Lockheed Martin's Atlas 5 launch vehicle is known for being reliable, accurate and usually on time. But affordable? Not so much.

A workhorse for U.S. military and civil space payloads, the modular Atlas 5 has an almost-flawless track record—and a correspondingly hefty price tag: In 2011, under NASA's five-year launch services agreement with United Launch Alliance (ULA), the Lockheed-Boeing joint venture that manages government missions can charge $101-334 million per Atlas launch.

Those prices could be reduced by 2015 if ULA and the U.S. Air Force can negotiate a bulk buy of Atlas 5 and Boeing Delta 4 core stages. But for the past several years, with only two commercial missions in backlog—a pair of high-resolution, Earth-observation satellites for U.S. remote-sensing services provider DigitalGlobe—Atlas 5 has not been a serious contender in a competitive launch market dominated by European and Russian rockets.

In 1988, when the first Atlas vehicle was launched, 40% of Lockheed Martin missions were commercial. Since 2006, when ULA was formed to consolidate Atlas and Delta operations, the rockets' manifests have primarily been held by dozens of national security and civil space missions for the company's anchor tenant.

So it came as a surprise when Lockheed Martin Commercial Launch Services announced on Sept. 9 a contract with Mexico to loft the Boeing-built Morales 3 geostationary communications satellite on an Atlas 5 in its 421 configuration in 2015. Commercial Launch Services President Robert Cleave says the combination of economies expected from the core-stage block buy, and ULA's aggressive efforts to negotiate more favorable pricing with suppliers, has helped reduce the cost of an Atlas 5 commercial launch by “north of 20%” in the past year, making it more attractive to non-U.S.-government customers.

With looming defense cuts anticipated under U.S. sequestration, and the emergence of new launch vehicles aimed at government business—notably the SpaceX Falcon 9—Lockheed Martin wants back in the game.

“We've taken a pause to focus on the U.S. government as the core business of the Atlas rocket. But now we want to get back and be a meaningful participant in the market,” Cleave said Sept. 11 on the sidelines of the annual Euroconsult satellite conference here. “Meaningful to us is a couple a year, and we're going to be very selective in who we pursue. This is a special rocket, and we're not going to bid on every single opportunity that comes out.”

Cleave declined to discuss Morales 3 launch pricing, but says a commercial Atlas 5 is now competitive with other launch vehicles, including Sea Launch's Ukrainian-Russian Zenit and International Launch Services (ILS) Russian Proton. Although both companies bid on the Morales 3 contract, likely at prices lower than Atlas 5, both endured launch failures in 2013.

Outside of launchers, Lockheed's shift toward commercial customers is evident in its other space businesses as well, including the year-old Commercial Ventures unit that markets the A2100 spacecraft for commercial geostationary missions. In the 1990s, Lockheed Martin made an ambitious push to enter the commercial satellite market, but pulled back after losing money. Today, with 23 A2100s in production, Commercial Ventures President Linda Reiners says only one is commercial: The Jaiburu-1 Ka-band spacecraft being built for Australian startup operator Newsat with financing from the U.S. Export-Import Bank.

Reiners says the company initiated enhancements to the A2100 in 2011 to lower costs to attract a more diverse customer base in a satellite market led by Boeing and Space Systems Loral in the U.S., and EADS-Astrium and Thales Alenia Space in Europe.

“We've struggled to be competitive in the last couple of years,” she says, noting they expect to be “very competitive” within a year.

The improved A2100 that will evolve over the next few years is to be scalable and flexible, with extended life on orbit, shorter production cycles, a broad power range and a new, optional all-electric propulsion system based on Hall effect thrusters that Reiners says will cut lengthy orbit-raising times in half.

“Our technology has greater thrust than other systems available,” she explains, in reference to Boeing's new 702 SP all-electric spacecraft unveiled last year. Based on xenon-ion propulsion (XIP) technology, the 702 SP can take 6-8 months to deliver a satellite to its final orbital position after separation. “Our system takes three to four months, depending on how far you are going and how much you weigh.”

Craig Cooning, vice president of Boeing Space and Intelligence Systems, says Hall thrusters on the A2100 may get a satellite to orbit faster than XIPs, but the 702 SP offers greater payload capacity on a bus small enough to accommodate dual launches on a Falcon 9. “A small satellite with a lot more capacity is a great trade for an extra 60 days of orbit-raising.”