The Space Shuttle was sold by NASA to America in the early 1970's as a low-cost, reusable spaceship that would replace all existing boosters and manned spacecraft. The Apollo capsule and Saturn launch vehicles were scrapped. Production of all other expendable boosters would be discontinued once the Shuttle was 'fully operational'. The myth of its lower cost was maintained in the face of mounting evidence to the contrary until the shuttle Challenger exploded on the way to orbit in 1986. In the post-mortem that followed, it was discovered that the shuttle was actually more expensive and very much more operationally constraining in delivering satellites to orbit than the expendable boosters it was supposed to replace. So the American government abandoned use of the Shuttle for satellite launches and allowed production of expendable launch vehicles to resume.
But the Shuttle was now the only American manned spacecraft, so a new mission was found for it. It was claimed it was now safe after billions of dollars of post-Challenger fixes. It was also claimed that only its unique design would allow NASA to assemble a space station. The space station project stretched out, until it was taking decades. The shuttle was getting old, and America had no lifeboat - a manned re-entry vehicle - that it could use to rescue crews from the space station if the balky shuttle was unavailable. On the other hand, NASA saw development of any other manned spacecraft as a threat to the very existence of the Shuttle. Various suggested supplemental projects suggested in the 1980's and 1990's were decisively squelched. The X-38 lifting body was to be developed as a Crew Rescue Vehicle, and perhaps as a Shuttle alternative. But the initially simple skunk-works approach to the program was overwhelmed by NASA gold-plating, and it finally was quietly killed off 'due to cost over-runs'. The X-33 single-stage-to-orbit was NASA's true vision for a shuttle successor, but after spending a huge sum NASA decided SSTO was actually not attainable using existing technology, and canceled that. Given that NASA's lead-time for developing new spacecraft had gone from a few years in the 1960's to a few decades by the 1990's, NASA decided it would be prudent to start the long definition process for the Orbital Space Plane, a shuttle successor that would be launched by an expendable launch vehicle.
Then in 2003 the space shuttle Columbia was lost during re-entry. The final shuttle myth - that it was safer than alternatives - was demolished. Flights of the shuttle would have to end by 2010, it was decided, and therefore a successor ready for flight before then.
Meanwhile President Bush had been convinced by the NASA administrator O'Keefe to back yet another in-the-future grandiose manned space exploration program. The Orbital Space Plane was renamed the Crew Exploration Vehicle. Now the requirements for the spacecraft would be extended by requiring it to be the manned return vehicle not just from earth orbit, but from the moon and Mars. In the original 2003-2004 concept a CEV program would have been developed in three phases, to support NASA's then-planned three spirals of space exploration development:
In Phase 1 of the CEV program (different from Spiral 1 of the overall program!) two contractors would develop competing CEV designs and demonstrate these in unmanned flight tests in 2008. Design of the definitive manned CEV would at the same time be taken up to the Preliminary Design Review stage. A single prime contractor would be selected to continue with Phase 2 in late 2008. That contractor would develop, test, and deploy a man-rated CEV system capable of supporting Spiral 2 requirements by 2014 (and hopefully capable of supporting Spiral 3 requirements without further modification). After completion of phase 2 the contractor would provide sustaining engineering services and production capability to support additional flights and additional CEV spacecraft.
The CEV requirements included:
On 4 September 2004, NASA announced selection of contractors for initial Crew Exploration Vehicle studies. The contracts were awarded for a six-month base period. A six-month option would be exercised on a case-by-case basis. The selected companies and the value of their contracts were:
Although each contractor conducted thousands of pages of rigorous trade studies against NASA's proposed requirements, they came to very different conclusions. However there were some common themes identified by more than one contractor:
By the time the final CEV proposals were received, Mike Griffin had been appointed the new NASA Administrator. He saw that the CEV plan would realistically leave NASA with a half-decade gap between the retirement of the shuttle and the commencing of CEV flights. Griffin obtained White House backing to reject all of the contractor's proposals abandon the long, expensive, 'spiral' development process, and plunge ahead using existing technology and NASA's best judgment. On June 13, 2005, NASA announced the down-select of two contractors: Lockheed Martin and the team of Northrop Grumman and Boeing. However the selected contractors would only build a CEV to NASA's own design.
Phase 1 was now accelerated so that a single contractor would be selected without prototyping or flight-test in 2006, so that the spacecraft could be available by 2010 as a shuttle replacement. The crew requirement was increased to six, and CEV launch mass to 30 tonnes, meaning the CEV could only be launched atop a Shuttle-derived, NASA-operated launch vehicle. NASA's CEV configuration, as finally made public in late 2005, was called 'Apollo on steroids'. The CEV would be used initially to provide access to the International Space Station after the retirement of the Space Shuttle in 2010. Thereafter it would provide the earth return vehicle for missions to the moon (by 2020) or Mars (by 2030+?).
It looked like the errors of the original Apollo program would be repeated. A three-module spacecraft, as used successfully on Soyuz and Shenzhou, was rejected. Instead the sole crew habitat space would be the re-entry vehicle, which would be a 41% scaled up version of the Apollo command module. This would have over three times the internal volume and double the surface area of the Apollo capsule, but NASA claimed its mass could be limited to only 50% more than the Apollo design. Despite the increase in volume and mass, it would provide accommodation for only four to six crew (versus three to five in Apollo).
The service module was stubbier and lighter than the Apollo CSM, and powered by a liquid oxygen/methane engine. The same propellant combination would be used in the reaction control systems of both the command and service modules, the ascent stage of any later lunar lander, and the ascent stages of any Mars landers. The choice of this untried rocket propellant was driven by NASA plans to - maybe - generate methane from the Martian atmosphere on future manned expeditions. For NASA's lunar landing scenario, the CEV would be required to make only the Trans-Earth injection maneuver to bring the crew home. In the Apollo scenario, the CSM had to brake both the CSM and lunar module into lunar orbit, as well as make Trans-earth injection for the CSM.
The CEV would be launched into earth orbit by the Crew Launch Vehicle, a shuttle-derived two-stage rocket consisting of a single Shuttle RSRM solid booster as the first stage and a new second stage, 5.5 m in diameter, using Lox/LH2 propellants and powered by a single SSME.
By January 2006 NASA still had not released its revised baseline so that the prospective contractors could begin working on their final proposals for the down-select. The contradictions in NASA's homegrown design had become apparent even before the final specification could be released. Reportedly, the liquid oxygen/methane engines would be eliminated, replaced instead by toxic but proven storable propellant engines as used on Apollo and the Shuttle. The CEV's first flight had slipped to 2011 or 2012. NASA had lost one its main political supporters, Tom DeLay.
The selection of an Apollo-type configuration for the re-entry vehicle represented a step back sixty years. The original Apollo design, a NASA in-house concept, was inferior to contractor alternatives. The Soviets selected the Soyuz configuration (identical to the losing General Electric Apollo design) and had a configuration still in production fifty years later - and likely to continue to the middle of the 21st Century in the Chinese Shenzhou. Apollo, by comparison, remained in production only five years. In 2005, Northrop-Grumman again proposed a Soyuz-type design.
Other alternatives for Apollo were a variety of ballistic, lifting-body and winged configurations, any of which would have provided a fine basis for a manned spacecraft that could be recovered with horizontal landings. At least the excuse given in 1961 - that there was no time to pursue development of a winged vehicle and still make the end-of-the-decade lunar landing deadline - may have had some validity. But this made less sense in 2005, when Lockheed proposed a winged design based on forty years of intervening lifting body research and shuttle hypersonic flight experience.
Incredibly, NASA made the same mistake again, fifty years later. The same approach was used. First, proposals from industry were solicited. In both the Apollo and CEV cases these were imaginative, innovative, and incorporated all of the lessons of hundreds of millions of dollars of advanced research funded not just by NASA, but also by industry and the US Air Force. Superior contractor designs using the Soyuz-type separate orbital module or a winged spaceplane approach were made in both cases. In both cases the contractors were thanked, and NASA then proceeded with its own in-house government design. This was then suitably tweaked until it will passed the Congressional pork test.
After the Apollo decision, it was apparent that a two-man Apollo or Gemini direct lunar mission would have been much more logical, economical, and less risky. In the CEV decision, it was apparent that a design with a re-entry vehicle and service module under 8 tonnes that could be launched by an existing heavy-lift EELV rather than NASA's shuttle-derived hardware would be much more economical. But again the decision was made primarily on political grounds, and to keep NASA government jobs.
The following table compares NASA's CEV design and mission plan with those recommended by its subcontractors:
| Contractor | CEV Concept | Crew | RV Form | Cargo LV | Lunar Scenario |
| Andrews | MM+CM+SM | 6 | Apollo | ELV 40t | L1 |
| Boeing | MM+CM+SM | 4 | Apollo | ELV 20 + ELV 40t | EOR/L1 |
| Draper MIT | Integral | 6 | Soyuz | HLV 60t | Direct |
| Lockheed | MM+CM+SM | 4 | Lifting Body | ELV 70t | EOR + LOR Equatorial |
| Northrop-Grumman | MM+CM+SM | 4 | Soyuz | SDV 20t + ELV 55t | EOR/L1 |
| Orbital | Integral | 4 | Apollo | SDLV 141t | LOR |
| Raytheon | Integral | 3 | Apollo | ELV 25t | L1 |
| SAIC | Integral | 4 | Soyuz | ELV 10 to 30t | EOR + LOR Polar |
| Schafer | Integral | 4 | Discoverer | ELV 25t | EOR/L1 |
| Spacehab | MM+CM+SM | 4 | Apollo | ELV 15t | EOR/LOR |
| t/Space | Integral | 4 | Discoverer | Quick Reach 5 t | EOR/LOR/EOR |
| NASA | Integral | 6 | Apollo | SDLV 25t/SDLV 136t | EOR + LOR Polar |