Mark Whittington has an interesting OSP policy alternative. It needs some tweaking--I'd offer second and third prizes, as well, to reduce risk to contestants, and reduce the turnaround requirement to a week, which would probably keep Boeing and Lockmart from playing.

Which actually raises an interesting question.

If, by some political miracle, the government actually did put out a prize for OSP functionality rather than a cost-plus contract, would they play? They hate to spend their own money on something with no guaranteed return (and much smaller payoff than the current multi-billion program), but if they bow out of the competition, they risk an upstart going after and winning it, and not only cutting them out of that game, but showing the absurdity and waste of the current NASA procurement system, which would be a major blow to their future.

It's a no-win situation for them. Ergo, expect them to be the strongest voices in lobbying against such an approach.

Those are good points. My view, though, is that moment somebody wins the X Prize, there is the very real possibility that venture capital money will be more available for an orbital vehicle and thus Boeing and Lockmart will find themselves with the same problem anyway. If a group of upstarts are working on orbital vehicles in a couple or so years, having proven that they can go sub orbit, someone is going to wonder why we are spending 9+ billion dollars so we can do it the same old way it's always been done.

Don't underestimate the ability of large corporations to prevent smaller organizations from entering a market that they dominate. Not to be pessimistic or anything. If Boeing or LockMart actually feel that someone else is going to be a threat to their business, you can bet that they're going to do something about it - and that probably doesn't include overhauling the current space launch systems.

I'm generally in agreement. Instead of a billion-dollar winner-takes-all contest, though, I'd instead have Uncle Sam guarantee to pay a specified amount for 10 launches in the next 5 years for any company that can pass the test. This would make it much friendlier for investors because the contest doesn't dry up after the first winner. And I think that for a vehicle going to ISS's orbit, investors will be essential, because of greatly increased development costs.

Good article, Mark!