Rather than waste taxpayer dollars by selecting one of the military's inefficient, overpriced, or corrupt contractors, DARPA decided to offer a prize and unleash the ingenuity of America's innovators.  The experiment has been an enormous success.  Competition spurred 35 teams to far outspend DARPA's $25 million total investment (roughly the price of an F-15 fighter), and the contest generated tremendous support from the private sector.  Sponsors of Carnegie Mellon's 'Boss' and Stanford University's 'Junior' included several technology heavyweights, such as Intel, Google, and Hewlett Packard.

While prizes have a long history of promoting innovation, the 2004 Ansari X Prize has been credited with reigniting interest in these powerful incentives.  According to the X Prize Foundation, its prize was designed to help "make space travel safe, affordable and accessible to everyone through the creation of a personal spaceflight industry."  This industry was born when Burt Rutan captured the $10 million prize by launching SpaceShipOne, the world's first manned, privately funded spacecraft. 

Several private space ventures have followed in SpaceShipOne's footsteps, inspired by the freedom to lead, the freedom to explore, and most importantly, freedom from the restrictions of a hopelessly bureaucratic and uninspired government space program.  The government, however, is not enthusiastic about relinquishing its space monopoly. 

When NASA sought to establish a series of Centennial Challenges, modeled after the X Prize, Congress fought hard to restrict the project's funding.  Under the status quo, aerospace projects are often awarded to contractors in important Congressional districts-- prizes would threaten an important supply of pork barrel spending.

This explains why Centennial Challenges comprise less than one fiftieth of one percent of NASA's 2008 budget.

The private sector has been eager to pick up the slack.  In September, Google announced it would provide $30 million to fund "a global private race to the Moon that excites and involves people around the world and, accelerates space exploration for the benefit of all humanity."  The government doesn't like the sound of this.

Fortunately for the nation's entrenched space bureaucracy, Congress has the power to regulate commercial space flight into submission.  Less than three months after the launch of SpaceShipOne, the President signed the Commercial Space Launch Amendments Act, giving the FAA authority to regulate private space exploration.  And regulate they shall.

Private space ventures must now obtain a complex and burdensome "experimental permit" from the FAA.  Despite FAA assurances that these new rules would not pose "too much regulatory burden" so that "developers can go out and fly," regulators rarely err on the side of underregulation.

Of the nine teams which signed up to compete in last month's Northrop Grumman Lunar Lander Challenge, only one could obtain the required FAA permit.  These restrictions threaten to stifle the growth of private space flight.