When Jeff Bezos pens a letter to a government official, as he did earlier this week, it’s an indication that he thinks things are super serious. That doesn’t mean anyone else should.
The Lonesome Loser
His company submitted what it considered its best foot forward in response to a government contract request, only to find that it priced itself out of the running. The company’s competitors are also highly competent at what they do--and they undercut its bid. His company’s competitor had this to say about the process:
“As the losing bidder, Amazon was informed of our pricing and they realized they’d originally bid too high," Frank X. Shaw, Microsoft’s corporate vice president for communications, said in an emailed statement. "They then amended aspects of their bid to achieve a lower price.”
Yes, that’s right--that was a Microsoft executive’s quote earlier this year, in his case talking about Amazon’s efforts to change reality and somehow win the Department of Defense’s (DoD) Joint Enterprise Defense Infrastructure (JEDI) after it had lost the first few times. And Amazon posted some responses to fight the good fight.
In a “deja vu all over again” kind of way, the same scenario is playing out with another Bezos company--Blue Origin.
In mid-April 2021, NASA released a Source Selection Statement for its Human Landing System (HLS). Of the three bidders, Blue Origin, Dynetics, and SpaceX--only SpaceX was chosen to pursue the contract. The decision’s selection rationale was unusual for an agency dumping billions into other space programs--fiscal responsibility. Of all three, SpaceX was the only company offering a bid NASA could afford. From the Source Selection Statement:
“NASA’s fiscal year 2021 appropriations and appropriations indications for future fiscal years that span the Option A period of performance are incongruent with NASA’s Option A acquisition strategy. Thus, while not NASA’s optimal outcome in this matter, in accordance with section 6.1 of the BAA, NASA is permitted to select for award multiple, one, or none of the Option A proposals. Perhaps most critically, the solicitation provides that “[t]he overall number of awards will be dependent upon funding availability and evaluation results.”
In other words, NASA’s desire to have more than one company working on HLS was limited in its ability to pursue those bids by 1) what the companies bid and 2) the funds it receives from Congress. SpaceX offered an affordable path for NASA’s HLS ambitions. Blue Origin did not. Just this week, and in the steps of JEDI, Bezos is offering to lower Blue Origin’s pricing for the NASA HLS contract a few months after learning it “originally bid too high.”
Both counteroffers push similar narratives, basically implying that no rational agency would ever not choose Amazon or Blue Origin for its needs. And yet, the circumstances of each are very different. For JEDI, Amazon seemed to believe it was fighting against behind-the-scenes machinations of Donald Trump conspiring with the DoD’s acquisitions managers against Amazon:
“On JEDI, President Trump reportedly ordered former Secretary Mattis to “screw’” Amazon, blatantly interfered in an active procurement, directed his subordinate to conduct an unorthodox “review” prior to a contract award announcement and then stonewalled an investigation into his own political interference.”
Based on the later and current shenanigans of the former president, Amazon’s claim could be pretty plausible. But the DoD’s decision to scrap JEDI put a stop to that line of inquiry.
However, a more pertinent difference is that when Amazon contested the JEDI decision, it rightfully claimed its expertise, history, and existing services as reasons for the DoD to reconsider Amazon--at amended lower pricing. It could claim all of those reasons because Amazon’s customers use them every day.
Too bad Blue Origin can’t make the same claims.
I’ve already analyzed the slow development spiral Blue Origin is in. For that information, just click on this link. That analysis is pertinent to the problem below.
Unhurried, Untested, and Undeveloped
Blue Origin can’t claim the depth of expertise, the scope of history, and rainbow of existing services Amazon Web Services offers. And that’s because it doesn’t have any of those. One of the reasons for the lack of product or service is its slow development cycle. Blue Origin’s process, captured in its motto, “Gradatim Ferociter,” is designed to appeal to risk-averse government customers. But after the initial hype, it’s only appealing if Blue Origin has something to show for it--which it doesn’t (New Shepard isn’t New Glenn). That is an odd circumstance considering how much press Blue Origin has received, pushing the narrative that it is a space company.
The press is focusing on the capable (for suborbital fair rides) New Shepard. New Shepard was exciting--six years ago. It was the first of its kind to launch and land vertically in late 2015. SpaceX has launched the Falcon 9 over 100 times, successfully nailing the landings 89% of the time since 2015. Blue Origin has launched and landed its New Shepard suborbital rocket a total of--16 times.
But where is New Shepard’s successor, New Glenn? New Glenn is supposed to be the orbital, “embiggened” version of New Shepard. In theory, New Shepard is the test demonstrator, the rocket that provides Blue Origin some critical insights for launching and landing rockets. Launching New Shepard, the company was supposed to gain experience building rocket engines, capsules, and rocket bodies. Then, Blue Origin would apply those insights and experiences to New Glenn. But no one has seen a New Glenn first stage test launched or landed. Instead, we witnessed the most expensive way to transport a cowboy hat to space and back.
Worse, Blue Origin’s pedantic pacing impacts an existing and productive launch service provider--the United Launch Alliance (ULA). ULA is waiting for a rocket engine from Blue Origin for its Vulcan rocket.
NASA considered this history and apparent lack of progress. When it released its source selection statement for HLS in April 2021, it noted Blue Origin’s low technology maturity level (page 18):
“...Blue Origin’s propulsion systems for all three of its main HLS elements (Ascent, Descent, and Transfer) create significant development and schedule risks, many of which are inadequately addressed in Blue Origin’s proposal. These propulsion systems consist of complex major subsystems that have low Technology Readiness Levels (TRLs) and are immature for Blue Origin’s current phase of development.”
For those not familiar with the language, “schedule risks” means NASA believes Blue Origin’s estimated timeline to fulfill its HLS obligations is unrealistic, leading to delays. And as we’ve seen with other NASA systems, delays mean spending more taxpayer money. So, Blue Origin is not only expensive when compared with SpaceX; it would likely need more money for years down the road.
Release the PokeCons
Those legitimate concerns return us to the very passive/aggressive message Bezos addressed this week to NASA’s administrator, Bill Nelson. He made sure every congresscritter was aware of his offer, demonstrating the message’s actual target.
Anyone reading the letter could be forgiven for being a little confused. Usually, when a person is asking for a favor, they will go out of their way to be nice to the person providing the favor. Not so with this letter (also not so with the JEDI messaging):
“Yet...the Source Selection Official veered from the Agency’s oft-stated procurement strategy. Instead of investing in two competing lunar landers as originally intended, the Agency chose to confer a multi-year, multi-billion-dollar head start to SpaceX. That decision broke the mold of NASA’s successful commercial space programs by putting an end to meaningful competition for years to come.”
Bezos is attacking at least two things in that statement. The first is the Source Selection Official, Kathy Leuders, by making it seem like she went rogue in daring to select only SpaceX. He’s also throwing NASA under the bus, as Leuders is merely confirming NASA’s selection.
After that attack, Bezos offers what essentially looks like a bribe (money or favor given or promised in order to influence the judgment or conduct of a person in a position of trust) to get selected for HLS:
- Blue Origin will permanently waive up to $2 billion in payments from now through the next two fiscal years.
- Blue Origin will fund its development of “...a pathfinder mission to low-Earth orbit of the lunar descent element to further retire development and schedule risks.”
- Blue Origin will do this through a firm-fixed-price contract.
Bezos is making a public offer to encourage his favorite Pocket-Congress critters (PokeCons?) to battle for him. And they will because, after all, $2 billion could buy a single Space Launch System launch. Whether they would pay enough cash to include Blue Origin in HLS is another question. But, it would undoubtedly set up a precedent for a slew of other companies who have felt wronged by a government contracting decision.
Unresolved Issues and Crocodile Tears
But, Bezos’ offer doesn’t address many of NASA’s reasons for not selecting Blue Origin for HLS. To be clear, the money favor, er, waiver, would help NASA with affordability and maybe change its mind about the overall value of Blue Origin’s bid. It also sweeps under the rug the fact of Blue Origin’s fumble in requiring initial “advance payments” from NASA for kickoff meetings (which is against the Broad Agency Announcement rules and makes the bid automatically ineligible). So, yes, according to NASA, Blue Origin’s bid should have been automatically disqualified.
Schedule risk still exists. Blue Origin has been shouldering, largely thanks to Bezos’ wallet, New Glenn’s Gradatim Ferociter-style development for years. So the company should already have been highly motivated to complete New Glenn quickly and competently. A firm-fixed-price contract from a customer doesn’t necessarily bolster its motivation nor guarantee that the company will speed up that development.
NASA also had issues with Blue Origin’s intellectual property assertions. It wants to limit what data and software the government has access to and is designed to have the government haggle with Blue Origin later about IP entitlements.
Bezos didn’t clarify how Blue Origin’s commercial plan would make things cost less for NASA.
And the list goes on.
But here’s the thing: none of it matters.
At least, none of it matters without New Glenn. If NASA awarded an HLS contract to Blue Origin today, well, that would be akin to the USAF contracting with ULA to use Vulcan for National Security Space Launches. Neither launch vehicle exists, and they haven’t been tested.
Despite the seeming lack of performance, there doesn’t appear to be significant movement or changes in Blue Origin’s management layer. To my eyes, this means that Bezos seems to believe that whatever Blue Origin is doing, however slowly it is doing it, it’s acceptable to Bezos. Unfortunately, this implies that Blue Origin will not move fast enough to overcome the development and schedule risk that NASA is worried about. NASA can’t afford to get into another development project with nearly guaranteed delays.
All of the above reasons and history are why decision-makers should ignore Bezos’ letter. It was inappropriate for him to write it. It was disingenuous for him to throw Leuders and NASA under the bus. And it was dishonest for him to paint a sudden shift in Blue Origin’s development pacing when nothing appears to have changed.
In both the JEDI and HLS kerfuffles, Bezos has painted his companies as victims. For AWS and JEDI, that’s a laughable assertion considering the success and growth AWS is experiencing. For Blue Origin and HLS, it’s a sad confirmation of just how far behind the company is.