Congress cancels novel satellite program

WASHINGTON — With a federal budget crunch looming, Congress this month canceled Pentagon plans to buy and launch two commercial imagery satellites to complement its network of classified spy craft, military and space industry officials said.

House and Senate intelligence appropriations committees cut all funds for the satellite program during a conference to work out differences in the classified 2009 bills that approve intelligence spending. They also erased the remaining 2008 funds.

Congress cut "about $1 billion," said an industry official with direct knowledge of the program. The exact budget is classified, but the program was expected to cost about $1.7 billion, according to Pentagon documents and military and industry officials who spoke on condition of anonymity to discuss the classified information.

The cancellation means the next administration will not be locked into an expensive and potentially controversial program while paying for wars in Iraq and Afghanistan as well as the $700 billion national financial rescue.

In a related move, the Pentagon has pushed back a competition between Lockheed Martin Corp. and Boeing Co. for a new multibillion satellite communications system contract, according to an industry source familiar with the decision.

A contract award for the Transformational Communications Satellite, known as TSAT, is now planned for the fourth quarter of 2010, said the source who asked not to be identified because the Pentagon has not officially announced the change. The Air Force has planned to award the contract, which could have been worth as much as $6.5 billion, in December.

The National Reconnaissance Office was supposed to buy and launch two commercial-style satellites around 2012 under the program called the Broad Area Space-Based Imagery Collection satellite system, or BASIC. The program also funded additional commercial imagery purchases, according to Pentagon documents obtained by The Associated Press last month.

Some of the money — approximately $350 million — has been set aside for the Pentagon to study whether it needs more satellite imagery, and if so, to begin a new satellite program with the funding, two industry officials said. The study is expected to be completed this spring.

Pentagon, Air Force and National Reconnaissance Office officials wrangled for months over whether to buy and operate commercial satellites with the ability to see the outlines of 16-inch objects from space, or to pump the money into buying more imagery from the commercial companies that already have such satellites in orbit.