Duane, $1.6 billion for 12 resupply missions (plus whatever seed money SpaceX received in the R&D phase) is far cheaper than the cost of operating the shuttle. If we are to again go beyond Earth orbit, NASA needs to turn over station resupply and other low-Earth orbit missions to reliable commercial companies. Dragon is far from being "man-rated," but SpaceX gains more operational experience with every launch. There record so far is excellent. Sooner or later, there will be an accident. Let's hope there are no humans aboard if/when it happens.
I've heard and read a number of statements that consider NASA ceding orbital missions as a negative and possibly as a sign of the decline of US space technology and vision. I would say quite the contrary. If SpaceX is just the first of a number of commercial launch providers, NASA and the Government have done their job.
The technology has gone from something that only wealthy governments could afford, to something with the potential to be a viable commercial business.
Under NASA commercial space launch program designed in part to replace the retired shuttle program, SpaceX demonstrated for the first time in May the capability to send a cargo ship to the space station and return cargo to Earth. As a result, and as we reported, this milestone activated a $1.6 billion contract for at least 12 resupply missions to the space station. Orbital Sciences Corp. is in the process of demonstrating the same capability that will give it a $1.9 billion resupply contract. SpaceX also has a full roster of satellite launch contracts with private companies. For now, it looks like a viable commercial space company.