After six years of the United Launch Alliance holding a monopoly for large U.S. government satellite launches, its primary customer, the U.S. Air Force, has begun issuing contracts that will foster competition in this market.

Launch market upstart Space Exploration Technologies (SpaceX) won the first two competitions out for bid under the Air Force's new Orbital/Suborbital Program-3 (OSP-3) contract last week. These are the first Air Force-funded opportunities for would-be competitors to ULA to earn government money to prove out their young designs and march forward on the path to certification for launches in the Evolved Expendable Launch Vehicle (EELV) class, which is used for the most valuable Pentagon and intelligence satellites.

SpaceX will use its Falcon 9 v1.1 to boost NASA's Deep Space Climate Observatory (Dscovr) satellite and the Falcon Heavy for the Space Test Program (STP-2) satellite. The Dscovr launch is slated for November 2014 with STP-2 to follow in September 2015, says Lt. Gen. Ellen Pawlikowski, Air Force program executive officer for space programs. This is the first government order for the yet-to-be proven Falcon Heavy.

SpaceX bested Orbital Sciences Corp., which pitched its new Antares rocket for these missions. The two are the only companies approved to compete to launch larger satellites under the Air Force's new OSP-3 contract vehicle. OSP-3 will include 10-12 launches through 2017 at a cost ceiling of $900 million. Also under OSP-3, the Air Force selected Orbital, with its Minotaur family, and Lockheed Martin, offering the new Athena, as eligible competitors for launches of smaller satellites, Pawlikowski says.

The Air Force has already set aside about $100 million for the Dscovr launch and another $162 million is expected for the STP-2 mission, Pawlikowski says, adding that SpaceX's proposals were “considered best value to the government.” Though this will be the first government-sponsored Falcon Heavy mission, SpaceX is funding a demonstration flight of the booster from Vandenberg AFB, Calif., in the second half of next year. Intelsat is the first customer, with a launch slated in 2015.

No funding has been set aside yet for smaller launch missions under OSP-3, which follows the OSP-1 and -2 contracts served by Orbital's Minotaur family; OSP-2 expired this year. That prompted officials to issue a call for bids for this recent program and provided an opportunity to invite proposals for improved lift and performance offered by companies hoping to compete for EELV-class missions.

SpaceX's wins place the company on a good competitive footing, but it will have to perform. Last year, the Air Force laid out criteria for launch market “new entrants” to be certified to fly Air Force payloads, such as GPS satellites. Both SpaceX and Orbital submitted letters of intent to certify their rockets for eligibility to compete against ULA for future launches.

Each has negotiated a unique path to certification with the Air Force, based on how much commercial, NASA or Pentagon business they earn—to prove experience—and how much access they will give USAF to pricing and technical data to support cost validation and mission assurance requirements.

SpaceX's OSP-3 contract win clearly puts it ahead of Orbital in the race to take on ULA, and SpaceX CEO Elon Musk says the company's wins are a “vote of confidence” in its work developing the Falcon family. But certification will take time. Orbital plans its first Antares launch in the first quarter of next year for NASA 's Commercial Orbital Transportation Services (COTS) program, says Barron Beneski, a company spokesman. “We'll have to earn our stripes for the Antares program,” he says. A second mission for COTS is also planned, with eight slated for the follow-on Commercial Resupply Service project.

Meanwhile, the SpaceX Falcon 9 v1.1 and Falcon Heavy must make three flights before certification will be granted, according to the company's Katherine Nelson. “We expect Falcon 9 to accomplish that next year,” she says, and “we expect the Falcon Heavy process to follow Falcon 9 by about a year.”

The Dscovr and STP-2 flights will provide one flight each for the Falcon 9 v1.1 and Heavy variants.

Though SpaceX successfully docked its Dragon capsule with the International Space Station this year, much work remains to demonstrate its launch vehicle capabilities. The new Merlin 1D engine, to be used for the v1.1 and Falcon Heavy, is still being developed and is not expected to fly until spring at the earliest.

However, the missions offer SpaceX opportunities to demonstrate new capabilities. Though the company has delivered supplies twice to the International Space Station in low Earth orbit, the Air Force has varied mission needs. For example, the Dscovr mission will require an upper-stage coast, and the satellite was designed to operate with a continuous sun-lit view of the Earth, which will require it to be positioned at the Earth's Lagrangian point about 932,000 mi. away. And, Air Force launches often require delivering a satellite into geosynchronous orbit 23,000 mi. above Earth, a different challenge from conducting operations in low Earth orbit.

Though competition is at least a few years out for ULA, its pricing for EELV launches continues to be scrutinized by the government. As a result, the Air Force's proposal to buy five years worth of rockets from ULA to receive lower pricing with larger orders has met with skepticism from Congress.

Pentagon acquisition chief Frank Kendall approved the buy of 36 rockets from ULA, while reserving up to 14 for competition once a contender is ready. A contract has not yet been signed, but the decision clears the way for the Air Force to negotiate pricing and terms with ULA for the missions ordered in fiscal 2013-17. These launches would take place into 2019.

Skeptics of the strategy argue that funding ULA work so far into the future bolster's the company's monopoly position and leaves too few opportunities for potential new entrants. The Air Force is in a quandary. It must provide funding and stability to its only rocket provider, and will get the best price only by buying in bulk. But it must also foster a competitive landscape and maintain as level a playing field as possible for manufacturers.

ULA is also under pressure to improve more than pricing. Until October, the company boasted a flawless track record of Atlas V and Delta IV flights.But a serious low-thrust problem was detected on the RL10 upper stage, made by Pratt & Whitney Rocketdyne, for a Delta IV boosting the Boeing GPS IIF-3 satellite Oct. 8. The Air Force convened an investigation board to explore the root cause.

However, as of last month, Air Force Space Command chief Gen. William Shelton was skeptical any cause could be found soon. “I don't think we are close on this investigation,” he said, adding that the satellite's flight to the right orbit was the result of a “bit of a diving save” owing to a large fuel reserve on the upper stage. Though the satellite reached orbit, this incident is more than just a blot on ULA's track record. “We have to find out what happened and why, because there is no Plan B,” Shelton says. “The cost of launch failure would be staggering.”

The RL10 is the sole upper stage for EELV boosters While the variants used for the Atlas V and Delta IV are slightly different, the upper stage is a potential single-point-of-failure for the entire military space program.