Orbital Sciences Corporation's Antares rocket rolls out to the launch pad at NASA?s Wallops Flight Facility on Wallops Island, Virginia October 1, 2012.

WASHINGTON | Fri Feb 15, 2013 3:17pm EST

WASHINGTON (Reuters) - Orbital Sciences Corp worries that budget pressures and "old habits" may limit funding for the U.S. government's move toward smaller, less complex satellites aimed at avoiding cost overruns and delays that have often plagued space programs.

Orbital on Thursday reported record revenues and operating income for 2012, but said revenues in its advanced space segment dropped by 19 percent due to "decreased activity on national security satellite contracts.

Michael Hamel, a retired general who heads business development for the company, said he worries that tight budgets will limit even modest investments in a shift towards less complex satellites. Orbital thinks a move to a so-called "disaggregated" approach could ultimately save the government money and make its space hardware less vulnerable.

"We're caught in this vicious cycle," he told Reuters this month. "We're going to build up an inventory of these very expensive systems and that means there won't be dollars to reinvest in more resilient architectures and solutions."

Orbital, which builds both satellites and the rockets that launch them, contends that the government could save money and time by building simpler satellites that could be launched on smaller rockets.

It says that it could provide five basic satellites and rockets for the price of one big U.S. military satellite.

Many of the problems facing satellite programs date back to the 1990s, during the last downturn in defense spending, when the Air Force tried to save money by squeezing several missions onto a single big satellite. Nearly every program structured that way ran into technological challenges, massive cost overruns and long launch delays, Hamel said.

The programs also required far more expensive launchers and intensive government oversight, given their cost and importance to U.S. national security, he added, noting that some of those practices were "old habits" that were difficult to change.

Air Force officials insist that many of the older satellites programs, including the Space Based Infrared System missile warning satellites built by Lockheed Martin Corp, are in better shape now, and the government is trying to save money by buying several at a time through so-called "block buys."

Hamel argues that spending more on these big satellites means there will be less funding for newer smaller technologies, which can also be launched on smaller, commercial-style rockets that are a third less expensive to produce.

He admitted to a "certain impatience" with the pace of the government's progress toward newer programs.

"It's essential for the government to invest in new architectures and systems with new buying practices that really do leverage what we're providing the commercial marketplace and to make dollars available for that," Hamel said.

INITIAL HOSTED PAYLOAD PILOT STARTED IN 2008

Orbital in 2008 kicked off a successful pilot program called Commercial Hosted Infrared Payload, or CHIRP, in which the company integrated a missile warning sensor developed by SAIC onto a commercial satellite it was building for satellite operator SES.

The program's success sparked interest in further government use of such "hosted payloads," which would get sensors into space for far less money than separate government satellites.

Air Force General William Shelton last month said the service hoped to award a hosted payloads contract later this year, but industry executives warn that even modest new programs will be vulnerable to cuts given the current U.S. budget crisis, especially if officials try to safeguard bigger programs.

Hamel said hosted payloads could help the government increase its ability to monitor debris space by putting cameras onto satellites already due to be launched into geostationary orbit, at a cost of $20 million per satellite.

That compares to the typical cost of $1 billion to $2 billion for more sophisticated, dedicated government satellites.

Hamel said a disaggregated approach to military and intelligence satellites would also leave the U.S. government less vulnerable to cyber attacks because replacement satellites could be launched more quickly and inexpensively if needed.

A classified U.S. intelligence assessment completed last year analyzed China's increasing activities in space and cyberspace, and mapped out the growing vulnerability of the most sensitive U.S. satellites.

Hamel said space executives were increasingly concerned about cyber attacks by China and others, noting that satellite systems were particularly vulnerable because they relied on computer networks for their operations and transmissions. (Reporting By Andrea Shalal-Esa; editing by Andrew Hay)

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1 of 2. A still image from an undated video footage released on January 28, 2013 by Iran's state-run English language Press TV shows a monkey that was launched into space. Iran said on Monday it had launched the live monkey into space, seeking to show off missile delivery systems that are alarming to the West given Tehran's parallel advances in nuclear technology.

DUBAI | Mon Jan 28, 2013 7:30pm EST

DUBAI (Reuters) - Iran said on Monday it had launched a live monkey into space, seeking to show off missile systems that have alarmed the West because the technology could potentially be used to deliver a nuclear warhead.

The Defense Ministry announced the launch as world powers sought to agree a date and venue with Iran for resuming talks to resolve a standoff with the West over Tehran's contested nuclear program before it degenerates into a new Middle East war.

Efforts to nail down a new meeting have failed repeatedly and the powers fear Iran is exploiting the diplomatic vacuum to hone the means to produce nuclear weapons.

The Islamic Republic denies seeking weapons capability and says it seeks only electricity from its uranium enrichment so it can export more of its considerable oil wealth.

The powers have proposed new talks in February, a spokesman for the European Union's foreign policy chief said on Monday, hours after Russia urged all concerned to "stop behaving like children" and commit to a meeting.

Iran earlier in the day denied media reports of a major explosion at one of its most sensitive, underground enrichment plants, describing them as Western propaganda designed to influence the nuclear talks.

The Defence Ministry said the space launch of the monkey coincided "with the days of" the Prophet Mohammad's birthday, which was last week, but gave no date, according to a statement carried by the official news agency IRNA.

The launch was "another giant step" in space technology and biological research "which is the monopoly of a few countries", the statement said.

The small grey monkey was pictured strapped into a padded seat and being loaded into the Kavoshgar rocket dubbed "Pishgam" (Pioneer) which state media said reached a height of more than 120 km (75 miles).

"This shipment returned safely to Earth with the anticipated speed along with the live organism," Defence Minister Ahmad Vahidi told the semi-official Fars news agency. "The launch of Kavoshgar and its retrieval is the first step towards sending humans into space in the next phase."

There was no independent confirmation of the launch.

SIGNIFICANT FEAT

In Washington, U.S. State Department spokeswoman Victoria Nuland told reporters she could not confirm whether Iran had successfully sent a monkey into space or conducted any launch at all, saying that if it had done so "it's a serious concern."

Nuland said such a launch would violate U.N. Security Council Resolution 1929, whose text bars Iran from "any activity related to ballistic missiles capable of delivering nuclear weapons, including launches using ballistic missile technology."

The West worries that long-range ballistic technology used to propel Iranian satellites into orbit could be put to use dispatching nuclear warheads to a target.

Bruno Gruselle of France's Foundation for Strategic Research said that if the monkey launch report were true it would suggest a "quite significant" engineering feat by Iran.

"If you can show that you are able to protect a vehicle of this sort from re-entry, then you can probably protect a military warhead and make it survive the high temperatures and high pressures of re-entering," Gruselle said.

The monkey launch would be similar to sending up a satellite weighing some 2,000 kg (4,400 pounds), he said. Success would suggest a capacity to deploy a surface-to-surface missile with a range of a few thousand kilometers (miles).

Michael Elleman, a missile expert at the International Institute for Strategic Studies think-tank, said Iran had demonstrated "no new military or strategic capability" with the launch.

"Nonetheless, Iran has an ambitious space exploration program that includes the goal of placing a human in space in the next five or so years and a human-inhabited orbital capsule by the end of the decade," Elleman said. "Today's achievement is one step toward the goal, albeit a small one."

The Islamic Republic announced plans in 2011 to send a monkey into space, but that attempt was reported to have failed.

Nuclear-weapons capability requires three components - enough fissile material such as highly enriched uranium, a reliable weapons device miniaturized to fit into a missile cone, and an effective delivery system, such as a ballistic missile that can grow out of a space launch program.

Iran's efforts to develop and test ballistic missiles and build a space launch capability have contributed to Israeli calls for pre-emptive strikes on Iranian nuclear sites and billions of dollars of U.S. ballistic missile defence spending.

MANOEUVRING OVER NEXT TALKS

A spokesman for EU foreign policy chief Catherine Ashton said the powers had offered a February meeting to Iran, after a proposal to meet at the end of January was refused.

"Iran did not accept our offer to go to Istanbul on January 28 and 29 and so we have offered new dates in February. We have continued to offer dates since December. We are disappointed the Iranians have not yet agreed," Michael Mann reporters.

He said Iranian negotiators had imposed new conditions for resuming talks and that EU powers were concerned this might be a stalling tactic. The last in a sporadic series of fruitless talks was held last June.

Iranian officials deny blame for the delays and say Western countries squandered opportunities for meetings by waiting until after the U.S. presidential election in November.

"We have always said that we are ready to negotiate until a result is reached and we have never broken off discussions," IRNA quoted Iranian Foreign Minister Ali Akbar Salehi as saying.

Salehi has suggested holding the next round in Cairo but said the powers wanted another venue. He also said that Sweden, Kazakhstan and Switzerland had offered to host the talks.

In Moscow, Russian Foreign Minister Sergei Lavrov told a news conference: "We are ready to meet at any location as soon as possible. We believe the essence of our talks is far more important (than the site), and we hope that common sense will prevail and we will stop behaving like little children."

Ashton is overseeing diplomatic contacts on behalf of the powers hoping to persuade Tehran to stop higher-grade uranium enrichment and accept stricter U.N. inspections in return for civilian nuclear cooperation and relief from U.N. sanctions.

IRAN DENIES FORDOW BLAST

Reuters has been unable to verify reports since Friday of an explosion early last week at the underground Fordow bunker that some Israeli and Western media said wrought heavy damage.

"The false news of an explosion at Fordow is Western propaganda ahead of nuclear negotiations to influence their process and outcome," IRNA quoted deputy Iranian nuclear energy agency chief Saeed Shamseddin Bar Broudi as saying.

In late 2011 the plant at Fordow began producing uranium enriched to 20 percent fissile purity, well above the 3.5 percent level normally needed for nuclear power stations.

While such higher-grade enrichment remains nominally far below the 90 percent level required for an atomic bomb, nuclear proliferation experts say the 20 percent threshold represents the bulk of the time and effort involved in yielding weapons-grade material - if that were Iran's goal.

Tehran says its enhanced enrichment is to make fuel for a research reactor that produces isotopes for medical care.

Diplomats in Vienna, where the U.N. nuclear watchdog agency is based, said on Monday they had no knowledge of any incident at Fordow but were looking into the reports.

"I have heard and seen various reports but am unable to authenticate them," a senior diplomat in Vienna told Reuters.

The International Atomic Energy Agency, which regularly inspects declared Iranian nuclear sites including Fordow, had no immediate comment on the issue.

Iran has accused Israel and the United States of trying to sabotage its nuclear program with cyber attacks and assassinations of its nuclear scientists. Washington has denied any role in the killings while Israel has declined to comment.

(Additional reporting by William Maclean and Marcus George in Dubai, Justyna Pawlak in Brussels, Fredrik Dahl in Vienna; Writing by Mark Heinrich; Editing by Robin Pomeroy, Jon Hemming and Cynthia Osterman)

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Russia's President Vladimir Putin gestures during a news conference after their meeting with Turkey's Prime Minister Tayyip Erdogan in Istanbul December 3, 2012.

BRUSSELS | Fri Dec 21, 2012 8:02am EST

BRUSSELS (Reuters) - Russian anger at an EU energy law blocked progress at talks between Russian President Vladimir Putin and European Union leaders on Friday.

Putin, on his first visit to Brussels since his re-election as president in May, was greeted by four topless women, protesting against civil rights curbs in Russia and shouting "Putin, go to hell". They were bundled away by police.

Relations between the 27-nation bloc and Russia, its main external supplier of energy and a key trading partner, have long been poisoned by rows over gas pipelines.

Europe relies on Russia to cover around a quarter of its natural gas needs, but over the past decade Moscow has had a series of disputes with its ex-Soviet neighbors - Ukraine and Belarus - that disrupted its gas exports to Europe.

Those disputes increased the EU's determination to diversify supply away from Russia.

Adding to the grievances are simmering trade disputes over everything from cars to pigs, and European leaders' condemnation of the jailing of members of the band Pussy Riot, seeing it as part of a trend of squashing personal freedoms.

For Russia, which sits on the world's largest natural gas reserves and supplies more than a quarter of the European Union's natural gas imports, energy is the major issue.

In opening comments, Putin referred to EU energy law as "uncivilized".

POTENTIAL

"Of course the EU has the right to take any decisions, but as I have mentioned ... we are stunned by the fact that this decision is given retroactive force," Putin told reporters on the sidelines of a Russia-EU summit in Brussels. "It is an absolutely uncivilized decision."

He was referring to EU legislation to create a single energy market and prevent those that control supply, such as Russia's Gazprom, also dominating distribution networks.

From the European Union side, European Commission President Jose Manuel Barroso said there was "huge potential for cooperation" to the benefit of both sides.

"I think we should in fact be able to transform what is today an interdependence by necessity into an interdependence by choice, a political choice," he said. "That's what requires political leadership on both sides."

Expectations for Friday's talks have always been low, but Russian and EU sources both see the need for continued dialogue.

The EU's executive Commission added to tensions between Europe and Moscow in September when it opened an investigation into suspected anti-competitive market practices by Russia's state-dominated Gazprom.

Trade disputes are also high on the agenda. EU Trade Commissioner Karel De Gucht said this month time was running out for Russia to settle trade disputes with the EU on everything from pigs to cars and he threatened to take Moscow to the WTO.

Putin also complained about lack of agreement on travel visas, saying Russia was being unfairly treated compared with other nations.

"I have a long list of states here with me which have a visa-free regime with the EU. There is Venezuela, Honduras, Mauritius, Mexico, seems everyone else is there," Putin said.

(Additional reporting by Adrian Croft and Justyna Pawlak)

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Visitors talk near the welcome desk of the EADS booth at the ILA Berlin Air Show in Selchow near Schoenefeld south of Berlin on September 13, 2012.

PARIS/BRUSSELS | Tue Oct 9, 2012 8:04am EDT

PARIS/BRUSSELS (Reuters) - The boards of EADS and BAE Systems prepared to weigh the results of weeks of tough political negotiations over a $45 billion merger on Tuesday with momentum building for an extension to a Wednesday deadline for the deal.

Several sources briefed on the negotiations said France and Britain had narrowed differences over the wording of key guarantees on state shareholdings, raising the prospect that the companies will buy more time to complete the complex deal.

"There has been some progress," a source close to the talks said, asking not to be identified.

But a French government source said the country had not changed its official opposition to a 10 percent cap on its future shareholding in the group, which would be the world's largest aerospace and arms conglomerate with 220,000 employees.

Differences between Britain, France and Germany over state control, jobs and investment have threatened to derail the talks, which have also drawn criticism from a number of investors.

The companies say they cannot spell out the full benefits of the merger before completing negotiations over the shape of the company's capital and possible guarantees on investment.

EADS Chief Executive Tom Enders and BAE Systems Chief Executive Ian King were due to review the talks with their boards and make a decision on the merger, on which the two managers have staked their careers and industrial ambitions.

"Ian King and Tom Enders will discuss the situation later today and then decide, jointly with the respective company Boards, the way forward," EADS said in an emailed statement.

The companies have insisted they will only request an extension to the October 10 deadline set by UK regulators if there is meaningful progress at government level.

Britain and France have the power to veto the deal, which must also be approved by the United States and overcome political objections in Germany.

UNIONS ON STAND-BY

Core EADS shareholders Lagardere, the French media firm, and German car firm Daimler also have the right to veto a deal. Both have expressed unease about the terms but are not participating in board discussions to prevent a conflict of interest, according to a person familiar with the talks.

EADS has put its unions on stand-by for briefings on a possible deal in either one week or two weeks, union officials said, suggesting the companies would seek a far shorter extension that the maximum allowed 28 days. A scheduled European works council went ahead on Tuesday with no managers present.

British Defense Secretary Philip Hammond said he hoped to meet his French, German and U.S. counterparts to discuss the proposed merger on the sidelines of a NATO meeting.

"We always knew that there was a crunch point this Wednesday and the company has to decide today whether it's going to ask the stock exchange for an extension of time or not," Hammond told reporters in Brussels.

(Additional reporting by Gernot Heller, Mathias Blamont, Sophie Sassard, Paul Sandle, Chris Vellacott, Arno Schuetze, Elizabeth Pineau, editing by Peter Millership)

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