SpaceX have been awarded a United States Air Force satellite launch contract worth $US83 million, breaking a decade-long monopoly on military launches held by Lockheed Martin and Boeing.
The GPS satellite will be launched in May 2018 from Florida, Air Force officials said.
The fixed-price award is the military's first competitively sourced launch contract in more than a decade. It ends the exclusive relationship between the military and United Launch Alliance (ULA), a partnership of Lockheed Martin and Boeing.
ULA did not compete for the GPS launch contract, citing accounting issues as well as trade sanctions on its rockets' Russian-made engines.
Another factor was SpaceX's cut-rate pricing, a former ULA vice president said.
"This GPS III Launch Services contract award achieves a balance between mission success, meeting operational needs, lowering launch costs, and reintroducing competition for National Security Space missions," Lieutenant General Samuel Greaves, who heads the Air Force's Space and Missile Systems Center, said in a statement.
Between now and 2018, the Air Force plans to solicit bids for contracts covering eight more satellite launches.
ULA did not immediately respond to a request for comment about bidding on future launch contracts.
The $US82.7m awarded to Space Exploration Technologies, as SpaceX is officially known, covers production of a Falcon 9 rocket, spacecraft integration, launch operations and spaceflight certification.
Elon Musk, a billionaire entrepreneur who helped found Tesla Motors Inc and PayPal Holdings Inc, started SpaceX in 2002 with the goal of slashing launch costs to make Mars travel affordable.
SpaceX also said on Wednesday it planed to send an unmanned Dragon spacecraft to Mars as early as 2018, a first step in achieving Mr Musk's goal to fly people to another planet.
It holds more than $US10 billion worth of launch service contracts for NASA and commercial customers. The company recently made spaceflight history by returning Falcon 9 rockets to landing pads on land and sea - a key step in Mr Musk's ongoing quest to develop a relatively inexpensive, reusable launch vehicle.
SpaceX declined to comment about its first military launch contract until after an Air Force conference call with reporters on Thursday.