Germany Forms Public-Private Partnership for Military Satcom

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PARIS — The German Federal Armed Forces spent years weighing the merits of two models for procuring satellite telecommunications capabilities: Britain’s Skynet 5 system, in which the military customer pays an annual service fee and leaves hardware acquisition to the contractor; and France’s Syracuse 3, which features government ownership of the capital assets and government management of the network.

In the end, Germany decided to build its Satcom Bw military satellite telecommunications system using elements of both models.

The Satcom Bw contract was signed July 5 in Koblenz between a new joint-venture company, Milsat Services GmbH of Bremen, and the German Bundeswehr’s Federal Office for Information Management and Information Technology.

The government has estimated the total Satcom Bw budget at 939 million euros ($1.2 billion), including 900 million euros of hardware and services contracted with Milsat Services over 10 years. The contract includes an option for a 7.5-year extension.

Milsat Services is 74.9 percent owned by EADS Space Services, a subsidiary of Europe’s EADS aerospace conglomerate; and 25.1 percent by ND Satcom of Friedrichshafen, Germany, a satellite ground hardware manufacturer now 100 percent owned by satellite-fleet operator SES Global of Luxembourg.

Some 40 percent of the Milsat Services contract will be spent on the purchase, launch and insuring of two Satcom Bw satellites, to be launched separately in late 2008 or early 2009 and located at 37 degrees west and 63 degrees east longitude.

The satellites, providing SHF and UHF transmission capacity, will be assembled by Alcatel Alenia Space of France and Italy using that company’s Spacebus platform and an electronics payload supplied by satellite manufacturer Astrium, a sister company of EADS Space Services.

Each satellite is expected to weigh about 2,500 kilograms at launch. Milsat Services has agreed to launch both satellites with Arianespace. Given their relatively low weight, they will be launched either as supplemental passengers on heavy-lift Ariane 5 rockets carrying larger satellites at the same time, or singly aboard separate launches Russian Soyuz vehicles, which Arianespace will operate from Europe’s French Guiana spaceport starting in late 2008.

The Bundeswehr will own the satellites once they are in orbit. Bundeswehr spokesman Lt. Col. Robert Wilhelm said German government budget rules obliged the Bundeswehr to conduct a detailed assessment to determine whether ownership or leasing was preferable.

“The conclusion was that if you compare prices in our system, procurement is the cheaper alternative,” Wilhelm said in a July 6 interview.

Eric Berenger, chief executive of EADS Space Services, said the hybrid nature of the Satcom Bw procurement, featuring a large up-front payment for the satellites and their launch, means EADS Space Services will not need to arrange bank financing.

The need for such financing and the associated negotiations over risk management is one reason Britain’s Skynet 5 contract, signed in November 2004, took 18 months to negotiate with contractor Paradigm Secure Communications, an EADS affiliate.

Berenger said in a July 5 interview that Milsat Services, through its relationship to Paradigm Secure Communications, will be able to provide backup communications to the Bundeswehr in the event of a failure of one of the Satcom Bw satellites.

“Such backup is not explicit in the contract, but our aim here is to be a real one-stop shop for the Bundeswehr and we certainly can furnish additional capacity to them, if needed, in addition to what we are contracting with Intelsat,” Berenger said.

The Bundeswehr’s Wilhelm said Satcom Bw managers foresee using all the capacity on the two satellites for the German military. It is not foreseen that Milsat Services will have extra capacity to sell to allied governments. Such sales are central to Paradigm’s Skynet 5 business plan, and the company already has sold Skynet 5 capacity to NATO, the Netherlands, Holland, Portugal and France.

Some of the ND Satcom-provided ground terminals will be purchased by the Bundeswehr as part of the overall Milsat Services contract, while others will be leased from ND Satcom.

ND Satcom said its role in Satcom Bw will generate at least 180 million euros in revenues over the 10-year period. Harald Reder, chief executive of ND Satcom Defence, said the company will be both leasing and selling ground hardware. ND Satcom also will train Bundeswehr personnel to run the satellite control and bandwidth-management operations, and will build an anchor station.

The contract calls for the delivery of 700-800 two-way broadband communications terminals with 1-meter antennas, and 70 tactical terminals including 2.4-meter antennas, Reder said July 6.

ND Satcom has been providing ground gear for the Bundeswehr’s first-stage Satcom Bw program since 2002. This program uses commercial C- and Ku-band satellite capacity purchased from Intelsat of Washington.

The Milsat Services contract also includes funds for 10 years of continued leasing of Intelsat capacity in zones out of the Satcom Bw satellites’ coverage area. Many of the ND Satcom terminals will be capable of X-, C- and Ku-band transmissions, Reder said.

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