SPACEHAB Receives $1.0 Million Contract Option From NASA; Company Continues to Support New Vision for Space Exploration.

HOUSTON -- SPACEHAB, Incorporated (Nasdaq/NMS:SPAB), a leading provider of commercial space services, announced today that NASA has exercised the Company's six-month option, valued at approximately $1.0 million, for the phase two extension of the Concept Exploration and Refinement contract.

"We are pleased to continue this exciting work with NASA," said Michael E. Kearney, SPACEHAB President and Chief Executive Officer. "We believe that NASA understands the importance of commercial involvement in the Nation's Vision for Space Exploration, and SPACEHAB is committed to providing the highest level of innovation and quality to the program."

In September 2004 SPACEHAB was selected as one of just a handful of companies awarded Concept Exploration and Refinement contracts. This contract gave SPACEHAB the opportunity to identify systems and an architecture that support human lunar exploration, while being extensible to Mars missions and other destinations. This new option period, scheduled through August 2005, allows the Company to continue and expand upon the work completed over the previous six months.

SPACEHAB has focused on utilizing a modular approach, with commercial elements where feasible, to achieve the lunar exploration objectives and is evaluating a wide range of architecture concepts. Richard Fitts, Program Manager for SPACEHAB's study effort, stated, "It is exciting to have our relatively small company contribute significantly to helping NASA achieve their exploration goals."

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" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in the statements. In addition to those risks and uncertainties discussed herein, such risks and uncertainties include, but are not limited to, whether the Company will fully realize the economic benefits under its U.S. National Aeronautics and Space Administration ("NASA") and other customer contracts, whether NASA and other customers will continue to utilize the Company's habitat modules and related commercial space assets, whether plans to complete the International Space Station ("ISS") are fulfilled, continued availability and use of the U.S. Space Shuttle system, technological difficulties, product demand and market acceptance risks, the effect of economic conditions, uncertainty in government funding, the impact of competition, delays and uncertainties in future space shuttle and ISS programs, resolution of the Company's indemnification claim with NASA arising from the loss of the Columbia orbiter and its crew during the STS-107 mission, and other risks described in reports filed by the Company with the Securities and Exchange Commission. The Company assumes no obligation to update these forward-looking statements.