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Witnesses at House Science Committee Hearing Express Strong Support for Aerospace Prizes

Press Release From: House Committee on Science, Space, and Technology
Posted: Thursday, July 15, 2004

$10 Million X-Prize Cited as Success Model  

WASHINGTON, D.C. - A panel of expert witnesses, including the Chairman of the X-Prize Foundation and a former Science Committee Chairman, today urged Congress to authorize contests and inducement prizes to spur innovation and advance space exploration.

Testifying before the Subcommittee on Space and Aeronautics, the witnesses told the panel that a substantial prize offering could help develop the necessary technology to fully implement the President's Space Exploration Vision.  Citing the success of the X-Prize, which was the catalyst for the first privately financed flight into space, the witnesses said prizes could help spur innovative ideas and technologies. 

Subcommittee Chairman Dana Rohrabacher (R-CA)said, "I was particularly pleased that the Aldridge Commission recommended prizes as a significant means for increasing the private sector's involvement in space exploration.  The good efforts of the Commission and the X-Prize have given us the historic opportunity to do space smarter."  Rohrabachercontinued, "[L]ast month Burt Rutan's hybrid spacecraft design successfully achieved suborbital flight and safely returned a human to Earth.  In performing this monumental task he demonstrated that space travel is no longer the sole domain of government.  This is a compelling example that a revamped national space program, fueled by inspired market-based creativity and innovation, holds the promise of America exploring space."

"While establishment of a NASA prize program is certainly worth considering, we should not be lulled into thinking that it is any substitute for providing adequate funding for NASA's R&D programs," cautioned Subcommittee Ranking Minority Member Nick Lampson (D-TX).

The President's Commission on Implementation of United States Exploration Policy (also known as the Aldridge Commission) recommended that NASA offer inducement prizes of up to $1 billion to aid the implementation of the President's Space Exploration Vision.  NASA Associate Administrator for Exploration Systems, Rear Admiral Craig Steidle, USN (Ret.) discussed the agency's proposed Centennial Challenges program, which would establish prize contests for the design and development of new innovative technologies.  NASA is seeking Congressional authorization of $50 million annually for the program and hopes to offer prizes of up to $10 million.  

Admiral Steidle told the Subcommittee that NASA is exploring prize competitions for: full missions; key technologies; leveraging partnership opportunities; and educational enrichment. "By specifying technical goals, but not pre-selecting the best way to achieve them, a large number of approaches to a problem will be developed, including unorthodox approaches that would likely not be pursued in a traditional procurement," he said.  "Centennial Challenge winners will be judged and earn awards based on actual achievements, not proposals.  Using this approach, we hope to reach new innovators who would not normally work on NASA issues and find novel or low-cost solutions to NASA engineering problems that would not be developed otherwise." 

"I would suggest that the reason you want to do prizes is because you will get people involved to win prizes who would never dream of pursuing a government contract," said the Honorable Robert Walker (R-PA), a former Science Committee Chairman and former member of the Aldridge Commission.  "What you will do is encourage people to take risks that they might find unacceptable if there wasn't a prize out there, and certainly take some risks that the government, inside of its regular institutions, would probably find unacceptable.  So what you'll end up with, with prizes, is people willing to do things that are outside the box.  You won't necessarily have RFPs (requests for proposals), or specs - you will have a goal and there will be people who will take that desire to pursue that goal and extend it in ways that we can't even imagine."

Dr. Peter Diamandis, Chairman of the X-Prize Foundation testified on the success of the X-Prize contest, which promises $10 million to the first team to build a privately financed spaceship and fly the weight of three people to space (defined as 100 kilometers altitude) two times in as many weeks.  "The results of this competition have been nothing short of miraculous," he said.  "For the promise of $10 million, more than $50 million has been spent in research, development and testing.  And where we might normally have expected one or two paper designs resulting from a typical government procurement, we're seeing dozens of real vehicles, motors and systems being built and tested."  Dr. Diamandis applauded NASA's proposed Centennial Challenges program saying, "Entrepreneurs will solve the problems that large bureaucracies cannot.  Prizes offer NASA and the U.S. government both fixed-cost science and fixed-cost engineering.  More importantly, they offer NASA the passion and dedication of the entrepreneurial mind that cannot be purchased at any price."

Dr. Molly Macauley, an economist and senior fellow with Resources for the Future, testified that prizes could provide tremendous benefit, even when the ultimate goal is not attained.  "Even if an offered prize is never awarded because competitors fail all attempts to win, the outcome can shed light on the state of the technology maturation.  In particular, an unawarded prize can signal that even the best technological efforts aren't quite ripe at the proffered level of monetary reward.  Such a result is important information for government when pursuing new technology subject to a limited budget," she said. 

Dr. Douglas Holtz-Eakin, Director of the Congressional Budget Office, cautioned that to be successful a contest's rules and structure must be clear and adhered to.  "Unclear or unenforceable rules are an invitation to conflict, and the government will bear a cost of adjudication when disputes arise," he told the panel.  "Rules governing entry and elimination, if the contest has phases, are also important."  Dr. Holtz-Eakin also said that competitors must have confidence that a promised prize payment will actually be offered.  Such confidence, he said, may waver if the prize payments stretch over several years and represent a significant share of the agency's budget.  "Funds appropriated for a payment that is in the future but have yet to be obligated can be rescinded or otherwise limited by subsequent legislative action, especially if federal policies toward the program's objectives change."  To ensure the confidence of competitors he suggested that the agency could purchase an insurance policy or place the prize funds in a private escrow account.

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