PARIS — Small-satellite builder OHB Technology of Germany is awaiting clear signals from the European Space Agency (ESA) before deciding whether to compete to build six to eight of the 26 Galileo navigation and timing satellites on its own or to join the competing industry consortium for a piece of the Galileo contract, OHB Chief Executive Marco R. Fuchs said May 7.
In a conference call with investors, Fuchs said Bremen-based OHB is prepared “to bid to the end – even if we lose” – to build up to eight Galileo satellites if ESA indicates a high preference for competition. If not, Fuchs said, “we will cut a deal with the Astrium-Thales Alenia Space team.”
ESA expects to begin a series of industry consultations and requests for bids this summer to build the full Galileo network, including 26 satellites. The project is being financed wholly by the European Commission, which has said it wants to introduce competition into the bidding for as much of the work as possible.
But some ESA officials have said their preference is to have the 26 remaining Galileo satellites built by the same Astrium-Thales Alenia Space team that is building the first four Galileo in-orbit validation satellites to be launched around 2010.
For ESA, the advantages in keeping the existing contracting team for the entire system include not needing to transfer technology from one group to another, or to provide program oversight to two competing manufacturers. These considerations may outweigh the lower price presumably offered in a true competition, ESA officials say.
Fuchs said OHB is not in a position to build all 26 satellites but could handle six or eight of them and also offer ESA a credible competitive player at a time when Europe’s two principal satellite prime contractors – Astrium and Thales Alenia Space – have decided to join forces for the Galileo satellite work.
For OHB, Fuchs said, there are advantages in proving to ESA that a competitive satellite builder exists in Europe, even if that means being kept out of the Galileo contract.
Fuchs said OHB’s Kayser-Threde subsidiary, purchased in July 2007, is counting on two satellite contracts this year, both from the German Aerospace Center, DLR. The first, called TET-1, is a technology-demonstration platform that OHB values at about 22 million euros ($33.9 million). The second is the EnMap Earth observation satellite, valued at 80 million euros.
The OHB-System division responsible for communications satellites is expecting the full contract complement for the first Small-GEO satellite platform that is being built with ESA financing. The Small-GEO work is intended to strengthen Europe in the global market for small commercial telecommunications satellites.
The company already has received 13 million euros in ESA funds for the Small-GEO design. Following design modifications that have increased the complexity of the satellite, OHB likely will receive a follow-on contract for more than 110 million euros from ESA this year to build the first Small-GEO platform. The company originally had expected to book 87 million euros from ESA for this work.
Commercial satellite-fleet operator Hispasat of Spain will be the customer for the first Small-GEO satellite and is expected to contract with OHB-System for Hispasat’s share of the financing this year. This contract is expected to be valued at around 42 million euros, according to OHB.
Fuchs said OHB remains in the competition to build Turkey’s Gokturk military optical Earth observation satellite against French, Italian and British competitors. Defense officials from Turkey said Telespazio of Italy and Astrium Ltd. of Britain are the two remaining bidders. The contract has been valued in Turkey at around $230 million, but Fuchs said that since all three bidders are making their offers in euros, the decline of the U.S. dollar will not be a factor.
But the dollar’s decline could be a factor in an Earth observation satellite contract OHB is competing for in Kazakhstan, Fuchs said.
