Jim_R
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Jim
SpaceX was selected from a pool of competitors along with Rocketplane-Kistler to participate in the first commercial contract for third-party cargo deliveries to the International Space Station. The contract was structured to support the development of nascent space companies from startup to production/execution by dangling carrots full of money for them to reach for. Companies had to meet both technical progress and business development milestones, which were explicitly spelled out in the contract, and each time a milestone was met, NASA would pay out another tranche of cash. You can look up the various milestones in the Space Act Agreement (the contract NASA signed with SpaceX in 2006 for their initial cargo flights), here (Appendix 2 lists the milestones and the cash payoffs for reaching each one): https://www.nasa.gov/centers/johnson/pdf/189228main_setc_nnj06ta26a.pdf
Interestingly, since NASA was trying to help build up new spaceflight companies (but didn't want to foot 100% of the bills itself), some of the milestones involved the companies succeeding in meeting outside investment goals. Something like, "Secure $xx million of non-gov't capital investment, and get $10M from NASA". (The actual financing goals are not specified in the SAA. I'm not sure why, but would guess for business confidentiality reasons.)
The other company initially selected along with SpaceX was Rocketplane-Kistler. They made it through a couple of the initial technical milestones, but faltered in securing outside financing, and NASA ultimately terminated their contract about a year after it was awarded, after which RP-K eventually went bankrupt. NASA subsequently awarded RP-K's slot to Orbital Sciences Company (now Orbital-ATK), which was an established aerospace contractor, not a startup. They have gone on to successfully fly the Cygnus unmanned cargo vehicle to ISS, and have been selected for a follow-on unmanned cargo contract as well.
Several other companies competed for the initial cargo flight contract that SpX and Rocketplane-Kistler won. Most of those companies never really had a viable path forward, which is why they were not selected, and they disappeared pretty quickly after the selections were made. One notable exception is SpaceDev, which eventually became Sierra Nevada Corp, who lost out on that initial cargo flight contract but continued working in the background to develop their "Dream Chaser" lifting body vehicle. They competed for the contract to carry astronauts to the ISS, but lost out to SpaceX (Dragon v2) and Boeing (CST100 or "Starliner"). However, Sierra Nevada *did* win a follow-on contract for unmanned cargo deliveries to ISS, and they are continuing to work toward that goal. This is another excellent example of government/private enterprise interrelationship, as SNC's Dream Chaser is a derivation of a NASA concept that was investigated circa 1990.
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