NASA Responds To SPACEHAB Claim for Losses On Columbia Mission

SPACEHAB says it's received NASA's determination about the company's claim for the loss of its Research Double Module, destroyed during the STS-107 space shuttle tragedy. NASA's determination states that its liability is limited to the contractually stipulated $8.0 million contract provision. The Company is pursuing receipt of the $8.0 million plus interest from NASA in this fiscal quarter.

As reported in January 2004, SPACEHAB's contract with NASA included an indemnification provision providing for any loss of, or damage to, the Company's flight hardware up to $8.0 million. SPACEHAB filed a formal claim against NASA in the amount of $87.7 million for its loss in the shuttle accident which includes the $8.0 million contractually-stipulated provision.

NASA's notification to SPACEHAB in response to the claim represents the final decision of NASA. Although SPACEHAB has agreed to accept the contract indemnification amount of $8.0 million, the Company has the right to file an appeal for the difference between the $8.0 million amount specified by NASA and the amount identified in SPACEHAB's claim. The right can be exercised by filing an appeal with either the Armed Services Board of Contract Appeals or the US Court of Federal Claims. SPACEHAB is evaluating whether it will pursue an appeal. In addition to an appeal, SPACEHAB has other legal recourse it can pursue. Once an assessment of its options is complete, SPACEHAB will make a formal announcement of its decision.

SPACEHAB's insurer for the STS-107 space shuttle mission, Lloyd's of London, paid the full proceeds of a $17.7 million policy to the Company shortly after the accident. Now, Lloyd's is suing SPACEHAB for the very same $17.7 million. Lloyd's says its payment was in error because SPACEHAB and its insurance broker misled Lloyd's in issuing the policy and hasn't cooperated with Lloyd's in protecting Lloyd's right of subrogation. SPACEHAB says it believes that the Lloyd's complaint is without merit.

FMI: www.spacehab.com