Airbus Bests Thales Alenia-OHB Team for Billion-dollar ESA Weather Satellite Contract

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KOUROU, French Guiana — Airbus Defence and Space has been selected to build Europe’s next generation of polar-orbiting meteorological satellites after an extended evaluation that hinged in part on whether bidders could guarantee equivalent work shares in both France and Germany, industry officials said.

The European Space Agency’s Industrial Policy Committee is expected to validate the choice of the agency’s bid-evaluation board, which preferred Airbus to competitor Thales Alenia Space, on April 11. Thales Alenia of France and Italy was teamed with OHB AG of Bremen, Germany.

The 20-nation ESA has budgeted 800 million euros ($1.1 billion) for its share of the Metop Second Generation program, mainly to cover the costs of the design and construction of the first pair of Metop-SG satellites, to be launched around 2021.

Europe’s Eumetsat meteorological satellite organization of Darmstadt, Germany, has tentatively budgeted 3.4 billion euros for the remaining Metop-SG costs, including the construction and launch of one or two additional pairs of satellites, the system’s ground network and operations for 20 years.

Eumetsat governments are expected to decide by early next year whether to incur the additional capital costs of ordering a third pair of Metop-SG satellites from Airbus — in which case the per-satellite cost will be lower than for a two-pair order — or forgoing the third pair now but forcing an earlier decision on a Metop-SG follow-on.

ESA and Eumetsat structured the Metop-SG contract to require that France and Germany have equal work shares to avoid a repeat of a bitter struggle about which nation would claim leadership of the Meteosat Third Generation satellite system in geostationary orbit. After a dispute between Germany and France that delayed the program and threatened to undermine ESA’s role as a contracting authority, Thales Alenia Space and OHB won the six-satellite Meteosat contract, but only after agreeing to increase Germany’s work share on the effort.

For Metop-SG, the German and French governments agreed in 2012 that they would have broadly equal roles and that neither could plant its flag on the program. But ESA and Eumetsat also stipulated that they wanted maximum economies to be guaranteed by the contracting teams. That argued for a single company to carry away the entire prize, using a common satellite platform to carry the two sets of sensors, rather than dividing the work.

This is what has occurred with the decision to favor Airbus Defence and Space over Thales Alenia Space and OHB for Metop-SG.

For Thales Alenia Space, the loss is doubly painful because it had already lost the competition to build the IASI infrared sounder for Metop-SG. Airbus signed that 230 million-euro contract with ESA in October.

More recently, Airbus won a contract, valued at 144 million euros, for the Sentinel-5 spectrometer payload, which will ride on Metop-SG.

Thales Alenia Space’s tie-up with OHB for the Meteosat Third Generation competition was obviously an advantage as the Franco-Italian company sought to ease German government concerns about German work share by highlighting the substantial role of OHB.

Whether the OHB connection helped for Metop-SG is not clear. European government officials have privately expressed concerns that a Thales-OHB win of the Metop-SG contract would overextend OHB’s resources. The company is already juggling its prime contractor role on 22 Galileo navigation satellites, which are nearly a year late, in addition to its big share of the Meteosat Third Generation program.

The company is also building Germany’s EnMap hyperspectral Earth imaging satellite and fell so far behind schedule that customer DLR, the German Aerospace Center, stepped in to demand an accounting. OHB ultimately replaced the management team from its Kayser-Threde subsidiary, which is overseeing EnMap development.

In this instance, Thales Alenia Space had nowhere else to go in Germany, regardless of whether OHB was in a position to act as a credible bid partner, officials said. The situation is similar to Thales Alenia’s situation in Britain, which is increasing its space spending.

Airbus Defence and Space has a well-established space-hardware manufacturing presence in Germany, France and Britain. Thales Alenia Space’s strength is centered in France and Italy.

Given ESA’s geographic-return rules, which require that each nation’s industry get a program work share in proportion to its government’s contribution to a given program, Thales Alenia Space officials have agreed they will need to shore up their British and German presence over time.

Correction: An earlier version showed a model of MeteoSat, not Metop