Judge Issues Injunction Barring ULA From Procuring Russian Engines

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Elon Musk

By Douglas Messier
Managing Editor

Elon Musk’s efforts to overturn a U.S. Air Force launch contract with United Launch Alliance (ULA) has had an immediate impact, with a U.S. Court of Federal Claims judge issuing a preliminary injunction barring rival ULA  from any further purchases of Russian-made RD-180 rocket engines for its Atlas V launch vehicle.

Judge Susan G. Braden issued the order late Wednesday barring ULA and the U.S. Air Force “from making any purchases from or payment of money to NPO Energomash or any entity, whether governmental, corporate or individual, that is subject to the control of Deputy Prime Minister Rogozin, unless and until the court receives the opinion of the United States Department of the Treasury, and the United States Department of Commerce and United States Department of State, that any such purchases or payments will not directly or indirectly contravene Executive Order 13,661. The scope of this preliminary injunction does not extend to any purchase orders that have been placed or moneys paid to NPO Energomash prior to the date of this Order.”

President Barack Obama’s March 16 executive order placed economic sanctions on a number of Russian officials including Rogozin, who oversees the defense and space industries as part of his duties as deputy prime minister. In its lawsuit, SpaceX claims that Rogozin benefits from the ULA’s purchase of RD-180 engines from NPO Energomash.

SpaceX filed suit on Monday seeking to set aside a 36-core launch contract the U.S. Air Force signed in December. The company claims the sole-source, no-bid contract is unlawful, and it is seeking to be able to bid on 22 launch contracts with its Falcon 9 rocket.

In the injunction, Braden cited additional actions taken on Monday by the Treasury, State and Commerce departments concerning Rogozin and the export and re-export of high technology defense articles.

On April 28, 2014, the United States Department of the Treasury, Office of Foreign Assets Control, issued a “Specifically Designated Nationals and Blocked Persons List,” which includes three references to Deputy Prime Minister Rogozin. In addition, on April 28, 2014, the United States Department of State and the United States Department of Commerce issued restrictions banning the export or re-export of “any high technology defense articles or services.”

ULA fired back on Thursday morning, accusing an “opportunistic” SpaceX of disrupting a “national security launch contract” and ignoring “the potential implications to our National Security and our nation’s ability to put Americans on board the International Space Station.”

“ULA is deeply concerned with this ruling and we will work closely with the Department of Justice to resolve the injunction expeditiously. In the meantime, ULA will continue to demonstrate our commitment to our National Security on the launch pad by assuring the safe delivery of the missions we are honored to support.

“SpaceX’s attempt to disrupt a national security launch contract so long after the award ignores the potential implications to our National Security and our nation’s ability to put Americans on board the International Space Station. Just like ULA, NASA and numerous other companies lawfully conduct business with the same Russian company, other Russia state-owned industries, and Russian Federation agencies. This opportunistic action by SpaceX appears to be an attempt to circumvent the requirements imposed on those who seek to meet the challenging launch needs of the nation and to avoid having to follow the rules, regulations and standards expected of a company entrusted to support our nation’s most sensitive missions.”

Braden’s order is reproduced below.

ORDER ISSUING PRELIMINARY INJUNCTION

On April 28, 2014, Space Exploration Technologies Corp. (“SpaceX”) filed a Complaint in the United States Court of Federal Claims alleging, inter alia, that the United States Air Force (“Air Force”) has entered into an unlawful contract with United Launch Systems, LLC, a joint venture between The Boeing Company and Lockheed Martin Corporation, to procure rocket launch vehicles on a sole source basis, pursuant to the Air Force’s Evolved Expendable Launch Vehicle (“EELV”) Program. The EELV Program is the fourth largest program in the defense budget, the estimated cost of which is expected to approximate $70 billion.

Congress has authorized the United States Court of Federal Claims:

to render judgment on an action by an interested party objecting to a solicitation by a Federal agency for bids or proposals for a proposed contract or to a proposed award or the award of a contract or any alleged violation of statute or regulation in connection with a procurement or a proposed procurement.

28 U.S.C. § 1491(b)(1) (emphasis added).

The United States Court of Appeals for the Federal Circuit has held that the phrase “in connection with,” as used in Section 1491(b)(1), is “very sweeping in scope” and “involves a connection with any stage of the federal contracting acquisition process.” Distrib. Solutions, Inc. v. United States, 539 F.3d 1340, 1345–46 (Fed. Cir. 2008) (emphasis added) (quoting RAMCOR Servs. Grp., Inc. v. United States, 185 F.3d 1286,. Procurement has been defined to include “all stages of the process of acquiring property or services, beginning with the process for determining a need for property or services and ending with contract completion and closeout.” Res. Conservation Grp., LLC v. United States, 597 F.3d 1238, 1244 (Fed. Cir. 2010) (quoting 41 U.S.C. § 403(2)); see also Sys. Application & Techs., Inc. v. United States, 691 F.3d 1374, 1380–81 (Fed. Cir. 2012) (“On its face, the [Tucker Act] grants jurisdiction over objections to a solicitation, objections to a proposed award, objections to an award, and objections related to a statutory or regulatory violation so long as these objections are in connection with a procurement or proposed procurement.”); Distrib. Solutions, 539 F.3d at 1345 n.1 (explaining that a “non-frivolous allegation of a statutory or regulatory violation in connection with a procurement or proposed procurement is sufficient to establish jurisdiction”).

The April 28, 2014 Complaint alleges that the majority of EELV launch vehicles use RD-180 rocket engines manufactured by NPO Energomash, a corporation owned and controlled by the Russian Government. Compl. ¶ 5. Dmitry Rogozin, the Deputy Prime Minister of Russia, is the head of the Russian defense industry and, in particular, the Russian space program. Compl. ¶ 5; see also

http://www.nbcnews.com/storyline/ukraine-crisis.

On March 16, 2014, the President of the United States issued Executive Order 13,661, declaring that,

All property and interests in property [of Deputy Prime Minister Rogozin] that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person (including any foreign branch) . . . are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in[.] Exec. Order No. 13,661, 79 FED. REG. 15,535, Section 1(a) (March 19, 2014).

On April 28, 2014, the United States Department of the Treasury, Office of Foreign Assets Control, issued a “Specifically Designated Nationals and Blocked Persons List,” which includes three references to Deputy Prime Minister Rogozin. In addition, on April 28, 2014, the United States Department of State and the United States Department of Commerce issued restrictions banning the export or re-export of “any high technology defense articles or services.” United States Expands Export Restrictions on Russia, http://www.state.gov/r/pa/prs/ps/2014/04/225241.htm; Commerce Department Announces Expansion of Export Restrictions on Russia – April 28, 2014, http://www.bis.doc.gov/index.php/component/content/article/9-bis/carousel/666-commerce-department-anounces-expansion-of-export-restrictions-on-russia.

Rule 65(a) of the Rules of the United States Court of Federal Claims authorizes the United States Court of Federal Claims to issue a preliminary injunction. The United States Court of Appeals for the Federal Circuit requires the court to consider four factors in deciding whether to issue a preliminary injunction: “(1) a reasonable likelihood of success on the merits; (2) irreparable harm if an injunction is not granted; (3) a balance of hardships tipping in [Plaintiff’s] favor; and (4) the injunction’s favorable impact on the public interest.” Sciele Pharma, Inc. v. Lupin Ltd., 684 F.3d 1253, 1259 (Fed. Cir. 2012) (quoting Amazon, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1243, 1350 (Fed. Cir. 2001)); see also CC Distribs., Inc. v. United States, 65 Fed. Cl. 813, 815 (2005). “No one factor, taken individually, is necessarily dispositive . . . . [T]he weakness of the showing regarding one factor may be overborne by the strength of the others.” FMC Corp. v. United States, 3 F.3d 424, 427 (Fed. Cir. 1993). In “the context of bid protests, the Tucker Act [also requires the court], in conducting its balancing, to ‘give due regard to the interests of national defense and national security and the need for expeditious resolution of the action.’” Serco, Inc. v. United States, 101 Fed. Cl. 717, 721 (2011) (quoting 28 U.S.C. § 1491(b)(3)).

After considering the April 28, 2014 Complaint, Executive Order No. 13,661, together with subsequent Executive Branch restrictions, and conducting a hearing on this date, in the court’s judgment, the public interest and national defense and security concerns that underlie Executive Order 13,661 warrant issuance of a preliminary injunction in this case that prohibits:

The United States Air Force and United Launch Services, LLC (“ULS”), a majority owned subsidiary of United Launch Alliance, LLC (“ULA”), and affiliates thereof, including general partners, directors, officers, employees, agents, representatives, predecessors, as signs, joint ventures, subsidiaries, and divisions, from making any purchases from or payment of money to NPO Energomash or any entity, whether governmental, corporate or individual, that is subject to the control of Deputy Prime Minister Rogozin, unless and until the court receives the opinion of the United States Department of the Treasury, and the United States Department of Commerce and United States Department of State, that any such purchases or payments will not directly or indirectly contravene Executive Order 13,661.

The scope of this preliminary injunction does not extend to any purchase orders that have been placed or moneys paid to NPO Energomash prior to the date of this Order.

IT IS SO ORDERED.

s/ Susan G. Braden
SUSAN G. BRADEN
Judge

  • therealdmt

    Ooh, looks like Elon struck a raw nerve here.

  • Cicero

    ULA’s appeals to patriotism ring hollow when they get their engines from less than stable political regimes.

  • mzungu

    Hmm… Didn’t see that coming as part of the lawsuit. Nice monkey-wrench by Space X, but I expect the govt would simply waiver the engine buy.

  • Robert Gishubl

    The order exempts purchase orders already issued so any engines already ordered but not paid for can still arrive and be used. It effect will be minimal in availability of rockets for launch contract because by the time they need to order new engines either the sanctions will be over so it will be ok to buy more or there will be higher level dispute and Russia would not send the engines in retaliation.
    The real impact will be to raise awareness in Congress and expose its hypocrisy or fund commercial crew properly and open up government launch contracts to bidding rather than lock in a vested interest monopoly for many years.

  • windbourne

    Hmmm.
    As much as I want to see this BS stopped, I have to wonder if SpaceX is not biting the hand that feeds it?
    I will say that I find it interesting that the house republicans are doing an interesting bill..

    http://www.reuters.com/article/2014/04/30/usa-defense-aerospace-idUSL2N0NM27O20140430

    With this, they are directing the DOD to create a new American engine to be owned by America.
    BUT, of course, they are not stopping funding for Russian launches, nor are they increasing funding for private space human launches.

    So, it appears that the neo-cons/tea* want to develop new engines for ULA, but are still blocking SpaceX and others from getting humans up so that SLS remains a go for 2022-2024.

  • mzungu

    Is that’s on top of the 2 year supply they claimed to have already secured?

    Don’t think ULA have lost much sleep over this, P&W have also secured the IP rights to make the engine anyway…P&W could prob. just orders the “difficult-2-make-here”parts instead of the whole engine…figure less politically sensitive that way.

  • Douglas Messier

    Yes, the orders are in addition to the existing stockpile that is already in the United States.

    I think interfering with ULA procurement of Atlas V engines is a very serious matter indeed, regardless of the supply of engines they already have. It comes at a very sensitive time in U.S.-Russian relations when Dmitry Rogozin is telling NASA to use a trampoline to get astronauts to the ISS.

    It’s worth noting that there hasn’t been any breaches in the agreement on rocket procurement or ISS access — yet. And there are probably a lot of efforts going on behind the scenes, away from the public declaration, to preserve both of these deals.

    I’m a bit worried that anything that further roils the situation could cause a breach. The Russians could decide on their own they don’t want to deal with this situation and cut off the RD-180 engine supply. That would have a lot of bad implications. It’s easy to think that SpaceX would simply step in and do all these launches, but it might not be as simple as that.

    This might not be a realistic fear, but you never know how things like this are going to play out. The judge’s order and the appeal is just coming an extremely sensitive time.

  • mzungu

    I wouldn’t worry about it. They love their Motherland, yes. but they loves their Rubles as well. Engines and rockets are kind of a commodity thing now….

    As far as the Air Force are concern, I guess they still have the Delta IV Medium that covers that range. it’s just matter of swapping out a few pages of Powerpoints. :D

  • therealdmt

    I see it similarly. The logical thing (what SpaceX expects) would be for congress to shift the launches to a US contractor with US engines, and additionally, to increase funding for commercial crew to end dependence on Russia for launching our astronauts as quickly as possible.

    The initial reality seems to be more of a mixed bag, however. Commercial crew has certainly garnered some support and the House has increased funding for it, but amazingly STILL proposes underfunding it by 10’s of millions (and thus setting itself up to pay MORE US taxpayer money to the Russians when the initial commercial crew flight will be further delayed!!!?)

    On the DOD launch front, some senators are pushing to review the whole Bulk Buy contract and possible open some or all of it back up to competition (and thus save taxpayers a lot of money), but simultaneously some in Congress are working to spend MORE taxpayer money on opening up US production of the RD-180 and keeping the current contractors employed (and the money flowing).

    SNAFU

  • windbourne

    Sadly, that is a good synopsis.

  • getitdoneinspace

    I certainly hope this does not turn into a cost-plus deal with ULA to either build their own RD-180 or a replacement engine. Cost-plus to one vendor has to end for this type of procurement. I truly think the COTS model is a fantastic model for developing / innovating capability for the future. And I like the number of 3 vendors for each initiative to maintain competition and opportunity for different ideas to be explored. The government funding engine development would be fine by me, as a taxpayer, but only if it is done like COTS with 3 parties. And the 3 parties must make a significant commitment to the effort. They must have skin in the game. I could see Aerojet (for ULA) & SpaceX & some other party (Blue Origin??) or who knows who else is out there with an innovative idea willing to put skin in the game. Summary, cost-plus just gets want is asked for and the COTS model gets innovation, competition, and progress now and into the future.

  • Christopher James Huff

    This is about SpaceX being unfairly excluded. How is that “the hand that feeds it”? More like the hand that’s snatching food away to give to an already-obese favorite.

  • windbourne

    Nasa is counting on atlas for human launch.
    In fact, DOD and NASA desperately need 2 different launch systems in similar sizes.
    Delta could do the trick, but price must come down.