SpaceX Drops Block Buy Lawsuit in Exchange for “Expanded Competitive Opportunties”

Only a few days after officially entering mediation, SpaceX has agreed to drop its lawsuit against the Air Force’s block buy of 36 launch cores from ULA under the EELV program.

Here a joint statement released by SpaceX the Air Force:

“The Air Force and SpaceX have reached agreement on a path forward for the Evolved Expendable Launch Vehicle (EELV) program that improves the competitive landscape and achieves mission assurance for national security space launches. Under the agreement, the Air Force will work collaboratively with SpaceX to complete the certification process in an efficient and expedient manner. This collaborative effort will inform the SECAF directed review of the new entrant certification process. The Air Force also has expanded the number of competitive opportunities for launch services under the EELV program while honoring existing contractual obligations. Going forward, the Air Force will conduct competitions consistent with the emergence of multiple certified providers. Per the settlement, SpaceX will dismiss its claims relating to the EELV block buy contract pending in the United States Court of Federal Claims.”

Even though the statement references “expanded” competitive launch opportunities, it is difficult to construe today’s announcement as anything other than a major win for United Launch Alliance and a highly controversial procurement process which has drawn GAO and Congressional scrutiny over rising prices and reliance on the politically charged RD-180 main engine which powers the Atlas V booster.

While the terms of the block buy remain objectionable to some, it is worth recalling that SpaceX had come to live with the arrangement after pressure driven in great part by Arizona Senator John McCain resulted in a reduction from 50 to 36 cores and a promise of competitive launches. SpaceX did not file suit until the initial obligation of 14 openly competed launches was reduced to 7, with the distinct potential for further reductions.

With the lawsuit now dropped, it will be interesting to see how many launches are actually competed, a number which will tell what if anything SpaceX gained from the legal actions, and perhaps even more so, how many are won by SpaceX rather than the incumbent, which will still enjoy the benefit of a nearly billion dollar per year launch subsidy.

Another factor, and one impossible to predict, is the potential effect of any further deterioration in US/Russian relations as a result of the latter nation’s actions in Ukraine. While ULA is now assured completion of its 36 core order, it is quite possible that a significant expansion of the already overt Russian participation in that conflict could enter into the calculation of granting ULA orders which would result in the purchase of even more RD-180 engines for military launches.

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