Back in December 2013, GAO issued a protest decision involving a battle between the two private space contractors, Blue Origin and SpaceX, to lease Kennedy Space Center Launch Complex 39A – where the majority of Apollo and Space Shuttle missions were launched – from NASA. Although the ultimate decision denying the protest is not particularly interesting, GAO’s jurisdictional ruling allowing it to decide the protest on the merits appeared to be instructive on when GAO has jurisdiction to hear protests involving “mixed transactions.” But, GAO’s decision on reconsideration, in May 2014, has left major questions as to the validity of GAO’s original decision.
In response to the initial protest, NASA argued that GAO lacked statutory jurisdiction to hear Blue Origin’s protest because the solicitation at issue was for a lease of federally-owned property, not for a procurement for goods and services. Blue Origin countered that the contract at issue is not just a lease, but instead a “mixed transaction” that also includes elements of a procurement of goods and services, such as the operation and maintenance of the launch complex. GAO agreed with Blue Origin. GAO explained that a “mixed transaction” can either aid the agency in discharge of its mission by an “intangible” benefit (such as a concession-type contract that provides a benefit to the public or reduces the agency’s workload) or a “concrete” benefit (such as concession-type agreements that include the delivery of goods or services to the agency that are more than a trivial portion of the contract). GAO concluded that the launch facility lease conferred both intangible and tangible benefits to NASA, therefore it was a “mixed transaction” and GAO had jurisdiction over the protest. GAO found significant that, as part of the lease, the successful contractor would need to maintain the current launch facility to build a new launch facility, either of which would be turned over to NASA at the conclusion of the lease, and as a result NASA “will be left at the conclusion of the lease … with a well-maintained launch complex … that will be useful in one manner or another.” Since most leases of federally-owned property contain maintenance and operations provision that are intended to leave the agency with a useable facility at the conclusion of the lease, the Blue Origin decision appeared to extend GAO protest jurisdiction over most competitions for private leases of federally-owned property.
Even though NASA prevailed in having the protest denied, it sought reconsideration from GAO on the issue of jurisdiction, raising three arguments for why GAO should not have taken jurisdiction: (1) GAO’s finding that NASA will receive a concrete benefit that is more than de minimus in value was not supported by the record, (2) GAO finding that the intangible benefit of directly assisting the agency in fulfilling its statutory mandate is adequate to confer jurisdiction, abrogates the rule articulated in prior cases that supporting and stimulating efforts in support of a lawfully mandated public policy – such as the commercial use of space – did not establish that NASA was acquiring services for its own direct benefit and use, and (3) GAO’s decision wrongly concluded that the transaction here would satisfy an agency need.
GAO ultimately dismissed NASA’s request for reconsideration on the basis that NASA had prevailed in the protest and therefore the jurisdiction issue was moot. Nevertheless, GAO appeared to acknowledge that NASA’s arguments on reconsideration might have merit: “We have reviewed all of NASA’s arguments, and recognize that NASA has raised several significant arguments as to why our Office should not have taken jurisdiction over the matter. Nevertheless, since we have denied the merits of Blue Origin’s protest … we do not address whether any of NASA’s arguments for reconsideration have merit. We also note, however, that our Office resolves questions of jurisdiction on a case-by-case basis. Consequently, NASA may raise any concerns with our decision in Blue Origin in future protests where the agency has concern as to whether our Office has jurisdiction to consider a protest concerning a NASA transaction.”
In light of the above comments in GAO’s decision on reconsideration, the jurisdictional holdings in the original protest decision appear to be of questionable value, particularly in regards to future NASA procurements.
For what its worth, NASA ultimately did execute a lease agreement with SpaceX for Launch Complex 39A.