Pentagon may transfer FIA from Boeing to Lockmart

http://www.latimes.com/business/la-f...lines-business

Pentagon May Slash Boeing Contract
Officials are finalizing plans to shift much of the spy satellite
project to Lockheed because of cost overruns and delays, sources say.
By Peter Pae
Times Staff Writer

September 17, 2005

The Pentagon is on the verge of taking away from Boeing Co. most of its
multibillion-dollar contract to build the nation's next generation of
spy satellites because of cost overruns and delays, government and
aerospace industry sources said Friday.

It would be a blow to the company's space operations in Southern
California, as Pentagon and intelligence officials are finalizing plans
to transfer much of the work to Boeing rival Lockheed Martin Corp.,
three sources familiar with the talks said. The sources requested
anonymity because of the classified nature of the program.

The spy satellites are part of a highly classified program known as
Future Imagery Architecture. The Pentagon's National Reconnaissance
Office has not disclosed the program's cost, the kind of satellite
being developed or how many people are working on it.

But since awarding the satellite contract to Boeing in 1999, the
government has spent more than $10 billion on the program, including
about $4 billion in cost overruns, industry analysts estimated. About
5,000 people are thought to be working on it, most of them in
windowless Boeing offices in Seal Beach and at its sprawling
satellite-making operations in El Segundo.

It is unclear how many jobs would be affected in the event Boeing loses
the contract, but analysts said it would provide a boost to Lockheed's
satellite manufacturing operations in Sunnyvale, Calif. For decades,
Lockheed built virtually all of the nation's spy satellites until it
lost out to Boeing in a major upset six years ago.

"It appears that Boeing's effort to make off with a huge franchise from
Lockheed has faltered," said Loren Thompson, a Lexington Institute
defense policy analyst. "It's potentially a very big gain for
Lockheed."

As a new entrant to the spy satellite business, Boeing may have
promised too much and ultimately could not deliver, he said. Until
recently, much of Boeing's space expertise was in making rockets to
launch satellites and developing commercial telecommunication
satellites. It had little experience manufacturing satellites with
optical lenses that can take close-up pictures from space of objects on
the ground.

"Boeing bid very aggressively even though it didn't understand the
technology as well as Lockheed," Thompson said.

Boeing spokeswoman Marta Newhart said Friday that the Chicago-based
company had not been notified of any changes to the contract. She
declined to comment further.

Lockheed spokesman Tom Jurkowsky declined to comment and deferred all
questions to the government. The Pentagon said it could not respond to
questions about the program.

Two months ago, a special panel reviewing Boeing's program recommended
to the Pentagon that it stop work on these next-generation electrooptic
satellites, concluding that Boeing's proposal was too challenging,
industry and government sources said.

A slightly different take on the story. Interesting if Negroponte is
the driving figure. Also interesting is the assertion that Boeing will
retain the radar part of FIA -- see recent indications that Space
Radar, when and if it gets built, is to be the US' sole
military/intelligence radar imager.

-----------------------------------------------

Aviation Week & Space Technology
Negroponte Strips Intel Satellite Work From Boeing
09/16/2005 02:05:18 PM
By Amy Butler

Boeing is expected to lose its multi-billion-dollar contract to develop
secret imaging satellites owing to ballooning costs and schedule slips,
and U.S. National Intelligence Director John Negroponte will likely
hand the work to rival Lockheed Martin.

The government's decision to switch contractors could be finalized as
soon as Friday, Sept. 16, sources close to the program told Aviation
Week & Space Technology.

The satellites will provide high-resolution electro-optical pictures to
the U.S. intelligence community as part of the Future Imagery
Architecture (FIA) being managed by the National Reconnaissance Office
(NRO). Another portion of FIA, for which Boeing remains the contractor,
will consist of radar imaging satellites.

FIA was among the first efforts up for changes during Negroponte's
first program review, which began earlier this month, and his decision
may reflect a new hard line for underperforming contractors.

The transfer is a major loss for Boeing's space business, which is
suffering after the downturn in the commercial communications satellite
market and the subsequent crash in demand for space launches.

The cost for FIA, a classified program, has soared from $6 billion to
more than $15 billion. Roger Roberts, Boeing's senior FIA official,
left the company last month under the cloud of FIA's problems. Boeing
officials say he simply retired. Howard Chambers was named Roberts's
interim successor this week.

UPDATE 2-US shifting portion of spy satellite work-sources
Thursday 22 September 2005, 5:32pm EST
By Andrea Shalal-Esa
[EXCERPTS]

WASHINGTON, Sept 22 (Reuters) - The U.S. government has decided to
restructure a $15 billion Boeing Co. contract to develop secret imaging
satellites, shifting a big portion of the work to Lockheed Martin
Corp., sources familiar with the matter said on Thursday.

The sources said the change would give responsibility for
electro-optical satellites -- which act like giant high-resolution
cameras in space -- to Lockheed, which made the current electro-optical
satellites already in space.

Boeing would remain responsible for the radar satellites involved in
the project, these sources said.

Director of National Intelligence John Negroponte had made the decision
and his staff was informing lawmakers, said one source, who asked not
to be identified.

The FIA program has run into increasing trouble in recent years, with
technological snags sending costs soaring and delaying by years the
expected launch of new satellites.

Rick Oborn, spokesman for the National Reconnaissance Office, which
awarded the classified Future Imagery Architecture (FIA) contract in
1999, said only that Boeing's contract was being changed.

"We are restructuring Boeing's FIA contract and the details of that are
classified," he said.

Boeing spokeswoman Marta Newhart said the company had not been notified
of any changes to the contract.

Lockheed spokesman Tom Jurkowsky said his company also had not been
officially notified of any change to the program.

Negroponte's decision was relayed to Congress in private meetings on
Thursday by several intelligence officials including Air Force Gen.
Michael Hayden, Negroponte's top deputy, said one official, who spoke
on condition of anonymity because of the classified nature of the
contract.

The change came just before the Senate Select Committee on Intelligence
met behind closed doors to mark up legislation authorizing the federal
government's intelligence budget for fiscal year 2006.

http://www.dailybreeze.com/business/...s/1748211.html

Saturday, September 24, 2005

Harman: Keep Boeing pact intact
By Muhammed El-Hasan
DAILY BREEZE

Rep. Jane Harman, D-El Segundo, said Friday that she will work to keep
a multibillion-dollar satellite program in Southern California despite
a tentative decision by the Department of National Intelligence to take
part of that work away from the Boeing Co.

"I believe there are better options, and will continue to work with the
DNI and the relevant congressional committees on a plan to save
valuable technology and the work force that builds it," Harman said in
a statement.

Since last week, various news agencies have reported that Boeing may
lose part of a U.S. spy satellite contract to rival Lockheed Martin
Corp. because of continued cost, schedule and technical problems.

The super-secret program, known as Future Imagery Architecture, was
awarded to Boeing in 1999 for an unspecified sum. The agency
traditionally hasn't discussed the program or its value, estimated by
analysts at as much as $19 billion.

Boeing has been working on the program in Southern California, but
wouldn't say exactly where. Harman's statement Friday indicates at
least part of the work is done in El Segundo, where Boeing has its
Satellite Development Center. It employs 5,600 workers.

"This decision, should it become final, would be heartbreaking for many
tireless workers in El Segundo who have made a maximum effort to build
a hugely complex system," Harman said.

Boeing's contract to develop and build the satellites is being
"restructured," according to the government agency that manages the
U.S. spy-satellite program.

National Reconnaissance Office spokesman Rick Oborn declined to say how
the Future Imagery Architecture contract will change, saying Boeing
will remain the prime contractor, Bloomberg News reported.

Citing anonymous Pentagon and congressional sources, the Los Angeles
Times reported Friday that National Intelligence Director John D.
Negroponte "has signed off on a plan to strip Boeing Co. of a major
portion" of the contract.

"This potential move could happen," a source familiar with the issue
told the Daily Breeze on Friday on condition of anonymity, "The
decision has not come down yet. It is not final. But it is a
possibility."

In an interview Friday, Boeing spokeswoman Marta Newhart said that
Boeing hasn't stopped its work on the program.

"We've not heard from the customer," Newhart said. "There's still no
official word to the Boeing Co. on the program. So, we're going to
continue to execute on the contract we have and fulfill our commitments
with the customer."

In her statement, Harman argued that Boeing deserves to keep its share
of work on the satellite program.

"It is appropriate to insist on an overall strategy for space
architecture and to face tough decisions," Harman said. "Boeing
management readily admits that mistakes were made on this program. But
those mistakes are now corrected and I remain hopeful that a
well-managed program will ultimately move forward."

I'm a bit dubious that the Pentagon is all that concerned about Misty
III -- FIA would be much better suited to the military's needs.

------------------------------

Air Force Reviewing Troubled Space Programs
Tue Sep 27, 2005 7:52 PM ET
By Andrea Shalal-Esa
[EXCERPTS]

WASHINGTON (Reuters) - The U.S. Air Force is reviewing its space
programs -- many of which are behind schedule and over budget -- with
an eye to slowing down projects whose technologies are not yet mature,
the Pentagon's top space official said on Tuesday.

Air Force Undersecretary Ron Sega, a former astronaut and the
Pentagon's executive agent for space, also urged greater cooperation by
the intelligence and defense communities on satellites, noting their
importance to fighting wars abroad, as well as responding to recent
hurricanes in the Gulf region...

Sega, who directed Pentagon research for four years, stopped short of
saying space programs were in crisis but said his previous work made it
clear that the technological maturity of current programs differed
widely.

"We would be well-served to lower the risk as we build operational
systems and make sure that we have the parts we need and ... make sure
the technology is mature," he said.

Sega said he would thoroughly examine each satellite program and how
they would fit into an "integrated architecture in space," as well as
overall military intelligence, reconnaissance and surveillance work.

His remarks came a week after intelligence director John Negroponte
recommended canceling a key part of Boeing's contract for the Future
Imagery Architecture satellite and hiring Lockheed Martin Corp. to do
the work.

Negroponte also moved to cancel a second satellite imagery program,
Misty, being built by Lockheed, but defense officials said they need
the new satellite for military purposes.

The Pentagon offered to pump billions of dollars into the classified
project, but details are still being worked out with congressional
committee that oversees intelligence and defense spending, according to
sources familiar with the matter.

It will be interesting to see how LockMart will manage "Quick
turnaround" and "adhering to the time line". I suspect that the answer
will involve 8X, at least as a transitional program.

+++++++++++++++++++++++++++++++++

Satellite FIAsco
by Amy Butler
Aviation Week & Space Technology
26 September 2005
p. 30
[EXCERPTS]

The government is in talks with Boeing and Lockheed Martin to determine
how to transfer the former's work on a multibillion-dollar contract to
develop secret imaging satellites to Lockheed Martin for a quick
turnaround, according to sources familiar with the issue...

Boeing was able to avoid the strain of a full contract termination. NRO
spokesman Richard Oborn says, "We are restructuring the Boeing FIA
contract." Termination was an unfavorable option because it would
expose the government to the cost of shutting the effort down. Another
unpalatable alternative was to create a team of the two contractors
[Boeing and LockMart], a potentially thorny move, given that they are
bitter rivals.

A new contract is expected for Lockheed Martin, which lost the original
FIA competition partially because of Boeing's low-cost proposal... The
company will now be expected to provide electro-optical satellites
adhering to the time line outlined in Boeing's contract, says a source
close to the issue. Launch of the first satellite had slipped as much
as five years to 2009.

Allen Thomson wrote:
It will be interesting to see how LockMart will manage "Quick
turnaround" and "adhering to the time line". I suspect that the answer
will involve 8X, at least as a transitional program.

+++++++++++++++++++++++++++++++++

I think has more to do with corrective actions from the DSB/AFSAB
report on the mistakes of the 90's made in space
acquisition--specifically the complete and utter stupidity of allowing
TFNG to underbid the established industry expert without sufficient
deference being given to experience base.
This new contract is a corrective action, and involves a completely new
set of requirements, so expect it to allow LockMart to put its entire
focus beind 'Mission Success' instead of cost as the primary driver.

Tom
















Satellite FIAsco
by Amy Butler
Aviation Week & Space Technology
26 September 2005
p. 30
[EXCERPTS]

The government is in talks with Boeing and Lockheed Martin to determine
how to transfer the former's work on a multibillion-dollar contract to
develop secret imaging satellites to Lockheed Martin for a quick
turnaround, according to sources familiar with the issue...

Boeing was able to avoid the strain of a full contract termination. NRO
spokesman Richard Oborn says, "We are restructuring the Boeing FIA
contract." Termination was an unfavorable option because it would
expose the government to the cost of shutting the effort down. Another
unpalatable alternative was to create a team of the two contractors
[Boeing and LockMart], a potentially thorny move, given that they are
bitter rivals.

A new contract is expected for Lockheed Martin, which lost the original
FIA competition partially because of Boeing's low-cost proposal... The
company will now be expected to provide electro-optical satellites
adhering to the time line outlined in Boeing's contract, says a source
close to the issue. Launch of the first satellite had slipped as much
as five years to 2009.

Tom Cuddihy wrote:

I think has more to do with corrective actions from the DSB/AFSAB
report on the mistakes of the 90's made in space
acquisition--specifically the complete and utter stupidity of allowing
TFNG to underbid the established industry expert without sufficient
deference being given to experience base.

This new contract is a corrective action, and involves a completely new
set of requirements, so expect it to allow LockMart to put its entire
focus beind 'Mission Success' instead of cost as the primary driver.

Well, yes, I think that the ultimate outcome will be that NRO has
pushed the "reset to 1999" button. But that leaves the intervening
five or six years from 1999 to 2005 to be made up -- from now till 2010
or a bit later. The present spysats are getting elderly and some
replacements may be needed between now and 2010, so what's going to be
fill the gap? The only thing I can see is 8X and/or spare CRYSTALs. In
any case, the launch of the last T-4B may be informative.

Hmm. I'm getting the impression that the Boeing - Lockheed transfer of
FIA EO is not totally done yet. Aside from the following newsbittie,
the actual event would be a Really Big Deal that I've not yet seen
reported much.

+++++++++++++++++++++++++


http://news.moneycentral.msn.com/pro...4&ID=52174 95

October 24, 2005 04:07 PM ETEarnings Preview:

Associated Press NewsNEW YORK (AP) - Defense contractor Lockheed Martin
Corp. reports third-quarter earnings on Tuesday, Oct. 25. The following
is a summary of key developments and analyst opinion related to the
period.

ANALYST TAKE: Banc of America analyst Nick Fothergill wrote in a
September report he expects to see the company's strong cash generation
continuing and predicted that space programs will see growth from
defense intelligence and communications contracts.

[much snip]

In mid-September, a government official said the Defense Department is
considering shifting part of a classified spy satellite program to
Lockheed from Boeing, which received the $4 billion contract in 1999. A
private think tank said the Boeing contract has been hampered by cost
overruns and delays.