NASA Adminsitrator bounced by an unusually cozy relationship with federal regulators

Although federal procurement directives are moving towards acquisitions of supplies and services described in terms of common commercial standards, some needs of the government can only be met by particularized specifications and contractors. Take, for instance, spaceships (although we are now seeing the development of private sector contractors even in the space field, a circumstance not dreamed of when space exploration began in the era of Sputnik).

Why commercial standards? In a word, competition. As the American Bar Association Model Procurement Code elucidates,

"Fair and open competition is a basic tenet of public procurement. Such competition reduces the opportunity for favoritism and inspires public confidence that contracts are awarded equitably and economically." Code § 3-201, Commentary 3.

Indeed, an fundamental purpose and policy of the Model Procurement Code is "to foster effective broad-based competition within the free enterprise system". §1-101((2)(g). And, this is not a mere aspiration. "It is the general policy of this [State] to procure standard commercial products whenever practicable. In developing specifications, accepted commercial standards shall be used and unique requirements shall be avoided, to the extent practicable." MPC Regulation § R4-201.01.2 "All specifications shall seek to promote overall economy for the purposes intended and encourage competition in satisfying the [State's] needs, and shall not be unduly restrictive." MPC § 4-205. Further, in general, "Correction or withdrawal of a bid because of an inadvertent, non-judgmental mistake in the bid requires careful consideration to protect the integrity of the competitive bidding system, and to assure fairness. If the mistake is attributable to an error in judgment, the bid may not be corrected." MPC § R3-202.11.1

One of the big impediments to preferring standard commercial products and standards is the pushback and lobbying of entrenched contractors, the "good old boy" network. The basis for such a network is understandable from the standpoint of preferring the devil we know, but it runs foul of the demands of procurement when we become enamored of those well-known devils.

This post, and the article from the Washington Post that inspired it, illustrate the kind of relationship that can, and often does, call such discrimination into question. Once again, I caution that I slice and dice, rearrange, omit, and shade original articles to fit the didactic intent and space of this blawg, to be read as a hypothetical for educational purposes, and not as evidence or insinuation of guilt or wrongdoing. So, you are IMPLORED to link to and read the source material cited, and do not to rely on the rendition here.

Boeing tried to amend bid after guidance from NASA official, raising concerns it received inside information

After a top NASA official contacted a senior Boeing executive about a bid to win a contract potentially worth hundreds of millions of dollars, the company attempted to amend its proposal past the deadline for doing so, according to the article. That raised alarm bells inside the space agency, where officials were concerned that Boeing was attempting to take advantage of inside information. The conversation at the root of the investigation was between Loverro and Jim Chilton, the senior vice president of Boeing’s space and launch division, putting one of the company’s top executives in the middle of the probe.

Federal procurement regulations encourage the government to communicate with contractors about their bids to help agencies get the products and services that best fit their requirements. “The question becomes when is it okay to have those discussions, and more importantly, whether you have to have the exact same discussions with all potential bidders,” said David Berteau, the president and chief executive of the Professional Services Council, a trade group that represents federal contractors. According to the article, a person with direct knowledge of the matter who spoke on the condition of anonymity because of the ongoing investigation said: “I can tell you with 100 percent confidence that no laws were broken. What we are talking about are conversations that occurred outside the normal dictated channels but didn’t violate the sanctity of the procurement process.”

According to a congressional aide with knowledge of the matter, NASA procurement officials grew concerned earlier this year when Boeing contacted the agency, saying it wanted to change parts of its bid for the lunar lander contract. Not only was it late in the process, but the specificity of Boeing’s proposed changes raised “red flags” inside NASA that the company had received inside information improperly. NASA officials wondered, “How did they know to raise this issue or try to fix this issue?” according to the aide, who spoke on the condition of anonymity because of the ongoing investigation.

NASA officials have stressed that the agency has gone to great lengths to ensure the integrity of the contract awards, worth $1 billion combined, that went to teams led by Jeff Bezos’s Blue Origin and Dynetics, as well as Elon Musk’s SpaceX.

Ultimately, the matter was referred to NASA’s inspector general office, and NASA’s leadership last month forced Doug Loverro to resign from his position as the associate administrator of NASA’s human spaceflight directorate. In his resignation letter, Loverro wrote that he took “a risk earlier in the year because I judged it necessary to fulfill our mission. Now, over the balance of time, it is clear that I made a mistake in that choice for which I alone must bear the consequences.” The inspector general investigation could be another headache for Boeing, under fire for having an unusually cozy relationship with federal regulators, especially if it identifies wrongdoing on the part of Boeing senior executives.

In an interview with The Post last month, Loverro said he was trying to speed up the Artemis moon program to meet a White House mandate to return astronauts to the lunar surface by 2024. “It had to do with moving fast on Artemis, and I don’t want to characterize it in any more detail than that,” he said.

But the probe is also focusing on Boeing, officials said. “This certainly goes both ways. It’s one thing to have a mistake that violated the Integrity in Procurement Act,” the aide said. “It’s another if the company took that information and acted on it.”

FURTHER READING:

• Special Compliance Requirements for Government Contractors Part 1, and Part 2

• FAR 52.203-13 Contractor Code of Business Ethics and Conduct.