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updated 10/20/2008 9:02:57 PM ET 2008-10-21T01:02:57

Congress has canceled Pentagon plans to buy and launch two commercial imagery satellites to fill out its network of classified spy craft, according to military and space industry officials.

House and Senate intelligence appropriations committees cut all funds for the satellite program during a conference earlier this month to work out differences in their classified 2009 bills that approve intelligence spending. They also wiped out the remaining 2008 funds. The exact amount is classified, but the program was expected to cost about $1.7 billion, according to the officials, who spoke on condition of anonymity to discuss the classified information.

The Broad Area Space-Based Imagery Collection satellite system, or BASIC, was supposed to see the National Reconnaissance Office buy and launch two commercial-like satellites around 2012. The program also funded additional commercial imagery buys, according to Pentagon documents obtained last month by The Associated Press.

A portion of the funds — more than $300 million, according to one industry official — has been set aside for the Pentagon to study whether it needs additional satellite imagery, and if so to start a new program, according to two industry officials.

Pentagon, Air Force and National Reconnaissance Office officials wrangled for months over whether to buy and operate commercial satellites capable of seeing objects as small as 16 inches or to pump the money into buying dramatically more imagery from the commercial companies that already have similar satellites in orbit.

Critics of the program say the Pentagon would be spending billions to re-create and compete with private companies like GeoEye of Dulles, Va., and DigitalGlobe of Longmont, Colo., which are expected to put four new satellites into orbit by 2013. On its face the decision conflicts with the president's national security space policy, which directs the government to buy as much commercial imagery as possible to help the companies withstand competition from subsidized foreign satellite companies.

The BASIC system was meant to spy on enemy troop movements, spot construction at suspected nuclear sites or alert commanders to militant training camps. Their still images would be pieced together with higher resolution secret satellites into one large mosaic.

The new satellite system is meant to bridge what intelligence agencies fear will become a gap caused by the cancellation in September 2005 of a major component of the Future Imagery Architecture system overseen by the National Reconnaissance Office. The primary contractor, The Boeing Co., headquartered in Chicago, ran into technical problems developing the satellite and spent nearly $10 billion, blowing its budget by $3 billion to $5 billion before the Pentagon pulled the plug, according to industry experts and government reports.

A single satellite can visit one spot on Earth once or twice every day. BASIC's additional satellites will allow multiple passes over the same sites, alerting U.S. government users to potential trouble, humanitarian crises or natural disasters such as floods.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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