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Bid a Must for Space Imaging ; Thornton Firm Makes Third Try for U.S. Contract

Posted on: Tuesday, 13 July 2004, 06:00 CDT

It's make-or-break time at Space Imaging Inc.

The Thornton spy satellite company is battling a Virginia -rival to win a federal contract worth about $500 million. A victory is critical for Space Imaging.

It would allow the company to build and operate a next- generation commercial spy satellite that could photograph objects 1 to 2 feet across in size. The satellite would replace an aging one launched in 1999.

Space Imaging has failed twice in the past year to secure such an award from the Pentagon's National Geospatial-Intelligence Agency. The NGA would help bankroll the satellite's construction and buy photos.

Industry officials said Space Imaging and Orbimage Inc. of Dulles, Va., appear to be the only companies bidding on the NGA's latest contract, called NextView.

"I would look for whoever didn't get the award to be ultimately acquired at some point," said Edward Jurkevics, founder of Chesapeake Analytics Corp. in Arlington, Va. "It's a really important contract."

Bids were due June 15. An NGA spokesman wouldn't identify the bidders. The agency plans to announce a winner by the end of September.

Space Imaging, which had more than $200 million in revenue last year and employs about 280 people, is considered the favorite - although it isn't assured of victory.

Jurkevics noted Space Imaging is larger than Orbimage, which had first-quarter revenue of $2 million after emerging from bankruptcy protection at the end of 2003. Orbimage launched its first satellite a year ago.

Jurkevics also said Space Imaging has a veteran partner in Lockheed Martin Corp., which is expected to build Space Imaging's satellite if it wins the NGA award.

"It would indicate to me that (Space Imaging) could put together a pretty strong proposal and a pretty strong team," -Jurkevics said.

It isn't the first time Space Imaging was favored. Last year, it unexpectedly lost out to smaller rival DigitalGlobe Inc. of Longmont in head-to-head bidding to snare a similar NextView award from the NGA.

After that failure, the NGA entered one-on-one talks with Space Imaging for a follow-on award that would allow the company to deploy its own satellite. But the NGA broke off the negotiations in March after the two sides failed to iron out financial terms.

Space Imaging's investors - Lockheed and Raytheon Co. - declined to offer financial aid that might have sealed a deal. Space Imaging spokesman Mark Brender said the two didn't want "additional financial exposure."

After the negotiations breakdown, the NGA said it would put the second NextView contract out for bid. "Our offering is innovative and creative and addresses the concerns of NGA and our owners from the last NextView round," said Brender, who declined to go into detail.

According to a report by CRT Capital Group, Space Imaging has reached an agreement with "a politically powerful and technologically advanced strategic partner" that would provide financing to the company.

DigitalGlobe was barred from bidding as a prime contractor on the new NGA contract. The agency has said it wants more than one commercial supplier of imagery.

Industry experts had considered larger companies such as Lockheed, Boeing Co. and Northrop Grumman Corp. as potential bidders. But officials at each said their companies hadn't bid.

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