FYI,

"NASA Competition Designed for Growth"
Houston Chronicle
http://www.chron.com/disp/story.mpl/front/3998466.html

: 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.

: "Some of the best, most innovative ideas came from the lesser
: known names in the aerospace industry," said James Bailey, a NASA
: contracting officer in Houston, who wouldn't confirm the finalists.

: Elon Musk, chief executive of Space X, said the competition could
: end up being "the greatest value for money that NASA has gotten
: from any program." But he worried that the amount offered by the
: space agency may not be enough to develop a successful space
: vehicle if the prize money is split, given that the cost of a
: single space shuttle flight is $1 billion.

: "For a commercial company to develop a complete system ... for
: $250 million, even for $500 million, is a pretty tall order," Musk
: said. "I'm a little concerned that NASA potentially endangers the
: outcome by splitting the baby here."

: Griffin has taken a page from the Hoover-era U.S. Postal Service
: in offering an incentive to the private sector to develop
: commercial space transportation.

: The U.S. Postal Service took the lead in developing commercial
: aviation when it began flying mail in 1918. The agency developed a
: system of routes across the country and then turned the job over
: to private companies in 1927.

: Not much later, President Hoover's postmaster general, Walter
: Folger Brown, developed a system of bonuses for the companies if
: they offered seats to passengers in addition to space for the
: mail. He wanted the industry to mature but realized it wouldn't
: happen without economic incentives.

: The result was that commercial air traffic jumped from
: 6,000 passengers in the late 1920s to 450,000 passengers in 1934,
: said Bob van der Linden, a curator at the Smithsonian
: Institution's National Air and Space Museum.

: "Traditionally, Uncle Sam has done this many times before," said
: van der Linden. "Prove it can be done, help business get involved
: and when business can make money, you step back and everybody
: benefits."

Mark Reiff