Galileo Deal Opens Door to Non-European Participation

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  Space News Business

Galileo Deal Opens Door to Non-European Participation

By PETER B. de SELDING
Space News Staff Writer
posted: 14 April 2008
12:02 pm ET





European contractors bidding for work on the Galileo satellite navigation constellation will be permitted to include U.S. and other non-European partners in their bids if doing so brings “demonstrated substantial advantages in terms of quality and cost,” European Union transport ministers agreed in a document to be presented to the European Parliament the week of April 21.

 

The document, which ministers approved at an April 7 meeting in Luxembourg, also accepts the possibility of further Galileo cost increases
�and raises the possibility that the program
might never be financed by the private sector.

 

The 27-nation European Union has agreed to spend 3.405 billion euros ($5.36 billion) on the 30-satellite Galileo constellation between 2007 and 2013, the date at which full service is supposed to start.

 

The first four operational satellites
already are being built by a consortium that has been disbanded by European governments in favor of a wide-open competition for six main Galileo work packages to be awarded late this year.

 

Whether bidders could include U.S.
, Russian or other non-European suppliers in their bids has been a source of debate between the European Commission and the European Space Agency (ESA), which is acting as contract oversight manager for the project’s construction phase. ESA’s procurement rules guarantee that governments paying in to ESA will see contracts returning to their domestic industry in strict proportion to their contribution
level. The European Commission favors a more
�competitive policy that places value for money as the overriding concern.

The April 7 document approved by the transport ministers orders Galileo project managers to pursue “dual sourcing, wherever appropriate,” to avoid a situation in which a single
�contractor has a lock on the work forever.

 

The document also says
�European contractors “should have the possibility to rely on non-European sources for certain components and products in case of demonstrated, substantial advantages in terms of quality and cost, taking account of the strategic nature” of the Galileo project.

 

With the euro trading at above $1.50, U.S. contractors offer European Galileo bidders the possibility of reducing their overall bid costs by seeking non-European participation. Questions remain over whether U.S. satellite parts that are subject to the U.S. International Traffic in Arms Regulations technology-export rules would be accepted in a Galileo bid. These rules give the U.S. State Department a voice in how the components are used and the location from which
the satellites are launched.

 

European Commission officials have said that the 3.405 billion euros approved for Galileo is not negotiable. But the document opens the door for further cost increases “relating to non-contractual liability arising from the public ownership of the system, in particular force majeur and catastrophic failure.”

 

Unlike the U.S. GPS satellite navigation and positioning system, Galileo is designed to offer service guarantees to its fee-paying customers, raising many liability issues with which program managers continue to grapple.

 

European Union formalities have prevented the agreed-to financing from being made available to the European Commission and ESA, and stalled the process of awarding contracts. Commission officials now say a plenary session of the European Parliament meeting the week of April 21 likely will approve the financial-payment scheme. Assuming there are no major differences with what the transport ministers have approved, the transport council will do likewise in mid-May.

 

The final text then must be crafted in the 22 European Union official languages, and published in the Official Journal, at which time it becomes European Union law and the monies are released. That could occur by late May, commission officials say.

Comments: pdeselding@gmail.com