The U.S. government has taken the first steps toward allowing commercial space companies to launch its national security satellites into outer space.
The Air Force, NASA, and the National Reconnaissance Office - the secretive federal umbrella agency that operates spy satellites - have signed an agreement to establish clear criteria for private rocket builders to launch their pricey payloads, which include $1 billion spy satellite and robotic missions.
United Launch Alliance, a joint venture of aerospace behemoths Lockheed Martin Corp. and Boeing Co., is currently the Pentagon's sole launch provider for such missions. The new agreement could break the company's virtual monopoly on the launches and give opportunities to smaller upstart firms, such as Space Exploration Technologies Corp.
The company, better known as SpaceX, has repeatedly contended that it can provide rockets at a fraction of its competitors' prices. For example, SpaceX said launches on its Falcon Heavy would cost $80 million to $125 million. This is half the cost of United Launch Alliance's similar-sized Delta IV Heavy rocket, which can run around $250 million, according to the Federal Aviation Administration's most recent estimate.
Elon Musk, SpaceX's chief executive, has publicly criticized the Pentagon for not allowing competition with United Launch Alliance. But now - at a time when all aspects of federal spending are under scrutiny - his sales pitch has resonated with the government.
"Fair and open competition for commercial launch providers is an essential element of protecting taxpayer dollars," he said in a statement commending the government's decision.
But SpaceX has yet to build the Falcon Heavy. It is still in development. That didn't stop the company from breaking ground in July on a $30 million launchpad at Vandenberg Air Force Base, located northwest of Santa Barbara, Calif.
Situated along the Pacific Ocean, Vandenberg has primarily been used for launching spy satellites since the beginning of the Cold War because its location is considered ideal for putting satellites into a north-to-south orbit.
At the time, there were no guarantees that the military or NASA would step forward to pay for the Falcon Heavy to lift its payloads into space someday.
There still isn't a guarantee that SpaceX will win those contracts, but the government's recent announcement gives the company a chance. To win, SpaceX and other commercial companies' rockets must first meet detailed technical requirements and have several successful launches under their belts.
"This strategy is the best balance of ensuring reliable access to space while encouraging competition and innovation in the launch industry," Erin Conaton, undersecretary of the Air Force, said in a statement. "We are committed to providing a level playing field to all competitors in the interest of ensuring the best capability for our war fighters and the best value to the American public."
Explore further: How bad can solar storms get?