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Pointing at SpaceX explosion, ULA says Pentagon contracts shouldn't just go to lowest bidder

The Washington Post

The recent explosion of a SpaceX rocket should raise concerns about going with the lowest bidder on sensitive national security launch contracts, the chief of the United Launch Alliance wrote in a letter to top Pentagon officials this month.

Tory Bruno, ULA's chief executive, urged the Air Force to postpone the deadline for bids, saying it should take time to explore the impact of SpaceX's rocket failure while also taking into account both companies' experience and past performance.

The Pentagon should have particular reservations, Bruno wrote, given that SpaceX has now had two of its Falcon 9 rockets blow up, which he said "serve as a reminder of the complexity and hazards intrinsic to space launch services."

"This strategy defies both law and logic and puts hundreds of millions of taxpayer dollars and Warfighter mission needs unnecessarily at risk," he wrote.

The letter is the latest salvo in one of Washington's most contentious contractor feuds, one that has pitted a pair of the world's most powerful defense contractors against a brash billionaire looking to shake up a calcified market by offering launches far more cheaply. And it's the most glaring example yet of a competitor going after SpaceX for its pair of explosions.

SpaceX and the Air Force did not immediately respond to requests for comment.

For a decade, ULA, a joint venture of Lockheed Martin Corp. and Boeing Co., had a monopoly on launching national security satellites for the Pentagon. But then SpaceX, the hard-charging company founded by tech entrepreneur Elon Musk, sued the Air Force for the right to compete, saying it could save taxpayers millions of dollars. The parties settled, and last year the Air Force granted SpaceX the certification to compete, saying it had met its rigorous technical standards.

ULA fired its chief executive and hired Bruno, who vowed to "literally transform the company" in order for it to compete against SpaceX, which had already won contracts from NASA to fly cargo and eventually astronauts to the International Space Station.

But faced with competition for the first time, ULA declined to bid on the first of the contested contracts last year, saying among other things that the Air Force was giving too much weight to the price companies bid. The emphasis on price — and not experience and past performance — put ULA at a disadvantage, the company said.

SpaceX — which is based in Hawthorne and whose full name is Space Exploration Technologies Corp. — then walked away with the $82.7-million contract, the first of nine launches to be competitively bid, at a price far lower than the Air Force had been paying ULA in the past. Lt. Gen. Samuel Greaves cheered the service's new partner, saying in a statement last month that the Air Force hopes "to continue fostering competition in order to promote innovation and reduce cost to the taxpayer while maintaining our laser focus on mission success."

But SpaceX has now had two of its rockets explode in spectacular fireballs, raising concerns about its reliability and safety. One of its rockets blew up last year while carrying $118 million worth of cargo to the space station. This month, a rocket blew up during fueling before an engine test and a $195-million satellite belonging to a private-sector company was destroyed.

The Air Force is part of the investigation into the most recent failure, but officials have said the explosion has not affected SpaceX's certification.

In his letter to Air Force Secretary Deborah Lee James and Frank Kendall, the Pentagon's chief weapons buyer, Bruno sought to contrast his company's long record of accomplishment with the track record of his relatively new competitor. He trumpeted ULA's 111 consecutive successful launches on its Atlas and Delta rockets. And he wrote that ULA has a long heritage of delivering "into precise orbits some of the most sensitive and valuable national security payloads directly supporting our country's Warfighters — and it has done so with unprecedented dependability and mission success."

Focusing so heavily on price is appropriate only when the "risk of unsuccessful contract performance is minimal," he wrote. And the recent SpaceX explosion, he wrote, "reminds us that the risk associated with space launch service contracts is well beyond 'minimal.'"

The criteria used by the Air Force in the contract to launch its GPS III satellite, he wrote, "relegates technical performance to an afterthought, favoring price as the determining evaluation factor — a purchasing strategy befitting perhaps of basic commodity contracting services, not the 'incredible challenge' of spaceflight."

He urged the Air Force to push back the deadline for bids by 60 days so that it could "explore the nature and impact" of SpaceX's failure and also ensure that it "adequately factors" criteria such as "reliability, schedule certainty and past performance." And he hinted that the fight may not be over, saying ULA's concerns "could conceivably be litigated in a courtroom."

Despite the plea, the Air Force proceeded with the bids, which were due Monday. This time, ULA said it submitted a bid.

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