* U.S. urged to use private operators for space transport
* NASA would focus on bigger space challenges
* Shuttle Endeavour crew prepares for Friday homecoming (Restores full quote in 4th paragraph to clarify meaning)
By Irene Klotz
CAPE CANAVERAL, Fla., July 29 (Reuters) - The U.S. government should leave the business of launching cargo and people into Earth orbit to private commercial space transporters, members of a presidential panel said on Wednesday.
A subcommittee of the Human Space Flight Review panel said turning over transport services to the International Space Station to private firms would allow the U.S. space agency NASA to focus on new challenges, such as extending human presence beyond low-Earth orbit.
The International Space Station, a $100 billion project involving 16 nations, orbits about 225 miles (360 km) above the planet.
"My God, great NASA has been to the moon and we are sort of thinking that it is a big challenge for us to continue going to (low-Earth orbit)? Let's turn it over to newcomers," Bohdan "Bo" Bejmuk, a former Boeing Co (BA.N) executive, told panel members.
"I think you will find out there are a lot of people who will rise and compete," Bejmuk told the meeting broadcast by NASA. "Some of them will fail, some of them will succeed, but you will have essentially created a new industry."
NASA currently spends about half of its budget -- $18 billion in the fiscal year ending Sept. 30, 2009 -- on human space programs.
Its future plans include completing construction of the space station with seven final shuttle missions, retiring the shuttle fleet in 2010 and developing new spacecraft that can travel to the space station, the moon and other destinations.
NASA has provided seed funds for privately-funded Space Exploration Technologies (SpaceX), and Orbital Sciences Corp ORB.N, to develop commercial spaceships to haul cargo to the space station.
SpaceX, founded by Internet entrepreneur Elon Musk, also has a contract option to upgrade its capsule with an escape system and other equipment needed for passenger service.
The government's own new Orion spaceship is scheduled to debut in 2015.
A review conducted for the panel by The Aerospace Corp. shows an additional two-year delay is likely based on current budget plans and the program's technical status.
The human space flight review panel, headed by former Lockheed Martin (LMT.N) chief Norm Augustine, is scheduled to issue its report by Aug. 31.
NASA meanwhile prepared on Wednesday for the homecoming of the shuttle Endeavour and its seven-member crew.
The astronauts used the ship's robot arm to reinspect Endeavour's heat shield to make sure it was intact for Friday's descent through the atmosphere and landing.
Touchdown is scheduled for 10:48 a.m. EDT (1448 GMT) at the Kennedy Space Center in Florida. (Editing by Pascal Fletcher and Alan Elsner)