Intelligence agencies rethinking how to buy data from new Earth imaging companies

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National Space Council's Scott Pace: “It’s a new challenge understanding how to asses those capabilities.”

WASHINGTON — There are at least 30 companies today that are operating Earth observation satellites or have announced their intentions to do so. “Not all will make it,” noted Jeff Tarr, former CEO of DigitalGlobe.

The ones that do break out of the pack will be partly due to government contracts. The National Geospatial Intelligence Agency is a giant buyer of commercial data. In the coming months, the responsibility for the procurement of satellite imagery will be taken over by the National Reconnaissance Office.

Whether it’s NGA or NRO, there are still questions on how government agencies should buy remote sensing data given the growing population of providers and diversity of products.

“It’s a new challenge understanding how to asses those capabilities,” said Scott Pace, executive secretary of the National Space Council, an interagency panel chaired by Vice President Mike Pence.

The market has changed from one that supplied mostly raw data to one that provides “higher value added products,” Pace said this week at a Hudson Institute event. The government sees this as a “geospatial information technology issue,” he said. Remote sensing satellite companies that don’t move up the value chain may end up with “fewer buyers.”

The House Armed Services Subcommittee on Strategic Forces in its mark of the Fiscal Year 2019 National Defense Authorization Act asks intelligence agencies to explain their buying strategy. “The acquisition of commercial imagery should take advantage of a broad swath of U.S. industry capabilities by contracting with several providers to leverage high-resolution providers, global coverage, high revisit rates and cost-effective services that are rapidly emerging within industry,” said the subcommittee bill.

Officials are working on a plan to transition commercial imagery acquisition from NGA to NRO in fiscal year 2019. The committee wants the directors of both agencies to brief defense and intelligence committees on the details by August 1. The bill calls for an “open and fair competitive acquisition process to leverage industry capabilities, including but not limited to plans following the EnhancedView contract.”

EnhancedView is the NGA’s commercial imagery program. The agency in 2010 awarded DigitalGlobe and GeoEye $3.5 billion and $3.8 billion contracts respectively in a 10-year deal. DigitalGlobe acquired GeoEye in 2012 and now is the primary supplier of imagery to NGA.

NRO Director Betty Sapp broke the news about EnhancedView last month at the Space Symposium in Colorado Springs. “NRO and NGA are working together to make sure that transfer is seamless,” she said. “The potential gain for the future is huge. We see a real opportunity for synergy in operations, acquisition and delivery timelines.”

NGA Director Robert Cardillo told reporters last week at the GEOINT Symposium in Tampa, Fla.: “We are in discussion about making that transition.”

Regardless of which agency gets to oversee or sign off on contracts, “What’s not changing is my functional management role, my responsibility to present data,” Cardillo said.

There are two years left in the DigitalGlobe’s EnhancedView contract. “It comes up for renewal in August,” said Cardillo. “We need to figure out the mechanics of such a change if we decide it’s in our interest to make that move,” he said of the transfer to the NRO. Although the NRO would execute the contract, “it would still be under my responsibly to document the needs against which that contract will operate.”

The upside of turning this job over to the NRO? “Betty could create some synergy between the processing of commercial and government imagery, storage, transport, make it a truly unified architecture,” said Cardillo.

DigitalGlobe’s Chief Technology Officer Walter Scott told SpaceNews that the company is not concerned about the looming changes. “We work well with both organizations,” he said of NGA and NRO. “We’re happy to serve the U.S. government.”

“Which agency is in charge is less important than the mission,” he said. “We’re confident that the demand for what we provide will continue.”

The fact that NRO is “embracing commercial” is good news for the industry, said Scott. “It enables NRO to do leading edge things. You have seen this happen in other industries. Any technology that matures allows government agencies to push things for which there is no commercial market.”

If and when the NRO solicits competitive bids for a new EnhancedView contract, DigitalGlobe will face tough competition from companies like Airbus and Planet. “We believe we’re uniquely situated,” said Scott. “There isn’t anybody that can deliver the resolution, the accuracy and capacity that we deliver.”

There are more companies in the remote sensing business, “but I don’t see direct competitors. I see complements, players in the industry in places that may not have been served,” said Scott. “There are lower resolution, higher frequency players, others focused on analytics,” he added. “Early players may have to be highly vertically integrated as the industry matures. It’s possible to not have to carry all the load and focus on specific things a company does well.”

DigitalGlobe is building a new Worldview Legion constellation that is scheduled to launch in 2021. “It will give us more high demand capacity in parts the world where most people live, and ensures continuity of services as Worldview 1 and 2 reach their end of life in the next decade.”

A Planet spokeswoman said the company “will pursue business opportunities where we know our unique capabilities can deliver value.”

Cardillo said competition is welcome. “I love all these companies,” he said of the new crop of small satellite startups, each trying to find its niche. NGA doesn’t want to “drive” the market, he said. “I want the market to work. But the government shouldn’t be their first customer. We should be their second customer.”