Rejecting aerospace giants Lockheed and Boeing, NASA has awarded $3.5 billion in contracts to start-up companies to deliver cargo to the International Space Station after the U.S. space shuttles are retired.

The two start-ups due to start cargo shipments to and from the space station in 2010: Space Exploration Technologies--also known as SpaceX--which is a Hawthorne, Calif.-based company headed by PayPal founder Elon Musk, and Dulles, Va.-based Orbital Sciences.

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

NASA decided to use commercial contractors 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 U.S. space shuttles are retired in 2010. The proposed replacement for the shuttles 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 earlier this week.

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, Boeing, and Alliant Techsystems.

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 Center in Florida. Orbital plans to fly from NASA's Wallops Island facility in Virginia.