Articles and Essays
Boston Globe -- June 20, 2004
Off to the $pace races
Can prize competitions spur innovation that government bureaucracies can't?
by Ian Garrick Mason
On Feb. 28, 1927, a 25-year-old airmail pilot, backed by a group of St. Louis businessmen, hired the Ryan Airlines company to build a long-range version of its M-2 single-engined monoplane. Designed and constructed in only two months, and flight-tested over a few days, on May 20 the plane bounced down a muddy Long Island runway and took off.
Thirty-three and a half hours later, Charles Lindbergh and his plane, The Spirit of St. Louis, landed in Paris, capturing the $25,000 Orteig Prize, awarded to the first person to fly nonstop between New York and Paris. Established in 1919 by New York hotelier Raymond Orteig, and merely one of dozens of similar prizes established in the early years of aviation, the Orteig Prize stimulated nine different attempts to cross the Atlantic – and jumpstarted the age of passenger-carrying civil aviation.
But in our government-driven space age, such incentives to private-sector innovation have been lacking – until recently. In 1996, with the support, once again, of business leaders in St. Louis, entrepreneurs Gregg Maryniak and Peter H. Diamandis created the $10 million X Prize (now the Ansari X Prize), a competition intended to stimulate the development of vehicles capable of carrying civilian passengers into space, ending the government monopoly on human space flight. The idea spread. Attracted by the prospect of achieving big technology payoffs for the price of a few prize purses, NASA and the Defense Department have begun testing the waters with their own competitions. And last Wednesday, the President’s Commission on Moon, Mars and Beyond released a report recommending the expanded use of prizes to foster private-sector innovation in technology development and even the mounting of space missions.
As Brant Sponberg, program manager of NASA’s Centennial Challenges prize program, explains, prizes turn the classic contract process on its head. “With a normal contract, you solicit a bunch of proposals, which assumes that NASA has the smarts to pick the right proposal. With prizes, we set out the goal, and then let Darwin – competition – sort it all out.”
This summer, the X Prize may finally achieve its Lindbergh moment. Tomorrow morning, Scaled Composites of Mojave, Calif., the leading competitor among the 27 teams from seven countries currently registered for the competition, will launch its first test-flight to the X Prize-mandated altitude of 62 miles (100 kilometers) over the California desert, which if successful will make its pilot the first civilian to fly a nongovernment vehicle into space.
That doesn’t mean that Scaled Composites, directed by famed aircraft designer Burt Rutan and project-funded by Microsoft cofounder Paul Allen, will have won. To take home the X Prize, a team must design and launch a spacecraft capable of carrying three people (or at least a pilot and enough ballast to simulate two passengers) into suborbital space and return it safely to earth – and then, using the same spacecraft, do it again within two weeks. Most observers expect Rutan’s crew to accomplish this later in the summer.
The purses for NASA’s own prize-based program, Centennial Challenges, inspired in part by the X Prize and aimed at spurring innovation in fundamental technologies and space exploration capabilities, will initially be small – less than $250,000 apiece. But the program ultimately hopes to stimulate the development of exotic technologies like autonomous drills, nanotube tethers, and solar sail vehicles with purses as high as $10 million.
The President’s Commission report proposes even higher amounts, with $100 million to $1 billion potentially offered to “the first organization to place humans on the Moon and sustain them for a fixed period before they return to Earth.”
For NASA, these competitions offer the possibility of achieving big technological gains on the cheap, with the heavy lifting done by the competitors. (Paul Allen, for example, told The New York Times he spent $20 million on Scaled Composites’s effort to the win the X Prize purse. The Commission report estimates that X Prize competitors have invested more than $400 million in all.) “If we do this right, we shouldn’t have a lot of overhead,” says Sponberg, who heads a full-time staff of just 3 (including himself). “We want to preserve the funds for the purses.”
But however big the prizes, for competitors the real incentive lies in future revenue streams. According to a 2002 study commissioned by the Department of Commerce’s Office of Space Commercialization, there are several potential markets for suborbital services: microgravity research, fast package delivery, fast intercontinental passenger transport, and, yes, even space tourism.
Of course, prizes cannot guarantee timely results. The $1 million “Grand Challenge” sponsored in March by the Defense Department’s Advanced Research Projects Agency (better known as DARPA) to see who could first develop a self-piloted ground vehicle capable of navigating a 300-mile desert racecourse from California to Nevada (and potentially serving as a model for future military hardware) ended without a winner. But hope springs eternal: DARPA has subsequently increased the purse to $2 million, and plans to run another race in October 2005.
Nor are prizes a panacea for all funding issues. “As a complement to direct government funding of technological innovation – but not a substitute for it – prizes are great,” says Dr. John Logsdon, director of George Washington University’s Space Policy Institute. But “privately supported prizes are not alternatives to direct private funding of innovation,” he warns. “While Paul Allen may be supporting Burt Rutan’s attempt to win the X Prize, Microsoft is not depending on prizes to develop their next operating system.”
“The interesting thing about prizes is that it’s never the guy you think will win,” says Brant Sponberg. Indeed, as Logsdon explains, prizes “allow those who would not otherwise be able to compete with established firms for government contracts the opportunity to prove the merit of their ideas. It is hard to criticize that.”