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The New York Times September 30, 2005

Review Leads to Upheaval in Spy Satellite Programs

By Douglas Jehl

WASHINGTON, Sept. 29 - A high-level review led by John D. Negroponte, the new intelligence director, is stirring a major upheaval within the country's spy satellite programs, beginning with an overhaul of a $15 billion program plagued by delays and cost overruns.

In a terse announcement last week, the National Reconnaissance Office, responsible for developing and launching the devices, said only that a Boeing Company contract to provide the next generation of reconnaissance satellites, known as the Future Imagery Architecture, was being "restructured."

But government officials and outside experts said Mr. Negroponte had ordered that Boeing stop work on a significant part of the project, involving satellites with powerful cameras, under a plan to shift the mission to Lockheed Martin, Boeing's chief competitor.

Under Mr. Negroponte's plan, the remainder of the program, involving satellites that use radar for surveillance, would remain with Boeing. But it is not clear whether the proposal goes far enough to answer Congressional demands for deep cuts in spending on reconnaissance satellite programs that cost taxpayers billions of dollars and whose value is being questioned by Democrats and Republicans alike.

Members of Congress are calling for major shifts in intelligence spending, by transferring spending to human spying efforts from satellites. The review by Mr. Negroponte, who took over in April as the director of national intelligence, suggests willingness to call for major changes in multibillion-dollar programs that had escaped critical scrutiny.

The details of the satellite programs remain highly classified, and Mr. Negroponte's office and the staff of the Congressional Intelligence Committees have generally refused to discuss the new wrangling over the program. But Representative Jane Harman of California, the ranking Democrat on the House Intelligence Committee, issued a statement last week saying that the decision by Mr. Negroponte "would be heartbreaking" for Boeing workers in her home district, "who have made maximum effort to build a hugely complex system."

A second showdown is expected in coming weeks over a different satellite program, a $9.5 billion stealth program that the Senate Intelligence Committee has tried to kill for the last three years, on the ground that its costs far outweigh the benefits it would deliver.

Senator John D. Rockefeller IV of West Virginia, the ranking Democrat on the Senate committee, said last December that he would seek a closed session of the Senate this year to review an expensive technical program if Senate appropriators continued to recommend that it be financed. Government officials said at the time that Mr. Rockefeller was referring to the stealth satellite, which could operate only in clear weather and during daylight.

Despite Mr. Rockefeller's threat, Senate appropriators are believed to have included money for the satellite in a classified annex to a defense appropriations bill that is scheduled for a Senate vote in coming days.

"There's a feeling on the Hill that there's too much redundancy and not enough progress" in satellite programs, said Loren Thompson, a defense expert at the Lexington Institute, a research group.

Most of the scrutiny is being focused on reconnaissance satellites, responsible for collecting images of the earth, rather than on eavesdropping satellites, which intercept communications. The current generation of reconnaissance satellites is aging, but the government is widely believed to be developing a number of replacements, including but not limited to the $15 billion future imagery system and the $9.5 billion stealth satellite being built by Lockheed.

Some critics have questioned the need for the United States to launch many more reconnaissance satellites, at a time when commercial satellites already in place can provide high-resolution images. Within an overall intelligence budget estimated at $40 billion a year, these critics argue that the more urgent need is to add resources for human spying.

John Pike, who operates the defense and intelligence Web site called GlobalSecurity.org, said, "Some would say it's time to recognize that the world has changed - that the number of intelligence questions that can be answered with images from space is very limited."Representative Peter Hoekstra, Republican of Michigan and chairman of the House Intelligence Committee, expressed public concern in June about an intelligence budget that he called "out of balance" and plagued by "overlapping and duplicative technical programs." The classified intelligence budget for fiscal 2006 calls for deep cuts in the future imagery system, government officials say.

Boeing's earlier victory over Lockheed in winning the contract for this program came as a shock within the defense industry, where Lockheed had always been dominant in satellites. But the program has run into increasing trouble in recent years, with technological problems sending costs soaring well beyond the initial $10 billion project and delaying the expected launch of new satellites.

A Boeing spokesman, Marta E. Newhart, said the company "is disappointed with the government's decision in light of the progress the program has demonstrated and resources the nation has invested."

A Lockheed spokesman, Thomas Jurkowsky, would say only that his company recognized "the importance of our country's reconnaissance capability" and stood "ready to support our government customers" when asked.


Copyright 2005, The New York Times Company