NASA fires Rocketplane

NASA has terminated its agreement with Rocketplane Kistler, one of the winners of a $500 million spaceship competition, and is reopening its competition for the $174.7 million that the company lost out on. The winner of that renewed competition would have to demonstrate the ability to deliver cargo to the international space station, just as Rocketplane Kistler was required to do.

The termination came a month after NASA put Rocketplane Kistler on notice that it was in danger of losing out on further money because it hadn't met the required financial and technical milestones. The company was supposed to raise $500 million in private investment by May, but the company didn't hit that goal - and as a result stopped development work on its K-1 launch vehicle.

The official notice following up on that warning was delivered to the Oklahoma-based company this afternoon, said Alan Lindenmoyer, manager of the Commercial Crew and Cargo Program Office at NASA's Johnson Space Center.

Rocketplane's chairman, George French, said in a statement that he was "deeply disappointed in NASA's decision today."

"I am very proud of the technical progress that our superb team has made over the last year," he said. "Through August of this year, we received glowing reviews from NASA on the technical progress we are making on the K-1 vehicle, including cargo modules being developed specially for NASA. On the financial side, I believe we received more commitments from private investors to finance the K-1 program than any purely commercial space venture to date."

George French III, Rocketplane's business development associate as well as the chairman's son, told me that NASA's effort to promote space privatization was "a good program."

"We're very thankful for the opportunity to be involved, and we do hope to be involved sometime in the future," he said. "NASA needs an option to get privatization into space."

Rocketplane said it was still reviewing the details of NASA's decision.

After Rocketplane won the funding from NASA in August 2006, the company reorganized itself into two units: Rocketplane Kistler, which is focusing on the K-1; and Rocketplane Global, which is developing a completely different suborbital space plane. Today's action does not directly affect Rocketplane Global's operations, and in fact that unit is due to announce a new space plane design next week at the X Prize Cup in New Mexico.

NASA already had paid $32.1 million to Rocketplane Kistler for meeting earlier milestones. The company won't have to give that money back, but it will lose out on the remaining $174.7 million that was set aside for future milestones.

Lindenmoyer told reporters that Rocketplane Kistler could continue to work on the K-1 for NASA on an unfunded basis. It could also try to regain NASA funding in the renewed competition, along with other would-be contractors, he said.

"We would welcome a new proposal from them to be evaluated against other proposals from industry," Lindenmoyer said.

NASA needs to have a replacement system for resupplying the space station by 2010, when the space shuttle fleet is due to be retired. The $500 million effort - known as the Commercial Orbital Transportation System program, or COTS - was designed to encourage low-cost options for that resupply. NASA has other options as well, including other countries' space transports (such as the Russian Soyuz or Europe's ATV) and eventually the agency's own Orion crew transportation vehicle.

The Orion is being developed under a multibillion-dollar contract with Lockheed Martin, and is due to enter service in the 2014 time frame.

NASA's agreements with Rocketplane Kistler and SpaceX, the other company to receive money through the COTS program, called for resupply capability to be demonstrated by 2010. But Lindenmoyer said the winners of second-round funding would not necessarily have to hit that 2010 goal.

"We have our need in that time frame," he told reporters. "It's not a requirement."

Several companies are waiting in the wings to vie for the leftover $174.7 million, including Transformational Space and PlanetSpace, as well as SpaceDev, Spacehab and Constellation Systems International. Lindenmoyer said other companies would be welcome to compete as well. That could include Rocketplane Kistler as well as SpaceX, which has hit all its milestones so far, he said.

Lindenmoyer said the full requirements for the second round would be issued Monday, and proposals would be due 30 days from the date of the announcement. NASA would select the winner or winners "as quickly as we can," he said.

"We hope by the first part of next year, 2008, no later than the first quarter of 2008 we should be in a position to complete the evaluation," Lindenmoyer said.

Lindenmoyer said NASA's parting of the ways with Rocketplane Kistler should not be seen as a failure for the COTS philosophy of encouraging private enterprise in space. The program is working "exactly the way it was designed," he said.

"This is not a traditional NASA program, so therefore, recognizing that level of risk that we are undertaking, and the potential payoff, it is not a surprise. ... We had a quantifiable risk, and it was mitigated by the fact that we were able to make a decision early on in the program," he said.

Lindenmoyer said the prospect of lowering the cost of spaceflight - first for cargo deliveries and eventually for crews - was worth the financial risk.

"This is incredibly important to NASA and the nation, so absolutely we will stick with it," he said.

This item was last updated at 6:24 p.m. ET.