PARIS and WASHINGTON — U.S. geospatial-information providers DigitalGlobe and GeoEye have thrown a curve ball into the long-running competition between U.S. and European hardware builders for a satellite contract with the United Arab Emirates (U.A.E.) by proposing to sell the U.A.E. the nearly completed GeoEye-2 satellite, industry officials said.

DigitalGlobe and GeoEye, whose merger cleared final U.S. government approval Jan. 31, would thereby be spared the expense of storing GeoEye-2 for three years while waiting for the orbiting WorldView-1 satellite to reach retirement.

Herndon, Va.-based GeoEye and Longmont, Colo.-based DigitalGlobe have said the merged company will operate a fleet of three satellites, fewer than the combined four or five satellites the two companies would operate if they remained in competition.

The U.A.E., led by its air force, has been talking for years about purchasing its own high-resolution optical satellite system instead of relying on images purchased from suppliers like GeoEye and DigitalGlobe in the United States, and Astrium Geo-Information Services in Europe.

U.S. and European bidders have admitted to being exasperated that the contest seems to be never-ending, but the prospect of a $1 billion sale is too enticing for them to stop sending teams to the U.A.E. to keep their bids active.

In September, a U.A.E. air force official said the competition was nearing completion and had been narrowed from an initial 11 bidders to finalists from Europe and the United States. According to industry officials, bidders on the program included a team of Astrium and Thales Alenia Space of Europe; Lockheed Martin Space Systems of Sunnyvale, Calif., builder of GeoEye-2; and a team of Raytheon Intelligence and Information Systems of Aurora, Colo., and Ball Aerospace & Technologies Corp. of Boulder, Colo.

The two European companies also joined to build the French Pleiades satellites, which are dual-use assets whose imagery is available for commercial sale, with a portion of the image-taking ability reserved for the French Defense Ministry.

The United States and France, which along with Israel are the nations that have been most active in developing their own high-resolution optical satellite capabilities, have arrived separately at the same policy on imagery exports: A 50-centimeter ground-sampling distance, meaning objects of that size and larger can be distinguished, is allowable, while images sharper than 50 centimeters require special government approval.

U.S. manufacturers have been slow to seize export opportunities for Earth observation satellites, but Astrium and Thales Alenia Space have sold several spacecraft equipped with high-resolution imaging cameras, notably to Turkey, Kazakhstan and South Korea. None collects imagery at resolutions sharper than 50 centimeters.

It remains unclear what conditions, if any, the U.S. government — which has made it clear it supports U.S. industry involvement in the competition — has set on the U.A.E. sale, and specifically whether the camera U.A.E. planned for GeoEye-2 would be replaced by another, less-capable system to stay within the 50-centimeter limit. As designed, the satellite’s imager can detect objects with a diameter of 34 centimeters from its planned operating altitude.

The U.A.E. air force official said when the procurement process began nearly a decade ago, it was unclear whether a U.S. company would be allowed to bid. The easing of U.S. export restrictions since then has permitted the U.A.E. to benefit from a healthy trans-Atlantic competition.

GeoEye has estimated that the GeoEye-2 satellite will end up costing between $820 million and $850 million, including its launch and insurance. The company said that as of June 30 it had spent $718 million on the program. The satellite had been scheduled for a mid-2013 launch aboard a Lockheed Martin-supplied Atlas 5 rocket, and GeoEye had said it had until March to inform Lockheed Martin whether it would proceed with the launch.

With the merger with DigitalGlobe — which looks more like an acquisition by DigitalGlobe than a merger — now complete, GeoEye and DigitalGlobe are free to plan their combined orbital fleet and prepare for GeoEye-2’s storage.

Asked about the GeoEye-2 offer, one industry official said it appears to be outside the specifications set by U.A.E. officials for the competition. The official conceded it would not be the first time a customer changed specifications midway through a competitive bidding process.

In a statement to SpaceNews emailed Feb. 1, DigitalGlobe spokesman Robert Keosheyan said, “DigitalGlobe acknowledges receiving an unsolicited inbound expression of interest from the UAE and is in the process of considering whether to engage in discussions.”

Warren Ferster is the Editor-in-Chief of SpaceNews and is responsible for all the news and editorial coverage in the weekly newspaper, the Web site and variety of specialty publications such as show dailies. He manages a staff of seven reporters...