The project was started in July 1996. The pilotless X-33 was slated to begin carrying out a series of suborbital test hops in July 1999. Engine problems, weight growth and the craft's stability were a few of the problems engineers have battled to fix since the X-33's inception.

The X-33 is designed to launch like a rocket and land like a plane.

The X-33 is meant to validate new technologies that can reduce the cost of access to space. The hope is to lower the cost of lofting payloads to low Earth orbit from $10,000 to $1,000 a pound.

"It's taken awhile, but we've come up with an agreement that is good for the government and allows Lockheed Martin some options as they go forward as well," said Art Stephenson, director of NASA's Marshall Space Flight Center in Huntsville, Alabama.

To date, NASA has committed $912 million for building the X-33. Lockheed Martin initially coughed up $212 million as part of the deal, but the company and other contractors on the project have now committed $356 million.

Nearly 95 percent of the hardware necessary to finish the spaceplane will be ready by year's end, Stephenson said.

For the X-33 to move forward, the vehicle will now carry yet-to-be-built hydrogen tanks made of aluminum, replacing the composite liquid-hydrogen tank design that failed. An already-fabricated oxygen tank made of aluminum is ready to fly.

The project's restructuring, however, doesn't mean that the X-33 will ever get off the ground.

A 2003 liftoff of the spaceplane is contingent on Lockheed Martin's ability to compete and win additional government monies under the Space Launch Initiative. Funds for that initiative are still under discussion in Congress.

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The just-signed agreement permits work to continue on the X-33 project through March 31 of next year, Stephenson said. "This agreement allows us to keep a team viable and continuing to work on the X-33 program," he said.

NASA then has the option to select Lockheed Martin to continue X-33 work based on a competitive proposal the company could submit that vies for Space Launch Initiative funds, Stephenson said.

Albert E. Smith, executive vice president for Lockheed Martin Space Systems, told SPACE.com that no specific launch time within 2003 has been set.

"We're shooting for a 2003 launch, but I would not cut it to the month, or even the quarter at this point, until we finish our planning," Smith said.

As for Lockheed Martin's follow-on spaceliner, the VentureStar, Smith told SPACE.com that the marketplace for commercial launches has "deteriorated significantly" in the last year.

This shaky marketplace means any decision about building a commercially funded reusable launch vehicle would be difficult, Smith said.

Stephenson was more upbeat about 21st-century space business.

"There may be a new market that evolves from the space station that might drive the equation," Stephenson said. "We could have orbiting factories in space developing materials that have very high value here on the ground. We just don't know," he said.