Billionaire Elon Musk's firm SpaceX has won long-waited approval from the US Air Force to launch military satellites, opening the way to a lucrative market that has been a virtual monopoly for a Boeing and Lockheed Martin joint venture.
Certification for the California-based SpaceX follows months of wrangling and a lawsuit filed by the company against the air force, which was eventually settled.
Now SpaceX can compete against the United Launch Alliance -- the giant Boeing-Lockheed combination -- for major defense contracts valued at about $9.5 billion over the next five years.
As soon as next month, the company could have a chance to bid for the military's new GPS satellite launches, the air force said in a statement.
"This is a very important milestone for the air force and the Department of Defense," said Air Force Secretary Deborah Lee James.
"SpaceX's emergence as a viable commercial launch provider provides the opportunity to compete launch services for the first time in almost a decade," she said.
The introduction of genuine competition is likely to cut the costs of the military's satellite launches, which number about 10 to 12 a year, analysts said.
The move will transform the military launch market, said defense consultant Loren Thompson of the Lexington Institute.
"For the last ten years, pretty much everything the air force lofted into orbit went on a launch vehicle made by the Boeing-Lockheed Martin United Launch Alliance," he said.
"Now that monopoly is waning," he told AFP.
The market landscape is also changing after Congress told the United Launch Alliance that it must stop using Russian-made rocket engines by 2019, he said.
"SpaceX could become the dominant supplier of military launch services, given the rock-bottom prices it charges," he added.
Although costs vary with payloads, UAL charges roughly $160 million for a launch, while SpaceX can offer about half that price, analysts said.
"The cost of launches is going to come down. There's no question about that," Thompson said.
A push by lawmakers to discard the Russian-made RD-180 rocket engine could end up creating a new dominant player -- SpaceX, said Marco Caceres, a senior analyst with the Teal Group Corporation.
"If Congress doesn't let up on its position on RD-180, then we are going to create another monopoly for at least another four to five years, " he said.
Founded in 2002, SpaceX is controlled by Musk, a billionaire tech entrepreneur who started PayPal and Tesla. The company has grown rapidly to become a leader in commercial space launches and for US space agency NASA.
Musk had been sharply critical of the US Air Force, accusing it of dragging its feet and failing to recognize an opportunity to bolster competition and slash costs.
But Musk issued a positive statement after the decision was announced.
"This is an important step toward bringing competition to National Security Space launch. We thank the Air Force for its confidence in us and look forward to serving it well," he said.
The air force said it spent more than $60 million on the review for SpaceX, with 150 staff members examining 125 "certification criteria."
An independent review ordered by the air force earlier this year found the military and SpaceX lacked a "common understanding," reflecting a clash of cultures between Musk's entrepreneurial firm and the Pentagon's slower-moving bureaucracy.
SpaceX has made numerous cargo flights to resupply the International Space Station and is preparing for a manned flight.
The company competes with France-based Arianespace, which complains of not having fair access to US government contracts.
Some critics of SpaceX have questioned if it can maintain safety standards and successful launches given their focus on low-cost operations.