Space Force delays $12B deal with contractor after court rules company acted fraudulently: report

The Space Force is delaying a $12 billion deal with a contractor after finding out a county court in Texas previously characterized the contractor as engaging in fraudulent action in an unrelated business transaction that involved the Navy.

The Washington Post reported Wednesday that the Space Force is evaluating the case involving National Security Technology Accelerator, also known as NSTXL, which was selected by the Space and Missile System Centers earlier this month to oversee billions of dollars in contracts over a 10-year period.

The scrutiny focuses on NSTXL’s earlier partnership with an events management firm as part of a contract with the Navy. NSTXL ended its relationship with the events firm after the firm supposedly failed to perform its contractual responsibilities, according to the Post, but NSTXL drew harsh criticism from the judge for what followed.

In a Nov. 24 ruling published by the Post, Judge Steven Kirkland of Harris County said the contractor engaged in “illegitimate use of the corporate form” by cutting the events firm out of future business and shifting business to NSTXL-NC, a separate organization that had no directors other than Tim Greeff, president of NSTXL.

Kirkland further wrote that the organizations “engaged in a series of activities to attempt to cover-up and hide their misdeeds,” like submitting false statements in court to try and dismiss the litigation.

Space and Missile Systems Center spokeswoman Capt. Kaitlin Toner told the Post that the agency was “not made aware” of the Texas litigation when it was evaluating bids for its contract. She added that they are “further assessing the matter.”

Toner told The Hill in a statement that the award is near the conclusion of a 30-day congressional notification period, which allows Congressional stakeholders to ask questions “as they perform oversight over the Department. 

“Following the 30-day period, the formal award can be made,” she said. “However, SMC intends to delay the award in order to further evaluate this litigation.”

 “We are intent on doing our due diligence in thoroughly assessing this matter and continuing the responsibility determination as expeditiously as possible.”

“Litigation is sometimes an unfortunate part of severing ties with a services vendor,” NSTXL said in a statement Wednesday. “The matter in question concerns the non-performance of a vendor under a 2014 services agreement between a vendor and NSTXL. A Texas state civil court erroneously determined otherwise–and NSTXL will appeal any final judgment based on the current findings.”

The agreement was supposed to be awarded on Dec. 31, pending the congressional notification period, according to an announcement from NSTXL in early December.

The Space Force was created as the sixth branch of the military with President Trump’s signing of the annual defense policy bill in 2019. Since then, about 2,400 service members have officially transferred into the service, with plans to grow to 6,400 active-duty troops and add a reserve component in 2021.

President-elect Joe Biden and his transition team have not revealed their plans for the Space Force after Biden takes office next month.

Updated at 5:57 p.m.