Cnet news has an article on NASA with the loaded title "Do we need NASA?". I think it's a silly question - the question should be "What should NASA be Doing?"
Prizes are featured in some of the article. Peter Diamandis, famous in part because of X PRIZE competitions, says:
NASA can remain relevant--but only by focusing on what for-profit companies won't do. "NASA should be in focusing on breakthroughs in propulsion systems. They should be taking very high risks, funding things that are likely to fail because that's what government should be doing, pushing the envelope.
NASA's Centennial Challenges prize manager Ken Davidian says:
We're trying to get out of this low Earth orbit business ... If there are commercial suppliers of space capabilities like launch vehicles for cargo delivery, we're required by law to use them. We want to use them. The premise is that those services will be cheaper to buy than to use ourselves.
I agree, and that would free NASA to do some amazing things that no commercial company will have any interest in. Space trucking - especially launch - should be commercial by now. However, it's a difficult business, so it probably needs significantly more NASA commitments (like COTS, prizes, and more assurance that the market will be there if the commercial service is built to address that market).
We're going to be relevant in the things that commercial can't do--all the exploration stuff ... We're going to push the boundaries out and hopefully commercial industry will be back-filling...so NASA can keep pushing out further." Another area would be sending signals to the investment community, he added.
Surprisingly, the article didn't quote these 2 prize-related personalities saying anything specific about prizes, but I'll say it - one little thing that NASA should be doing is increasing its funding of that little Centennial Challenges prize program. The small side of the commercial space industry is ready to take up all sorts of these challenges if they're offered.