NASA is cutting off funding to RpK. It was inevitable, as long as they continued to miss their financing milestone.

The question now is--what will they do with the money? Personally, I'd like to see t/Space get a shot. Full disclosure, though--that's partly out of self interest. If they do, I'll likely get some contract work from them.

It's actually kind of complicated, because it's not clear how NASA will make the decision. Will they have to redo the competition? It's been over a year since the original awards, and presumably the competitors could argue that a lot has changed. On the other hand, perhaps NASA could just ask for a new Best and Final Offer from the contestants.

[Afternoon update]

Clark Lindsey notes that it's not quite a done deal. He also notes the chicken-and-egg nature of the problem (just like that of the launch-cost problem in general):

I've been told that the issue that kept coming up during RpK discussions with potential investors was the lack of a firm commitment by NASA to a contract for launches to the ISS if the demo was successful.

Self-fulfilling prophecy.

And that's the problem with any kind of government prize or guaranteed market. The government is fickle. In addition, in this case, the market wasn't even guaranteed. A COTS participant has to make the numbers close on their business plan without NASA to raise the money, and that's still a tough proposition, in terms of investor perception. RpK had a bigger problem than SpaceX (and t/Space) because their concept needs so much money.

The sad thing is that if it wasn't for the siren call of COTS Rocketplane may have well been testing their XP, or at least have been close to it using the 18 million they received from Oklahoma. Indeed they may well have won the space tourist race given Scaled recent setbacks and likely schedule slip.

It will be interesting to see if they will be able to recover on the XP project now that COTS is out of the way.

I've always wondered why these companies want in on this. After the first couple of funding tranches (nice money, admittedly), the company is expected to foot some 70% of the bill. It only makes sense to sign on if you're already building a system anyway.

I am deeply unsurprised.

Why not offer a prize of 500 million dollars, to the first company, to send a spacecraft to the ISS.

Rand, hasn't Kistler been in financial dire straits before?

Rand, hasn't Kistler been in financial dire straits before?

Couldn't agree more about t/Space. I hope the remaining COTS money is put forward for a new contestant and I hope t/Space wins it.

Would t/Space even feel like they need the full 175+ million? Might be room for two new entrants...

The whole premise of starting "big" has not, does not, and will not work. The Wright Brothers did not build a C-5A or even a DC-3. They started small. Microlaunchers (com) is small. That is how to start. Anything else will always be PowerPoints and wishful thinking.

Kistler went to Ch.11... Looks like the ghost of Kistler has struck again.

Theoretically NASA could indeed announce another competition but were due to award more stuff under COTS in the 2010-2011 timeframe in anycase, supposedly to the 'non-winners' of 2005/2006(T/Space being one).

I think T/Space would welcome the $175m+ but would have to get financing underway pretty rapidly to meet the terms of the COTS contracts - the same reason that RpK seemingly failed to do.
The thing that T/Space has going for it is the individual corporations have their own financing set-ups in place and work on other stuff besides.

I'd would go with t/space or planet space a tie between those two for my first choice second would be starbooster Buzz Aldrin runs that company and third something that uses EELVs they are proven and will get cheaper if flown often.
I still wish RPK could have meet their schedule or NASA been more patient as the K1 was a very good design.
Also if they're going to be harsh with contractors who fail to meet deadlines and design requirements why hasn't Lockheed's contract for the CEV been pulled ?
After the very poor performance LM has shown recently and even having the gall to consider a version as bad as the design cycle 607 Orion which I nick named the pinto Orion though this may be an insult to ford pintos.
I would have considered handing the Orion contract to Boeing or NG.
Lastly they should kill Ares I it's just another medium class launch vehicle if you want to use a 50,000lbs class launch vehicle for crew launch one already exist the delta IV H if Orion is too heavy no problem Boeing can easily increase the delta's payload to 35T.
If they don't want anything partly designed by the USAF there's Falcon 9 heavy which I have a lot more fate in then Ares I and Direct Launcher a true shuttle derived vehicle.

What is this "cycle 607 Orion" you refer to Ruri? I haven't seen it.

Bet you anything that the money goes straight into CEV.

Was Kistler actually supposedly building just one K1 rocket ? The same one that they reported to be rusting away at "70% structurally complete" for a few years by now ?
Well, if history is any indication, the last 10% of the project take 90% of the resources and time, and you dont build a revolutionary reuseable spacecraft fleet with just one flight article.

They never stood a chance with that approach.