ESA Again Fails To Select a Prime Contractor for Meteosat

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PARIS — A European Space Agency (ESA) bid-evaluation board on Dec. 9 failed for the second time to select a winner of the biggest satellite-construction competition in Europe, a highly unusual move some government officials say is an indication of the political pressure surrounding the contract.

At stake is a contract for 1.4 billion euros ($2.1 billion) to build six third-generation Meteosat meteorological satellites. Funded 75 percent by Europe’s meteorological satellite agency, Eumetsat, and 25 percent by ESA, the Meteosat Third Generation (MTG) program has a total budget of 3.3 billion euros including the satellites’ construction and launch, the building of a dedicated ground infrastructure and two decades of system operations.

ESA’s tender-evaluation board had solicited best-and-final bids from the two competing consortia, led by Astrium and ThalesAlenia Space, in early October. The agency had expected to enter into final negotiations with a selected candidate in time to permit Eumetsat’s ruling council to begin its MTG subscription solicitation Dec. 2.

But the evaluation board met Nov. 23 and was unable to select a winner, obliging Darmstadt, Germany-based Eumetsat to remove an MTG decision from its council agenda. Eumetsat’s council agreed to schedule an extraordinary council meeting in mid-March.

Government officials said Eumetsat and at least one of its larger government members, in separate letters, reiterated after the Nov. 23 nondecision their requirement that MTG contractor selection should be based on value for money.

MTG from the outset has been an unusual program, and not only for its size. When ESA government ministers met in November 2008 to vote their share of MTG costs, these governments engaged in a bidding war that resulted in far more money being committed than what ESA had requested. The bidding ended only when ESA’s two biggest powers, France and Germany, agreed to share program leadership with stakes of 34 percent each.

That assured French and German industry the lead roles in satellite hardware construction. But the German government made clear in the months following the ESA vote that it wanted for its industry not only its share of MTG industrial contracts, but the title of MTG prime contractor as well.

The six MTG satellites — four imaging satellites and two equipped with sounders — will operate from geostationary orbit. Astrium’s German division does not have its own geostationary satellite platform, so the Astrium bid proposes a platform made by Astrium France and similar to one used for South Korea’s Communications, Oceanography and Meteorology Satellite, to be launched in 2010. Astrium’s MTG bid nonetheless has the company’s German address as the prime contractor location based on instruments and integration work to be done in Germany.

ThalesAlenia Space of France and Italy has built Eumetsat’s previous geostationary-orbiting satellites, but they have all been spin-stabilized, whereas the MTG spacecraft will have standard solar arrays and will be stabilized on three axes. So MTG is a new development for ThalesAlenia Space as well.

ThalesAlenia Space’s biggest problem was that it does not have a large German industrial presence. Encouraged by ESA, the company struck a deal with OHB Technology of Bremen, Germany, in which OHB’s Small-Geo satellite platform, being developed under an ESA contract for future commercial telecommunications customers, would also be used for MTG. The platform and other work assigned in Germany would give the ThalesAlenia Space bid the requisite German content. But ThalesAlenia Space is prime contractor for the work.

“In principle if Germany is getting its rightful work share in both bids, then that should solve the problem,” one government official said. “But you have the national-flag issue of who is prime contractor, and this makes things more complex — especially if one bid is clearly less expensive or technically superior.”

Volker Liebig, director of Earth observation at ESA, said the Astrium and ThalesAlenia Space bids both were acceptable on technical merit, but that the review board wanted further details on specific areas of both bids. In a Dec. 10 interview, Liebig said this is the reason the board was unable to decide on a winner at its Dec. 9 meeting. The two teams have until Jan. 27 to answer the questions, with ESA’s review board scheduled to meet Feb. 3 to attempt, for the third time, to select a winner.

ESA’s Industrial Policy Committee, which has final responsibility for signing ESA payments, is scheduled to meet the first week of March to give its endorsement of the choice, with the Eumetsat special council meeting to occur March 15.

Liebig declined to discuss the relative prices attached to the two proposals, but said he is certain that, given what he knows of the bids, MTG will be built within the foreseen financial budget.

Liebig said both bidders will be given written and oral briefings on how the evaluation was performed, and the criteria that led to the choice. He said he is aware of industry rumor that one bid is being favored over another, and that this is not the case. “It’s normal for a contract of this size that you have this kind of thing,” he said. He declined to give examples of the bids’ elements that needed further explanation.

ESA’s tender-evaluation board includes about a dozen experts backed by several dozen engineers that have delved into the details of bids, each of which covers several thousand pages delivered, in paper version, by truck to ESA’s European Space Research and Technology Center in Noordwijk, Netherlands.

Liebig said neither he nor ESA Director-General Jean-Jacques Dordain sits on the evaluation board, although the board’s decision must be approved for political and other criteria by ESA management.