For both of the above comments, remember that I'm talking about the politics of the idea, not what I personally think is reasonable/rational/moral.

Spaceprojects is right, there *isn't* an appropriate level of public outcry when bloated, ill-conceived projects fail. After all, "bloated" = lots of jobs. This makes it easy for politicians to support such projects.

As for Tom's point, again, *I* think that $49bn profit would be fine if someone pulled it off, but it would be easy to turn it into a political loser. For example, opponents would claim that the admin knew all along it would only cost $1bn but set such a high prize level due to the fact that the Vice-Prez' brother-in-law is on the board of the winning company.

I believe this issue has come up in real-world procument/contracting situtations, and that there really is a problem when vendors earn what can be attacked as "unreasonable" profits even though the total cost to government has gone down. I'm not saying it makes sense, I'm just saying it is the political reality. Been a while since I studied that literature but maybe I can come up with some cites.

Not to mention that with prize money, the politicians don't get to control which states/districts benefit from the spending. I can assure you that big time money will not get dispersed so blindly. That of course is one of the problems with the current system, but I'm just making the point that it isn't just "NASA bureaucracy". Congress and the White House generally *prefer* such bureaucracies since it makes it possible for them to direct spending (note that Karl Rove is reported to have liked the fact that the Bush initiative will create jobs in Texas, Florida, and Alabama).

This also affects public support. With the NASA+contractors system, there are many communities that pretty clearly know they are going to be winners and so are apt to support the proposals, quite actively. With a prize system, it is much less clear to people in advance whether their community/company/union/whatever will be a beneficiary and so it is much more difficult to organize lobbying efforts to make the spending committment happen in the first place.

I guess my point is the reason we don't do prizes isn't merely stupidity or inability to reform NASA, it's that the ultimate decisionmakers -- the politicians -- have reasons to structure the system this way, and if the only option were a straight prize system, they'd be much less likely to spend the money on space in the first place.

Privately funded prizes are a different story, but I didn't think anyone was expecting a privately-funded Mars prize or the like.