SpaceX is working in a private-public partnership with NASA to develop the next generation of rockets and space technologies that can be used for both commercial and government purposes. Under this partnership, SpaceX has developed the Falcon 1 and Falcon 9 rockets along with the Dragon capsule. As a launch mechanism, the Falcon 9 rocket is 6 times more cost effective than the rockets used to launch NASA's space shuttle. In the hopes that these cost effective mechanisms will continue to be created, both NASA and the United States Air Force have awarded SpaceX indefinite delivery/indefinite quantity (ID/IQ) contracts. This means that the Air Force can buy $100 million worth of launches, while NASA can purchase up to $1 billion.
Prototype of the Falcon 1 rocket
Falcon 9 rocket
SpaceX is working to be able to send cargo and the Dragon capsule to the ISS (International Space Station) this year. It will mark the beginning of this companies ability to transport cargo back and forth from the Earth into outer space. Along with it's various governmental contracts, SpaceX has also landed a contract with SES to put SES-8, a communications satellite, into orbit. All of these only make up a small percent of the contracts and prizes awarded to this company, sometimes it pays to be one of the first.
SpaceX Dragon capsule
Ultimately, the US government believes that private companies will be much more effective at developing space technologies than any government organization. Private companies have the incentive of profit. Governments don't send things into space to make money, so they aren't nearly as motivated to do well or develop cost effective systems. Another major argument for private space industry is that companies don't have all of the bureaucratic red tape that governments must have. Companies are capable of making quick decisions and working autonomously. We're all just going to have to hope that these companies really can deliver.