Rocketplane Kistler Appeals NASA Decision to Terminate COTS Agreement

WASHINGTON –Rocketplane Kistler (RpK) is not going down without a fight.

Less than24 hours after being notified that NASA was pulling the plug on a 14-month-oldagreement to help finance the company's effort to develop a commercialtransportation service to and from the international space station, RpKappealed the decision.

NASAannounced Oct. 18 it intends to take the $175 million previously committed toRpK under the Commercial Orbital Transportation Services (COTS) program and putit back out for competition in a matter of days. The agency plans to release asolicitation for a new full and open COTS competition Oct. 22 and giveprospective bidders 30 days to submit proposals.

"Wespent the last year trying to work with RpK to give them every opportunity tosucceed," Alan Lindenmoyer, the NASA official in charge of the COTSprogram, said during an Oct. 18 press conference here. "Based on itsfailure to meet its performance milestones, we've come to the conclusion thatit is in NASA's best interest to discontinue our funded Space Act Agreement andreopen the competition."

An attorneyfor RpK of Oklahoma City, sent NASA a letter Oct. 19 asking the agency toeither reconsider the termination or give the company $10 million for progressit made toward its unmet milestones.

Under theterms of its Space Act Agreement, RpK cannot appeal its termination to the U.S.Government Accountability Office, which normally referees governmentcontracting disputes.

RpK can,however, sue NASA in federal court. But the company first must exhaust athree-step appeals process that begins with NASA's COTS contracting officer andends with the agency's associate administrator for exploration systems, RichGilbrech, who signed off on RpK's termination.

In RpK'sOct. 19 letter, a copy of which was obtained by Space News, the attorneycalls NASA's actions "arbitrary, capricious, and an abuse of discretionthat will not withstand judicial scrutiny should this matter remain unresolvedafter the three NASA levels of review."

NASAspokeswoman Melissa Mathews said RpK's appeal will not delay the agency'splanned COTS solicitation. "The Oct. 18 termination letter is a finalagency decision," she said.

RpK was oneof two companies NASA picked in mid-2006 to share some $500 million in publicfunding to help build and demonstrate competing vehicles capable of carryingcargo and potentially crews to the international space station. The other COTSwinner was Space Exploration Technologies Corp. of El Segundo, Calif., which Lindenmoyer said has met all of its milestones to date, including a recentNASA-led critical design review for a planned 2009 demonstration flight of thefirm's Falcon 9 rocket and reusable Dragon capsule. Space ExplorationTechnologies has completed six milestones to date, earning$95 million of the $278 million it is entitled to under its COTS agreement.

RpKstruggled from the beginning of the COTS program to raise the private capitalit needed to complete its fully reusable K-1 rocket, which has been indevelopment for more than a decade. But it was not until well after RpK failedto meet a renegotiated May deadline for completing its financing – and thenmissed a key early technical milestone – that NASA moved to terminate theagreement.

Lindenmoyersaid RpK was told it could continue to work with NASA on the K-1 through anunfunded COTS agreement similar to ones the agency has awarded to a half-dozencompanies interested in selling resupply services to the international spacestation after the space shuttle retires in 2010.

Lindenmoyeralso said RpK is free to submit a new proposal when the new COTS solicitationis released. NASA hopes to evaluate proposals and make its new selection orselections during the first quarter of 2008, he said.

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