Elon Musk’s rocket company, SpaceX, just became the only player in a government competition worth about $US70 billion.
The money comes from the US Air Force, which pays private companies to launch its spy satellites into orbit.
For nearly a decade, United Launch Alliance (ULA) had a comfortable monopoly on the high-paying military business. But in 2019, a US law will forbid the use of Russian-built rocket engines to launch military satellites — and ULA currently relies on those foreign engines.
ULA has been phasing out Russian engines to stay in business with the US military, but in the meantime this has led to a major opening for SpaceX.
When the Air Force called for bids to launch a new global positioning (GPS) satellite in 2018, for example, ULA had to pull out: The company wouldn’t have enough Russian engines left to power its Atlas 5 rocket by then. ULA also lacks a financial accounting system that can show it is compliant with a second important piece of the law, which requires that no funds from other government contracts benefit US military launches, according to Reuters.
The Pentagon didn’t waive the law for ULA, and the bids were due on November 16. So now SpaceX is all but guaranteed to win the launch bid. It’s the only other company certified for military launches, and the only one that submitted a bid for launching the new satellite, called GPS 3.
The US Government Accountability Office estimated that military satellite launches are worth about $US70 billion through 2030, Bloomberg reports, and the GPS 3 launch is the first of several bids that the Air Force will offer over the next few years. If SpaceX gets the contract and the launch goes well, it’s likely to get tapped again and again.
ULA will have to figure out a new engine source, or hope that the law changes, if it wants to get back in the competition.
SpaceX winning the bid could be good news for military budgets, since Musk’s company will likely charge less than $US100 million for each satellite launch. That’s much cheaper than ULA’s $US160-million-or-more price tag. (Back in 2012, however, SpaceX submitted a bid to the Air Force demonstrating it could launch satellites for about $US80 million. It’s also working on a reusable rocket that would bring down the launch cost even more.)
Still, the US Air Force says it needs at least two certified competitors, just in case something goes wrong with one of the companies before an urgent satellite launch. More direct competition would also further drive down the cost.
For now it’s unclear what ULA’s plan is going forward.
“We look forward to working with the Air Force to address the obstacles to ULA’s participation in future launch competitions to enable a full and fair competition,” Tory Bruno, ULA’s CEO, told Bloomberg.
We’ve reached out to ULA and will update this post if we hear back.
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.