On Wednesday, the US Air Force awarded Elon Musk’s private company SpaceX an $82.7-million contract to launch a GPS satellite.
This is the first time a company other than United Launch Alliance (ULA) has been given a contract for a military space launch in a decade, loosening the tight grip they held on the market.
The contract covers production of a Falcon 9 rocket, spacecraft integration, launch operations and spaceflight certification.
Winning this contract might also give SpaceX a huge advantage in the US military spaceflight market, making it harder for ULA to compete with them for future national security launches.
Breaking a 10-year monopoly
ULA is a joint venture between Lockheed Martin and Boeing Co. It has enjoyed a monopoly on the market of ferrying national security satellites to space for the last decade.
In 2006 the alliance was awarded a contract in which the Air Force agreed to them $800 million per year from 2006 to 2019 to launch national security satellites to space. The Air Force had not certified SpaceX rockets to conduct national security launches at that time so the company wasn’t able to compete against ULA for these missions.
But ever since SpaceX burst into the spaceflight scene with its first Falcon 9 flight in 2010, ULA’s monopoly has been on shaky ground. SpaceX fought to get certification, claiming that they could launch medium-lift missions at half the price.
In May 2015, the Air Force finally certified SpaceX. And ULA responded to the new competition by not submitting a proposal for this GPS launch contract. They cited a number of reasons, one of them being an inability to compete with SpaceX’s cut-rate pricing.
At a Senate Armed Services Committee hearing in January, Air Force Secretary Deborah Lee James said that Air Force staff were currently investigating the repercussions of prematurely ending their contract with ULA.
SpaceX is on a roll
The announcement of this $82.7 million contract comes just as SpaceX is basking in the glory of two successful landings of reusable rockets, all in a period of a few months.
And just Wednesday the company announced plans to send an unmanned Dragon spacecraft to Mars as soon as 2018, bringing them one step closer to their goal of landing humans on the Red Planet.
The satellite, which is the second orbiter of a new generation of GPS satellites, is slated to launch on May 2018 from Florida.
“This GPS III Launch Services contract award achieves a balance between mission success, meeting operational needs, lowering launch costs, and reintroducing competition for National Security Space missions,” Lieutenant General Samuel Greaves, who heads the Air Force’s Space and Missile Systems Center, said in a statement.
The Air Force plans to solicit bids for contracts covering eight more satellite launches, the next one being another GPS III satellite. ULA does not expect to sit out on bids for these upcoming launches.
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.