NIMA Seeks Funding For 2nd NextView Contract

DigitalGlobe, of Longmont, Colo., ultimately may not be the only winner of a $500 million, five-year contract to meet the imagery needs of the U.S. defense and intelligence agencies under the NextView contract awarded by the National Imagery and Mapping Agency. The NextView contract extends through the end of fiscal year 2008.

Agency officials last week said they would like additional funding from Congress to support a second contract that could go to Space Imaging, a Thornton, Colo.-based remote sensing company that lost to rival DigitalGlobe in last week’s two-way competition. The agency wants to ensure that the defense and intelligence agencies served by NIMA have a second source of imagery.

Ironically, DigitalGlobe Chairman and CEO Herb Sattlerlee had begun lobbying members of Congress and their staffs in recent weeks to allocate a second contract. His company’s win in the bidding process has not changed DigitalGlobe’s position that having access to imagery from two providers would be in the best long-term interest of the U.S. government and the industry.

“It’s good for the industry to have both of us continue,” said Chuck Herring, DigitalGlobe’s director of marketing communications.

With remote imagery companies struggling to become financial successes, a $500 million contract is a huge boost. Until the private sector market for imagery grows substantially, companies must rely on government contracts to generate the bulk of their revenues.

Bethesda, Md.-based NIMA established the NextView program to ensure the availability of high-resolution imagery from the next series of U.S. commercial imagery satellites and to strengthen the agency’s alliance with the industry. The NextView contract is aimed at giving the U.S. government greater access, priority capacity and more advanced capability than previous commercial imagery arrangements.

In an unusual award announcement, NIMA officials said they would hold further discussions with Space Imaging about a possible second contract that has yet to be funded. Such a move would allow Space Imaging to continue the development of a follow-on system.

Mark Brender, Space Imaging’s vice president of corporate communications, said company executives are looking forward to meeting with NIMA officials in the coming days to better understand the government’s evaluation process and how the agency made its decision.

“We proposed a commercial imaging system that met NIMA’s key requirements,” Brender said. “Our proposal was a low-risk plan for the deployment of a system that would be an ideal geospatial and mapping tool for NIMA and the U.S. government. Though we are terribly disappointed, Space Imaging is still committed to NIMA and our other customers.”

Space Imaging’s chances may have been hurt by concerns about its long-term funding. The financial stability of companies is important to federal agencies when they issue long- term contracts and Space Imaging may have been perceived as weaker than Morgan Stanley-supported DigitalGlobe in that regard, industry sources said.

DigitalGlobe is virtually debt free and bankrolled by a major investment firm, while earlier this year Space Imaging’s primary backers Lockheed Martin [NYSE: LMT] and Raytheon [NYSE: RTN] opted not to commit additional funds to the operation. That decision may have left government officials with concerns about its staying power, industry sources said.

Steve Tatum, a Lockheed Martin spokesman, said his company plans to invest further in the development of remote sensing satellites but chose not to pump more money into Space Imaging until market demand rises sufficiently to warrant such a commitment.

Meanwhile, Space Imaging is profitable and growing, Brender said. The company’s high-resolution Ikonos satellite is performing above expectations.

“It is meeting or exceeding all of its design specifications,” Brender said. “The satellite, launched in 1999, originally was expected to last five to seven years. However, that estimated life has been extended.” –Paul Dykewicz

(Mark Brender, Space Imaging, 703/558-0309; Tim Puckerious, ORBIMAGE, 703/480-7527; Chuck Herring, DigitalGlobe, 303/682-3820; Steve Tatum, Lockheed Martin, 408/887-5859)