It's official now -- SpaceX is a contender.

With this month's successful Crew Dragon "pad abort" test, Elon Musk's SpaceX took another step toward space launch supremacy. Source: SpaceX.

Last week, the National Aeronautics and Space Administration officially "certified" SpaceX as one of its preferred contractors, allowing the upstart space launch company to bid against the United Launch Alliance (ULA) of Boeing (NYSE:BA) and Lockheed Martin (NYSE:LMT) on almost every kind of space mission in NASA's inventory. As reported on, SpaceX will from here on out be able to bid on "medium-risk" missions, including the launching of "most" Earth observation satellites and "many" interplanetary probes aboard SpaceX Falcon 9 lift vehicles.

SpaceX's new "Category 2" certification does not, however, allow the company to bid on any "multibillion-dollar interplanetary flagship missions." (Yet.) For the time being, only ULA, with its Atlas V and Delta II rockets, and Orbital ATK (NYSE:OA), which flies the Pegasus XL rocket, are allowed to bid on such "Category 3" projects.

What's next for SpaceX?
You might expect the answer to this question to be "Category 3, of course!" But in fact, SpaceX has one more trophy to collect before seeking Cat-3 certification from NASA. This one will come from the U.S. Air Force -- and it could be worth even more than NASA's Cat-3 stamp of approval.

As confirmed by the Air Force Times earlier this month, SpaceX is entering the final lap in its race to win Air Force certification to launch some of America's most sensitive spy satellites into orbit. Testifying before Congress last month, Air Force Secretary Deborah Lee James confirmed she is confident that SpaceX's Falcon 9 will win certification by June -- in time to compete against ULA for at least two Air Force space launches this year, and more in years to come.

Currently monopolized by ULA, such Air Force "national security" launches are budgeted to cost taxpayers about $7.1 billion this year. That's a multibillion-dollar opportunity for the privately owned space exploration company.

What does it mean for investors?
By the same token, though, it's a multibillion-dollar risk for publicly traded Boeing and Lockheed Martin, the owners of ULA. At present, ULA is under contract to build and launch some 78 rocket cores carrying national security payloads for the Air Force -- $17.6 billion worth of work. The problem is, while ULA has these revenues "in the bag," its ability to compete for future Air Force work is anything but certain.

ULA has landed billions of dollars worth of business from the U.S. Air Force. But soon, SpaceX may begin undercutting ULA on price. Source: SpaceX.

As we discussed earlier this year, issues with ULA's reliance on Russian RD-180 rocket engines to get its big Atlas V rocket into orbit -- and issues with the cost of the company's Delta rockets -- pose real problems for ULA. On one hand, SpaceX's Falcon 9 rockets are cheaper to operate than anything ULA can offer the Air Force, making it hard for ULA to compete on price. On the other hand, if Congressional rules against using Russian rocket engines for national security launches are implemented, ULA may soon be unable to bid on such launches at all.

The upshot for investors: Up until now, ULA has managed to sidestep this risk for the simple reason that it was the only space launch company certified to run national security launches for the Air Force. Next month, that all changes when ULA begins facing competition from SpaceX.

For the time being, ULA CEO Tory Bruno says he's "not the least bit afraid of competition," according to Reuters.

What we'll really want to see, though, is how ULA reacts -- and what effect its reaction has on Boeing's and Lockheed's profits -- after ULA loses its first Air Force contract to SpaceX.

That's when things will really get interesting. That's when SpaceX's "certification" will finally feel real.

SpaceX's Falcon 9 rocket, now NASA-certified, can go up, up, and away -- for cheap. Source: SpaceX.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.