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The Associated Press September 16, 2005

Boeing May Lose Part of Spy Satellite Pact

By Lolita C. Baldor

Defense Department and intelligence officials concerned about problems with a classified spy satellite program are preparing to shift part of the program's contract from Boeing Co. to Lockheed Martin Corp., a government official familiar with the discussions said Friday.

No decision has been made yet, but one is expected in the next two weeks, said the official, who did not want to be identified because of the classified nature of the program.

The National Reconnaissance Office, the government's spy satellite agency, awarded a contract — estimated to be more than $4 billion — to Boeing in 1999 to develop the next generation of reconnaissance satellites.

The program, however, has been plagued with problems, included reported cost overruns and delays. Known as Future Imagery Architecture, the program was expected to be one of the most expensive in the history of U.S. intelligence-gathering, according to an analysis by GlobalSecurity.org, a private think tank.

An independent team reviewed the program, which led to the recommendation by the National Reconnaissance Office to make changes in the contract, said another official familiar with the discussions. The official said the plan is to give the electro-optical — or intelligence cameras — portion of the program to Lockheed.

Jamal Ware, spokesman for the House Intelligence Committee, said the committee has received no official notice of any changes in the program.

Boeing spokeswoman Kimberly Krantz said, "Boeing has not been notified by the customer about any changes to the program."

Lockheed Martin spokesman Tom Jurkowsky would only say that the company "stands ready to support our government customer when asked. We recognize the importance of our country's reconnaissance capability."

Lockheed had the contract for the previous spy satellite.

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Associated Press writers Allison Linn in Seattle and Matthew Daly in Washington contributed to this report.


Copyright 2005, The Associated Press