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  SPACEHAB,
  Inc.

  12130
  Highway 3, Bldg. 1

  Webster,
  Texas 77598-1504

  1.713.558.5000

  fax:  1.713.558.5960

  www.spacehab.com

December 4, 2007

Mr. Doug Jones

Division of Corporate Finance

United States Securities and Exchange Commission

100 F Street, NE

Washington, D.C. 20549-3561

  RE:

  SPACEHAB, Incorporated

  Form 10-K for the Year Ended June 30, 2007

  File Number: 000-27206

Dear Mr. Jones:

We are in receipt of your comment letter dated November 14, 2007
regarding the above filing and, in response, submit the following information
for your consideration.

Form 10-K for the Year Ended June 30, 2007

Item 7. Management’s Discussion and Analysis

Critical Accounting Policies

Revenue Recognition

1.               Our Astrotech payload-processing
subsidiary has a firm fixed price contract, with United Launch Alliance (“ULA”),
assignee from Lockheed Martin Corporation. Under the terms of this contract,
Astrotech agrees to process up to as many missions as ULA has to process but
Astrotech is reimbursed for at least four missions annually and in return
receives a per mission payment as missions are processed. If no missions are
processed during the year, ULA reimburses Astrotech for the four guaranteed
missions in December of the applicable year. Additionally, ULA reimburses
Astrotech quarterly for a “reservation” fee for certain designated areas within
the Astrotech facilities for their use only. Any additional services or
missions beyond the agreed four missions annually are recognized as revenue if
and when such additional services are rendered. Lockheed Martin, now ULA, is
assigned dedicated payload processing bays, including storage facilities, at
Astrotech’s payload processing facility. Astrotech provides relatively constant
services in support of such dedicated facilities regardless of the number of
missions actually processed. Essentially all of the processing activities are
performed by

ULA provided personnel. As such, the revenue is essentially fixed
annually and ratable to the periods during the year.

Our Sea Launch contract provides for relatively fixed services
throughout the year as well, however, under the Sea Launch contract Astrotech
is paid a fixed per mission fee only upon the completion of a mission by the
customer. There is no minimum number of missions and no guarantee of revenue
under this contract. As such, the revenue is deemed earned upon the completion
of each mission, thus under the completed contract method of revenue
recognition. As noted on page 36, we did not receive revenues under the Sea
Launch contract during the period of repair to their floating platform, but we
continued to staff and operate the land facilities.

Consolidated Statements of Cash Flows

2.               As noted in our disclosure on page 47,
we received payments from a government agency that we classified as restricted.
The restriction on the cash received in this situation is that such proceeds be
used to build a building, an investment activity. The building will be owned
and operated by our Astrotech subsidiary. We agree with your interpretation
that the restriction refers only to use of the funds, but, since that
restriction is that the funds be used in an investment activity, we believe
classification in the investing activity section of the cash flow statement is
consistent with paragraph 14 of FAS 95. In this unique situation, the cash
disbursed from the restricted cash account will not pass through cash used in
investing activities (capital expenditures) since that cash is being pre-paid
by the government agency funding the building. As a result, the building will
be an asset of the Company, but will have a zero accounting basis.

Notes to Consolidated Financial Statements, page 47

Note 2, Summary of Significant Accounting Policies, page 48

Property and Equipment, page 49

3.               Prior to the loss of the Space Shuttle
Challenger in January of 1986, all satellite and spacecraft launches in the
United States were performed at government facilities. This policy precluded
private industry and private investment from involvement in this industry. The
shuttle disaster brought attention to the U.S. space policy and President
Reagan in 1988 announced a new initiative that would be conducive to commercial
launch ventures by providing a favorable government policy that mandated NASA
to not be involved in commercial launch services unless the case can be made
for specific national security or foreign policy reasons.

Astrotech was founded to provide commercial pre-launch facilities to be
used in place of the government facilities. Astrotech operates essentially the
only commercial pre-launch facilities at each of the major domestic launch
sites. Our reported $26.8 million backlog in June represents missions scheduled
for launch and for which use of our pre-launch facilities has been reserved. In
addition we have entered into contracts with NASA for Indefinite Delivery,
Indefinite Quantity (IDIQ) missions that could result in as much as $10 million
and $35 million in additional backlog. We believe that our competitive

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position and dominance in the market will continue to result in
attracting future pre-launch business for Astrotech.

We include the risk disclosure noted on page 13 because there is always
a possibility that another change in government policy could occur that would
reduce the competitive value of our facilities near the launch sites. Over the
past decade the domestic commercial space program has declined due to the
subsidies given by foreign governments to our competitors in other countries. The
U.S. government could however reverse this by enacting aggressive subsidies
here domestically. Our impairment analysis acknowledges these risks and is
based on the continuation of existing government regulation and policy for
commercial space commerce.

In regards to our impairment and FAS 144 analysis, we have concluded
that the cash flows expected to be generated from the operation of these
facilities will exceed their carrying value, thereby eliminating the need for
any impairment disclosure. These cash flows will result from the backlog
currently on the books in addition to future contract awards.

4.               Of the 84% of fiscal year 2007 revenues
referred to as generated from U.S. government contracts, 65% were generated by
our space shuttle module operations included in our SPACEHAB Flight Services
business unit. These revenues resulted from use of our space shuttle module
assets and services provided in preparing and operating these assets on space
shuttle missions. We recognized that the final mission under contract before
the scheduled retirement of the space shuttle fleet in 2010 was completed in
August 2007 and recognized an impairment of essentially the entire remaining
book value of our modules and the payload processing facilities relating to our
space shuttle operations in our fiscal year 2007 results.

Our Astrotech payload processing facilities, however, do not support
space shuttle activities and serve an entirely different market. Even though we
provide services to NASA, among other customers, at our Astrotech facilities,
the services provided relate to satellite and spacecraft pre-launch services
from science and exploration activities of NASA and not the space shuttle and
International Space Station activities served by our SPACEHAB Flight Services
business unit. The Astrotech facilities are significant structures, including
land and related improvements; typical of long lived assets. As discussed in
item 3 above, we believe the domestic commercial satellite industry will
continue to exist for the foreseeable future given conservative market
projections and that U.S. government law and policy will not significantly
alter the role of commercial enterprise in supporting this industry.

Supporting the assumptions above as to our Astrotech payload processing
facilities, we currently have long-term contracts in place with ULA, Sea Launch,
and NASA. In addition, as discussed in item 2 above, we are constructing a
major payload processing facility at Vandenberg Air Force Base, California on behalf
of the National Reconnaissance Office in support of a series of satellite
launches in development by that agency. Currently, the United States has only
two operable heavy lift launch vehicles, the

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Lockheed Martin Atlas V, and the Boeing Delta VI, capable of launching
large commercial satellites and requiring the payload processing facilities
operated by Astrotech. While operating the only capable facilities for servicing
these launch vehicles in what is projected to be a stable future market, we
believe the expectation of employing our Astrotech payload processing
facilities for the extent of their estimated operating lives is appropriate. The
specific facilities consist of a range of buildings and facility improvements
with a corresponding range of estimated operable lives.

Revenue Recognition, page 50

5.               Our SPACEHAB Flight Services business
unit provides integral assets and services to NASA on specific scheduled space
shuttle missions. NASA plans and schedules each space shuttle mission years in
advance, employing detailed time lines and milestones. Our space shuttle
activities parallel this detailed scheduling with program initiation made upon
formal notice by NASA and scheduled detailed deliverables throughout the
mission. When the mission schedule changes, our firm fixed mission price is
adjusted for a cost based “equitable adjustment” to compensate for additional
costs encountered. Our “output” is measured by successfully meeting a
deliverable such as completing a testing requirement, installation of the
module into the bay of the space shuttle or completion of some other defined
activity that cannot be quantified as a reliable measure of output. We
determined, therefore, that costs incurred represent the best measure of output
for revenue recognition in our space shuttle activities.

As required under paragraph 51 of SOP 81-1, we continue to review and
validate our use of cost as a measure of output for revenue recognition. In the
initial years after the loss of the space shuttle Columbia our flight services
revenue was primarily cost based under the “equitable adjustment” provisions of
our contract for future missions being delayed. As the missions moved from
standby to active preparation, the significant difference became subcontracted
work towards milestones. In each situation, we determined that cost provided
the best measure of output.

6.               We discussed our ULA contract in item 1
above and refer to that discussion here as well. This contract, originally with
Lockheed Martin, was entered into in 2002 along with a parallel contract with
the Boeing Corporation in support of the construction of a new payload
processing facility at our Astrotech Florida facility to be used exclusively by
Lockheed Martin and Boeing. The contract terms provided for fixed quarterly
payments from both Lockheed Martin and Boeing that were to be made directly to
SunTrust Bank, the mortgage holder on the new building. Lockheed Martin and
Boeing were each assigned exclusive areas within the building, including
storage and support areas. Astrotech was responsible for maintaining the
building, providing utilities and support services. When Lockheed Martin or
Boeing scheduled delivery of a satellite for processing, they were responsible
for providing all technical personnel, computers and service equipment and for
managing the processing activity. The contracts did provide for supplemental
charges if the customer were to process more that the contracted number of
missions in a year or for specific additional services, if needed. Boeing
subsequently prepaid their guaranteed obligations under the contract and exited
from the

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commercial satellite launch business, and we applied the proceeds from
Boeing to the mortgage on the building.

Under our ULA contract we continue to receive four quarterly fixed
payments (the mortgage is now paid off) and we continue to provide specific
facilities to our customer for their exclusive use. The contract provides an
excess mission charge for missions in excess of four annually. In recent years
and in the foreseeable future, we do not anticipate that our customer will
utilize the full minimum of four missions. Our required level of support is
consistent throughout the year since we are obligated to maintain essentially
the same level of support with or without a mission, and our quarterly payments
are fixed as to amount and period through the year.

Note 9, Convertible Preferred Stock, page 54

7.               The Note 9 you reference erroneously
states that “No dividends are payable on the convertible preferred shares.” We
will correct this disclosure on all future filings. The Series C Convertible
Preferred Stock issued in the exchange offer disclosed in note 27 on page 65
also participates in dividends with common stock. Neither the Series B nor the
Series C preferred stock are paid dividends other than the rights to
participate with the common stock. Both the Series B and the Series C
convertible preferred stock issues have now been converted into common stock. The
Company has never paid a dividend to its common or preferred stockholders.

Since there are no dividends specifically applicable to the preferred
stock, all earnings are available to the common stock as required under FAS 128
and EITF 03-6 for presenting per share amounts.

Note 15, Segment Information, page 60

8.               The specific products and services
offered by our three business segments, SPACEHAB Flight Services, Astrotech and
SPACEHAB Government Services, are discussed in Note 1 and Note 15 of our
financial statements. These disclosures, particularly in Note 1 include
disclosure of services, customers and facilities. We include a more
comprehensive discussion of our Business Units in Item 1 on page 2 of our Form
10-K. In response to your observation regarding paragraph 37 of FAS 131, on
future filings we will enhance the disclosure discussion in the footnotes to
our financial statements reflecting on segment information.

9.               Our Flight Services segment provides
specific assets and payload processing facilities in support of U.S. space
shuttle missions. The specific assets consist of habitable space modules that
fit into the bay of the space shuttle to provide cargo and research capability
along with living and work quarters for astronauts while in orbit. The Flight
Services segment operates a payload processing facility outside of Cape
Canaveral Air Force Base, Florida. Our SPACEHAB Flight Services is human
spaceflight based and our payload processing includes stowage and configuration
of cargo, astronaut training, and use of our proprietary space assets. The
payload processing facility was sold in 2005 and

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is currently leased back from the owner and supports continuing space
shuttle activities and several sub-tenants. In our fiscal year 2007, we
recorded an impairment for our modules and other space shuttle supporting
assets, reducing the net asset value.

Although our Astrotech segment provides payload processing facilities,
these facilities are specifically designed to support satellite and related
operations and are not used in our Fight Services space shuttle operations. The
Astrotech facilities are located outside of Kennedy Space Center, Florida and Vandenberg
Air Force Base, California. As discussed previously, the Astrotech segment
assets consist of significant long-lived buildings and related assets expected
to provide service well beyond the life of the U.S. space shuttle program.

Our Government Services segment provides personnel who work at
facilities provided by Johnson Space Center or other contractors in Houston,
Texas and who utilize equipm