This situations represents a failure to understand economics. From the moon race to the period of the XPrize, and even after, NASA and the FCC has stymied private access to space. It is hard to test a launch vehicle if you can't get a launch or even testing (e.g.: static firing) permits. It is hard to start a space tourism business if the person developing your vehicles is barred from showing the CEO of the company the designs (as happened to Virgin Galactic for a couple years because Richard Branson is not a US citizen!)
This should resonate really well with anyone building a startup. A startup is a money engine. You find something that is profitable, and you invest in it and grow it.
You can go out and spend a lot of money doing things the manual way, but if everything pretty much stops when you stop spending money, you're not really investing in a sustainable business.
This is the case with NASA and a lot of government programs. We were spending a lot of money, but we were not building a space industry... in fact, because government bureaucrats saw space as a competitive advantage (NASA, for instance, long enjoyed easy funding from Congress) they worked to stymie private interests that might show them up.
It is great that things are changing now. We have SpaceX building launch vehicles. Virgin Galactic will start their business any day now (hopefully, though remember how congress wanted to shut it down because it might not be "safe"?) Jeff Bezos is doing something off in the desert of west texas, and even John Carmack has a small space business.
But we cannot ignore the legacy of hundreds of billion sunk into NASA on unsustainable programs, and quirky launch vehicles designed to meet bureaucratic needs, such as to at least have one component of it built in each of the 50 states.
So, the news that NASA is in an "embarrassing" state to me, is good news. I say this, because I would very much like to see Humans have ready access to space.