Call it "the battle of the billionaires" -- to control access to the moon. Ever since Blue Origin landed its New Shepard space rocket back on Earth after a brief visit to space -- while SpaceX was still trying to land its Falcon 9 on a ship at sea -- billionaires Elon Musk (of Tesla and SpaceX fame) and Jeff Bezos (of Amazon.com and Blue Origin) have been trying to win the space race.

Blue Origin one-upped SpaceX in 2015 by accomplishing the easier task of landing a suborbital rocket on solid ground, while Musk was preoccupied with the trickier mechanics of landing a much faster orbital rocket on choppy seas. A few weeks later, Musk landed a Falcon 9 on land -- just to show he could do that -- before returning his attention to sea landings, which he figured out in 2016. Ever since, these two space billionaires have been making like the Hatfields and the McCoys wearing spacesuits -- launching rockets, landing rockets, and designing new rockets.

Their latest contest centers on the moon and who will get to build lunar landers for NASA astronauts who want to go there.

Blue moon shines in a starry sky.

Image source: Getty Images.

SpaceX - 2; Blue Origin - 0

The first two rounds of this contest went to SpaceX, as Blue Origin struggled to get on the scoreboard. In March 2021, SpaceX won a $2.9 billion NASA contract to build the space agency's Human Landing System (HLS), which is a moon lander that will carry astronauts from a space station in orbit down to the moon and back again. Then in November 2022, SpaceX won a second NASA contract to build a second unit of its HLS (dubbed "Option B"), for $1.2 billion more dollars.

Boy oh boy, Jeff Bezos must have been mad about that!  

SpaceX - 2, Blue Origin - 1

There was good news for Blue Origin, too. Not wanting to hand SpaceX a monopoly over moon contracts and preferring to have multiple space companies bidding in order to keep prices down, NASA announced it would hold a Sustaining Lunar Development (SLD) competition to build a second kind of lunar lander with which to conduct its third landing on the moon.  

SpaceX would not be allowed to compete for this third contract. But Blue Origin was permitted. And last week, the latter announced it had won the contract, worth $3.4 billion.

What this means for Blue Origin -- and everybody else

Blue Origin is rightly elated to have won the SLD contract, but this isn't unalloyed good news for the space company.

The first time Blue Origin bid against SpaceX on HLS, it told the space agency it couldn't possibly build a lunar lander for less than $5.9 billion. If it's only getting paid $3.4 billion for SLD, it stands to reason that Blue Origin -- which Bezos currently funds almost entirely out of his own pocket -- will take a $2.5 billion loss on this contract.  

Ouch!

On the plus side, Blue Origin gets to stay in the moon race and gets a bit of cash flow with which to help complete the development of its other big project -- developing a New Glenn heavy-lift rocket. From that perspective, winning SLD was probably essential to giving Blue Origin a shot at building a viable space business. But still -- that $2.5 billion loss is gonna pinch.

As for everyone else in the space race, the implications of Blue Origin's win vary. Big aerospace and defense names like Boeing and Lockheed Martin, who form parts of Blue Origin's so-called "National Team" building SLD, will share in Blue Origin's victory -- and may share in its financial losses, as well.

Other space players -- notably Leidos, which bid against Blue Origin on SLD and lost -- may protest NASA's award but will probably be unsuccessful. In the first round of HLS, Leidos wildly overbid its rivals, requesting $8.5 billion to build its lander for NASA. Unless Leidos' costs have come down a lot, it probably never had much chance of winning SLD.  

The real winner is the American taxpayer

The biggest winner from last week's SLD contract announcement, though, is probably the American taxpayer.

Thanks to the magic of capitalism and price competition, SpaceX's bidding $2.9 billion to build HLS has already forced Blue Origin to lower its price on SLD by $2.5 billion. For that matter, through lessons learned designing HLS, SpaceX has been able to lower its own price on Option B to just $1.2 billion -- nearly a 60% reduction in price.

Mind you, until we see the landers actually built, tested, and deployed, it remains to be seen which of the two landers will reach the moon first. But with both companies building functionally similar products at financially similar prices (separated by as little as $500 million in cost), it's likely that both SpaceX and Blue Origin will remain in this space race for the duration.

You can expect continued reductions in cost as these two companies compete with each other to reach the moon. That's good news for everybody involved in the space race, but for taxpayers, it's the best news of all.