NRO Awaits Congressional OK To Revamp Boeing Contract

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The U.S. National Reconnaissance Office (NRO) wants to cancel part of Boeing’s multibillion-dollar contract to build a new generation of radar and optical spy satellites , government and industry officials said, but the precise role that rival Lockheed Martin will take on to avert any resulting gap in America’s intelligence-gathering capabilities remains unclear.

Officials said any changes to Boeing’s Future Imagery Architecture (FIA) contract will need to be approved by the U.S. Congress. One industry official said U.S. intelligence officials began briefing congressional authorities on the NRO’s argument in favor of reworking the Boeing contract Sept. 22.

“We plan to restructure Boeing’s FIA contract. This has not yet happened,” NRO spokesman Richard Oborn said in a Sept. 23 interview. He declined to provide further details.

Marta E. Newhart, a spokeswoman for Boeing Space and Intelligence Systems in El Segundo, Calif., said Sept. 23 that Boeing had yet to receive word from its customer of any changes to the FIA contract. “We have not been officially notified,” Newhart said. “Whatever the outcome, Boeing stands by our customer.”

Industry officials in the past have speculated that part of the FIA contract might be canceled to help contain the program’s ballooning costs. Boeing officials have conceded these issues, most recently in comments by Boeing Chief Financial Officer James A. Bell.

Bell told a Bank of America investors conference in San Francisco Sept. 20 that FIA, which has been subjected to restructurings in the past, continues to be a challenge.

“We’ve had some performance issues,” Bell said. “But I want to make sure we’re all on the same page. This is really hard stuff we’re doing. This is well beyond the state of the art of the technology. We’re inventing, creating technology and trying to insert it into product. There have been issues relative to being able to do this on schedule and within cost — for all contractors that work on these kinds of programs.”

Bell also said Boeing had not received word that its contract would be reduced. “To date we’ve got no word from our customer or any indication that this contract is going to be changed, or [that] any work will be taken from us or given to anyone else.”

Bell said that as is the case with many government contracts, the NRO could terminate the FIA contract for cause or for convenience, as it wished.

One industry official said John D. Negroponte, the U.S. director of national intelligence, briefed congressional officials Sept. 22 on the proposed cancellation of a piece of the FIA contract.

This official said it was not clear whether the FIA work taken from Boeing would be transferred to Lockheed Martin under a separate contract, or simply canceled as a cost-saving measure.

Industry officials in the past have suggested that one option open to the NRO would be to eliminate a piece of Boeing’s FIA contract altogether. To eliminate any gap in satellite intelligence-gathering that this might cause, Lockheed Martin would be asked to assemble a satellite from components remaining from a previous satellite reconnaissance program, according to this scenario.

G. Thomas Marsh, executive vice president of Lockheed Martin Space Systems, attended the same Bank of America investors meeting as Bell Sept. 20. Marsh declined to speculate on a Lockheed Martin role in FIA or any related gap-filler effort beyond saying the company stands ready “to do what we can to support our customer.”

U.S. Rep. Jane Harman (Calif.), the senior Democrat on the House Permanent Select Committee on Intelligence and whose district includes El Segundo, expressed concern about a gap in satellite collection capabilities during a Sept. 22 speech in Washington. “It would be unconscionable to allow our military commanders and troops — or our national policy leaders — to be left blind or deaf when they have critical intelligence needs,” she said in prepared remarks at the National Security Space Policy and Architecture Symposium sponsored by the National Security Industrial Association.

Although Harman did not specifically mention FIA in her remarks, she referred reporters back to the speech when asked to comment on the situation with that program. Pressed to address the possibility that Boeing might lose part of its FIA contract, Harman said, “It’s not over till it’s over.”