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For Eyes in Sky, Picture Clearing

Dulles Satellite Firm Had Bumpy Path to $500 Million Deal

By Bill Brubaker
Washington Post Staff Writer
Thursday, October 14, 2004; Page LZ05

At a recent news conference, a Defense Department intelligence agency announced it had signed a contract, worth as much as $500 million, with Orbimage Inc., a Dulles firm that provides high-resolution satellite images.

A year earlier, the agency had announced a similar $500 million deal with DigitalGlobe Inc., a Colorado company that also serves up satellite images to support the government's domestic and international intelligence missions.

"The satellite business is a risky business in and of itself," said Gary Adkins, an Orbimage vice president. The firm won a contract to build a spy satellite. (Ricky Carioti -- The Washington Post)

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Why the need for two spy satellites -- from two competing companies -- with similar capabilities?

Quite simply, the government needs a ready backup should one of these companies collapse, Jaan A. Loger, a director of the National Geospatial-Intelligence Agency in Bethesda, said at the news conference.

"The business is still young and not necessarily robust," Loger said. "Given that it's a risky business, we want to make sure that at least one survives, to be brutal about it. So we've got a better chance with two, starting off."

Orbimage's 12-year history illustrates just how volatile the spy satellite industry can be. Until last year, the money-losing company had been owned by Dulles-based rocketmaker Orbital Sciences Corp. But Orbital Sciences' ownership interest in Orbimage was canceled at the end of last year as part of a Chapter 11 reorganization by the satellite imaging firm.

Orbimage reported losses in the first two quarters of this year. But its stock price soared 71 percent, to $13.50, on the day the $500 million contract was announced.

"The satellite business is a risky business in and of itself," Gary Adkins, Orbimage's vice president of federal and national security programs, said in a recent interview. "If you're thinking about the expense and the investment it takes to accomplish a construction and a launch and getting a satellite in orbit, you know, it's quite risky. Just the general nature of the business itself has risk built into it."

The commercial satellite imaging industry has taken on new importance since the terrorist attacks of Sept. 11, 2001.

In May 2003, the Bush administration announced a policy to use commercial satellite firms "to the maximum practical extent" for tasks related to military, intelligence and other operations.

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