Hopes Fading for Quick MTG Dispute Resolution

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Agreement on financing for Europe’s future meteorological satellite system appears to be slipping further into the future as continued resistance on the part of the German Transport Ministry combined with British elections on May 6 will make it difficult to secure approval anytime soon, European government officials said.

With German Transport Ministry opposition to the award of a contract, Europe’s Eumetsat meteorological satellite organization was unable in late March to win unanimous consensus among its member governments to begin the formal financial-subscription process for the Meteosat Third Generation (MTG) project. Eumetsat is paying a majority of the six-satellite system’s costs, with the 18-nation European Space Agency (ESA) financing the remaining share.

Several government officials said they had hoped that Germany — and Portugal, which for financial reasons also had blocked the project at Eumetsat — would lift its objections in advance of the British national elections. That would have permitted the current British representatives to Eumetsat to subscribe right away, before the change in British administration.

Hopes in that direction were encouraged when ESA’s six-member Procurement Review Board delivered, as expected, a report on April 30 concluding that ESA’s handling of the competition to build the six MTG satellites was fair.

Germany had backed an independent audit of the decision, and government officials had hoped Germany would use the clean bill of health given by the audit as a face-saving way of withdrawing its objections.

But Germany did not drop its objections in time for Britain to approve MTG prior to the May 6 elections, according to a Eumetsat official. As made clear by an April 22 letter from Klaus-Dieter Scheurle, permanent state secretary at the German Transport Ministry, to ESA Director-General Jean-Jacques Dordain, Germany’s core issue is that a German firm was not selected as MTG prime contractor. The letter says German objections remain regardless of the conclusions of the outside audit. The winning bid by Thales Alenia Space of France and Italy and OHB Technology of Bremen, Germany, gives the French-Italian company the prime contractor’s role.

The Procurement Review Board’s report was sent to ESA’s member governments the week of May 3. Two officials with knowledge of its contents said it found no reason to reopen the MTG competition.

Buttressed by the audit’s findings, ESA is now free to continue final negotiations with the Thales Alenia Space-OHB team in view to signing a satellite contract valued at 1.25 billion euros ($1.6 billion) in June.

In a brief interview, Dordain declined to comment on the Scheurle letter. He said he would be sending the procurement board’s report to ESA governments and that he would strictly follow ESA’s rules for how contracts are negotiated.

One government official said ESA does not formally need the approval of the German Transport Ministry to move on the contract, for two reasons. First, the German government — represented by Germany’s Economics Ministry — in November 2008 endorsed MTG at a meeting of ESA government ministers, and committed to pay its 34 percent stake of the ESA portion of the program. In that sense, ESA already has the German financial contribution it needs.

Second, this official said, ESA’s check-approval body, called the Industrial Policy Committee, includes representatives of all ESA member governments, but the German seat is occupied by the German Aerospace Center, DLR, which is Germany’s space agency, and which is financed by the German Economics Ministry.

“The Economics Ministry, which has not voiced opposition to the MTG contract, appears to be in the driver’s seat for Germany as far as ESA programs are concerned,” a European government official said. “But it’s the Transport Ministry that governs Germany’s Eumetsat participation. So we are facing a battle between these two ministries, and at some point — hopefully before June — the office of the Federal Chancellor will need to step in and resolve the issue. How quickly the new British government will be able to act on MTG is another issue.”

 

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