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NGA discontinues EnhancedView contract with GeoEye

US: The US National Geospatial Intelligence Agency (NGA) will not renew the EnhancedView contract with GeoEye for the full year due to budget constraints, Reuters reported. However, the intelligence agency proposed an option under which GeoEye will get service revenue of USD 39.75 million for the three month ending November 2012, and a nine-month option providing for USD 119.3 million, contingent on funding.

The government agency also decided not to provide additional funding for GeoEye’s satellite beyond USD 181 million provided for in the contract, the company said in a regulatory filing.

The company has so far invoiced USD 111 million to the agency and expects that payment in the next 30 days. The NGA proposed new milestones for payment of the remaining USD 70 million.

GeoEye’s rival DigitalGlobe said earlier this week that the NGA plans to renew its EnhancedView contract for the third year.

US government officials earlier said the NGA plans to sharply reduce, and possibly halve, its plan to buy USD 7.3 billion of digital imagery from the two companies, sparking speculation about a consolidation.

GeoEye offered to buy larger rival DigitalGlobe for USD 792 million in May. But DigitalGlobe rejected the offer, saying it would fare better than GeoEye in the expected round of budget cuts and would wait for the decision on EnhancedView contract to take the next step.

Both DigitalGlobe and GeoEye provide digital imagery services to US military and intelligence agencies and are working on next-generation satellites to double their capacity.

Source: Reuters