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Spacehab Files Court Complaint for Losses On Space Shuttle Mission

Press Release From: Spacehab
Posted: Friday, February 3, 2006

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Houston, Texas, February 3, 2006 SPACEHAB, Incorporated (NASDAQ/NMS: SPAB), a leading provider of commercial space services, announced today that it is filing a civil complaint against NASA with the United States District Court in Houston, Texas for loss and damages suffered during the Space Shuttle Columbia tragedy in February 2003.

The Company's research double module and related equipment were destroyed, along with the space shuttle and her crew, during reentry at the conclusion of the STS-107 mission. In November 2004 SPACEHAB filed a claim with NASA under the Federal Tort Claims Act (FTCA) of $79.7 million for recovery of the losses on the flight. After NASA failed to respond to the claim within a reasonable period of time, the Company was left no choice but to consider the claim as denied and then pursue restitution in the Federal Court system.

Under the FTCA, SPACEHAB claims that NASA's actions and omissions led to the space shuttle disaster and the destruction of the Company's flight assets. The complaint identifies the tragedy as a foreseeable consequence of NASA's negligence as documented in the Columbia Accident Investigation Board (CAIB) report which represents the findings of the post-accident investigation.

Columbia's destruction was caused by insulating foam that came loose from the external tank on launch and damaged the orbiter's wing. The CAIB found that NASA was long aware of the danger and frequency of these kinds of foam strikes; a very serious one which occurred just two missions before the STS-107 mission. According to the CAIB, and as alleged in the complaint, NASA ignored its own rules, failed to fix the problem, and improperly allowed Columbia to launch in the face of this unaddressed danger. NASA has stated that the Agency 'accepts the findings of the CAIB' and 'embraced the report and all that is included in it.'

"We are disappointed that NASA took no action to resolve this claim, and that we had to resort to the courts in order to achieve a fair and reasonable settlement," stated Michael E. Kearney, SPACEHAB President and Chief Executive Officer. "These valuable assets, developed through private capital investment, have served NASA well on nineteen missions. We believe the private sector's participation in the space program is essential to the maturation of a robust space industry, but this goal is made extremely difficult in the current environment where 'business as usual' is prevalent." SPACEHAB is the only company to successfully conceive, design, develop and operate significant commercial space research and cargo assets for the space shuttle and International Space Station programs.

To date, two claims have been filed with NASA. The first claim, the contract claim, which was filed in January 2004 for recovery of the module and associated equipment, totaled $87.7 million and included subrogation of insurance proceeds of $17.7 million received from underwriters. NASA paid $8.0 million plus interest in October 2004 claiming its liability was limited under the contract. In December 2004 SPACEHAB appealed the denial of the contract claim beyond $8.0 million through the Armed Services Contract Board of Appeals. The contract claim is in the discovery phase. The second claim, the tort claim, was filed in November 2004 for $79.7 million ($87.7 million less the partial recovery of $8.0 million).

About SPACEHAB, Incorporated

SPACEHAB, Incorporated (www.spacehab.com) is a leading provider of commercial and government space services with three primary business units. The Flight Services business unit develops, owns, and operates habitat and laboratory modules and cargo carriers aboard NASA's Space Shuttles for Space Station resupply and research purposes. SPACEHAB's Astrotech subsidiary provides payload processing support services for both commercial and government customers at company-owned facilities in Florida and California. The Company's Government Services business unit supports NASA's Johnson Space Center providing configuration management, product engineering, and support services for both the Space Station and Space Shuttle programs. Additionally, through The Space Store, Space Media provides space merchandise to the public and space enthusiasts worldwide (www.thespacestore.com).

The statements in this document may contain forward-looking statements that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks, trends, and uncertainties that could cause actual results to be materially different from the forward-looking statement. These factors include, but are not limited to, continued government support and funding for key space programs, product performance and market acceptance of products and services, as well as other risk factors and business considerations described in the company's Securities & Exchange Commission filings including the annual report on Form 10-K. Any forward-looking statements in this document should be evaluated in light of these important risk factors. The Company assumes no obligation to update these forward-looking statements.

FOR MORE INFORMATION:

Kimberly Campbell
Vice President
Corporate Marketing and Communications
SPACEHAB, Inc.
713.558.5049
campbell@spacehab.com

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