A federal judge ruled on Wednesday, October 22nd that NASA could move forward to finalize new contracts to develop private “space taxis” despite a legal challenge from a smaller rival firm. Sierra Nevada Corp., the Colorado-based developer of the Dream Chaser mini-shuttle, had mounted a challenge to NASA’s award of the contracts last month to Boeing Co (NYSE:BA) and SpaceX.

NASA Wins; Boeing and Space X Shuttle Contracts Ruled Valid

On September 16th, NASA awarded Boeing a contract worth up to $4.2 billion and SpaceX another contract worth up to $2.6 billion. The contract funds a crewed test flight and up to six operational flights. Boeing and SpaceX both are developing “space taxis” to fly astronauts back and forth into Earth orbit, named the CST-100 and Dragon, respectively.

Decision obviates bid protest delay

Sierra Nevada’s original bid protest had automatically triggered a stop-work order pending a U.S. Government Accountability Office review. That meant all contracts would be on hold until the review was completed by Jan. 5th of next year.

However, given the urgency of developing space taxis as soon as possible, a couple of weeks ago NASA took the rare step of telling Boeing Co (NYSE:BA) and SpaceX to go ahead with executing the contracts even though the protest has not been officially resolved yet.

In doing so, NASA claims it “best serves the United States” to make sure the commercial crew systems are functional as soon as possible, and that any delays to flights planned for 2017 would jeopardize the International Space Station.

Sierra Nevada legal representatives called NASA’s decision “arbitrary and capricious” and requested that the U.S. Court of Federal Claims overturn the agency’s decision.

Court ruling on NASA’s action

At a hearing on Wednesday morning, federal judge Marian Blank Horn “provided the parties with a verbal decision declining to overrule” NASA’s action, according to court records. Of note, the GAO will continue to consider Sierra Nevada’s bid protest, and could still direct NASA to make changes to the contracts with Boeing and Space X in the future.