NASA Awards Two Contracts to Develop Private Spaceship

NASA said Friday that it had awarded contracts valued at $485 million to two closely held companies to develop a cargo ship to serve the International Space Station, planting the seeds for a commercial space industry.

The contract for Commercial Orbital Transportation Services will be shared by Space Exploration Technologies Corp., also known as SpaceX, based in El Segundo, and Rocketplane Kistler, based in Oklahoma City. It is the first time the U.S. space agency has hired contractors to build a spaceship that private companies, not the government, would own.

“If the commercial sector can do it safely and more cost-effectively, it makes sense to buy that service,” Scott Horowitz, a former astronaut and NASA’s associate chief for exploration systems, said Friday on NASA TV. The space agency would be one of the potential customers, including private clients, that could buy rides into space.

The winners beat out two publicly traded companies, SpaceDev Inc. of Poway, Calif., and Webster, Texas-based Spacehab Inc., along with privately held Reston, Va.-based Transformational Space Corp. and Andrews Space Inc. of Seattle.

Neither winning contractor has sent a craft into orbit, much less negotiated the complicated procedure of docking with the space station.

SpaceX will receive the larger contract, at $278 million, NASA said. The money will help the company expand its move into manned spaceflight, SpaceX Chief Executive Elon Musk said.

“I think it could be some of the best money NASA’s ever spent,” he said.

SpaceX will probably increase its staff by 70% to 100% over the next year, said Musk, who has funded much of his company’s growth with money he received when he sold the online payment company PayPal Inc. to EBay Inc.

Rocketplane Kistler, which will receive $207 million, also expects to use private funds to supplement the government grant, the company said.