Nasa is sponsoring a competition in which winning companies will get $500 million in seed money to develop space vehicles that the US space agency 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.

 

Michael Griffin, the Nasa administrator thinks a little push from government could do for the commercial space industry what it did for the commercial aviation industry in the 1920s and 1930s

 

"It is well past time for Nasa to do everything it can to stimulate commercial space transportation ... and I'm trying to do that," he told the US Senate committee recently.

 

Nasa hopes the private-sector vehicles can bridge an expected gap between 2010, when the space shuttle fleet will be grounded and 2014 when the crew exploration vehicle will be flying.

 

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 have made it to the final round. The winning proposals were expected to be picked late this summer.

 

Seed money

 

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.

 

"This is a programme whose time has come"

Kimberly Campbell,
vice-president at Spacehab

Many of the companies in the running, such as Spacehab Inc, already were developing their own private vehicles before Nasa began dangling the incentive money.

 

"This is a programme whose time has come," said Kimberly Campbell, a vice-president at Spacehab, an aerospace company based in Webster, Texas.

 

"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 is not the first to use a competition to encourage the development of private sector space vehicles.

 

Robert Bigelow, a Las Vegas-based entrepreneur, in 2004 had 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 100km (62 miles) twice within a period of 14 days, winning the $10 million Ansari X-Prize designed to encourage development of space tourism.

 

The finalists

 

Nasa has not said who the finalists are. But Campbell said they included her company; El Segundo, California-based Space X; Poway, California-based SpaceDev; Reston, Virginia-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 would not confirm the finalists.

 

"For a commercial company to develop a complete system  for $250 million, even for $500 million, is a pretty tall order"

Elon Musk,
chief executive, Space X

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 programme".

 

But he worried that the amount offered might not be enough to develop a successful 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."