NASA selected Space Exploration Technologies (SpaceX) and Rocketplane Kistler to demonstrate their ability to loft cargo and eventually crew members to the International Space Station (ISS).

In the demonstration contracts, each firm would have to demonstrate various proficiencies, including a test flight in 2008. The demonstration contracts would be worth about $207 million for Rocketplane and more than $270 million for SpaceX, sister publication Defense Daily reported.

The two firms were among six finalists in the competition, which originally attracted a score of rival firms vying to provide demonstrations of their ability to perform Commercial Orbital Transportation Services (COTS) for NASA.

There is no guarantee that Rocketplane and SpaceX will awarded contracts to perform actual missions, which might be worth a total $500 million over five years, according to NASA officials, and losing firms should not feel out of the running, as they might have an opportunity to vie for work later.

"We don’t consider any of these companies losers," Alan Lindenmoyer, NASA commercial crew/cargo project manager, said at a press conference. "We are encouraging these other companies" to remain interested in competing for NASA contracts, he said.

While NASA itself long has performed the job of hauling fresh supplies up to the ISS and hauling waste and unwanted items back from the space station, it makes sense to outsource the work to commercial firms if they can perform it at less cost and still provide safe, reliable and effective shipments, Scott Horowitz, associate NASA administrator for the Exploration Systems Mission Directorate, said.

Such savings could free resources, such as personnel and funding, for other needed NASA work, he said at a briefing to announce the two winners. "This is a business" and one where costs and efficiencies are valued, he said. In going to the private sector for these space transport services, NASA aims to create a new market.

The phase one demonstration contract, where SpaceX and Rocketplane each will show its lift capabilities, will be followed by phase two, where NASA will award actual transport mission contracts, Horowitz said. Missions would include some in which items being shipped to the ISS would need pressurized environments and other missions where cargo would require pressurized, temperature-controlled environments. Later, there would be missions to carry crew members to the ISS.

Cost controls will be critical for the two competitors, because the initial demonstration contract that each will receive will be a fixed-price milestones contract, rather than a cost-plus contract where the government would pay for whatever costs each company incurred in the program.

SpaceX’s proposal uses the company’s Falcon 9 two-stage launch vehicle to provide power to loft the payload, paired with either a Dragon Cargo capsule atop the rocket or a Dragon Crew capsule, depending on the mission. Costs would be contained by using simple components.

Rocketplane would use a K-1 lifter, with a first stage that would be reusable as a cost savings, able to perform the burn at launch and then, after separation, return to the launch point.

"This will be a very successful program," Lindenmoyer said.

When the demonstration phase concludes and NASA moves to award contracts for actual missions, the work might be split between the two companies, if SpaceX offers a lower cost or better service for one type of mission but Rocketplane offers a better price or service on another type of transport, according to Horowitz. If one company is superior in every area, it could wind up with all of the phase two work.

Phase two work might involve up to six missions per year, Horowitz said.

— Dave Ahearn