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U.S. Spy Satellite Chief Says Programs Now on Schedule, Cost

Sept. 15 (Bloomberg) -- The director of the U.S. National Reconnaissance Office said today that the nation’s spy satellite programs are now on schedule and cost.

NRO chief Bruce Carlson told reporters in Washington that the agency’s major programs, which he said number between 10 and 15, are meeting performance objectives while proceeding on time and within budget.

Two years ago, Carlson said, two-thirds of those programs were graded either “yellow or red” in the Pentagon’s grading system, indicating problems. “Today it’s green -- all of our major system acquisitions. I think we’ve hit stride,” he said.

The NRO, which has a classified budget, manages development and acquisition of the nation’s surveillance and reconnaissance satellites. Congress and analysts have criticized the agency’s handling of the programs, most notably a Boeing Co. satellite program called the Future Imagery Architecture.

The FIA was to be the new network of as many as nine spy satellites taking high-resolution all-weather pictures of specific locations. Boeing in 1999 beat the incumbent satellite maker, Lockheed Martin Corp., for the job.

The government and Boeing have never disclosed the value of the FIA program, which Lexington Institute defense analyst Loren Thompson said was in excess of $10 billion. It was cut short after running billions of dollars over budget.

‘Colossal Failure’

Carlson today called the FIA program “a colossal failure.”

“The requirements were not managed or held to any strict degree,” he said. “We turned all the management of that program to the contractor -- a contractor who never built one of those things before, and take what we’ve built before and make it half the size. There are a dozen reasons why that was a failure.”

Today “we have a pretty healthy constellation,” Carlson said of the nation’s spy satellites. “We know how to manage programs.”

He said in an interview that since the FIA episode, his agency has made “significant changes” in award fees paid to contractors.

“You don’t get an award fee for just getting to the end” of a project, Carlson said. “You’re never in an NRO program getting an award fee unless the satellite is on orbit and working 100 percent.”

To contact the reporter on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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