France Dumps Plan To Privatize Its Military Telecom Satellites

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CANNES, France — France has formally scrapped plans to privatize its military satellite telecommunications system through a sale and leaseback formula after concluding its defense authorities prefer to keep full ownership and control of the system, Defense Minister Gerard Longuet said March 6.

Longuet’s statements to the Toulouse Chamber of Commerce and Industry would appear to mark the end of a three-year debate inside the French government over whether to follow the outsourcing route pioneered by the British Defence Ministry.

British defense authorities have elected to outsource all their beyond-line-of-sight communications to the private sector. Paradigm Secure Communications, a division of Astrium Services, owns Britain’s Skynet satellites under a long-term contract that permits Paradigm to sell X-band satellite capacity to other governments, and to NATO, after assuring British military demand is met.

The Paradigm contract, signed in 2003, now extends to 2022. A fourth Skynet 5 satellite, which like its predecessors will be purchased and owned by Paradigm, is scheduled for launch in 2013.

Since the Paradigm contract was signed, British defense authorities have appeared at numerous industry conferences lauding the contract format.

In his March 6 remarks, Longuet took a different view.

Responding to a question from the audience, Longuet said France has decided to put an end to what had been called the Nectar outsourcing program for two reasons, according to a transcript of the session provided by the French Defense Ministry March 9.

First, he said, France’s indecision over the past several years means the assets they would be selling — two Syracuse 3 satellites in service since 2005 and 2006 — have declined in value.

In 2010, French defense authorities said their idea was to sell the two Syracuse 3 spacecraft, plus access to a third satellite to be co-owned with Italy, for about 400 million euros ($528 million). In return, the industrial consortium owning the satellites would provide access to the French government for an annual fee.

In addition to the fact that the bids by Astrium and Thales Alenia Space were not attractive, especially given the aging of the Syracuse 3 satellites, he said the basic idea of the project was not all that appealing, either.

 

Soldiers, Not Lawyers

Having to share ownership of a strategic asset would present problems for French defense forces during crises that were unforeseen in the Nectar contract, he said.

Longuet compared the Nectar sale-and-leaseback project to a farmer who had partial ownership of a tractor and had to negotiate last-minute plowing priorities with the tractor’s other owner. “The other owner would want to let me use the tractor only when it’s raining,” Longuet said. “I’d like to use it in fair weather.”

Longuet suggested that France’s impression of the Paradigm contract came from British military officials. He used an example of a refueling jet that had to change course in midflight and would then need new authorizations for insurance and legal purposes. He said he would prefer to have soldiers, and not accountants and lawyers, control the disposition of French military assets.

Astrium Services and Paradigm officials, as well as British Defence Ministry managers, have said the long-term Skynet contract includes surge capacity provisions to ensure that the British military is never wanting for capacity.

Astrium and Thales Alenia Space officials have expressed frustration in the past three years that the French government has started and stopped, on multiple occasions, the sale-and-leaseback procedure for Syracuse 3.

Informed of Longuet’s statements, one French industry official said it would have been easy enough to adjust the Nectar sale to reflect the current value of the Syracuse 3 satellites. In addition, a Syracuse 3-equivalent payload is set for launch aboard the French-Italian Sicral 2 satellite in 2013.

In his prepared remarks, Longuet said France had begun studies of a military satellite telecommunications network to replace its Syracuse 3. In addition to the cooperation with Italy on Sicral 2 and a broadband data satellite in Ka-band, called Athena-Fidus, to be launched in 2013, France and Britain are studying whether to work jointly on the next-generation system.

 

Helios Contract

Longuet’s statements came after a visit to Astrium and Thales Alenia Space production facilities in Toulouse. During the visit, he announced Astrium will maintain and upgrade the ground-based user segment for the Helios 2 military reconnaissance satellite and its successor system under a six-year contract valued at 204 million euros.

Under the contract, Astrium will maintain and upgrade Helios 2 ground hardware located in the six nations that have access to Helios 2: Belgium, Germany, Greece, Italy and Spain, in addition to France.

The contract, which is effective immediately and runs to 2018, covers the period during which Helios 2B will be succeeded by two smaller spacecraft equipped with high-resolution optical imagers. The French arms procurement agency, DGA, is the contracting authority.

Astrium Satellites is prime contractor for the two Helios 2 successor satellites, known as the Optical Space Component, or CSO for short, with Thales Alenia Space contributing the optical sensor. The CSO construction contract, signed in December 2010, is valued at 795 million euros. The contract includes an option for a third satellite to be built if France finds financial support from other European nations.

Helios 2B was launched in December 2009.

In remarks prepared for delivery during the visit, Longuet said the Defense Ministry will begin a definition phase for an operational eavesdropping satellite, called Ceres, tentatively scheduled for launch in 2020.

 

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