Airbus Seeks New Terms on Data-relay Contract with ESA

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PARIS — Airbus Defence and Space is asking the European Space Agency to revise the terms of their ambitious public-private partnership on space-based optical data-relay services, saying the risks to the company have grown well beyond what was foreseen in the original contract, European government and industry officials said.

ESA has responded that Airbus knew or should have known the project’s risks when it agreed to a firm, fixed-price commitment in return for managing the European Data Relay Services (EDRS) program, officials said.

“The program is in trouble,” said one industry official whose company has an interest in EDRS’s success. “Airbus is basically saying, ‘We can’t do it under the original terms, there have been too many delays, and our financial exposure is too high.’ ESA’s response has been: ‘You signed a firm contract, and these risks were known at the time.’”

The EDRS program faces delays not only with its own in-orbit data relay payloads but also with the European government satellites that are expected to utilize the network. 

ESA has committed about 275 million euros ($358 million) to the EDRS program, with Airbus committing an undisclosed figure that was estimated at less than 70 million euros.

Airbus officials publicly said they are sticking with the program and will work through the current issues. 

“EDRS will be realized as planned,” said Evert Dudok, head of Airbus Defence and Space’s Communications, Intelligence and Security division, which manages EDRS. “We are facing delays in some of the system elements, and the Sentinel 1A [Earth observation satellite, carrying an EDRS laser communications terminal] was late in getting to orbit. Also, the European Commission and ESA have needed more time than forecasted to work out the management of the Copernicus program.”

The ESA-European Commission Copernicus environment-monitoring program is EDRS’s anchor customer. Copernicus includes multiple satellite sensors, including at least four satellites carrying EDRS laser communications terminals.

The delay in the start of revenue generation is an issue, Dudok said, but the company expects to be able to exercise options in the EDRS contract with ESA to iron out the current issues.

ESA Director-General Jean-Jacques Dordain said the agency is willing to see Airbus depart as system manager and for EDRS to be run as a conventional government procurement program if that is needed to keep it on track.

Dordain said June 4 that ESA’s belief in the value of EDRS, for disaster response and other uses, has firmed in recent months. “There is a big difference between receiving data a few minutes after it is imaged by a satellite and receiving it hours later,” Dordain said.

Dordain said he understood Airbus’ concerns about program delays and the possibility that the company will not see a return on its investment as soon as originally hoped. He said he did not think Airbus is exaggerating its difficulties as a way of winning better contract terms.

If Airbus cannot expand the EDRS customer base beyond the European Commission and Copernicus, the argument is strengthened for running the program as a conventional government procurement without a private-sector manager seeking an investment return, Dordain said.

Under Dordain’s direction, ESA has made public-private partnerships a showcase feature of the agency’s program development. But all previous public-private partnerships have involved companies taking limited risks in markets that were well developed commercially, or where government demand was foreseeable.

EDRS, which has been strongly backed by the German government, takes public-private partnership risk to another level. There is no commercial market for satellite data relay services.

One point of debate between the 20-nation ESA and Airbus is the amount of capital at risk that Airbus has in EDRS. Industry estimates have been as high as more than 10 million euros ($13.7 million), although government officials have questioned that figure.

Airbus has contracted for the construction of a satellite carrying a laser communications terminal as a secondary payload for a telecommunications mission.

But this satellite, being built by OHB AG of Bremen, Germany, and including a telecommunications payload to be used by Avanti of Britain, is behind schedule and is not expected to be in service before 2016, a year behind the original schedule.

A second EDRS laser communications terminal will be placed aboard a telecommunications satellite under construction for satellite fleet operator Eutelsat of Paris. This satellite, Eutelsat 9B, is under construction by Airbus Defence and Space and was scheduled for launch this year before its launch vehicle, Russia’s Proton rocket, failed in May.

Proton’s return to flight and its ability to work through its manifest this year remain unclear.

EDRS is planned as a global data-relay system to speed data from Earth observation satellites in low Earth orbit to ground managers via satellites in the higher geostationary orbit 36,000 kilometers over the equator.

The idea is to reduce the time from an image’s capture to its exploitation by users to minutes from hours.

One longstanding challenge for Airbus is to turn the current regional EDRS, with two nodes in geostationary orbit, into a global system that would be realized with the construction of a third satellite, preferably covering North America.

Airbus, a successful manufacturer of commercial telecommunications satellites, hopes to find a customer over North America that will agree to permit Airbus to add a laser communications terminal, built by Tesat Spacecom of Backnang, Germany, to an otherwise conventional telecommunications satellite.

With a global network, Airbus would be in a better position to expand EDRS beyond its initial Copernicus market to civil and military markets with unmanned aerial systems equipped with compatible laser communications terminals.

Airbus officials have said the third node is crucial to the long-term financial success of EDRS as a commercial program.

The German Aerospace Center, DLR, which is the principal EDRS backer at ESA and is also an EDRS service supplier to Airbus, declined detailed comment on the program, saying in a statement: “We are working together with ESA and industry to safeguard the program and meet the special challenges of industrial and institutional demands.”

 

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