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Outsourcing Space: The Final Private Sector Frontier

An advisory committee is set to present the President with his options for NASA after the space shuttle retires, according to Reuters and the Wall Street Journal.

It appears the committee favors outsourcing a lot of future work in space.

The Augustine Commission reportedly believes outside contractors could spur technological advances and lower costs. That's potentially good news for companies working to get into the commercial business of ferrying humans and cargo to the International Space Station, companies like Elon Musk's SpaceX and Orbital Sciences. But the news puts more pressure on traditional NASA partners like Lockheed Martin, Boeing, and Alliant Techsystems.

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"We're very excited about it," Barron Beneski of Orbital Sciences tells CNBC. "It opens up quite a few new opportunities for us."

Not so fast. "Let me emphasize that there will be a lot of deliberating between now and when the administration makes decisions," says ATK's Brian Cullin. His firm is currently building the Ares 1 rocket, set to be the main launch vehicle to take humans and cargo to the Space Station once the shuttle retires next year. The rocket "is slightly under budget" so far at $3 billion and is on track to be ready by 2014. That leaves a four-year gap, during which time NASA will have to depend on the Russians for transport to the ISS. Cullin says that unlike rival upstarts, years of rocket science (literally) have gone into making the current development program "by far the safest architecture you can put together."

Yet the momentum seems to be shifting away from the traditional, expensive, and time-consuming way NASA has done things. Cullin says it's understandable and desirable to move toward a more commercial, less expensive model, but, "It's a misplaced confidence to think that can happen in the short term." The news is coming out the same week ATK will perform the first ground test of the the Ares 1 in a horizontal firing in the Utah desert. It will demonstrate the most powerful thrust ever from a solid rocket motor. The Orlando Sentinel reportsthat critics are already calling the Ares 1 program dead, yet fans have put up a YouTube video to fight for its survival.

It will be up to Congress and the Obama administration to decide what, if anything, to do with the Augustine Commission's report. But while companies like Orbital Sciences praise the report's "new approach to space", ATK says that approach will take time. "It's not like making cars."

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