They had been waiting for this moment for the better part of a decade — the announcement from NASA on who would build the next spaceship to take astronauts to the International Space Station.
Sierra Nevada Corp., a more than 3,000-person outfit headquartered in Nevada, was a distinct underdog. Its competitors were Boeing, which traces its space legacy to the Apollo, Gemini and Mercury programs, and SpaceX, the brash upstart founded by billionaire Elon Musk that became the first private company to resupply the space station.
But the executives at the Sierra Nevada had built something they considered ground-breaking: a sporty space plane called the Dream Chaser that looked like a miniature version of the shuttle and gave them confidence they would win the contract, potentially worth billions of dollars.
It was also a chance to make history by restoring America’s ability to launch its own astronauts from U.S. soil, ending reliance on Russia, to which the United States has paid $1.2 billion for trips to the space station since the shuttle was retired in 2011.
On the day of the contract announcement, Mark Sirangelo, director of the company’s space program, took the call at his desk. It was not good news. “Like a death in the family,” he would later say.
And so Sierra Nevada entered a realm particular to the world of government contracting: that of the big-time corporate loser.
Ford will survive if someone decides to buy a Chevrolet, and it won’t break Denny’s if you eat breakfast at IHOP. But the stakes are higher for contractors who put everything on the line in a marketplace dominated by a single customer: the federal government.
The loser’s locker room is a scene of despair, anger, calls for litigious revenge. There is lost revenue, sometimes layoffs, even bankruptcy. In Sierra Nevada’s case, it had a spaceship suddenly in search of a mission and now even more pressure to find a customer to fly it.
As federal procurement spending has been cut dramatically — by almost $100 billion between 2010 and last year — the stakes have only climbed. Having to absorb defeat with less business to fall back on is driving a wave of industry consolidation, and many contractors are looking to foreign governments and the commercial sector to help offset the losses.
“It’s a zero-sum game,” said David Versel, a research associate at George Mason University’s Center for Regional Analysis. “Since there’s so much less funding than there used to be, it’s harder and harder to stay in business.”
The consequences are more pronounced in the landmark, and increasingly rare, multibillion-dollar opportunities such as the one Sierra Nevada was pursuing. Winners can be guaranteed a stream of orders that last years, if not decades. Lose, and you could be shut out of an industry for good.
But even in the day-to-day scrum of midlevel government contracting, a loss can be agonizing.
When Jared Shepard’s team at Reston-based Intelligent Waves went after a $500 million information technology contract for the military a few years ago, about a dozen employees worked on the 300-page proposal for more than six months. Sometimes toiling until 1 or 2 in the morning. Shepard, the company’s chief executive, canceled a three-week honeymoon to Australia and took a week in the Caribbean instead. Even then, he was on his laptop daily — grateful for his forgiving bride.
The company’s bid was 30 percent lower than the incumbent contractor, and Shepard felt good about his company’s chances.
When they lost, he called his attorney, ready to fight.
“They immediately call me angry,” said the attorney, Lee Dougherty. “They spent months and months, full time devoted to a proposal. So when they call me they are usually very emotional. They’re just perplexed because they were so sure they would win.”
On those initial calls, he is more therapist than legal adviser, a listener and a voice of reason that, more often than not, says: You lost, and it’s probably not worth filing a protest, which is often costly and unsuccessful.
Even when they are successful, it doesn’t mean you get the work. Shepard won the protest, and the competition was reopened. But his company lost again, and three years later it still hurts.
“I guess part of me is still a little chapped by that one,” he said.
For Chris Dunn’s small company, Applied Network Solutions, based in Columbia, Md., the five-year IT contract for an intelligence agency was a bit of a stretch. But he decided to go for it, thinking, “If you don’t swing, you don’t hit.”
If they won, the contract could have doubled the size of the company, which could have helped open the door to other lucrative contracts. Dunn had a good feeling: “Everybody believed we were the team to beat,” he said.
He received the bad news on his cellphone in a parking lot.
“I hung up the phone and sat there and said, ‘Well, now what?’ ” he said.
At Sierra Nevada, some employees had worked on the Dream Chaser program since its inception more than a decade earlier. The company had invested millions in it. And even though it was not as well-known as its rivals, Sierra Nevada fared well in the early rounds of a competition designed not just to build a spaceship that could take astronauts to the space station but also to help develop the burgeoning commercial space industry.
In the first round, it won $20 million, more than even industry giants such as Boeing and the United Launch Alliance, a joint venture between Lockheed Martin and Boeing. In the second round, it won more than $100 million. By the final round, NASA had invested more than $363 million on Sierra Nevada’s program.
At the end, it came down to three finalists: Sierra Nevada, Boeing and SpaceX.
Boeing and SpaceX offered capsules. Sierra Nevada had something different: the Dream Chaser, a quarter the size of the space shuttle, it looked like a Mini Cooper next to an 18-wheeler. But even though it’s a compact “space plane,” it can carry as many passengers — seven — as the shuttle. And unlike its predecessor, and the capsules that splash down in the ocean, the Dream Chaser can land on commercial runways, meaning the cargo and crew could be almost immediately accessible. And then it could fly again.
And the American space program could fly astronauts again, too. Since the retirement of the shuttle, it was in an uncomfortable, even embarrassing, position: having to hitch rides on Russian Soyuz rockets to the space station.
NASA Administrator Charles Bolden wrote in a blog post that “it is unacceptable that we don’t currently have an American capability to launch our own astronauts.” And costly: NASA paid more than $70 million a seat for the rides.
The winner of the “commercial crew” contract would be able to add an American flag next to the corporate logo on its rocket and demonstrate how far commercial space flight has come.
The contracts also marked a shift for NASA. Instead of owning and operating the rockets, NASA would essentially hire them in an arrangement not unlike a rental-car agreement, allowing the agency to focus on its main target: Mars.
For Boeing, a win would represent another notch in a well-marked belt. For SpaceX, it would cement the once spunky outlier as a legitimate, mainstream player — another coup, after becoming the first commercial company to resupply the space station with a contract worth $1.7 billion.
For Sierra Nevada, it would be a breakthrough that could, in an instant, hoist it to the top tier of space companies. A decade in the making, the company wanted this win. Bad.
Last September, the call came. NASA announced that Boeing and SpaceX would share the $6.8 billion award, Sirangelo would tell his team that this was their Apollo 13 mission. Like the astronauts who had to abort landing on the moon because of an oxygen tank explosion, the company had come so close to its goal — but fell short.
About 100 people would lose their jobs. Denial gave way to depression — and anger. “We all did our grieving,” Sirangelo said. The team “was fairly devastated by the loss.”
To the dreamers, the vastness of space has long represented opened-ended possibility. Sierra Nevada had built a ship to cross the threshold, and it was not about to give up now. It filed a protest with the Government Accountability Office, saying that its proposal could have saved NASA money. When that was denied last month, it pressed on, saying that it “firmly believes that the Dream Chaser will play a central role in shaping the future of space transportation.”
The statement embodied the optimist of an explorer, straddling the fine line between faith and delusion, persistence and masochism. Just because NASA snubbed it didn’t mean the space agencies of other countries would.
Sirangelo, a sincere and soft-spoken man, and his team hit the road to work with foreign governments, hoping to sell them on the spacecraft.
This month, his company announced the completion of a study that could pave the way for the German Aerospace Center to use the Dream Chaser to take European astronauts to the space station.
There is also the possibility that, one day, it could take to rich space tourists to low Earth orbit.
Even though the Dream Chaser was designed to carry people, Sierra Nevada, running out of options, bid on another contract to take cargo to the space station.
With proposals due in early December, they had to hustle. They worked through Thanksgiving, cramming at least six months of work into three. Members of the team decided that “we’ve come too far,” Sirangelo said. “We believe in this product and our effort too much. It’s going to be hell for three months, but we’re going to do everything we can.”
Still, the competition for the cargo contract is stiff. And Sirangelo is well aware of the risky downside.
“Maybe we’d lose again,” he said. “But we weren’t going to sit there and cry all night. We’re not made up that way.”
NASA is expected to announce the winners of that competition in June. Sierra Nevada will be waiting anxiously, wondering if it will once again be forced to answer the question: Well, now what?