would be flying on Starliner and DreamChaser. Space Adventures already has a contract with Boeing, and most likely Axiom would as well. The cubesat rideshares would be flying on PSLV, Soyuz, Atlas V (via ESPA rings), LauncherOnes, Electrons, and be deployed from ISS via NanoRacks.

    Now I don’t think it would be a total wash. I think the market is slightly larger because of SpaceX’s lower prices — it’s not completely inelastic — but it would still look about the same without SpaceX. Heck, bringing commercial launch back here from Proton and Sea Launch alone has made SpaceX worthwhile. But I’m not seeing a drastically different market with SpaceX than without SpaceX.

  • mkent: We could debate this till the cows come home, but we will still disagree. And I cite as my biggest two pieces of evidence that SpaceX has truly lowered cost and widened the customer base as follows:

    1. The large influx of private capital into both launch companies and satellite companies in the past three years. The increase has been large, and profound. A lot of money people now believe profits can be made in space that couldn’t be made before.

    2. The growing launch numbers, from a growing number of launch companies. The U.S. last year had its highest total of launches since 1968, and will certainly top those numbers this year. And those numbers are coming entirely from privately built and owned rockets.

    As I say, we could argue forever, but I will let the proof be in the pudding, which will be quite ateable in the next two years. :)

  • mkent

    Robert: I think you may not be remembering the 90’s before the NASDAQ crash. Both the launch and the satellite markets were going crazy.

    Orbital was financing the Transfer Orbit Stage (TOS), Pegasus, and half of Taurus. Lockheed was financing Athena I and Athena II. Boeing was investing heavily in Sea Launch. McDonnell Douglas put $1.5 billion into Delta III and $2.0 billion into Delta IV Medium. Lockheed put $500 million into Atlas V. Then there are the ones that never made orbit: AmRoc, Beal, SSI, Roton, Pioneer.

    The C-band satellite market was far hotter back then than it is today. Intelsat, Inmarsat, Eutelsat, Telesat, SES, and PanAmSat were each launching payloads almost every year. Add to that DirecTV, Dish Network, Sirius and XM satellite radio (separate companies back then), Thuraya, OrbImage, GeoEye, Digital Globe, Ikonos, OrbComm, Iridium, GlobalStar, ICO Global, and Teledesic. And those are just the ones that made orbit.

    The manned spaceflight market was not as advanced, but even then SpaceHab was building man-rated Shuttle modules commercially and selling flights to NASA. And let’s not forget Space Adventures and the X-prize.

    Overall the market back then looked much like it does today. In fact, I’d say in many ways the market is only just now getting back to what it was before the crash. Hopefully that doesn’t mean another crash is imminent.

    My point is that the space market today is a good thing, but it is not a new thing. I’m merely recommending a broader perspective.

  • mkent: I am very aware of the 1990s satellite dotcom boom. See all the graphs in my essay, The state of the global rocket industry in the 21st century, posted at the end of 2020. I show how it fueled a rise in launches, but only a relatively small rise. We are about to overwhelm those numbers now.

    That boom died for many reasons, one of which I firmly believe was that the cost of launch had not been trimmed sufficiently by the American launch industry. The rockets were all expendable, and costly. The only reason costs dropped at all was because the Russians became an option, and their tiny labor costs allowed them to undercut everyone else, but not so much as to really make getting to orbit as cheap as it could be, and actually is today.

    I am not claiming that this was the only factor that caused the bust, but it certainly was a factor.

    Things today are far different, because today we not only have competition like in the 1990s, but we have also some real and fundamental innovation in rocketry that is truly reducing costs.

  • Dean Hurt

    Jeff Bezos, Richard Branson and the rest need to heed the adage, “He who hesitates, is lost.” While the rest are sinking around with pet projects and unrealized promises, Elon Musk has been forging ahead aggressively toward the goal of getting mankind back into space again. Victory belongs to the bold.

  • Chris Lopes

    “crew would be flying on Starliner and DreamChaser.”

    Since neither of those options are currently operational (I suspect DreamChaser will never be, unfortunately), I don’t see how.

  • mkent

    Chris Lopes: In all likelihood, without an operational Crew Dragon NASA would have pressed on with CFT without flying an OFT-2. Word is that even with an operational Crew Dragon NASA was prepared to do just that when Boeing offered to re-fly OFT at its own expense. Notice that they did not require SpaceX to fly another Demo-1 after the Crew Dragon *blew up* after its return, a far more serious failure than Starliner’s software problems on OFT-1.

    I’m actually shocked by NASA’s response to both Demo-1 and OFT-1. Personally, I think re-flying each demo is / would have been the right thing to do.

    But you’re quibbling over a few months. That doesn’t change the fact that the market for manned spacecraft would still exist even without SpaceX.

  • Chris Lopes

    I’m sorry, but you could just as easily say that without SpaceX, NASA would have gone on to invent anti-gravity. The existence of SpaceX did not hinder Boeing’s development process one little second. Not having them around would do nothing to make Boeing better at spaceflight.

  • Mike Borgelt

    “Notice that they did not require SpaceX to fly another Demo-1 after the Crew Dragon *blew up* after its return”
    I thought it was a Dragon 2 undergoing ground test and the root cause was quickly identified and the relatively simple fix implemented.
    Note that it was a materials problem in an industry standard valve design which nobody had had a problem with before and everybody benefited.
    Not a kludged design with extremely flakey software like Boeing’s Starliner.
    I’d get on a Falcon/Dragon 2 but I’d give Starliner a miss. Even one of their test pilots quit to “attend to family business”.

  • George C

    Ray Van Dune: I read someplace and I am sure you can find it with a web search, that SpaceX hired terrestrial storage tank engineers (civil engineering) to help design rocket tanks.

    Maybe your observation was intended to be a softball question

  • Edward

    mkent,
    You wrote: “I disagree that this is a recent thing or that it started with SpaceX. Private companies have been investing their profits in comsat R&D, thereby designing better comsats for the open market since the 1960s. NASA had one last hurrah in comsat R&D with the Advanced Communications Technology Satellite (ACTS) in the 1990s, but even by then the commercial market was outpacing NASA. The government has been not much more than a side gig for these companies since the 1980s.

    For the most part, I agree with you on comsats. It was the first space industry to commercialize. Robert’s point that the price of a satellite (he mentions only launch) didn’t decrease much shows that there was not enough innovation. Irridium and Globalstar tried to correct this, but they failed to be price competitive with most ground solutions. Iridium went bankrupt not because the satellites cost $5 million each to make but because they cost $1 billion or so to launch. This bankruptcy disrupted the comsat market, scaring even the geostationary (GEO) operators, and the number of orders plummeted, and some orders were cancelled. It was a difficult time to work in that business, and I didn’t get hired for a job due to the cancellation of the satellite I would have worked on.

    Two decades ago, commercial global imaging satellites came online, but the expense slowed their introduction as well as their expansion. Ikonos got this commercial industry started. This is another area in which commercial space is competing with government space.

    Both of these markets are relatively small, largely because launch costs make these services fairly expensive. As launch costs come down, we are seeing a rapid increase in the communication market, and the global imaging should become more competitive soon, too. These two industries are making use of less expensive smallsats, too.

    The mindsets that I mentioned existed despite the commercial comsat industry and even despite the commercial global observation industry. The early customers for the observation companies were largely government customers. It was only after others began to discover uses for this imagery that the customer base began to grow, and several entrepreneurs have founded companies that process image information to help these other customers analyze their data. Since they use space generated data, I consider these companies to be part of the space industry, in a similar way that companies that use the internet to conduct business are considered part of the internet industry.

    The government’s Space Shuttle did much to damage Delta II and Atlas II, and the U.S. commercial industry never recovered, until Falcon 9, because Arianespace and the Russians captured the market. Delta III, Delta IV Medium, and Sea Launch failed to capture the commercial market that they were designed for.

    Your comment does not negate the points that I made. Two industries that were limited in size due to mindsets that increased costs and decreased use of space did not make enough difference to say that government did not have a virtual monopsony on the space industry. That the American space operation companies were going overseas for their launches only emphasizes that the U.S. government didn’t care that they were limiting the use of space, and that the U.S. launch companies were not finding ways to reduce costs showed that they were not responding to the pleas of the commercial operators. Commercial space just was not big enough to overcome the mindset generated by having a virtual government monopsony.

    The commercial launchers have been lowering the cost to orbit since the get-go in 1989.

    Actually, the cost of a launch remained close to $10,000 per pound. Pegusus even had a greater per-pound price, but reduced the overall cost for a small payload to a non-piggyback orbit. Other companies made only minor incremental improvements in the price of launch, but it was SpaceX, and now some small launch companies, that have reduced this in a revolutionary, not evolutionary, way. Even in today’s dollars, the cost of a Space Shuttle flight was not nearly as much as you said. You make my point by showing how much less a LauncherOne or Electron launch costs relative to Pegasus. The supposedly inexpensive EELVs were still more expensive than Arianespace, which was still too expensive for an expansion of the commercial space industry.

    But despite lowering the cost to orbit, SpaceX did not grow the market in an appreciable way.

    Really? There are a lot more companies doing business in space now than there used to be. A lull in geostationary (GEO) launches has been filled with a surge in low Earth orbit (LEO) launches, and there are still low orbit constellations being announced this year — just last week, Inmarsat responded to competition by announcing its own LEO constellation, called Orchestra.

    Put another way, if SpaceX never existed, what would the market look like today?

    A dearth of GEO launches would still exist, launches would still cost more, and LEO constellations would not be flying, assuming they would have been proposed. We would still be dependent upon the Russians for astronaut travel to ISS. The cost per astronaut would be higher, and the cost per cargo trip would also be higher. Many, many small satellite operators would still be unable to afford to get their satellites into orbit but have gotten their satellites up on Falcon 9 launches.

    There is an irony: now that smallsats and cubesats are popular, there aren’t yet enough small satellite launchers available to get them on orbit. It used to be that other way around. Many small launchers were built in preparation for coming smallsat revolution, but the revolution never came, and the launchers were given up. Athena is an excellent example. PSLV, Soyuz, Atlas V would still be too expensive for most smallsats, and Nanoracks can put smallsats into only a low-undesirability orbit.

    The smallsat industry had been expected to boom since the mid 1980s, but it didn’t really arrive until the mid 2010s. Several smallsat launchers went bust or lost a lot of money in the meantime. It was that lack of market that kept Falcon 1 from becoming operational. Meanwhile, SpaceX is making up for that lack, today, by launching large numbers of smallsats on Falcon 9.

    I think you may not be remembering the 90’s before the NASDAQ crash. Both the launch and the satellite markets were going crazy.

    I was in that industry at that time, and it was not the NASDAQ crash that stunted the satellite market, it was the bankruptcy of Iridium (and to a lesser degree Glabalstar) that scared investors away from the comsat market. Your memory may be correct, but your reason for the satellite market decline is. faulty. Once again, it was launch costs that made Iridium too expensive to make a profit. The money put into all those launchers was largely wasted, as they, too, were too expensive for satellite operators to use. This is why so few are flying today. Overall, the market today is very different than it was back then. Today, there are few GEO satellites ordered or launched because the GEO operators are concerned for their own futures due to the LEO smallsat constellations.

    Notice that they did not require SpaceX to fly another Demo-1 after the Crew Dragon *blew up* after its return, a far more serious failure than Starliner’s software problems on OFT-1.

    Why would they want another Demo-1, a demonstration of operations? It would be the wrong thing to do. This should not shock you. The operations went well, but it was a hardware problem, not an operations problem, that caused the explosion. A switch to different valves was all that was necessary, not another flight. Only the new valves needed testing. Starliner, on the other hand, failed to demonstrate important and necessary aspects of its mission. Hopefully, this will be rectified in the coming week.

    But you’re quibbling over a few months. That doesn’t change the fact that the market for manned spacecraft would still exist even without SpaceX.

    You are the one asking what the market would look like today, and it would not be only a few months behind, it would also be more expensive. Too expensive for some companies to successfully enter. In addition, would New Shepard and SpaceShipOne have launched if it hadn’t been for the pressure of September’s upcoming commercial Dragon flight? Would Roscosmos be putting a movie crew on the ISS if it weren’t for the pressure from another proposed Dragon flight for a Hollywood movie crew?

    One of SpaceX’s goals is to reduce the cost of space access so that more space exploration can be made. This company may be hated by some, but it is putting a lot of pressure on other companies to do more than they would have done otherwise. The space paradigm is changing, not because of operations as usual but because companies and governments are trying to catch up to SpaceX. The mindsets are changing, because they need to change in order for the rest of the world to stay in the space business with NewSpace. That is why we now have operational Electrons and LauncherOnes.

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