Hughes Unit Sues NASA for Failure to Orbit Satellites

A unit of Hughes Aircraft Co. sued NASA on Friday to recover $288.5 million in extra expenses that the company said it incurred when the space agency canceled plans to launch 10 Hughes satellites after the 1986 explosion of the space shuttle Challenger.

Hughes Communications Galaxy claimed in papers filed in U.S. District Court here that the National Aeronautics and Space Administration’s repudiation of contracts to launch commercial satellites forced Hughes to rely on private launch companies that in some cases charged twice as much as NASA. It also delayed Hughes’ launch schedule.

“It was a significant blow,” said John E. Koehler, vice president of the Hughes Space and Communications Group.

The space agency’s move, part of a major policy shift following the Challenger disaster, also delayed Hughes’ schedule for launching the satellites.

During the inception of the shuttle system, NASA eliminated other kinds of launch vehicles, leaving the shuttle as the only access to space. The policy laid the groundwork for major commercial and technical setbacks. After the Challenger disaster, commercial space users were forced off the shuttle and in some cases turned to foreign space programs.

NASA General Counsel Edward A. Frankle disputed Hughes’ claims. “Obviously we don’t think we breached anything, or took anything,” he said, adding that the conflict involves “a lot of tricky issues.”

Hughes, based in Westchester, is the largest builder of communications satellites. It operates 13 satellites, the world’s largest commercial fleet. The satellites are used to beam signals to broadcast and cable television operators and large data users.

Hughes contracted for NASA’s launch services in 1985 at a time when NASA was trying to draw satellite companies to its shuttle program to generate enough space flights to justify the program’s huge costs. Drawn by cheap rates, the satellite industry went along, in some cases redesigning its satellites to adapt them to the shuttle.

But the retrenchment that followed the explosion of the Challenger in January, 1986, set off a debate within the federal government about the future of NASA’s commercial launch business. It had become clear that the shuttle would not generate nearly as many flights as some had expected.

Some in government began to argue that the government should exit the business to stimulate a new market for American manufacturers of expendable satellite launchers. Ultimately, the White House’s Economic Policy Committee persuaded President Ronald Reagan to go along.

NASA announced it would end commercial launches and would launch only 20 of the 44 satellites then under contract. All 10 of Hughes’ satellites were dropped from the plan, causing Hughes Galaxy “substantial economic harm,” according to the suit.

Koehler said that with NASA out of the business, the French Arianespace consortium was temporarily the only provider and quickly raised its rates. On average, the launch prices were 50% higher as a result of NASA’s shift, Koehler said.