More details are emerging about Blue Origin’s losing bid for NASA’s lunar lander, and it appears the company made a risky gamble that backfired.
Elon Musk’s SpaceX and Jeff Bezos’ Blue Origin were two of the companies bidding for a contract to provide NASA’s new lunar lander. SpaceX ultimately won the contract, coming in substantially cheaper than Blue Origin’s bid. Blue Origin appealed NASA’s decision to the US Government Accountability Office (GAO), and then sued the government when the GAO upheld NASA’s decision.
More details have emerged, and it appears Blue Origin shot for the moon (pun intended), basing their bid on the belief that NASA would accept the higher bid and then negotiate a lower price after the fact.
The company “made an assumption about the Agency’s HLS budget, built its proposal with this figure in mind, and also separately made a calculated bet that if NASA could not afford Blue Origin’s initially-proposed price, the Agency would select Blue Origin for award and engage in post-selection negotiations to allow Blue Origin to lower its price. All of these assumptions were incorrect,” the four NASA attorneys wrote in the Agency Report, according to The Verge. “Realizing now that it gambled and lost, Blue Origin seeks to use GAO’s procurement oversight function to improperly compel NASA to suffer the consequences of Blue Origin’s ill-conceived choices.”
Because that’s totally how bidding usually works: Accept an overpriced bid, that didn’t score as high as the competitor’s, and then negotiate with the winning bidder in the hopes they’ll offer a lower price after they’ve already won. Or at least that appears to be how Blue Origin thinks bidding should work.
This isn’t the first time one of Jeff Bezos’ companies has overbid, lost a contract and they cried foul. Microsoft accused Amazon of doing the same thing when it sued after losing out on the Pentagon’s JEDI contract, saying Amazon used the litigation process to see the particulars of Microsoft’s sealed bid and then lowered its own to be more competitive.
Interestingly, Bezos’ companies seem to be aware of the reputation they’re building — as sore losers that resort to litigation to compensate for overpriced bids — as Amazon “sent The Verge an unsolicited 13-page list” of legal actions it says SpaceX has taken over the years, in what appears to be an effort to prove it’s no more litigious than the next company.
Ultimately, NASA said it best: “Blue Origin made a bet and it lost.”