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Massive Spy-Satellite Program to Cost Billions
Aerospace: Southland firms will get a major boost from top-secret, two-decade effort. Its scope could dwarf the Manhattan Project.

By PETER PAE, Times Staff Writer

     A team of Southern California aerospace companies is covertly recruiting engineers across the country for a new generation of spy satellites under what analysts believe is the largest intelligence-related contract ever.
     The supersecret project for the National Reconnaissance Office is estimated to be worth up to $25 billion over two decades, providing a major boost to the Southland's aerospace industry and solidifying the area's dominance of high-tech space research.
     Equipped with powerful telescopes and radar, the nation's newest eye in space is expected to form the backbone of U.S. intelligence for several decades, analysts said. The satellites will be farther out in space and harder to detect than the massive spy probes that currently orbit the Earth. They will also be able to fly over and take pictures of military compounds anywhere in the world, in darkness or through cloud cover, with far more frequency.
     Company officials are restricted from talking about the highly classified contract, but Roger Roberts, general manager of the Boeing Co. unit in Seal Beach overseeing the project, gave a hint of its scope.
     The endeavor will require 5,000 engineers, technicians and computer programmers over the next five years, and that will just be for the initial design and development of the satellites, he said.
     That figure doesn't include thousands more who will be required to assemble the satellites, most likely at Boeing Satellite Systems in El Segundo, and thousands of workers employed by hundreds of subcontractors and parts suppliers such as the 1,900-employee Marconi Integrated Systems in San Diego. Sending the satellites into space will also require new rockets, which should also bolster the launch industry.
     The need for engineers has been so great that two months ago Boeing opened a recruitment office in Sunnyvale, where it is targeting both dot-com survivors and Lockheed Martin Corp. engineers who built many of the spy satellites now in orbit. After dominating that business since the 1950s, Lockheed lost the new contract to Boeing.
     John Pike, a Washington, D.C.-based military space consultant, believes that in all, the work could eventually mean jobs for at least 20,000 people in California.
     "Lots of kids will be sent to college, lots of swimming pools are going to get built and a lot of people will spend their career working on this project," Pike said.
     Still, most state officials said they know little about the project.
     "I don't think most people are aware of how big this is," said Mike Marando, spokesman for the California Technology, Trade and Commerce Agency. "We know California benefits substantially, but by exactly how much we just don't know."
     The National Reconnaissance Office hasn't helped. The enigmatic agency announced the contract in a three-paragraph news release posted on its bare-bones Web site little more than a year ago. The project is officially known as Future Imagery Architecture.
     Despite slowly opening itself up in recent years, the NRO still remains one of the most secretive government agencies. Even its innocuous logo--a space probe circling the globe--was a secret until 1994.
     Besides saying it awarded the contract to Boeing "to develop, provide launch integration and operate the nation's next generation of imagery reconnaissance satellites," not much else has been revealed.
     Virtually everything else about the contract--its dollar amount, the number of satellites to be built, who is doing what and where, and the capabilities of the satellite--is secret. Even the duration of the contract is deemed classified.
     "This program is so secret that most of the people who work on it won't have a good sense of what they are doing," said Loren Thompson, a defense analyst at the Arlington, Va.-based Lexington Institute.
     Still, aerospace analysts have been able to draw some conclusions through past reconnaissance programs based on public information gleaned from different sources, such as watching the size and frequency of rocket launches carrying secret spy satellites.
     Analysts generally agree that the number of satellites involved in the new program will be at least a dozen to two dozen, compared with roughly half a dozen spy satellites now in orbit. The new models are likely to be significantly smaller and cheaper than the current generation of spy satellites, which cost about $1 billion each, weigh 15 tons and can take up to 18 months to build.
     With a bigger constellation of satellites, the probes will be able to revisit and take pictures of an area more frequently than the current versions. The need is driven in part by inadequacies identified during the Persian Gulf War, when military commanders complained about intelligence photos arriving late.
     The new system would be less detectable by those being observed. For instance, U.S. intelligence officials were alarmed recently when they found a large contingent of North Korean troops lined up near the demilitarized zone with South Korea. Analysts believe that the North Koreans were able to move troops undetected by coordinating the operation with the orbit of a U.S. spy satellite.
     And with improvements in optical and radar technology, U.S. intelligence officials hope to place the satellites at a higher orbit so they can take pictures of a ground target for a longer period.
     Satellites can now "linger" over an area about 10 minutes. U.S. officials hope to double that span with the new probes. In all, the Federation of American Scientists believes the new satellites will be able to collect eight to 20 times more images than the current system.
     The agency now operates three optical satellites called KeyHole, which take photographic and infrared images, and three school-bus-size radar satellites known as Lacrosse, which can see through clouds and darkness, analysts said. Boeing is building both types of satellites under the contract.
     "They were talking about integrating new technology and building satellites that are one-third the size that NRO is used to," said Marco A. Caceres, a senior space analyst for the Teal Group in Fairfax, Va. "They're going to be cheaper, but there are also going to be a lot more of them."
     In an unusual moment of candor, an NRO spokesman confirmed last week that the satellites will be smaller and cheaper but more numerous than the current crop.
     "I can tell you that we plan to begin launching [the satellites] around . . . 2005," said spokesman Art Haubold. "It's a multiyear effort that will provide a more capable but less costly means of filling the nation's imaging needs."
     He declined to specify the value of the contract, although he said, "We're talking about a big part of our business. That's all I can say."
     Boeing and other contractors--which would normally gloat--aren't talking, other than to confirm that they are part of the winning team. Besides Boeing, which will oversee the contract and build the satellites, the other main companies include Raytheon Corp., Eastman Kodak Co. and Harris Corp. Analysts believe that Aerospace Corp., a government-funded research operation in El Segundo, drew up the blueprints for the new satellites.
     Although the firms declined to discuss the contract, workers at Raytheon in El Segundo are probably developing the radar-imaging equipment as well as the ground-based controls for the satellites.
     Meanwhile, Rochester, N.Y.-based Eastman Kodak is working on processing the images captured by the satellites. The role of Harris Corp., a Florida-based maker of telecommunications components and provider of support services to the Defense Department, is unclear.
     "I can only confirm that we are a contractor," said Mark Day, a spokesman for Raytheon's Electronic Systems unit in El Segundo. Raytheon and Boeing's operations in El Segundo both trace their origins to the former Hughes Aircraft Co., a longtime handler of top-secret programs during the Cold War.
     The NRO, created in 1960 to build and operate spy satellites, has an annual budget of at least $6 billion, exceeding yearly spending of either the Central Intelligence Agency or the National Security Agency.
     Pike estimates that the new contract accounts for about $1 billion of the annual budget and has a lifetime of at least 20 years. After factoring in about $5 billion for design and development, he believes the total worth of the contract to be as much as $25 billion, which includes building the satellites and maintaining them. In comparison, the Manhattan Project to develop the atomic bomb, which at one time employed as many as 125,000 people, cost the U.S. $20 billion after adjustment for inflation.
     The NRO program "will be the most expensive program in the history of the intelligence community," the Federation of American Scientists recently concluded.
     Much of that expense will be incurred in the South Bay, an area represented by Rep. Jane Harman (D-Rolling Hills), a member of the House Permanent Select Committee on Intelligence, which last week received a classified briefing about the project from the NRO.
     "I used to say that the area was the aerospace center of the world," Harman said. "I would now say it is the center of the world for space-based intelligence."
     Since the 1950s, U.S. spy satellites had mostly been designed and built in Northern California at Lockheed Martin's massive 275-acre Sunnyvale facility, which during its heyday employed more than 30,000 people.
     It was in Sunnyvale that the first spy satellites, known as Corona, were built. Although it made its last flight in 1972, the project's existence was revealed and declassified only by a special order of President Bill Clinton about 25 years later.
     Declassified documents say the NRO launched 145 Corona satellites, each of which flew a few days at a time taking photographs with six- to 10-foot resolutions, compared with resolution of approximately six inches on current satellites.
     Instead of transmitting the images to Earth, Corona capsules were allowed to free-fall and be snatched up in midair by a C-119 Flying Boxcar, often after several attempts. The capsules usually contained hundreds of pounds of film.
     In late 1999, the NRO stunned the industry and awarded the contract to build the next generation of spy satellites to a Boeing-led team. The competition, which took three years, was considered among the fiercest in recent memory, analysts said.
     "I wish I can tell you how we won the contract. It's a story worth telling your grandchildren," said James Albaugh, president of Boeing's space and communications business.
     In aerospace, Boeing's coup was considered a huge turning point that reflected a shift in fortunes of the world's top two defense contractors. Lockheed shares fell for weeks after the news was made public. "This was the most serious loss for Lockheed in a decade," Thompson said. "This was a core business for Lockheed for decades. It was a large part of the reason why Sunnyvale existed at all."
     The aftermath is visible at Lockheed's Sunnyvale facility; the massive structure in which the first spy satellite took shape was recently torn down for an Internet firm. Nearby, Boeing opened a recruiting office to handle hundreds of applications weekly from Lockheed engineers drawn by a newspaper ad.
     "Stars. Sunsets. Satellites. Southern California has it all," it said, somewhat boastfully.