Lockheed Martin and a Northrop Grumman-Boeing team are expected to land three-year, billion-dollar contracts this August to develop competing concepts for NASA’s next manned spacecraft and prepare for a 2008 fly-off of prototypes that will decide who gets to build it.

Both teams are rushing to meet a May 2 deadline for submitting their proposals to NASA’s Exploration Systems Mission Directorate, which is managing the two-way Crew Exploration Vehicle (CEV) competition.

The CEV would be the United States’ first new manned space vehicle since NASA fielded Space Shuttle Columbia in 1981. It is a key component of the long-term space exploration strategy that U.S. President George W. Bush unveiled last year. The chief purpose of the capsule, which as envisioned would carry four crew members, is to enable astronauts to return to the Moon as soon as 2015 and no later than 2020. NASA has been tasked by the White House to develop and test an unmanned prototype of the new vehicle by 2008 and conduct the first manned flight no later than 2014.

Brian Anderson, NASA’s deputy project director for the CEV, said the cost-plus-award-fee contracts would run from September 2005 to December 2008. Before 2008 comes to a close, NASA wants both teams to conduct flight demonstrations that will help agency officials select one team to build the CEV.

NASA intends to limit the teams to spending 35 percent of their contract funds preparing for the fly-off, dubbed the Flight Application of Spacecraft Technology, or FAST demonstration. Spending internal corporate funds on the fly-off will not be permitted, which means the each team will have to design a convincing demonstration for roughly $350 million, including launch . That represents a fraction of what NASA spent on its abortive X-33 rocket plane project in the 1990s, but agency officials note that the CEV program emphasizes proven technologies, not cutting-edge designs and performance breakthroughs.

Lockheed Martin officials say they intend to demonstrate a full-scale prototype of their CEV design in 2008. Northrop Grumman and Boeing officials say the fly-off calls for something else.

“I don’t think it’s a full-prototype of the CEV at all,” said Robert Davis, director of business and strategy development for space systems at Northrop Grumman Corp. of Los Angeles. “It’s a flight demonstration whose purpose is to reduce risk and provide substantive evidence of progress toward the real system that will happen in the next decade.”

Bob Ford, CEV deputy program manager at Denver-based Lockheed Martin Space Systems, said his team’s 2008 demonstrator would closely resemble its proposed manned-system . “What we are trying to do for NASA is buy down the risk on the program,” Ford said. “The best way to do that is to go full scale.”

With NASA putting the highest premium on safety after the February 2003 Columbia accident, the CEV likely will be a ballistic re-entry system that uses some combination of parachutes and retrorockets to touch down either in the water like the Apollo capsules or on land like the Russian-built Soyuz capsules. Graceful runway landings do not appear to be in the plans for the CEV.

Neither Lockheed Martin nor the Northrop Grumman-Boeing team is willing to say much about its CEV idea until proposals are submitted in May.

However, an aerospace analyst tracking the competition said there will be no major surprises when the teams roll out their respective designs. One will propose a straight capsule; the other a capsule with tiny wings that provide some measure of aerodynamic control, the analyst said.

NASA has not said how it would launch the crew-carrying CEV into space, but has challenged the teams to design a vehicle that weighs no more than 20 metric tons — light enough to fly atop the heavy-lift versions of Lockheed Martin’s Atlas 5 and Boeing’s Delta 4 rockets.

Jim Nehman, deputy associate administrator for development programs in NASA’s Exploration Systems Mission Directorate, said the agency intends to release a request for proposals in 2006 for the CEV launcher . That effort, according to government and industry officials, is expected to yield a plan for qualifying the expendable Atlas 5 and Delta 4 rockets to launch humans into space.

The CEV as currently envisioned would not be able to reach the Moon on its own. Orbit- transfer stages, service modules and any other hardware that likely will be needed to land astronauts on the Moon would be the subject of future NASA procurements .

NASA put eight teams under contract in September to study CEV concepts as part of a broader look at competing approaches to returning to the Moon. In addition to NASA regulars Boeing , Lockheed Martin , Northrop Grumman and Orbital Sciences Corp., NASA gave study contracts to a mix of lesser-known entities: Seattle-based Andrews Space Inc.; Charles Stark Draper Laboratory, Cambridge, Mass.; Chelmsford, Mass.-based Schafer Corp. ; and the newly established Transformational Space Corp. LLC of Menlo Park, Calif.

Northrop Grumman and Boeing paired up almost immediately, and Orbital Sciences has since joined the Lockheed Martin team along with EADS Space Transportation of Europe, United Space Alliance of Houston, Hamilton Sundstrand of Windsor Locks, Conn., and Honeywell Defense and Space Electronics Systems, Minneapolis, Minn. Northrop Grumman and Boeing plan to announce new additions to their team the week of April 4 at the National Space Symposium in Colorado Springs, Colo.

None of the smaller companies plan to go up against the big primes for the two CEV design contracts. NASA officials have said they are considering some type of parallel effort geared toward the smaller, entrepreneurial companies, but have provided no details on how much money might be set aside. Some of these firms say NASA could spend $300 million or more over the next three years to encourage non-traditional approaches to meeting the agency’s Earth-to-orbit crew transport needs.

The other wild card in the CEV competition is whether the incoming NASA administrator will make any rule changes before proposals are due, the aerospace analyst said. The views of presidential nominee Mike Griffin are clear on many issues he will have to deal with as NASA administrator. But Griffin’s opinion of NASA’s approach to the CEV is at this point is a mystery, the analyst said.

Brian Berger is editor in chief of SpaceNews.com and the SpaceNews magazine. He joined SpaceNews.com in 1998, spending his first decade with the publication covering NASA. His reporting on the 2003 Space Shuttle Columbia accident was...