Battle's Not Over, but the War Seems to be Won — EnhancedView Funding OK for Another Year

Battle's Not Over, but the War Seems to be Won — EnhancedView Funding OK for Another Year

Congress has yet to complete action on the relevant authorization or appropriations bills, but GeoEye and DigitalGlobe reportedly both have been told that their funding under the EnhancedView contract is OK for another year.

Chris Quilty, Senior Vice President for Equity Research at Raymond James & Associates, reports that the two companies were notified on Friday by the Director of the National Geospatial-Intelligence Agency (NGA) that their EnhancedView contracts will be renewed for year 3 (September 1, 2012-August 31, 2013).  The companies have Service Level Agreements to provide commercial satellite imagery to NGA at $250 million per year.  The EnhancedView contract, signed in 2010, is a one-year contract with nine one-year options. 

DigitalGlobe issued a press release announcing NGA’s decision on Friday.  GeoEye has not issued a similar release yet.

The Senate Armed Services Committee  (SASC) added $125 million to the President’s request for the EnhancedView contract when it marked up the FY2013 National Defense Authorization Act (NDAA) in May.  A lengthy section in its report provided more detail than previously available publicly on the battle that has been underway for months behind classified doors. 

Congress has not completed action on the NDAA or the associated defense appropriations bill that would actually provide funding.   Nor has the intelligence authorization bill cleared Congress.   It remains unclear, therefore, as to where the money will come from — either NGA is expecting Congress to provide more than the request or it will have to reprogram the money from other accounts.

Quilty is not ready to break out the champagne quite yet.  “Overall, we view the NGA’s announcement as a clear positive for both companies,” but “even if both companies’ EnhancedView contracts are renewed on favorable terms, the stocks may yet languish in the current trading range due to lingering uncertainty about the longer-term disposition of their EnhancedView contracts…”, he cautions. 

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