Bloomberg.com
July 19, 2002
Boeing's U.S. Spy Satellites Face Launch Delays, Panel Says
By Tony Capaccio
Washington -- Boeing Co.'s spy satellite faces a launch delay of more than two years after an intelligence agency projected weight flaws and an inability to communicate with ground stations, according to people who have read the report.
The April review for the National Reconnaissance Office of the Future Imagery Architecture program identified eight other shortcomings, these people said, without elaborating. Development and production is worth as much as $19.5 billion in revenue to Boeing through 2012, analysts have said.
The satellites are key to Defense Secretary Donald Rumsfeld's plans for a space-based network that can track moving targets and deliver intelligence to commanders in the field.
"This is exactly the point in a program when you would see these problems as it starts to move from preliminary design to bending aluminum," said John Pike, a military space analyst with Globalsecurity.org, a defense research group.
Boeing and Pentagon officials have said the program, a new network of picture-taking spy satellites, is meeting cost and performance requirements. Boeing spokesman Douglas Kennett declined to comment on the review.
"The review should focus on programmatic issues but should also address the issue of requirements satisfaction and the degree to which FIA represents innovation," Peter Teets, director of reconnaissance office, wrote in a March 1 memo requesting the study.
The program passed a preliminary design review in early 2002. Boeing is refining the final design and building early components. The panel's review focused on hurdles that must be overcome soon to avoid delays and increased costs, the people said.
Launch Delay
The Teets memo is attached to a classified set of April 12 briefing documents provided to the Pentagon, executive branch and congressional panels such as the House Intelligence Committee. The documents said the performance is at risk, the 2006 launch date might be delayed as much as 30 months and cost is projected to increase, the people say.
Actions to resolve any deficiencies might trim the likely delay when remedial work is completed, the people said.
Congress in 1999 imposed a cap on the development program to control costs.
Boeing Beats Lockheed
Boeing in September 1999 upset Lockheed Martin Corp., the nation's spy satellite builder for 40 years, to win the contract. Boeing's team includes Hughes Electronics Corp., Raytheon Co., Eastman Kodak Co. and Harris Corp.
The program is run by Boeing's Space & Communications unit in Seal Beach, California, and is part of the unit that develops military communications satellites, airborne early warning radar and integrates the Army's new family of future combat vehicles.
The integration work such as FIA and military communications satellites is projected to bring Boeing 36 percent, or almost $4 billion, of the space unit's estimated $11 billion in 2002 revenue.
"It's an extraordinarily important, extraordinarily challenging program because you are trying to design from the bottom up an entirely new imagery satellite constellation to replace a hodge-podge of Cold War capabilities," Pike said.
Multi-Purposes Satellites
The Boeing network includes numerous satellites able to detect and take images using heat-seeking infrared sensors, traditional high-resolution electro-optical cameras or radar capable of taking highly detailed images in all weather.
"FIA will allow you to see more, see it more quickly and see it more often," said Jeffrey Richelson, a intelligence expert and author of the "U.S. Intelligence Community."
The potential FIA deficiencies could be the latest setback for the Pentagon's primary major early warning or advanced communications satellites, said the Lexington Institute, a Washington-based defense research institute that disclosed the panel's work.
Teets directed a nine-member panel led by former NRO director Martin Faga to "develop findings, conclusions, and recommendations in terms of progress against schedule, satisfaction of documented and future requirements, technical risk measured against system performance requirements and actual cost measured against projected cost."
Review Panel
The panel included retired Vice Chairman of the Joint Chiefs of Staff Admiral David Jeremiah, retired Air Force Vice Chief of Staff Thomas Moorman and retired NRO Deputy Director Jimmie Hill.
Faga in an e-mail to Bloomberg News declined comment. Teets through a spokesman declined to comment on the panel or actions he was taking in response. Boeing in briefing charts to reporters last month said the program has had a "solid performance."
"It's on schedule, it's on cost," Roger Roberts, Boeing vice president for integrated defense systems, which includes FIA, told reporters during a media visit about the program's status.
"Boeing is on course," Teets said at a news conference in February, the first official statement in several years about Boeing's FIA performance. "I fundamentally have some concerns in the forward-looking plan I intend to address and hopefully avoid downstream problems." The Faga panel was formed to review those issues.
The shares of Chicago-based Boeing fell $1.65 to $41.29 yesterday. Boeing second-quarter profit fell 7.3 percent as airliner deliveries slowed. The decline was less than investors expected.
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