Boeing Spy Satellite Program Overhauled

Boeing Co.’s supersecret program to develop a new generation of spy satellites has undergone a major overhaul to resolve technical troubles, and it will cost at least $4 billion more than initially planned, Pentagon officials said.

The Pentagon’s revelation this week marked the first time the military has acknowledged significant problems with the nation’s largest intelligence project, much of which is under development at Boeing facilities in Seal Beach and El Segundo.

“We feel confident that we now have an executable program,” said Art Haubold, spokesman for the Pentagon’s National Reconnaissance Office, which operates satellites that take pictures of military compounds around the world.

The agency has kept much of the project secret, including the total dollar amount. Space analysts have speculated that the program probably would cost about $25 billion over the next two decades.

Defense officials also have declined to reveal the number of satellites to be built and the number of people working on the effort, though analysts estimate that at least 5,000 engineers are participating in the program.

On Friday, Pentagon officials refused to explain what has triggered the need for the $4 billion in fixes, beyond saying that there are certain technical issues to be resolved and additional tests that need to be conducted.

The project, known as Future Imagery Architecture, calls for creating a constellation of satellites equipped with powerful telescopes and radar to gather clear and frequent images of enemy troops in darkness or through cloud cover.

Boeing’s partners include Raytheon Co., Harris Corp. and Eastman Kodak Co.

The $4-billion restructuring was disclosed Thursday in Washington after a Pentagon panel released a report, which found that the satellite project was “significantly underfunded and technically flawed.”

The declassified report, completed in November, concluded that the program was “not executable” unless significant program and schedule changes were made.

It was far from clear Friday whether the $4-billion amount would ultimately fix all of the program’s problems. Last year, congressional sources told The Times that the program faced potential overruns of as much as $8 billion through 2010.

In December, Congress called for a major overhaul of the satellite project.

In 1998, Boeing beat out Lockheed Martin Corp. to develop the spy satellites, primarily because it promised to deliver them with a radical new design at a lower price. The contract represented a stunning blow to Lockheed, which had been building spy satellites for 40 years.

Chicago-based Boeing’s shares fell 73 cents on Friday to $37.16 on the New York Stock Exchange.