Inside the Ring

Exquisite spy satellite

Director of National Intelligence Dennis Blair met with key senators Tuesday to discuss funding plans for an expensive new satellite system that will provide high resolution spy photographs and images, according to administration and congressional officials.

No details were immediately available on the meeting between Mr. Blair and Sens. Daniel Inouye and Thad Cochran, chairman and ranking member respectively of the Senate Appropriations Committee. The two, according to Senate aides, were expected to question the Obama administration’s decision to move ahead with production of a multi-billion dollar intelligence satellite dubbed the Next Generation Electro-Optical System.

The new system was announced in April and was not bid competitively, according to defense sources. Instead, they said, the contract was sole-sourced to Lockheed Martin, which has a long history of producing spy satellites.

But Wendy Morigi, spokeswoman for the DNI, said the selection of the final contract “wasnt quite a sole-source process.”

Instead, a “market survey” of eight companies was conducted in 2008 and in the end a “justification analysis” was done for picking the final contractor, which she declined to confirm was Lockheed Martin.

“Every effort was made to ensure that all companies could compete,” she said. However, in the end the contractor chosen was picked because of its satellite capabilities, she noted.

The contract for the new intelligence satellites will cost taxpayers about $20 billion, making it one of the most expensive systems produced for both the Pentagon and U.S. intelligence community, according to the sources who spoke on condition of anonymity because of the sensitivity of the subject.

The new satellite was approved personally by President Obama last spring, and the single contractor has raised questions among some defense officials because of the president’s criticism of the procurement process.

Mr. Obama in a speech March 4 criticized what he called the “broken” system of defense contracting during the eight years of the George W. Bush administration, including cost overruns, fraud and an absence of oversight and accountability. “In some cases, contracts are awarded without competition,” he said.

The White House was not immediately available for comment.

In April, when Mr. Blair’s office announced the system, a senior intelligence official who briefed reporters declined to say if the contract would be let to a single U.S. contractor.

“Our decision is essentially to continue to provide the level of support that we have counted upon from these assets over several years in the past,” the official said. “We are not moving to another plateau of performance.”

Asked about opposition within Congress to the system, the intelligence official said, “We and the secretary of defense intend to support this program whole-heartedly, and with the support of the White House we expect that we’ll be able to get it through.”

The official said the new satellite would be used for both wide area coverage as well as smaller “point collection” capabilities. U.S. spy satellites are the “workhorses” for both the military and intelligence agencies, the official said. Missions range from tracking terrorists and their training camps for the military to following missile deployments in China and other countries for intelligence agencies.

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