The International Space Station is nearing completion, and with the looming demise  of the Space Shuttle program and significant gap before the next-gen Constellation-class rocket is available, a replacement set of launchers is needed. And that's why NASA has had to outsource supply missions to the ISS in the interim period.
What's interesting is NASA's choice of supplier. Two contracts, for $1.6 billion and $1.9 billion, have gone to Space Exploration Technologies (SpaceX) and Orbital Sciences Corp. respectively, both relatively small private companies. SpaceX and Orbital, along with Russian spacecraft which will deal with human spaceflight, will supply the ISS with cargo between 2010 and 2016.
Orbital's eight launches will be from NASA’s Wallops Island launch pads, while SpaceX's twelve will rocket from the Kennedy Space Centre. In total 40 tons of pressurized and unpressurized cargo will be lifted to the ISS in orbit, amounting to about 70% of the ISS cargo requirements from 2013 onwards.
A separate, failed, bid for the work came from PlanetSpace, which is an alliance between Boeing, Lockheed Martin and Alliant Techsystems: all huge players in the high-tech manufacturing area, and with experience in space technology.
SpaceX and Orbital have developed their systems privately, with SpaceX achieving the historic position of being the "first privately financed company to achieve orbit with a liquid-fueled rocket" in September of this year with the successful launch of the small Falcon1 rocket. The video below shows its flawless 10-minute ride into orbit, after a few previous failed launch attempts.
The ISS missions will use the larger Falcon9 which is now in advanced development phase. Orbital's launches will use its Taurus II booster and Cygnus upper-stage delivery vehicle--it's also in advanced development, with launch readiness scheduled for 2010. Orbital is building on a history of advanced rocket design--their participation in NASA's HyperX scramjet experiments helped the program achieve the jet-powered aircraft world speed record in 2004.
While it's not a dramatic change in NASA policy, it does seem that this contract, awarded to smaller companies--SpaceX has only around 500 employees--with as-yet unproven launch vehicles, represents a slightly new direction for the Administration. And it needs to be successful: while NASA has scope to let another contractor into the program if either SpaceX or Orbital hit development problems, there is no real back-up plan. NASA simply chose companies it "thought had a good chance of making it."