Thales Contractor Given Broad Latitude in Choosing Iridium Next Suppliers

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PARIS — Prime contractor Thales Alenia Space expects to choose major elements of its supply team for building 81 next-generation Iridium mobile communications satellites in the coming weeks and has been given wide leeway from its customer on which companies will be given the work, the chief executives of both companies said.

The freedom goes so far as to permit Thales Alenia Space to reject a contractor that promises to bring new revenue sources to Iridium by offering hosted payload opportunities in favor of a marginally less costly company that offers no such option, the officials said.

Iridium Chief Executive Matthew J. Desch said several prospective contractors have invoked hosted-payload opportunities as a reason for selecting them, but that these considerations cannot be allowed to interfere with Thales Alenia Space’s decision-making.

“It’s a constant dialogue with them, of course,” Desch said in a Jan. 20 interview. “We’re in communications on almost a daily basis. But the terms of our contract give them the authority to select their team.”

Desch acknowledged that the hosted-payload issue presents Iridium and Thales Alenia Space with a special challenge. But he said the need for the prime contractor to move quickly on assembling the Iridium Next supply chain outweighs those concerns.

Cannes, France-based Thales Alenia Space in mid-2010 signed a $2.1 billion contract to build 82 850-kilogram Iridium Next mobile communications spacecraft. Seventy-two of them — 66 for the operational constellation and six as in-orbit spares — are scheduled for launch between 2015 and 2017 aboard eight Falcon 9 rockets operated by Space Exploration Technologies of Hawthorne, Calif.

McLean, Va.-based Iridium plans to finance its $3 billion Iridium Next system from its own operating cash flow and from a syndicated bank loan backed by France’s Coface export-credit agency. The company also is counting on finding between $200 million and $300 million in revenue from customers with small scientific or other payloads that would ride piggyback on the Iridium spacecraft in return for an annual fee.

The list of potential customers features several U.S. government agencies, which is one reason Iridium insisted that the satellites, while built in France with some work in Italy, be assembled in the United States.

Iridium and Thales Alenia Space officials have said they expect 40 percent of the value of the satellite contract to be provided by U.S. companies. In keeping with the terms of its agreement that won the Coface loan guarantee, Iridium selected a French prime contractor and some 50 percent of the work will be done in France, with the rest in Italy.

In a Jan. 11 interview, Thales Alenia Space Chief Executive ReynaldSeznec said one of the big contracts expected to be awarded by the end of January will be for the constellation’s integration. The work is expected to be valued at $130 million or more.

Competing for the work are Orbital Sciences of Dulles, Va., whose bid includes the use of its Chandler, Ariz., facility; and Ball Aerospace & Technologies of Boulder, Colo. Both of these companies have broad experience with U.S. government contracts and could be useful in steering hosted-payload customers to Iridium toward the end of 2011 and into 2012, when Iridium wants to make decisions on what payloads will be riding on how many Iridium satellites.

“We have a firm, fixed-price contract and we have to be able to manage it as best we know how,” Seznec said. “We have a good understanding with Matt that we cannot let future considerations, including hosted payloads, affect our decision. Our credibility as a prime contractor is at stake here, and we have to select on strict value-for-money criteria.”

One major subcontract that already has been signed is a $134 million deal with Seakr Engineering Inc. of Centennial, Colo., which will provide the Iridium Next communications processors.

The privately held Seakr is a known supplier for U.S. government contracts but is less established in the commercial satellite industry.

In response to Space News inquiries, Seakr on Jan. 18 issued a statement about the Iridium contract: “We are now fully on contract for the processor. A single processor unit will provide [more than] an effective 1 trillion floating point operations per second (TFlops) and, once deployed, will represent the highest-performance space-qualified reprogrammable processing system.”