WASHINGTON — NASA is proposing to add $300 million to its commercial cargo program in 2011 in part to keep Orbital Sciences Corp. and Space Exploration Technologies Corp. (SpaceX) on track to begin delivering cargo to the international space station next year.

The proposed funding would substantially increase NASA’s planned investment in the Commercial Orbital Transportation Services (COTS) program the agency began in 2006 as a $500 million effort to seed development of new logistics vehicles and rockets that were expected to be ready by 2010.

NASA officials say they are still sorting out exactly how to spend the additional $300 million in commercial cargo funding added to the Exploration System Mission Directorate’s budget in President Barack Obama’s $19 billion 2011 spending request for NASA. Under Obama’s plan, NASA would scrap its Constellation program — a 5-year-old effort to replace the aging space shuttle with new rockets and spacecraft optimized for the Moon — in favor of fostering development of commercial transportation systems for low Earth orbit.

NASA’s Exploration Systems Mission Directorate (ESMD), the part of the agency in charge of Constellation, would manage a dramatically changed portfolio under Obama’s proposal. In lieu of building the Orion crew capsule and its Ares 1 launcher, ESMD will oversee a multibillion-dollar technology development budget that includes $812 million in 2011 for commercial crew and cargo initiatives. Some $312 million of that amount explicitly is set aside for “additional incentives for NASA’s current domestic commercial cargo service providers,” according to agency budget charts.

That cargo money amounts to $300 million more than ESMD previously planned to spend next year as Orbital and SpaceX transition from COTS demonstrations to routine supply runs under $3.5 billion worth of Cargo Resupply Services contracts overseen by NASA’s Space Operations Mission Directorate, the part of the agency in charge of the shuttle and space station.

NASA Deputy Administrator Lori Garver said the president’s proposal, which includes flying the space station through at least 2020, will require the agency to make a larger up-front investment in commercial cargo providers to ensure their success.

“As we realize how dependent we are on the success of the commercial cargo, it was felt that more resources would be helpful in both reducing the risk and hopefully accelerating the timeline,” Garver told Space News Feb. 11.

NASA Chief Financial Officer Elizabeth Robinson said that the additional cargo funds are intended to pay for more tests and demonstration flights by the two COTS providers, Orbital and SpaceX.

“A lot of our efforts are ongoing in terms of trying to develop the details,” Robinson said in a Feb. 18 interview. “The goals of the money are to initiate new tests and demonstration flights, initiate, some enhanced capabilities, and things along those lines.”

Robinson said keeping the space station in service through at least 2020 will have an impact on the agency’s commercial cargo requirements.

“We’re also talking about fully utilizing the station in terms of the research,” she said. “The kinds of cargo that will go up and down are also evolving just because of the sheer magnitude of the work that’s going to be going on there. I think part of what this $312 [million] is for is to enable that.”

Alan Lindenmoyer, manager of the Commercial Crew and Cargo Program Office at NASA’s Johnson Space Center in Houston, told Space News the agency is still attempting to divine the White House’s intent behind the additional funds, but said more COTS demonstration flights are under consideration.

“The money would be used to pursue additional efforts that would help assure the earliest availability of cargo service and reduce risks associated with maintaining the availability of those services,” Lindenmoyer said, adding that the money would go directly to SpaceX and Orbital “or perhaps the launch site or test facilities.”

Lindenmoyer also said any new money Orbital or SpaceX get from NASA “would not necessarily cover the full cost of the selected risk mitigation measures.”

He said new money going directly to either of NASA’s commercial partners would be paid after completion of agreed-upon efforts  the same arrangement that governs COTS milestone payments.

SpaceX and Orbital declined to discuss how they would spend any additional COTS money they stand to receive.

“SpaceX is committed to fulfill our COTS obligations regardless of whether the incentives are awarded or not,” SpaceX spokeswoman Emily Shanklin said Feb. 18. “If awarded, SpaceX would likely use the funds to reduce risk, accelerate capability, facilitate performance improvements and generally maximize NASA’s benefits from the COTS program.”

Orbital spokesman Barron Beneski said the Dulles, Va.-based company is committed to fulfilling its existing COTS agreement with NASA.

“Should NASA decide to add additional funds to the project to reduce risk and enhance mission assurance, we would welcome that action,” he said.

Hawthorne, Calif.-based SpaceX expects to launch its first Falcon 9 rocket this spring before attempting its three promised COTS demonstrations. The last of the Falcon 9 flight hardware arrived this month at Cape Canaveral, Fla., where it is being readied for launch between March and the end of May.

Orbital, meanwhile, is targeting the end of March 2011 for its lone COTS demonstration a Taurus 2 launch of its Cygnus cargo vehicle from Wallops Island, Va., to the international space station.

Although Orbital is running behind on completing the critical design review for Cygnus and Taurus, Beneski said Feb. 18 that the review would be completed in March and would not delay Orbital’s COTS demo.

“It’s a tight schedule, no doubt,” Beneski said Feb. 18. “It’s doable, but a lot of things have to go right.”

Although Beneski would not provide details on how Orbital would use additional COTS money, government and industry sources told Space News that one idea under consideration involves launching Taurus 2 without Cygnus sometime before Orbital’s COTS demo.

Other potential uses of the money, these sources said, include modifying the B-2 test stand at NASA’s Stennis Space Center, Miss., to accommodate Taurus 2’s AJ-26 engine-powered main stage.

Lindenmoyer said that while the additional cargo funds are being characterized as an incentive to the COTS providers, neither Orbital nor SpaceX lacks motivation.

“It’s a lot of money, and money is incentive in several ways,” he said. “But I don’t think these companies could be any more incentivized then they already are. They have to complete their systems before they can sell their services, so I think it’s more of a question of approach to mitigating risk.”