Editorial: ESA’s Rational Shift

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  Space News Business

Editorial: ESA‘s Rational Shift

posted: 12 June 2006
01:47 pm ET


It is encouraging to see that the European Space Agency (ESA) has modified its longstanding geographic-return policy to give program managers more flexibility to award merit-based subcontracts on science missions. ESA Director-General Jean-Jacques Dordain is to be commended for quietly instituting the shift, which could set Europe on course to a more-rationalized space industrial base.

ESA’s geographic-return policy has issues, but it exists for a reason: It ensures that member states, particularly those lacking large prime contractors within their borders, reap domestic economic benefits that are proportional to their contributions to agency programs. This seems only fair and reasonable: Why should Belgium, for example, invest in ESA programs if all of the euros it contributes are spent in France, Germany and Italy?

Contributions to ESA’s science program are mandatory, so all members can make geographic-return claims on science missions.

The problem with geographic return, of course, is that it often leads to inefficiency and waste. It ensures the survival of too many providers of the same product or service. It also creates a situation where companies with a domestic monopoly — which is not unusual in smaller ESA nations — can dictate contract terms to the agency or to prime contractors.

It is worth noting here that the political forces behind geographic return are not unique to Europe. They are alive and well in the United States and manifest themselves in the form of wasteful make-work projects — many justified in the name of space science — that are inserted into the annual spending bills each year by interested members of the U.S. Congress.

Unlike U.S. pork barrel spending, however — where there is no consideration given to where the money comes from in the first place and no solution in sight — geographic return appears to be evolving for the better.

ESA’s 557 million-euro ($720 million) Gaia star-mapping mission is the first major project on which the modified rules will be applied. ESA and Gaia prime contractor Astrium Satellites — whose major operations are in France, Germany and Britain — have been granted permission to ensure that prospective subcontractors meet minimum technical standards to be considered for a role. In addition, competitions will be organized for almost all Gaia subcontracts, according to Jacques Louet, ESA’s head of science projects. “We occasionally have to say ‘No, your industry will not be a part of this program,’ despite geographic-return rules.”

That statement is key, because it indicates that ESA is serious about selecting component suppliers based on their ability to deliver on time and at cost rather than where they happen to be based.

The modified policy still has weaknesses. Because the broad principle of geographic-return still applies, countries that are passed over for work on one mission will expect to be compensated with a larger share of work on future missions. So it is conceivable that if a significant gap develops over time between the value of work being done in a given country and its contribution to ESA’s science program, agency managers would feel compelled to compensate in ways that are wasteful or inefficient — perhaps even more so than before.

But it is just as plausible that the shift will lead to the emergence of European centers of excellence for certain components and technologies, something the previous variation of geographic return had discouraged. ESA members that do not host large companies could encourage their industries to specialize in certain capabilities — infrared sensors or orbit-raising thrusters, to name just two examples — with the understanding that these will always be required for a certain percentage of space science missions. This becomes possible if ESA members can let go of the notion that they must get their money back on every single science mission the agency launches.

If ESA is able to successfully bring more competition into the equation, so much the better — competition weeds out the weak and inefficient. And it is not unreasonable to expect countries with the resources to invest in space science to be able to carve out at least some niches in which their industries can excel.

ESA is a unique organization because it comprises 17 nations — soon to be 21 or more — each with its own strategic and economic interests. Because of this, some sort of geographic-return policy, with the attendant problems, likely will always be around.

Mr. Dordain clearly recognizes that reality and is doing the right thing by trying to effect gradual change with a nudge rather than a shove. With a little luck, the shift he has put in motion will develop a momentum of its own.



ESA