The Space Shuttles are gone. And good riddance. NASA should announce that they will award competitive lowest bid open market non sole source launch contracts for cargo and personnel to the ISS. Seems simple enough.
Although NASA has done it's worst by tying the International Space Station up in dozens of treaties in an effort to make it impossible to privatize, there is still an easy way to achieve the same results.
1. Turn the operations of the Station over to a single BIG contractor. NASA likes this mode of operations anyway.
2. Put all Space Station accommodations on a minimum bid basis, with the minimum and a percentage of anything over the minimum going back to NASA. (NASA will be paying itself)
3. Now here's the tough part for NASA; NASA must bid the minimum for it's payloads, and IF it looses the bid NASA must offer the payload to ANY OTHER PRIVATE US Space Station that meets the requirements for that minimum bid. In other words NASA looses it's priority position on the ISS, and is forced to support private space station construction.
There is nothing really hard about privatizing the Shuttles or the ISS, but it will require that NASA make a real commitment to privatization, and I'm talking about a "ham & eggs" pig type commitment. NASA can not hedge it's bets and hold onto an "America's State Airline for Space" model of operation. But without private industry in Space our future in Space is limited anyway.
Of course privatization will mean the end of NASA as we know it. Without a NASA launch monopoly Congress would divert funding to other agencys to launch payloads into orbit. I would suggest a BRAC (or CRAC?) process to transfer unneeded centers to a reborn NACA, or to university or state control so that these centers could continue to contribute to scientific research and space operations. "NASA" would be come a "Manned Spaceflight Institute" in Houston to address the problems of humans in space. For a relevant research program, an old idea should be reserected, The Center that NASA never built, a Center for Computational Research, or actually two centers, one at MIT to develop an Artificial Intellegence, the second in the Nevada desert for research into Nano Technology Replication (nano replication research must be conducted someplace where an Hbomb can be used to erase mistakes).