GeoEye said yesterday it received a $111 million cost-share payment from the National Geospatial-Intelligence Agency (NGA) for successfully delivering the GeoEye-2 commercial imagery satellite to subcontractor Lockheed Martin [LMT] in early June for testing.
“In passing this critical milestone and receiving the $111 million cost-share payment, GeoEye has, once again, demonstrated its technical leadership and its ability to meet the U.S. government’s stringent EnhancedView program requirements on time and on budget,” GeoEye CEO Matt O’Connell said in a statement.
NGA’s EnhancedView is a 10-year, $7.3 billion program to provide it with commercial imagery.
The $111 million payment is a portion of $181 million NGA owes GeoEye as funding for the development and launch of GeoEye-2, scheduled for launch in the first half of 2013. NGA told GeoEye in a June 22 letter it elected not to obligate additional funding for the development and launch of GeoEye-2. NGA also proposed new milestones for payment of the remaining $70 million, three of which would occur before the launch of GeoEye-2 and for which no additional cost sharing would be provided (Defense Daily, June 26).
NGA also informed GeoEye on June 22 it would not exercise the full year EnhancedView Service Level Agreement option for the contract year starting Sept. 1. NGA instead proposed a three-month option from Sept. 1 to Nov. 30 in which it would pay GeoEye $39.8 million, and a further nine-month option of $119.3 million, based on funding availability.
O’Connell said in a conference call with investors Monday he didn’t see “any scenario” where GeoEye would delay the first half-2013 launch of GeoEye-2 despite the NGA declining to exercise its option.
NGA provided GeoEye with a July 6 deadline to respond and it asks the company to enter discussions regarding these proposals. GeoEye said it intends to enter negotiations and provide the information in a timely manner.
NGA informed GeoEye’s main satellite imagery competitor DigitalGlobe [DGI] on June 18 it planned to exercise its EnhancedView Service Level Agreement for the entirety of option-year three, which also begins Sept. 1 (Defense Daily, June 25). DigitalGlobe and GeoEye are the two companies competing to provide commercial satellite imagery to the federal government. EnhancedView is expected to be hit with substantial reductions as the Pentagon implements planned budget cuts.