Government denies Bezos' protest of NASA awarding lunar lander contract to Musk's SpaceX

The U.S. Government Accountability Office on Friday denied protests from companies affiliated with Jeff Bezos that NASA wrongly awarded a lucrative astronaut lunar lander contract solely to Elon Musk’s SpaceX.

The complaints were filed by Jeff Bezos’ Blue Origin and Leidos’ subsidiary Dynetics.

“NASA did not violate procurement law or regulation when it decided to make only one award … the evaluation of all three proposals was reasonable, and consistent with applicable procurement law, regulation, and the announcement’s terms,” GAO managing associate general counsel Kenneth Patton wrote in a statement.

The GAO ruling backs the space agency’s surprise announcement in April that NASA awarded SpaceX with a contract worth about $2.9 billion. SpaceX was competing with Blue Origin and Dynetics for what was expected to be two contracts, before NASA only awarded a single contract due to a lower-than-expected allocation for the program from Congress.

NASA, in a statement, said that the GAO decision will allow the agency “to establish a timeline for the first crewed landing on the Moon in more than 50 years.”

“As soon as possible, NASA will provide an update on the way ahead for Artemis, the human landing system, and humanity’s return to the Moon. We will continue to work with the Biden Administration and Congress to ensure funding for a robust and sustainable approach for the nation’s return to the Moon in a collaborative effort with U.S. commercial partners,” the U.S. space agency said.

A Blue Origin spokesperson told CNBC that the company still believes “there were fundamental issues with NASA’s decision, but the GAO wasn’t able to address them due to their limited jurisdiction.”

“We’ll continue to advocate for two immediate providers as we believe it is the right solution,” Blue Origin said. “The Human Landing System program needs to have competition now instead of later – that’s the best solution for NASA and the best solution for our country.”

SpaceX and Dynetics did not respond to CNBC requests for comment. Musk, for his part, weighed in on the GAO’s ruling with a single flexing arm emoji in a tweet.

The GAO protest ruling resolves a dispute around NASA’s Human Landing System program, one of the final key pieces of the agency’s plan to return U.S. astronauts to the surface of the moon.

Before the most recent contract award, NASA had handed out nearly $1 billion in concept development contracts – with SpaceX receiving $135 million, Dynetics 253 million, and Blue Origin receiving $579 million.

In choosing SpaceX for the next round of development, NASA decided to fund a variation of SpaceX’s Starship rocket, prototypes of which SpaceX has been testing at its development facility in Boca Chica, Texas. 

NASA plans for its astronauts to use Starship to transfer from the agency’s Orion spacecraft when the capsule reaches lunar orbit.

Shortly after NASA’s announcement in April, Blue Origin and Dynetics each filed protests with the GAO, challenging the space agency’s process and decision.

Blue Origin in April decried the award as “flawed,” saying that NASA “moved the goalposts at the last minute.”

The company also revealed that its proposal was roughly double that of SpaceX, with a bid of $5.99 billion. NASA later revealed that Dynetics’ bid was even higher, at $8.5 billion.

One effect of the protests is that NASA has been unable to move forward with work on HLS with SpaceX, with work essentially halted on the program until the GAO’s decision.

Shortly after flying himself to space on Blue Origin’s first crewed flight, Bezos wrote in a letter to NASA earlier this week that he would cover as much as $2 billion in the space agency’s costs for a lunar lander contract.

“We stand ready to help NASA moderate its technical risks and solve its budgetary constraints and put the Artemis Program back on a more competitive, credible, and sustainable path,” Bezos wrote in the letter.

Blue Origin communications vice president Linda Mills told CNBC in an email that there is “no change to the offer” Bezos made after the GAO ruling.