Boeing Wants Spy Satellite Contract Back

WASHINGTON – The Boeing Co. is facing its last chance to win back a major slice of work on a constellation of costly spy satellites that is late, over-budget and tinged by parochial politics.

Satellite programs take years to develop and cost at least several billion dollars each, making them among the most expensive government purchases that lack public oversight.

Industry experts, congressional aides and intelligence veterans agree on this: Boeing hurt itself by over-promising on a multibillion-dollar plan to build the top-secret satellites that were smaller, cheaper and more functional than its competition.

In September, the national intelligence director decided to take the most complicated work away from Boeing, a newcomer to the photo-reconnaissance satellite business, and give it to Lockheed Martin Corp.

The question is whether Boeing's friends in Congress can find a way to weaken John Negroponte's decision in legislative maneuvering before year's end.

The stakes are high for the program known as Future Imagery Architecture. For the companies, it means billions of dollars. For Negroponte, it's an early test of the authority Congress gave him in last year's intelligence overhaul law.

"It is a signature initiative for him," said John Pike, a satellite expert and director of GlobalSecurity.org. "And he cannot afford to lose on it. ... All these people who said Mr. Negroponte is going to be in charge are going to look not so good if Boeing manages to overturn him."

U.S. officials rely on photo-reconnaissance satellites to gather visual information from space about adversarial governments and terror groups, such as construction at suspected nuclear sites or jihadist training camps. Classified satellites can also be used to survey damage from hurricanes, fires or other natural disasters.

Agencies including the National Reconnaissance Office, which builds and manages the nation's spy satellites, are eager to replace an aging fleet of satellites whose rocket fuel supplies can't be replenished after launch.

Yet new satellite systems are notorious for cost overruns and schedule delays partly because, unlike most government purchases, the bulk of the expenses come during the early, less predictable development phase.

Defense analysts, including the Lexington Institute's Loren Thompson, say about a half-dozen imagery satellite programs are believed to be in operation or under development.

The Future Imagery Architecture is expected to cost tens of billions of dollars and is at least $4 billion to $5 billion over budget already. Experts believe the classified program will be a number of relatively light satellites that could cover the world with greater frequency by deploying more "birds" than earlier programs.

The program also is intended to pull together imagery from classified spy satellites, commercial satellites and unmanned aerial vehicles into one network for U.S. agencies to draw on.

In this system, one type of satellite would use radar and could collect images through clouds. Boeing is going to keep that work and remain the lead contractor for the overall program.

But the company lost the contract for a more complicated satellite that would take more precise pictures with visible-light or infrared cameras. At Negroponte's direction, the National Reconnaissance Office is negotiating with Lockheed, which will start fresh on its own design.

Said Negroponte's spokesman Carl Kropf: "This is what the law provides for him to do — to look across the intelligence community and its programs, offer his recommendations and make key decisions."

Congressional aides and industry experts say it is tough to defend Boeing, given the magnitude of failure on the contract it won in 1999. Yet public discussion is muted because of the highly classified nature of satellite programs.

Boeing has a number of allies in Congress, but only California Rep. Jane Harman, the House Intelligence Committee's top Democrat, has publicly opposed Negroponte's decision to take the work away from Boeing. She called it "heartbreaking."

Harman's district includes the facility where Boeing does this satellite work. She believes there are better options that will protect competition among U.S. aerospace companies.

"Bad management should not be rewarded," she said in an interview. "On the other hand, what we need to keep our eye on is gaps in capabilities — these are national security issues — and the health of the industrial base."

Others in Congress and government have grown displeased about the costs of satellites, especially when agencies could buy relatively cheap information from human spies paid in cash.

Retired Army Col. Lawrence Wilkerson, who was chief of staff to former Secretary of State Colin Powell, said that in several decades as an intelligence consumer, he rarely got useful information from satellite imagery. "Occasionally, you got something good, but not nearly worth the price we were paying for these things."

The House Intelligence Committee Chairman, Rep. Peter Hoekstra, R-Mich., called for Negroponte to offer a plan that outlines what the U.S. wants from satellites and its "woefully inadequate" human intelligence. Yet lawmakers, he said, won't be a "rubber stamp" for Negroponte's ideas.

Some tweaking of Negroponte's space plan has already begun, and more could come next month in legislation that authorizes and funds spy satellites.

Thompson said Lockheed has almost sealed the victory on Future Imagery Architecture. But, he added, "I would never underestimate Jane Harman's ability to influence events. She is very smart and a very strong member of Congress."

Lockheed says it is ready to meet the government's needs.

In a statement, Boeing spokeswoman Marta Newhart said the company is disappointed with the government's decision on the satellite program. "We understand the issues and have taken aggressive action to address them," she said.