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

Less than 24 hours after being notified that NASA was pulling the plug on a 14-month-old agreement to help finance the company's effort to develop a commercial transportation service to and from the international space station, RpK appealed the decision.

NASA announced Oct. 18 it intends to take the $175 million previously committed to RpK under the Commercial Orbital Transportation Services (COTS) program and put it back out for competition in a matter of days. The agency plans to release a solicitation for a new full and open COTS competition Oct. 22 and give prospective bidders 30 days to submit proposals.

"We spent the last year trying to work with RpK to give them every opportunity to succeed," Alan Lindenmoyer, the NASA official in charge of the COTS program, said during an Oct. 18 press conference here. "Based on its failure to meet its performance milestones, we've come to the conclusion that it is in NASA's best interest to discontinue our funded Space Act Agreement and reopen the competition."

An attorney for RpK of Oklahoma City, sent NASA a letter Oct. 19 asking the agency to either reconsider the termination or give the company $10 million for progress it made toward its unmet milestones.

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

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

In RpK's Oct. 19 letter, a copy of which was obtained by Space News, the attorney calls NASA's actions "arbitrary, capricious, and an abuse of discretion that will not withstand judicial scrutiny should this matter remain unresolved after the three NASA levels of review."

NASA spokeswoman Melissa Mathews said RpK's appeal will not delay the agency's planned COTS solicitation. "The Oct. 18 termination letter is a final agency decision," she said.

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

RpK struggled from the beginning of the COTS program to raise the private capital it needed to complete its fully reusable K-1 rocket, which has been in development for more than a decade. But it was not until well after RpK failed to meet a renegotiated May deadline for completing its financing – and then missed a key early technical milestone – that NASA moved to terminate the agreement.

Lindenmoyer said RpK was told it could continue to work with NASA on the K-1 through an unfunded COTS agreement similar to ones the agency has awarded to a half-dozen companies interested in selling resupply services to the international space station after the space shuttle retires in 2010.

Lindenmoyer also said RpK is free to submit a new proposal when the new COTS solicitation is released. NASA hopes to evaluate proposals and make its new selection or selections during the first quarter of 2008, he said.