Timeline of Events for Space Racers Dispute

The following is a timeline of events in regards to the arbitration award of a $1.3+ million dollar payment from the Alabama Space Science Exhibit Commission (d.b.a. U.S. Space & Rocket Center)  to Space Race, LLC. This award was for breach of agreement in the production of the STEM-centric cartoon series, Space Racers, that was funded by a NASA grant. The timeline has been created from the summary of factual findings from the Final Award document issued by the panel of three arbitrators.  This document was included in a set of publically accessible documents filed in New York state court, in early December 2018, by Space Race, LLC. This includes the testimony of ASSEC and Space Race employees. Additionally, a timeline of the arbitration proceedings, an excerpt from the final award findings and the award statement are also included.

As previously published, Space Race, LLC is seeking a New York court to affirm or disaffirm the arbitration award.  All direct quotes from the Final Award document will be presented in italics.

A complete version of the Final Award document can be downloaded here. 

February 2, 2016:

“U.S. Space and Rocket Center (USSRC) entered into a NASA Grant and Cooperative Agreement (CAN).  In this agreement NASA would provide funding to the USSRC which would serve as a pass through to fund Space Race for the production of the Space Racers cartoon series.*

A memorandum of agreement (MoA) was created that stated that Space Race would produce the show and the USSRC agreed to pay for the series. The agreement was contingent on NASA providing grant funding for the program.

*NASA regulations require that these type of grants be awarded to not-for-profit organizations who in turn contract for-profit companies to complete the work.

April 15, 2016:

The MoA was revised to include language that reflected that Space Race LLC, had entered into a distribution agreement with NBC owned child-centric station, Sprout. This rescoped agreement included language that stated that “the timeline for episodic development shrinks from spanning three years into a compressed 12-18 months”.  The rescope was submitted and accepted by NASA. The final award document notes that “The agreement and expectation of all the parties became that Space Race would produce all of the Space Racers episodes and incur the expenses to do so in the first 12-19 months of the CAN, but would be paid in full over the 3 years of the CAN”

October 31, 2016:

According to IMDB.com*, the second season of Space Racers (the first season to be funded through the NASA grant) aired in late October.  

 

During this time all 20 episodes of Space Racers covered by the MoA had been created by the middle of 2017.  The USSRC was invoiced for the services rendered and payments were made in advance of the set payment schedule. “In total, during 2016 and 2017, the USSRC paid Space Race $3 million of the initial contract amount of $4.5 million”.

*https://www.imdb.com/title/tt2542954/episodes?year=2016&ref_=tt_eps_yr_2016 

June 2017

“According to Dr. Deborah Barnhart, the Chief Executive Officer of USSRC, Erickson advised her in June of 2017 that the final $1.5 million installment would not be paid by NASA. Space Race was first advised of this by Barnhart at or about such time”.

According to NASA.gov, Kristen Erickson is NASA’s Science Engagement and Partnerships Director.*

*https://science.nasa.gov/about-us/leadership/ms-kristen-j-erickson

November 29, 2017
On a conference call NASA’s representative notified the USSRC’s lead contact for the agreement, Scott Harbor, along with Space Race’s leadership that “NASA would not further fund Space Race because of USSRC’s repeated failure to provide reports that it was required to submit”.

According to the notes of the call by Harbor, NASA stated that no 2018 funding take place.
“Kristen told SR [Space Race] that no year 18 funding would occur and it was due to us [USSRC] not meeting contract requirements.”

However, the NASA representative offered a possible resolution to the issue.

“Erickson further advised during the November 29, 2017 conference call that, if USSRC furnished the delinquent reports and a letter from USSRC requesting NASA funding for year three, then the remaining year three funding from NASA would remain in the NASA budget for 2018”

After the meeting, Harbor approached Dr. Barnhart about the possible resolution.

“Harbour testified that he advised Barnhart of the conference call, including that USSRC needed to provide the delinquent reports to NASA so that USSRC would receive the final payment of $1.5 million. Barnhart rejected Harbour’s request, claiming that she understood that NASA would not provide further funding even if the delinquent reports were provided to NASA. Barnhart told Harbour that “she was not worried about it.”

Space Race leadership, Chuck Matays,  also reached out to Dr. Barnhart during this period to ensure that the reports would be prepared and submitted to NASA, however they were met with no responses to phone calls and emails until December 11.

December 6, 2017:

“During a telephone conference call on December 6, 2017, Erickson further informed Harbour and representatives of Space Race that USSRC and NASA had jointly decided to stop the Space Racers project.”

December 11, 2017:

“Barnhart was unresponsive to Matays’ multiple emails and voice mail messages. Eventually, Barnhart replied to Matays on December 11, 2017, stating: “Let’s don’t get in a hurry. We are expecting written direction from NASA. Let’s see what they say officially.”

December 20, 2017:

Via a letter, NASA formally notified the USSRC that the funding for the Space Racers project had been terminated. The letter that would be passed on to Space Race leadership stated several key items.

“Space Race received a copy of a letter from Erickson to USSRC terminating the CAN: “Per paragraph 1800.921(b) of your award letter, NASA will not be providing additional funding to your award and thus will be cliañgiñg the period of performance to end on January 31, 2018.”

“The recipient agrees to perform work up to the point at which the total amount paid or payable by the Goverñmeñt approximates but does not exceed the total amount actually allotted to this award. NASA is not obligated to reimbürse the recipient for the expenditure of anióüñts in excess of the total funds allotted by NASA to this grant or cooperative agreement. The recipient is not authorized to continue performance beyond the amount allocated to this award.”

“[The decision to terminate] is not influenced by any action on the part of the Alabama Space Science Exhibit Commission.”

December 28, 2017:

“Space Race filed a Demand for Arbitration, dated December 28, 2017, and Statement of Claim, dated January 2, 2018, in which it asserted claims for (I) Breach of Contract and Breach of the Duty of Good Faith and Fair Dealing; (II) in the alternative, Declaratory Judgment; and (III) in the alternative, Reasonable Value of Services in Quantum Meruit. Space Race’s claims arise out of USSRC’s alleged failure to pay the outstanding principal amount of $1,313,902 pursuant to the MoA.”

January 2018:

“USSRC filed an Answer to Statement of Claim, dated January 12, 2018, in which it denied the material allegations set forth in the Statement of Claim and asserted various Affirmative Defenses.

“In January 2018, after the present arbitration had been commenced, USSRC reached out to NASA, asking it for the first time to reconsider the termination.”  “NASA did not agree to do so.”

2018 Arbitration Timeline:

“An evidentiary hearing was held before the Arbitrators on July 23, 24, 25 and 26, 2018. Post-hearing briefs, each dated September 7, 2018, were submitted by counsel for the parties. Following a request by counsel for further briefing, which the Arbitrators granted, USSRC submitted a Response to Claimant’s Post-Trial Brief, dated September 28, 2018, and Space Race submitted Claimant’s Post-Trial Reply Brief, dated October 9, 2018. The arbitration was formally closed on October 15, 2018.”

Excerpts from Final Award Findings:
(Author note: I have added bold formatting for key statements.)

When USSRC was advised repeatedly by NASA of its failure to submit reports required pursuant to the CAN, USSRC did nothing. Erickson clearly told Harbour and Space Race that all USSRC had to do was submit the delinquent reports, and write a letter to NASA requesting third year funding. Tr. 170-71. However, following Harbour’s report to her regarding the November 29, 2017 conference call, Barnhart did nothing. When Matays sent multiple emails and left multiple voice mail messages for her, Barnhart initially ignored all communication from Matays. In one such email, dated November 29, 2017, Matays wrote: “We learned that a decision had been made not to fund year 3 of the Space Racers project. Kristen made clear, however, that a memo from you requesting the funding continue (together with some remedial action) could allow the 3rd year of funding to continue as planned.” CEx. 95. When Barnhart belatedly replied to Matays’ email on December 11, 2017, Barnhart wrote: “Let’s don’t get in a hurry. We are expecting written direction from NASA. Let’s see what they say officially.” Ex. 99. This response, disingenuous at best, was made when Barnhart claims to have “known” that further funding would be withheld by NASA. Barnhart evidenced no sense of outrage or even unhappiness over the termination. Tr. 321-23. Instead, in a private email, Barnhart thanked Erickson for sending the termination letter. (“Thank you Kristen. You can call me anytime I can support you or NASA.”) Ex. 38.

Harbour spoke with Erickson again on December 6, 2017. His notes of that conversation state: “Kristen called me and we discussed Space Racers. Kristen informed me that USSRC & NASA had jointly decided to stop the Space Racers project.” Ex. 42 at 5580. Harbour testified that only Barnhart could have participated in such a joint decision on behalf of USSRC. Tr. 348. He also testified that Barnhart and Erickson were discussing funding for 2018 as early as 2016 and again in June 2017. Barnhart herself wrote an e-mail to Matays in June of 2017 stating that she would provide Erickson with her own “recommendation” as to whether to provide year 3 funding to Space Race. CEx.72; Tr. 371. Yet conspicuously absent from Barnhart’s testimony was any statement that she recommended to NASA that third year funding should be paid to Space Race. Instead, in June of 2017 Barnhart told Harbour that there would not be funding for year three of the CAN. Tr. 152-53, 330-31.

 

“According to Kim Whitson, USSRC’s expert witness, termination of a grant/cooperative agreement “must be reserved for exceptional situations that cannot be handled any other way.” Tr. 991-92. There was no evidence presented at the Hearing that NASA was confronted by any exceptional situation. The CAN provided: “Renewal is based on satisfactory progress and availability of funds.” Ex. 14, p. 9. Space Race had fully performed under the MoA; it did everything that it was required to do and did it well. There was no credible evidence submitted at the Hearing that Space Race had breached its contract performance obligations in any way. All that remained was for Space Race to be paid for the work that it had performed The term of the CAN as executed extended through February 1, 2019. Ex. 14, at 5859. There was no reason, other than USSRC’s breaches, for NASA to terminate the MoA prematurely by “changing the period of performance to end on January 31, 2018” (Ex. 40), prior to the time Congress would be acting on NASA’s 2018 appropriation request. The only other plausible explanation is that NASA was trying to avoid paying Space Race for the third year of the CAN, a plan which Erickson said was jointly decided with USSRC. This was done only after Space Race had frontloaded all of the product development work with the express agreement of USSRC and NASA, which work benefited both NASA and USSRC. A party cannot lawfully act in this manner and then seek to be excused for its wrongful conduct when the funding does not materialize because of its own actions and its failures to act.

Based on the evidentiary record, we conclude that USSRC’s conduct materially breached its obligations to Space Race under the MoA, materially breached the CAN, and caused Space Race to fail to receive the third year of funding from NASA.”

 

Award Statement:

“USSRC shall pay Space Race the principal amount of $1,313,992, representing the remaining unpaid amounts under the MoA. In addition, interest thereon shall be calculated at the annual rate of 6% pursuant to Alabama law, Rhoden v Miller, 495 So 2d 54, 58 (Ala. 1986), from April 22, 2018 (30 days following the date by which the federal government funded NASA’s educational programs through December 14, 2018, totaling $51,680.

The total amount of $1,365,582 ($1,313,902 + $51,680) shall be paid so as to be received by Space.Race by December 14, 2018, This Final Award is in full settlement of all claims·submitted to this Arbitration, All claims not·expressly granted herein are hereby denied.”