PARIS — The European Space Agency (ESA) on Feb. 24 signed the biggest satellite construction contract in its history, a $1.8 billion, six-satellite deal with Thales Alenia Space to provide meteorological services from geostationary orbit for 20 years starting in 2018.

In addition to being its biggest satellite commitment, the Meteosat Third Generation (MTG) contract was one of the most contentious in the history of the 19-nation ESA.

Germany and France, with equal shares in the program, had disputed leadership in ways that threatened to undermine ESA’s role as the neutral and unquestioned arbiter of Europe-wide space program contract awards.

“I need not recount here today the types of pressures that were applied to us,” ESA Director-General Jean-Jacques Dordain said at the contract signing ceremony at ESA headquarters here. “We demonstrated that ESA was able to stay the course and bring the negotiations to a conclusion on the basis of value for money.”

Given the acrimony in some parts of the German government over the award to a team led by Thales Alenia Space of France and Italy instead of Astrium GmbH of Germany, Dordain said it was all the more important for the winning team to bring the project in on budget and on schedule.

“Any cost overruns would be especially catastrophic,” Dordain said. “It would open room for critics to say we had selected the wrong team.”

In the end, Germany buckled to ESA’s selection decision, but not before squeezing out a bit more work for Astrium GmbH, whose bid to be prime contractor was judged more expensive than the offer from Thales Alenia Space of France and Italy, and OHB AG of Germany.

ESA is paying some 62 percent of the total contract value for the six satellites, which ESA officials said was 1.26 billion euros in 2008 economic conditions. Adjusting for inflation since then, the current value of the contract is about 1.4 billion euros, or $1.8 billion at current exchange rates.

Europe’s Eumetsat meteorological satellite organization of Darmstadt, Germany, is paying the remaining 38 percent of the satellite contract and more than two-thirds of the entire MTG program, which has been budgeted at about 2.4 billion euros.

The MTG program is the continuation of earlier-generation Meteosat satellites but the first featuring three-axis-stabilized satellites. Previous Meteosats had employed canister-shaped bodies that spun in orbit to stabilize their position.

All six satellites will use the Small-Geo multifunction platform being developed for ESA by OHB. MTG includes four imaging and two sounding satellites. Using the Ka-band radio frequency, the satellites will deliver 100 times the data volume of the predecessor second-generation Meteosats.

The most immediate challenge for Thales Alenia Space, OHB and their subcontractors will be to assure a contract distribution that respects ESA’s geographic-return rule. That rule guarantees nations participating in an ESA program that their national industry will receive contracts equivalent to 90 percent of their government’s contribution.

For MTG, Sweden at present is severely underrepresented in the contractor mix relative to its government’s participation. Thales Alenia Space and OHB officials said they have yet to sign about 30 percent of the total contract value with subcontractors, leaving ample room to increase Sweden’s participation with Swedish companies including Ruag and OHB Sweden.



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Peter B. de Selding was the Paris bureau chief for SpaceNews.