Budgetary Sleight of Hand Remains a Galileo Hallmark

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PARIS — From its earliest designs a decade ago, Europe’s Galileo satellite navigation project has required as much financial legerdemain as engineering prowess, a characteristic that it retains to this day judging from the contracts signed Feb. 2.

This is a project that faced a near-death experience several years ago when highly optimistic cost projections gave way to substantial cost overruns and the project ran out of money.

In what even Galileo skeptics now regard as a masterstroke, the European Commission was able to siphon farm price support monies from its agricultural budget and use them to keep Galileo afloat despite a wall of European Union regulations designed to prevent such now-it’s-here, now-it’s-there cash transfers.

It was at this point that Galileo managers were warned: The project will have 3.4 billion euros — about $4.5 billion at current exchange rates — to use through the end of 2013 and not a euro more.

Additional funds would come from the commission’s fresh seven-year financing, starting in 2014, whose total budget will not be known until late 2013.

In mid-2011, the commission determined that it had committed funds totaling 3.15 billion euros to Galileo, leaving 250 million euros at its disposal in the current budget.

It would use this money to purchase as many Galileo satellites and launches as it could, and to modify Europe’s heavy-lift Ariane 5 rocket so that it could join the European version of Russia’s medium-lift Soyuz vehicle in launching the Galileo constellation of 30 operational satellites and a couple of in-orbit spares.

The Ariane 5 upgrade is scheduled to cost 50 million euros. That left 200 million euros to buy new satellites. The commission said that depending on the bids it received for the satellites, it could order six or eight spacecraft with the available money.

But on Feb. 2, the commission announced cash commitments totaling 315 million euros. The breakdown is 255 million euros for eight satellites, 30 million euros for the Ariane 5 upgrade — the European Space Agency (ESA) agreed to finance the remaining 20 million euros for this — and 30 million euros to reserve three Ariane 5 launches.

Full payment of the Ariane 5 contract would await the arrival of the new seven-year budget in 2014.

But even with ESA’s surprise contribution, the commission’s commitment is 65 million euros more than it has at its disposal.

Given the rules that prevent the commission from borrowing against future budgets, the question is: Where did the extra 65 million euros come from?

“Of course we saw this and yes, there would appear to be a slight problem,” said one European government official. “If they found additional money, I don’t know where it came from.”

Didier Faivre, ESA’s director of navigation — ESA is Galileo contracting authority, acting on behalf of the commission — referred questions about the overall Galileo budget to the commission.

Commission spokeswoman Sara Tironi did not respond to Space News inquiries on Feb. 3.

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