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NASA May Outsource
The Wall Street Journal is running a piece about the growing momentum behind the idea of NASA outsourcing to private companies everything from transporting astronauts to ferrying cargo into orbit. Quoting: "Proposals gaining momentum in Washington call for contractors to build and run competing systems under commercial contracts, according to federal officials, aerospace-industry officials and others familiar with the discussions. While the Obama administration is still mulling options and hasn't made any final decisions, such a move would represent a major policy shift away from decades of government-run rocket and astronaut-transportation programs such as the current space-shuttle fleet. ... In the face of severe federal budget constraints and a burgeoning commercial-space industry eager to play a larger role in exploring the solar system and perhaps beyond, ...a consensus for the new approach seems to be building inside the White House as well as [NASA]. ... Under this scenario, a new breed of contractors would take over many of NASA's current responsibilities, freeing the agency to pursue longer-term, more ambitious goals such as new rocket-propulsion technology and manned missions to Mars. ...[T]hese contractors would take the lead in servicing the International Space Station from the shuttle's planned retirement around 2011 through at least the end of that decade."
A lot of people here seem to be missing the point with comments along the lines of "oh noes, outsourcing!" so I figure I should explain things in a way more grokkable to slashdotters. NASA's standard way of doing things is to have a single monopolistic supplier paid with a cost-plus contract, while the newer way involves having multiple companies competing for fixed-price contracts.
Under the cost-plus monopolistic way of doing things, a single company is chosen as sole supplier -- I'm sure slashdotters can appreciate why having a single monopolistic provider can be a problem. The "cost-plus" part means that the contractor is paid a multiple of whatever their development and production expenses are. That works well if you're in a "money is no object" scenario, but it means that the contractor has basically no incentive to be efficient or even finish work in a timely fashion, since they make just as much profit on development as on the final product (imagine if the software development projects you've worked on were like this). Of course, I'm sure the engineers work just as hard in any case, but it makes a big difference in how management is structured and how much bureaucracy gets in the way of engineers doing what needs to be done, as there's also substantially more paperwork in this scenario. NASA typically has an oversight role to make sure there isn't too much cost-plus waste going on, although this has gotten particularly bad with the Ares I since NASA decided to act as its own prime contractor, resulting in basically no oversight whatsoever (just look at all the Ares I problems which have been shoved under the rug and festered to see why this has been bad).
The new way of doing things, which NASA's been trying successfully with their COTS program, is to have multiple companies competing for fixed-priced contracts. The companies give initial estimates of cost during the initial contract phases, and if their estimates are poor they either eat the cost or stop getting paid. Payments are only made when specific milestones are accomplished and deliveries are made (e.g. pay a certain amount for delivering a particular amount of mass to orbit), so there's a big incentive to be as competitive as possible. Since you're not tied to a single company, NASA can just dump one company and switch to a competitor if somebody's underperforming, as they did when they switched from Rocketplane-Kistler to Orbital. Although some of these competitors are newcomers like SpaceX, there's also many well-established launch companies like Lockheed Martin, Boeing, and Orbital. Fixed-price competitive contracts is kind of an unusual way of business for many of the well-established companies, but they'll just have to either adapt or perish.
Finally, since there's multiple competing providers, companies (or teams within a company, so not all their eggs are in one basket) can try coming up with novel ways of delivering payloads to orbit. Since NASA isn't tying its entire fate to a single provider, individual providers have the flexibility to try to innovate and see if there's more cost-effective ways to launch payloads to orbit than the status quo. Once new launch methods have proven themselves in launching unmanned cargo, then they can transition to launching people.