Newt Gingrich has proposed devoting 10% of NASA's budget to prizes to spur the development of space technology, using the early 20th century Orteig Prize and Schneider Trophy and the Ansari X Prize as models.
I think this will be a lot harder to make this work than he seems to think.
Those prizes, as well as the Kremer Prizes for man-powered flight, were effective because in each case the entrants saw a clear way to profit from their hardware beyond the prize itself. Winning the Orteig Prize demonstrated the reliability of long range aircraft, which had obvious commercial application. Two of the losing aircraft became or were developed into successful commercial aircraft.
The Schneider Trophy entrants were valuable test-beds for their builders. The winners of the Kremer Prizes put what they learned about lightweight and efficient airframes to develop a successful line of lightweight and efficient aircraft. The technology used to win the Ansari X prize is now being used in a larger vehicle intended to carry paying passengers on suborbital flights.
Prizes can work well when the prize gives a nudge to someone who already sees a likely or probable market for the technology needed to win.
They can also work well to motivate small teams of volunteers working in their spare time. NASA's Regolith Excavation Challenge seems like a good example of this kind of project.
When neither case applies, the prize model breaks down.
Imagine a 21st century version of the Orteig Prize. It is awarded to the first person since the Apollo program to make a round trip from Earth to the Lunar surface and back.
(We require a round trip because otherwise the easiest way to win is find a terminally ill volunteer for a one way trip)
How much do we have to offer?
The Orteig prize offered $25,000 for the first non-stop flight between new York and Paris. Several entrants spent more than that, but this was rational. If you spent, as one team did, $100,000 for a Fokker triplane, they expected to be able to get most of that back if they lost the race without crashing the plane. It was still valuable for other purposes.
Now, the 21st c. version is much harder. Lindbergh crossed the Atlantic in one vehicle. A Lunar mission needs at least three: a lander to reach the lunar surface, a capsule to return to the Earth's surface, and a stage to send these from Earth orbit to the moon.
Also, if you want to use existing launchers, you need the ability to transfer propellant in Earth orbit. This requires some hardware as well, probably a tug and a propellant depot.
Avoiding this requires also developing a much bigger launcher than currently exists.
To win the prize you need to develop, approximately, four new transport systems. At best, three plus some money to modify the existing Soyuz capsule for reliable return at the higher velocities for return from Lunar orbit.
And none of them have a reliable salvage value, because Congress could decide at any time that the Moon is too expensive after all.
Now, suppose you think you can do all this for a mere $10 billion. The prize needs to be a lot bigger than that, because you need to allow for the chance that someone else will get there first, and you will get nothing.