Board of Directors Gives ‘Go’ for Investment in Development of New Logistics Service

SPACEHAB, Incorporated, a leading provider of commercial space services, announced today that it has concluded all proposal activities in support of NASA’s Commercial Orbital Transportation Services (COTS) demonstration initiative, and is eager to press ahead with plans to provide a commercially viable and robust International Space Station transportation service.

At the request of NASA, five members of SPACEHAB’s management team met with Agency decision makers in Washington, D.C. today, providing an overview and fielded questions about the Company’s technical approach to demonstrate a service capable of meeting NASA’s needs for the space station resupply following retirement of the space shuttle. After nearly one year of concept definition, technical development, and business planning, SPACEHAB has supplied NASA with all materials requested to evaluate the Company’s proposed solution.

SPACEHAB’s Board of Directors fully supports the Company’s plan to develop the Apex spacecraft that will serve as the vehicle used to provision the space station and service commercial payloads to and from orbit. In a meeting last week the Board approved a resolution authorizing SPACEHAB to expend funding necessary to complete design and development of the spacecraft upon NASA’s decision to co-invest in the program.

SPACEHAB is one of several finalists, culled from approximately two dozen, vying for part of NASA’s $500 million investment that the Agency is making to help spur the development of a space economy. NASA selection officials have said they will make an announcement regarding which companies will receive funding through Space Act Agreements this Friday, August 18, 2006 at 4:00 Eastern time.

In NASA’s Commercialization Plan provided to Congress earlier this month, the Agency stated that it has embraced commercialization as an effective mechanism to help achieve the Vision for Space Exploration and encourages the pursuit of appropriate partnerships with the emerging commercial space sector. As the plan outlines, NASA’s pledge to private industry is simply stated, “If you successfully demonstrate cost-effective commercial capabilities, NASA will welcome those capabilities and use them.”

“Not only has SPACEHAB provided cost-effective commercial services to NASA on twenty space shuttle and space station missions over the past decade, our COTS proposal documents a high-value, low-risk solution for meeting ISS delivery needs while further stimulating a commercial space market,” observed Michael E. Kearney, SPACEHAB President and Chief Executive Officer. “We have the team, facilities, processes, and experience to do precisely this job; a comprehensive service not available through any other supplier.”

About SPACEHAB, Incorporated

SPACEHAB, Incorporated (www.spacehab.com) is a leading provider of commercial and government space services with three primary business units. The Flight Services business unit develops, owns, and operates habitat and laboratory modules and cargo carriers aboard NASA’s Space Shuttles for Space Station resupply and research purposes. SPACEHAB’s Astrotech subsidiary provides payload processing support services for both commercial and government customers at company-owned facilities in Florida and California. The Company’s Government Services business unit supports NASA’s Johnson Space Center providing configuration management, product engineering, and support services for both the Space Station and Space Shuttle programs. Additionally, through The Space Store, Space Media provides space merchandise to the public and space enthusiasts worldwide (www.thespacestore.com).

The statements in this document may contain forward-looking statements that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks, trends, and uncertainties that could cause actual results to be materially different from the forward-looking statement. These factors include, but are not limited to, continued government support and funding for key space programs, product performance and market acceptance of products and services, as well as other risk factors and business considerations described in the company’s Securities & Exchange Commission filings including the annual report on Form 10-K. Any forward-looking statements in this document should be evaluated in light of these important risk factors. The Company assumes no obligation to update these forward-looking statements.

Contact:

SPACEHAB, Inc., Houston Kimberly Campbell, 713-558-5049 campbell@spacehab.com