X Prize as a Model for NASA?

As government bureaucracies go, the National Aeronautics and Space Administration (NASA) seems to be pretty typical: bloated missions (International Space Station), outdated equipment (Space Shuttle), and questionable priorities (manned mission to Mars). Why not introduce real reform into NASA a'la the X Prize? The X Prize is

a $10 million prize to jump-start the space tourism industry through competition among the most talented entrepreneurs and rocket experts in the world. Following in the footsteps of over 100 aviation prizes offered between 1905 and 1935 that created today’s multibillion dollar air transport industry, the ANSARI X PRIZE will be awarded to the team that designs the first private spaceship that successfully launches three humans to a sub-orbital altitude of 100 km on two consecutive flights within two weeks. All teams must be privately financed.

Do you recall Charles Lindbergh's flight across the Atlantic Ocean back in 1927? That was, in part, motivated by a $25,000 prize offered to the first nonstop flight from New York to Paris.

Could other government agencies be transformed along the lines of the X Prize? Michael Kremer of Harvard has suggested that a similar prize might be effective in stimulating pharmaceutical companies to develop new treatments for malaria and tuberculosis. To some extent, the whole idea of school vouchers as a means to spur innovation in the public school system is right up the same alley.