NASA has informed Congress it is terminating its Commercial Orbital Transportation Services (COTS) agreement with Rocketplane Kistler (RpK) because the company has failed to meet financial milestones.

Aides said that after reviewing the company's performance, the space agency sent RpK formal notification Sept. 7 saying that additional activity under the agreement is "not in the best interest" of NASA.

Written notification sets up a 30-day termination process that will end NASA development funding of the company's K-1 reusable launch vehicle. RpK and SpaceX had been sharing about $500 million in NASA seed money under the COTS program intended to spur development of commercial vehicles able to resupply the International Space Station with cargo and eventually crew after the space shuttle retires in 2010.

RpK had negotiated a July 31 deadline with NASA to raise $500 million in private funds to complete development of K-1. That would have freed more of the NASA funds, which were linked to technical and financial performance milestones.

When RpK failed to meet the deadline, the agency continued to work with the company while it sought financing. Scott Horowitz, associate administrator for exploration systems, said July 13 that if RpK failed to meet its financial milestones, unspent funds intended for it could be shifted to one or more of the other companies that have signed unfunded COTS agreements with NASA (Daily, July 16).

RpK executives could not be reached for comment late Sept. 7.