European Commission To Trim Initial Order of Galileo Satellites

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BRUSSELS, Belgium — The European Commission has reduced the number of satellites it expects to order this year for the Galileo navigation program to preserve the ability to modify the spacecraft design early in the system’s life, European government and industry officials said. The decision also permits the commission to save money at a time when the Galileo project threatens to burst through its budget limit.

The commission had asked the two final Galileo bidders — consortia led by Astrium Satellites and OHB System — to bid for 28 to 30 satellites, but recently has told them the maximum order will be for 22 spacecraft. The commission has asked both bidders to quote prices for eight and 16 satellites as well, in case it decides to divide the work between the two consortia.

Best-and-final offers are due in mid-November, with a decision scheduled for late December. The commission had budgeted 840 million euros ($1.24 billion) for the contract to build the Galileo satellites when it wanted 28 to 30 satellites. Officials said the bids they have received so far appear in line with that estimate.

At a conference here Oct. 15-16 on European space policy organized by Business Bridge Europe, government and industry officials acknowledged that the Galileo project still faces budget and schedule challenges that ultimately could leave it open to hostile scrutiny from the European Parliament.

European Parliament members have backed Galileo on the assumption that its budget of 3.4 billion euros through 2013 would purchase a fully operational system that year.

Neither objective looks feasible now, government and industry officials said. While it may be possible to have at least a partial Galileo constellation in orbit and providing limited service in 2013, it will be more like 2016 before the system is fully operational, they said.

One reason is that the 3.4 billion-euro budget ceiling was set before the European Commission knew it would have to pay some 400 million euros to cover cost overruns in Galileo’s In-Orbit Validation phase, during which four test satellites and most of the system’s ground network were built.

In early 2009, European Commission officials said they thought the European Space Agency (ESA), Galileo’s former financial backer, had been overly lax with industry. These officials said a commission audit of the In-Orbit Validation phase would cut the cost overrun by 30 percent to 40 percent, if not more, by denying the validity of payment demands industry had made.

Instead, the commission concluded after its audit that all of the cost-reimbursement requests were legitimate, meaning the overruns were due to contract change notices issued by ESA as Galileo added measures related to system security.

“This is certainly not good news for our budget, but in fact the charges were all legitimate,” said Fotis Karamitsos, Galileo director at the commission’s directorate-general for energy and transport, which has charge of Galileo. Karamitsos conceded Oct. 15 that he was among those who had thought the commission audit would find unjustified reimbursement requests. “This system is extremely complicated,” he said of Galileo.

Karamitsos said the decision to order only 22 satellites in the contract to be signed this year is mainly to permit Galileo managers to adjust the spacecraft for new technology or to account for developments in other satellite navigation systems. China’s Beidou-Compass system, which may be operational before Galileo, has still-unresolved signal-overlap conflicts with Galileo.

The four In-Orbit Validation satellites, meanwhile, have encountered multiple manufacturing and integration problems — the most recent related to their signal generators — and will not be ready for launch until late 2010 at the earliest.

Karamitsos and ESA Director-General Jean-Jacques Dordain said the consortium building the four satellites has given written assurances that two will be ready for launch in November 2010, with the others ready by early 2011. The satellites will be launched two at a time on the European version of Russia’s Soyuz rocket, for which a launch pad is under construction at Europe’s Guiana Space Center in French Guiana.

But several government and industry officials said even this date is optimistic, and that a more likely date is 2011 for all four satellites.

Industry officials said a time-honored game between satellite builders and launch service providers in which each attempts to hide its own delays behind the other’s schedule slips is already under way for Galileo.

Galileo program managers want to wait until the European Soyuz’s third flight before loading their hardware aboard. With multiple Soyuz delays, many due to difficulties Russian companies have had in building the Soyuz launch pad’s mobile gantry, it is not clear whether the vehicle will be operational soon enough to make its third flight in 2010.

That will add more cost to the program.

Galileo is also suffering from the fact that, to pay for the cost overruns elsewhere in the program, managers at the commission raided its applications-development budget, taking 400 million euros and leaving that part of the Galileo program with just about nothing.

“I am truly ashamed to say what we are spending now on Galileo applications each year,” said Matthias Ruete, director-general of the commission’s energy and transport directorate. “It’s 15 million euros.”

Addressing the conference Oct. 16, Ruete said the U.S. government spends more than $200 million each year developing new applications for the GPS system, and that if all the U.S. military navigation applications research is added the figure may be closer to $500 million.