The European Commission, playing what may be its last card as it seeks to resuscitate the Galileo satellite-navigation project, is proposing to take money from the commission’s agricultural-support program to pay for Galileo’s completion.

It would be an unprecedented maneuver that government officials concede may fail as Europe’s farmers protest the move, and because it would open the door to future cross-discipline budget grabs.

As expected, the Brussels-based commission on Sept. 19 defended the Galileo project on grounds of strategic independence in positioning, timing and location technologies, and on the likely tax revenue

to come from the ever-broader use of them.

European Transport Commissioner Jacques Barrot, whose directorate is leading the Galileo effort, told commission personnel

Sept. 20 that he would use all the means at his disposal to persuade European heads of state and the European Parliament that the proposed financing scheme should be approved.

European transport ministers are scheduled to meet Oct. 2 to review the proposal, and European heads of state are likely to make the final yes-or-no decision in December.

The commission estimates that Galileo, which already has cost the commission and the European Space Agency (ESA) more than 1 billion euros ($1.39

billion), will require

an additional 3.4 billion between 2007 and 2013.

Included in this figure is 330 million euros to operate Europe’s nearly completed Egnos navigation-aid network, which uses two satellites in geostationary orbit to improve the reliability of signals from the U.S. GPS satellite constellation in medium Earth orbit. The United States and Japan both have deployed their own versions of this system, which is used especially for air-transport navigation and guidance.

Also included in the 3.4 billion euros is 1.6 billion euros needed, in the commission’s view, to build and launch the 26 Galileo satellites that have not yet been ordered

, plus two ground spare satellites and one spare launch vehicle.

The budget estimate

features a contingency of 428 million euros to be drawn on in case of cost overruns, and to help pay for the overruns already identified in Galileo’s In-Orbit Validation (IOV) contract. This contract calls for the construction of about half the Galileo ground network in Europe, and the construction and launch of the first four


In its Sept. 19 proposal, the commission says Galileo’s full 30-satellite constellation could be operational by mid-2013 if European governments make the necessary decisions late this year. It says the funds taken from the agricultural programs were not going to be spent anyway because agricultural prices have risen above the levels that trigger government payments.

The proposal removes from


any responsibility for Galileo funding beyond the IOV contract. ESA’s rules on distributing contracts to companies based on their national governments’ financial contribution runs counter to the commission’s long-standing practice of selecting winners based on value-

for-money considerations.

With ESA out of the funding mix, the commission said it will enforce its policy of insisting on competitive procurement for the Galileo system.

“The commission strongly believes in the need to introduce robust and fair competition in the program on the basis of dual sourcing and regular competitive tendering in all elements of the program,” the commission’s proposal says.

This would appear to suggest that European Satellite Navigation Industries, a consortium of Europe’s biggest space-hardware companies

created to produce the Galileo infrastructure, will not be guaranteed the contract to build

the Galileo satellites beyond the four IOV spacecraft under construction.

Sensing an opportunity, smaller European satellite builders that had been excluded from the consortium have begun to negotiate the formation of their own, competing group. Surrey Satellite Technology Ltd. of Britain and OHB Technology of Germany, both stressing their track records in building low-cost satellites, are among the companies trying to stitch together a competing group.

Not all European industry officials support reopening Galileo for full competition. Officials from Astrium Satellites of Germany, France and Britain; and from ThalesAlenia Space of France and Italy – both members of the consortium now building the Galileo IOV satellites – have said throwing open the


contract to competition runs the risk of undermining the project’s political support.


n the past, several European governments – notably Germany and Italy – have blocked Galileo decisions as part of negotiations to favor their national industries.

“We’re not afraid of competition,” one member of the European Satellite Navigation Industries consortium said. “But Galileo is a result of a series of fragile political compromises that might be shattered if you organize a competition with real winners and losers.”

Jean-Francois Bou, the outgoing director of the Galileo program at Thales Group – also one of the consortium members – said despite the monopoly appearance of the consortium, and despite ESA’s contract rules, the consortium

already has assured that 70 percent of its contracts are assigned following competition.