NASA Hopes to Spur Commercial Space Growth

The U.S. space agency is sponsoring a competition in which winning companies will get $500 million in seed money to develop space vehicles that NASA will never design, build or own.

It took help from the U.S. Postal Service to jump-start the nation's commercial aviation industry in the late 1920s and early 1930s.

NASA Administrator Michael Griffin thinks a little push from government could do the same for the commercial space industry in the next several years.

The U.S. space agency is sponsoring a competition in which winning companies will get $500 million in seed money to develop space vehicles that NASA will never design, build or own. Like a U-Haul truck rental, NASA instead will merely lease them on a per-trip basis for sending cargo and eventually crew to the international space station.

The arrangement is unprecedented in the nearly 50-year history of the space agency, which traditionally oversees the development and construction of its own space vehicles instead of purchasing trips from private companies. NASA will pay out the money incrementally for each milestone achieved in the vehicles' development. After that, the company or companies who win the competition will have to finance the vehicles on their own.

"I consider it to be a big gamble," Griffin told a U.S. Senate committee recently. "It is well past time for NASA to do everything it can to stimulate commercial space transportation ... and I'm trying to do that."

NASA hopes the private-sector vehicles can bridge an expected gap between when the space shuttle fleet is grounded in 2010 and the crew exploration vehicle is flying in 2014. A thriving commercial space transportation industry also can offer researchers, and others, opportunities to send payloads into space without relying on NASA's crowded space shuttle schedule or worrying "that the government will decide next month or next year not to launch," Griffin said.

About two dozen companies made initial proposals to the government and only six companies have made it to the final round. The winning proposals were expected to be picked late this summer.

The $500 million seed money, which could be won by more than one company, represents only a percentage of the likely development and construction costs, which a NASA market survey puts as high as $2 billion. The winning companies will have to pay the rest of the cost of development and construction on their own. Many of the companies in the running, like Spacehab Inc., already were developing their own private vehicles before NASA began dangling the incentive money.

"This is a program whose time has come," said Kimberly Campbell, a vice president at Spacehab, a Webster, Texas-based aerospace company. "Prices with competition will generally be driven down, but the ease of doing business with the government will get better ... What you'll get is better efficiency."

NASA isn't the first to use a competition to encourage the development of private sector space vehicles.

Las Vegas-based entrepreneur Robert Bigelow in 2004 announced a $50 million prize to anyone able to build a space vehicle capable of carrying up to seven astronauts to an orbital outpost by the end of the decade. Also in 2004, SpaceShipOne became the first privately owned and operated spacecraft to exceed an altitude of 62 miles twice within a period of 14 days, winning the $10 million Ansari X-Prize designed to encourage development of space tourism.

NASA has been tightlipped about who the finalists are. But Campbell said they included her company; El Segundo, Calif.-based Space X; Poway, Calif.-based SpaceDev; Reston, Va.-based Transformational Space Corp.; Seattle-based Andrews Space; and Oklahoma City-based Rocketplane Kistler.

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