Amy Svitak Paris

GeoEye, a provider of high-resolution optical imagery to the intelligence community, is building an $800 million satellite scheduled to be lofted next year for a U.S. government customer that may not be able to use it.

In June the National Geospatial-Intelligence Agency (NGA) notified GeoEye it would be unable to co-finance construction and launch of the GeoEye-2 commercial remote-sensing spacecraft beyond $181 million already appropriated by Congress. Although NGA paid out $111 million of that money June 28, the move leaves GeoEye short about $156 million expected under the terms of its $3.8 billion EnhancedView contract signed with NGA in 2010.

The bigger blow came when the NGA signaled an inability to pay GeoEye $150 million agreed to for the purchase of submeter imagery in the fiscal year that begins Oct. 1. Instead, the agency proposes to restructure the 2013 Service Level Agreement (SLA), reducing payments to slightly less than $40 million between Sept. 1 and Nov. 30 and offering to pay $13.25 million per month for the balance of the fiscal year “in the event funding becomes available in FY13.”

These monthly payments—which were to ramp up considerably once GeoEye-2 joins the company's constellation of two high-resolution imaging spacecraft orbiting at 681 km (422 mi.)—are contingent on GeoEye's ability to put encrypted web-hosting platforms in place by mid-August to support the government's classified network requirements.

GeoEye Chief Executive Matt O'Connell admits the news from NGA was somewhat surprising, given that the agency recently notified the company's chief competitor, DigitalGlobe, of plans to uphold the terms of a separate EnhancedView agreement, valued at $3.5 billion, with the Longmont, Colo.-based company.

NGA's 10-year EnhancedView contracts with DigitalGlobe and GeoEye are valued at a combined $7.3 billion. The program started in September 2010 with a one-year commitment from NGA followed by nine optional annual renewals.