NASA anticipates investing up to $1.5 billion to support at least two companies in demonstrating crew-tended space stations. This revised strategy marks a departure from the agency’s initial plan for the transition from the International Space Station (ISS).

A draft announcement for partnership proposal (AFPP) for the second phase of the Commercial Low Earth Orbit Development Program was released September 5th. NASA is seeking feedback on this draft until September 12th. The draft reflects a policy shift detailed in a July 31 directive by Acting Administrator Sean Duffy. Instead of fixed-price contracts for certifying commercial space stations, the new approach utilizes funded Space Act Agreements to support the design and development of these stations. This represents a significant change from the original goal of a permanently crewed station. The program now mandates stations capable of supporting four-person crews for one-month stays.

Under the draft AFPP, titled Commercial Destinations – Development and Demonstration Objectives (C3DO), NASA aims to facilitate the development of multiple commercial space stations, culminating in a crewed demonstration mission by 2030. “NASA’s objective of the C3DO strategy is to enable the development of multiple commercial space station destinations, advancing them to the stage of an on-orbit low Earth orbit crewed demonstration flight as soon as possible, with NASA’s target set for no later than 2030,” the document explains.

The Space Act Agreements awarded through C3DO will aid in commercial station development, culminating in a four-person, 30-day mission. While this mission might not involve NASA astronauts, it will demonstrate primary space station functions and interoperability with crew and cargo transportation systems. Although the draft doesn't require support for missions exceeding 30 days, it includes accommodating long-duration missions as a stretch goal.

NASA projects allocating $1 billion to $1.5 billion in funding (fiscal years 2026 to 2031) for the C3DO agreements, with at least two awarded. Prior projections indicated $2.1 billion for the Commercial Low Earth Orbit Development Program (FY2026-2030), some of which is allocated to existing phase one agreements with Axiom Space, Blue Origin, and Starlab Space. Certification of commercial stations and service purchases are deferred to a future phase three, with details to be released by early December. This phase will involve contracts, not Space Act Agreements, and a fully open competition.

“The work done under our Phase 1 contracts and agreements have put us in a prime position to be successful for this next funded Space Act Agreement phase,” stated Angela Hart, manager of the Commercial Low Earth Orbit Development Program at NASA’s Johnson Space Center. “By leveraging these agreements, we provide additional flexibility to our commercial partners to define the best path forward to provide NASA a safe and affordable crewed demonstration.”

The policy change has prompted some companies to reassess their plans, and raised geopolitical concerns due to China's permanently crewed Tiangong station. However, Phil McAlister, former director of commercial spaceflight at NASA Headquarters, praised the revised approach as “genius,” stating that the previous strategy was flawed and would have resulted in a significant gap in U.S. access to LEO microgravity operations.

McAlister emphasized that the use of Space Act Agreements, rather than contracts, is advantageous, preventing designs from being over-constrained by NASA requirements. He believes this new approach will necessitate plan revisions from all proposing companies, concluding that "The companies that win the Phase 2 awards will be the ones that pivot the best. And there will be more awards, meaning everyone has a better shot at getting an award.”

NASA aims to finalize the AFPP by October 3rd, with a December 1st proposal deadline and Space Act Agreement awards by April 2026.