United Launch Alliance (ULA) and XCOR Aerospace this week said they have agreed to develop a liquid oxygen (LOX), liquid hydrogen (LH) engine that would be built using low cost methods and can be more easily operated and integrated than competing engine technologies to help ULA deliver lower cost space flights to its commercial and government customers.

“ULA understands that we have to offer competitive prices to our government and commercial customers along with the outstanding and unmatched reliability they expect from us,” George Sowers, vice president of Business Development and Advanced Programs at ULA, said in a statement. “By working with XCOR, we see the potential to develop engines that offer the performance and reliability our customers need at a more affordable price.

ULA is a joint venture between Boeing [BA] and Lockheed Martin [LMT].

The LOX/LH2 upper-stage engine will be in the 25,000- to 30,000-pound thrust class and is meant to replace the upper stages of ULA’s Delta IV and Atlas V families of expendable launch vehicles. Both rockets are capable of lifting large satellites into orbit.

The two companies said the agreement calls for a “risk-managed” approach to development with “go/no-go decision point and performance milestones” and will build on XCOR’s nimble small company capabilities for “rapid turnaround for build and test cycles that drive innovative learning.”

The agreement follows successful hot-fire demonstrations of a lighter-weight, lower-cost approach to liquid-fueled rocket-engine vacuum nozzles developed by ULA and XCOR. The nozzles use aluminum alloys and new manufacturing techniques designed to lower costs and save weight. The new nozzles will be combined with XCOR’s LH2 pump technology for the new LH2 engine development.

The hot-fire demonstrations of the new nozzles integrated with XCOR’s Lynx 5K18 LOX/kerosene engine demonstrate the ability of the aluminum nozzle to withstand the high temperatures of rocket-engine exhaust during a number of tests with no degradation of the alloys, the companies said. The tests also validated the design, materials and manufacturing processes used in the nozzle while laying a foundation for scaling the design to evolved expendable launch vehicle-sized engines like the Delta IV and Atlas V, they said.