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NASA IT Vendors Watch and Wait

Despite budget cuts totaling 40 percent over the last decade, NASA remains a big IT spender, awarding lucrative contracts for supercomputers, telecom equipment, network services, Unix, Linux and Windows workstations and support.

Computer Sciences Corp., Hewlett-Packard, Qwest Communications are just some of the big-name vendors doing business with the agency. Smaller tech firms and labs also compete for research grants to help NASA engineer around particularly vexing problems.

In the wake of last weekend's Columbia disaster, government officials are scrutinizing not only the cause of the accident that killed seven astronauts, but the overall direction and pace of country's space program.

And though the process has just begun, this much is clear: any significant change -- be it a temporary freeze to reassess priorities, or opening the coffers to reinvigorate the agency -- has implications for scores of IT companies dependent on business with the agency.

NASA, which stands for the National Aeronautics and Space Administration, had planned a Monday news conference to discuss its budget request for the coming fiscal year, but the session was postponed after the Columbia was lost. It has not been rescheduled yet.

IT Vendors Watch and Wait

Qwest supplies the backbone for NASA's research and engineering network. It also provides connectivity between NASA facilities in Australia, Canada and Spain. In December, it inked a contract, along with TKC Communications, to build a secure conduit between NASA's U.S. centers.

"We have not heard anything yet to indicate a change in (NASA's) plans," said Vince Hancock, a spokesman for Qwest , the Denver voice and data network operator, told internetnews.com

Likewise, GTSI is following NASA's deliberations closely. The Chantilly, Va., company supplies NASA with hardware and software -- from desktops and laptops to high-end servers, to storage and networking devices.

NASA is one of GTSI's largest customers, accounting for $40 million in direct revenue last year and another $250 million through the SEWP contract, a procurement program that originated at NASA but now extends to other agencies such as the Department of Defense.

"Much of what we supply to NASA is in support of infrastructure requirements and should not be affected by slowdowns in a program," said Jack Littley, a senior vice president with GTSI. "That being said, if NASA's budget approval is slowed down, direct sales to NASA sites may be put on hold temporarily."

Near-term, sector-watchers say NASA's largest contractors are best equipped to survive any program slowdown.

For example, Boeing and Lockheed Martin, which run the shuttle program for NASA and farm out a slew of IT subcontracts, would suffer a "fairly minor" loss of income if the remaining shuttles were grounded for a year, according to Deutsche Bank (DB) Securities analysts.

DB analysts do not think the Columbia incident will curb government investments in the related aerospace defense field. Many IT contractors work in both sectors.

After Challenger's explosion in 1986, the fleet was grounded nearly three years "while NASA and its contractors diagnosed and investigated the cause, devised a fix and verified that it was ready to fly again," DB analysts noted.

Investigators appear to have more clues to work with in the Columbia mishap, leading many to hope the interruption to the program will not be as lengthy.

Fed Sending Positive Signals

In addition to progress in the probe of the Columbia break-up, President George Bush and Vice President Dick Cheney in recent days have publicly pledged that the space program will proceed.

The administration has requested $500 million for NASA's budget in the coming fiscal year, a 6 percent increase, which could rise when Congress sets the budget. A chorus of voices, including scientists and the Columbia astronauts' families, have voiced support for continued space exploration.

This could lead to bolstered spending to upgrade the remaining shuttles and accelerate development of a new space plane, an initiative backed by NASA chief Sean O'Keefe. Such a pursuit would likely require additional IT investments, especially in engineering and design software.

Other government-wide mandates pre-dating Columbia also auger well for IT firms. During the current fiscal year, NASA met Bush's goal of outsourcing at least 15 percent of commercial-like work. Future targets call for that figure to be bumped to 5 percent.

In the midst of an ongoing sluggish market for nearly every IT sector, Qwest's Hancock, summed up the sentiment for all doing business with the space agency.

"NASA has been a great customer and we hope to grow our relationship," he said.

Given the progress in the Columbia investigation, commitment by the administration and leaders of Congress, it appears Qwest and others will have that chance.