Nasa aims to have people on the Moon in 2024 © Nasa
Nasa aims to have people on the Moon in 2024 © Nasa

Why Jeff Bezos is criticising Nasa's procurement

Will Green is news editor of Supply Management
27 July 2021

Amazon founder and world’s richest man Jeff Bezos has called on Nasa to turn away from a single source procurement strategy and reconsider his bid for a Moon lander.

Bezos said Nasa “veered from the agency’s oft-stated procurement strategy” when it awarded the contract to develop a Moon lander to SpaceX.

In a letter to Nasa Bezos offered to develop his Blue Origin lander and waive “all payments in the current and next two government fiscal years up to $2bn to get the programme back on track right now”.

“This offer is not a deferral, but is an outright and permanent waiver of those payments,” said Bezos.

“Blue Origin will accept a firm, fixed-priced contract for this work, cover any system development cost overruns, and shield Nasa from partner cost escalation concerns.”

Nasa plans to return people to the surface of the Moon in 2024 under its Artemis project, and in April awarded a $2.89bn contract to billionaire Elon Musk’s SpaceX to develop a lander.

In a Source Selection Statement, Kathryn Lueders, source selection authority for Nasa’s human landing system procurement, said SpaceX’s price was “the lowest among the offerors by a wide margin”.

Lueders said three bids – from SpaceX, Blue Origin, and Dynetics – were evaluated on three factors: technical approach, total evaluated price, and management approach.

She said it was Nasa’s “desire to preserve a competitive environment” but “at the initial prices and milestone payment phasing” proposed by the bidders, “Nasa’s current fiscal year budget did not support even a single… award”.

She decided to open price negotiations with the lowest-priced bidder – SpaceX – but in the end “SpaceX did not propose an overall price reduction”.

“After I reviewed this revised proposal and consulted… it was evident to me that it would not be in the agency’s best interests to select one or more of the remaining offerors for the purpose of engaging with them in price negotiations,” she said.

Bezos wrote: “Instead of this single source approach, Nasa should embrace its original strategy of competition. Competition will prevent any single source from having insurmountable leverage over Nasa.

“Without competition, a short time into the contract, Nasa will find itself with limited options as it attempts to negotiate missed deadlines, design changes, and cost overruns.  Without competition, Nasa’s short-term and long-term lunar ambitions will be delayed, will ultimately cost more, and won’t serve the national interest.”

Meanwhile, in another high-profile public procurement involving Bezos, the US Department of Defense scrapped the $10bn JEDI cloud-computing contract originally awarded to Microsoft in the Trump era. Rival bidder Amazon Web Services had complained it lost out because of Trump’s dislike of Bezos.

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