How did they pay?

SpaceX can make the payloads, and they already do in the form of starlink.

NASA carries out research/experiments something that spaceX probably doesn’t want to compete in since for the most part it does not pay

NASA does not build it’s own rockets (anymore) they make the payloads. NASA will never make rockets as good/cheap as a companies like ULA and SpaceX.

Take a look at the cluster fuck that is the SLS if you want an example

How is NASA a competitor to SpaceX?