Gibson: Cancellation of ULA Contract Led to Recent XCOR Layoffs

John (Jay) Gibson

Former XCOR CEO Jay Gibson told the Senate Armed Services Committee this week that the cancellation of an engine contract by United Launch Alliance led the struggling Mojave-based company to lay off its remaining employees last month.

“We were a subcontractor, and in the days of continuing resolutions we felt like we had a commitment from our prime” for funding that he said would last a year or more. “With less than 30 days notice, we were told that funding was terminated.”

Gibson didn’t name to whom XCOR was a subcontractor, but in May 2016, when the company laid off about half its workforce, it said it was suspending work on a suborbital spaceplane called Lynx to focus its resources on a liquid-oxygen, liquid-hydrogen engine program backed by United Launch Alliance. That engine was being considered by ULA as one option for a new upper stage for its Vulcan vehicle.

“The technology that we had, NASA and the Air Force were very, very high on it,” Gibson said at the hearing. “They felt like it was a long-term solution to upper-stage propulsion in a low-cost, high-reusability environment.”

Gibson left XCOR at the end of June after being nominated by President Donald Trump to become Deputy Chief Management Officer at Department of Defense. He was before the Senate committee for his confirmation hearing.

Two days after he left XCOR, the company laid off its remaining 21 employees at the end of June. It brought back some of them as contractors.

The company is now exploring various options involving its engine technology and the partially finished Lynx space plane.

What Gibson says is accurate; the loss of the ULA contract was a big blow to the company. The larger reality is that XCOR had become overly dependent upon that single contract.

During his two plus years at XCOR, Gibson was not able to raise enough money to diversify the business, finish the Lynx, and maintain operations in both Mojave and Midland, Texas.

Gibson had a difficult job coming into XCOR, which had not experienced the best business and financial management. A deal to move XCOR to Midland, Texas created a number of financial burdens on the small company.

Still, the numbers are not real kind. The company went from about 50 employees when he arrived to a relative handful of contractors with work on its two main projects — Lynx and the ULA engine — effectively shut down.

“I’m very proud of my management performance there. You do your best in a small business,” Gibson told the Senate committee. “Sometimes external factors are beyond your control.”