ESA Misses Deadline for Galileo Funding Decision

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The Galileo satellite-navigation system, whose projected in-service date already has slipped from 2008 to 2011 because of disputes among European governments over financing, risks falling further behind schedule because of a turf war that has all but stopped work on the project, government and industry officials said.

A Sept. 30 deadline for European Space Agency (ESA) governments to agree on their share of financing for Galileo’s ground network and initial four satellites came and went without an agreement.

The specific issue to be settled is a commitment from ESA governments to cover their 50-percent share of the 400 million euros ($482 million) in additional costs for Galileo’s In-Orbit Validation phase.

This segment of the project is being built by an industry consortium called Galileo Industries S.A. of Brussels under a contract that has been fully negotiated with ESA and is ready to be signed. The total contract value, including the 400-million-euro cost overrun, is nearly 1.1 billion euros.

Half of this sum is being paid by the European Commission, the executive arm of the 25-nation European Union; the other half is ESA’s responsibility. The European Commission already has approved its share and has given ESA the responsibility of negotiating the contract.

Several of the European government officials who oversee ESA have refused to sign off on the ESA contract until they are guaranteed that certain Galileo operating facilities, such as the control centers, are located on their territories. Germany has been the most adamant about this, but it has not been the only country with such concerns.

ESA Director-General Jean-Jacques Dordain said Sept. 30 that ESA has no authority to select where Galileo facilities will be located, and that these issues should be settled later on as Galileo’s privately owned operator takes over. Faced with the same stalemate in December 2004, Dordain agreed to permit Galileo Industries to start work on the ground segment with a 150-million-euro advance payment that was supposed to cover costs through June. Dordain said then that a final contract was only weeks away from being approved.

Nearly 10 months later, nothing has changed.

In an interview, Dordain said ESA has agreed with Galileo Industries that the initial contract, which had been extended to Sept. 30 without any new funding, has now been extended again, to Oct. 31 — with no new financing.

Dordain said European transport ministers, who are funding the European Commission’s 50-percent Galileo stake, are scheduled to meet Oct. 6 and have been advised by European Transport Commissioner Jacques Barrot that Galileo now faces serious trouble if the In-Orbit Validation contract is not approved in October.

Dordain said he has written to European research ministers, who fund ESA’s share of Galileo, to say the same thing in advance of a meeting of ESA governments Oct. 13.

“My pockets are empty if we have no agreement by the end of October,” Dordain said. “I could sign a contract with [Galileo Industries] tomorrow — even tonight — if I had the authorization from my delegations. The contract with industry is fully negotiated and ready to go. But nothing has moved since December.”

Galileo Industries Chief Executive Guenter Stamerjohanns said the company has slowed its activity in the last five months as its money has run down.

“We have become experts in stretching out our funding,” Stamerjohanns said Sept. 30. “But now the rubber band has been extended its maximum length before it snaps. We have a company to run, we have 120 employees and more than 500 working at subcontractor level. I have been very frank in telling people that there is a problem.”

Stamerjohanns declined to speculate on how much of a delay the current impasse already has caused Galileo. “I am focused on getting the work started, not on figuring out when the program will be completed,” he said. “But certainly the difficulties we have faced have not helped on the schedule side.”

Several industry officials said ESA should sign a contract for part of the In-Orbit Validation work with the money it has, while continuing to wait for a compromise that will free up the remaining monies.

Dordain said he refuses to do this. “I have an obligation to our delegations to spend public money prudently,” Dordain said. “If I signed a deal for, say, a portion of the work, I would leave myself open to surprises later on — for example, a contractor saying: ‘The price has just risen to 1.2 billion euros.’ Before I sign the contract I need a clear view of things. I certainly don’t have that now.”