Well, it looks like our current economic climate was good for something.

The AP has reported that the U.S. government, feeling the pressure of the current economic crisis and as a result of the their need to bail out and possibly fund over $700 billion in debt, has canceled their proposed Broad Area Space-Based Imagery Collection satellite system, or BASIC, which would have launched two commercial grade satellites similar to the ones already in use by GeoEye (NASDAQ: GEOY), and it’s only U.S. based rival DigitalGlobe (NYSE:DGI).

I hate to say that I am happy for the way things are going right now, but if it had to happen, it looks like PeakStocks.com recommendation GeoEye is going to be a beneficiary of the downturn, and the government’s latest announcement, which would have put the U.S. government in direct competition with these two satellite providers, in a move that was widely controversial and was perceived to have directly violated previous presidential directives.

New to the GeoEye story?

GeoEye provides space-based, and aerial imagery and geospatial information through high-resolution and low-resolution imagery, imagery-derived products, and image processing services to customers worldwide.

This capability benefits a broad array of industries including national defense and intelligence, online mapping, state and local governments, environmental monitoring and land use management, oil and gas, utilities, disaster management, insurance and others.

Want more?

• Read my initial buy recommendation here.
• or listen to my EXCLUSIVE interview with GeoEye’s management team here.

How Did We Get Here?

As I wrote previously, it appeared that the U.S. government couldn’t leave well enough alone, and for some strange reason, was actually considering spending BILLIONS of dollars, to do the exact same thing that was already available to them for a fraction of the cost.

Government efficiencies huh?

The sad part in all of this is that the government actually tried this before with stinging failure.

In 2005, after many years of bumbling and stumbling, the government canceled a project called the Future Imagery Architecture (FIA), after indecision over what kind of capabilities it should have, skyrocketing costs, constant delays and general incompetence by the government and their building partners.

The project was canceled even before a single satellite was launched, wasting billions of dollars.

In fact, the primary contractor, Boeing (NYSE: BA), 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.

You can read all about that fiasco here.

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