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SpaceX made history in May when its Crew Dragon capsule launched into space carrying two American astronauts. It was the first time a privately owned company put a human into orbit.

This joint NASA-SpaceX alliance brought human spaceflight back to America after almost a decade and marks the beginning of a new type of space program. But it's the ability to do it cheaper and better by partnering with the private sector that is important for the future of NASA's space programs. 

NASA depends on federal dollars

The historic Crew Dragon missions represent a huge success for NASA’s Commercial Crew Program (CCP), NASA’s $6.2 billion private-public partnership. The CCP provided funding for and guided the development of the Dragon capsule. 

NASA is a federal agency and receives its funding annually from the federal budget. The NASA budget is smaller than other federal agencies and has continued to shrink over the years. 

Other U.S. government agencies also have "space-related" provisions in their budgets, which contribute to certain NASA programs and missions. But overall, there has a been a shift away from spending federal dollars on space programs.

Public-private partnership born of necessity

The NASA-SpaceX partnership took off at a time when NASA’s budget was dwindling due to sequesters and cutbacks. 

The Obama administration effectively canceled the Constellation deep space exploration program in the 2011 federal budget. The administration's plan, much criticized at the time, was released in 2010. It proposed that NASA pay private companies to develop commercial spacecraft to transport astronauts to and from the ISS.  

The aim was to open up NASA once again to become "an engine for innovation, that will spur the development of commercial industry in low Earth orbit."

In 2011, ending the shuttle program put a spotlight on NASA’s problems. Without an operational shuttle, the U.S. didn't have a manned spacecraft program. Without shuttle service, U.S. astronauts were buying rides to the ISS, on Russia’s spacecraft which cost more than $80 million per seat. 

The private industry, SpaceX in particular, was there to fill some of the gaps left by ending the shuttle program. Over two decades NASA has awarded SpaceX and other private partners several lucrative contracts, including developing new spacecrafts. SpaceX was also contracted to transport cargo and astronauts to the ISS. 

Under NASA’s CCP, SpaceX received $3.1 billion to fund the development of the Crew Dragon capsule. Their competitor, Boeing, received a $4.8 billion contract to develop the Starliner. In comparison, it’s estimated that NASA’s inflation-adjusted costs were $900 billion through 2011 when the space shuttle program ended.

Elon Musk's SpaceX is a game-changer

In his 2017 Congressional testimony, Elon Musk, SpaceX founder and visionary, suggested that the NASA Space Act Agreement, which allows NASA to contract with outside agencies and private companies, was responsible for "setting only a high-level requirement for cargo transport to the space station [while] leaving the details to industry."