The US Air Force (USAF) has selected United Launch Alliance (ULA) and Blue Origin to develop a new rocket propulsion system to power the Vulcan next-generation launch system.
The companies will collaborate on developing the BE-4 rocket engine that will offer an alternative to the Russian RD-180.
ULA president and CEO Tory Bruno said: "While the RD-180 engine has been a remarkable success with more than 60 successful launches, we believe now is the right time for American investment in a domestic engine.
"We continue to meet our goal of delivering the most reliable launch systems at the most affordable cost, while developing a new rocket which enables brand new opportunities for the nation's use of space."
The development of the BE-4 is fully funded by Blue Origin, with investment by ULA.
The companies expect to achieve qualification for flight in 2017.
The BE-4 uses liquid oxygen and liquefied natural gas (LNG), and delivers a thrust of 550,000lb at sea level.
Each ULA Vulcan booster will be powered by two engines, to provide a thrust of 1,100,000lb at lift-off.
Additionally, the USAF awarded a separate development contract to an Aerojet Rocketdyne-ULA team for the AR1 engine.
Bruno added: "ULA continues to work with both Blue Origin and Aerojet Rocketdyne to pursue two options for a next-generation American engine and that is why we're teaming with two of the world's leading propulsion companies."
Vulcan is expected to be launched from Space Launch Complex 41 at the Cape Canaveral Air Force Station in Florida and Space Launch Complex 3 at Vandenberg Air Force Base in California in 2019.