CAPE CANAVERAL, Florida (Reuters) - NASA, rejecting aerospace giants Lockheed and Boeing, awarded $3.5 billion (2.37 billion pounds) in contracts to start-up companies on Tuesday to deliver cargo to the International Space Station after the U.S. space shuttles are retired.

A view of the International Space Station with the earth in the background in this view from NASA TV December 22, 2008.REUTERS/NASA TV

Space Exploration Technologies (SpaceX), a Hawthorne, California-based company headed by PayPal founder Elon Musk, and Dulles, Virginia-based Orbital Sciences Corp are due to start cargo shipments to and from the space station beginning in 2010.

The $100-billion orbital outpost -- being assembled in stages with modules for living and research -- is a joint project by the United States, Russia, Canada, Japan and European nations.

NASA decided to use a commercial contractor for deliveries rather than relying on the Russian Progress cargo vehicles, which help deliver supplies to the space station.

Russia will transport U.S. astronauts to and from the station on its Soyuz capsules after the shuttles are retired in 2010. The proposed shuttle replacement will not be ready to fly until about 2015.

“These commercial carriers will carry about 40 to 70 percent of our cargo to (the) space station,” NASA’s associate administrator for space flight, Bill Gerstenmaier, told reporters on a conference call.

SpaceX and Orbital Sciences beat out a Chicago-based consortium called PlanetSpace that included three of the U.S. space agency’s prime contractors -- Lockheed Martin Corp, Boeing Co and Alliant Techsystems Inc.

SpaceX’s contract is for 12 flights for $1.6 billion, while Orbital will make up to eight flights for $1.9 billion.

Both companies had previously been awarded NASA contracts, worth a combined $500 million, to develop their orbital cargo delivery systems.

SpaceX plans to launch from a complex it built at Cape Canaveral Air Force Station, beside the Kennedy Space Centre in Florida. Orbital plans to fly from NASA’s Wallops Island facility in Virginia.