Galileo Bidding Process Designed To Stem Legal Protests

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  Space News Business

Galileo Bidding Process Designed To Stem Legal Protests

By PETER B. de SELDING
Space News Staff Writer
posted: 11 July 2008
09:53 pm ET






— European government officials said they are confident they have structured the bidding process on the Galileo satellite navigation system to avoid legal challenge by non-European companies, who will be largely excluded from the year long process.

Unlike the U.S. GPS navigation constellation, which was financed solely by the U.S. Defense Department, Galileo is designed as a civilian-owned and �managed network whose contracts should, in principle, be open to non-European companies under the European Commission’s commitments to the World Trade Organization (WTO).

But the Galileo bidding process, which began July 1, limits all Galileo prime contracts, for both launch services, construction of the satellites and related ground-level services, to European Union companies. Certain subcontracts may be opened to non-European companies if “exceptional circumstances” can be demonstrated.

Some European government and industry officials fear that these barriers could be overrun by legal protests that, even if ultimately unsuccessful, could paralyze the Galileo project for months.

“I am sure there is legal talent in the United States that would very much like to test this,” one European government official said here July 2 during a space policy conference organized by the French Institute for International Relations (IFRI). “It doesn’t matter how small their chances are. They could put the brakes on the procurement process for God knows how many months.”

Paul Verhoef, head of the Galileo unit at the European Commission’s transport directorate, disputed this.

Verhoef agreed that Galileo is ostensibly covered under ‘s WTO obligations. But he said while has agreed to make government launch-service procurements open to non-Europeans, this only applies to companies from governments that offer reciprocal openness. The U.S. government policy prohibiting non- U.S. rockets from launching U.S. government satellites except in unusual cases means U.S.-based launchers can be kept out of Galileo bidding.

Whether the same can be said of , which has been lobbying for a role in Galileo launches, is unclear.

For the remaining Galileo prime contracts, Verhoef said the project’s security- related concerns are enough to immunize it from WTO-related attack. “The security aspects offer us the possibility of restricting the bidding and we will restrict the bidding,” Verhoef said. “The result is that candidates for the prime contracts will be restricted to EU companies only, and subcontracts for classified or critical supplies will be limited to EU companies as well.”

“For non-critical components, we open up the bidding in line with our WTO commitment,” Verhoef said. “ESA [European Space Agency] has the possibility of making exceptions here where it deems necessary. The situation is complicated, but believe me this has been looked at in detail.”

ESA is acting as procurement manager for Galileo on behalf of the European Commission.

Verhoef said that in the specific case of U.S. companies seeking Galileo work, the U.S. ITAR – International Traffic in Arms Regulations – technology export control regime would be viewed as a risk factor that could justify rejecting a U.S. bid.

Didier Faivre, head of ESA’s navigation department, said avoiding the purchase of all ITAR-controlled U.S. components is not a requirement of the Galileo program. In fact, Faivre said, it is all but certain that some components for Galileo satellites will be purchased in the because they are unavailable in

But Faivre agreed that the ITAR rules are a clear incentive for Galileo managers to avoid participation wherever possible.

In addition to , the Chinese government had hoped for a role in the full Galileo system by providing the search-and-rescue payload on the Galileo spacecraft. The Galileo procurement rules published July 1 make a Chinese contribution to the satellites almost impossible. Verhoef said that was not a signatory to the WTO Government Procurement Agreement, and so would have no right to bid on Galileo.