Two Firms Win Tentative German Milcom Satellite Contracts

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The German Defense Ministry has tentatively selected a bid from EADS Space Services and ND Satcom to provide a billion-dollar military satellite telecommunications system, including two satellites, starting in 2008, according to German government and industry officials.

The decision will place the competing bid, by Deutsche Telekom subsidiary T-System and OHB-System, on the sidelines, at least for the moment.

EADS Space Services is proposing an Alcatel Space satellite platform and a payload provided by EADS Astrium. T-System’s bid features an Orbital Sciences Corp. satellite platform — a Russian option had been considered and discarded — and a Raytheon UHF payload.

ND Satcom of Friedrichshafen, Germany, which in 2006 may become a wholly owned subsidiary of satellite-fleet operator SES Global of Luxembourg, will be responsible for the ground communications networks in the EADS Space Services bid. T-System would be responsible for that work in its bid.

Germany’s Satcom Bw system is designed as a hybrid between a classic procurement and a service-provision contract over 10 years starting in 2008, when the first of the two satellites would be launched.

German officials had long hesitated between an outright purchase and a commercial satellite services agreement along the lines of the Skynet 5 contract signed by the British Defence Ministry.

German Air Force Brig. Gen. Guenter May, in an address here April 25 at the “Military Space: Questions in Europe” conference organized by the French Aeronautic and Astronautic Association, said the procurement model has been selected for the purchase of the two telecommunication spacecraft.

The Satcom Bw contract, however, is more complicated than a straight hardware-purchase agreement. The German Federal Armed Forces reaffirmed April 20 that it remains undecided whether to slant the overall contract toward a purchase of hardware or of the guarantee of service.

Industry officials said German officials have concluded that it makes more sense to own their two Satcom Bw satellites, especially since they currently do not foresee the need to share the satellites’ X- and UHF-band capacity with other nations.

The contract calls for the construction and launch of the two satellites, plus 10 years of operations of the system by the contractor and 10 years of continued leasing of commercial C- and Ku-band satellite capacity from Intelsat.

In addition, the contract calls for the production of fixed and mobile ground terminals for Germany’s armed forces, and networking gear to assure that the commercial and government-owned spacecraft are interoperable by German troops.

Estimates are that the entire package, including project-financing charges to be assumed by the company established to manage the work, will be valued at more than 900 million euros ($1.17 billion) over the 10-year period.

The April 20 statement from the German Federal Armed Forces said that while the EADS-ND Satcom bid has been given a preference, no contract has been signed. “If these negotiations should not lead to success, the Ministry of Defense will open negotiations with T-System,” the April 20 statement said. “Thus, the project … is still in competition.”

Industry officials said a decision likely is to be made on a contract by this summer, with a debate on the contract scheduled in the German Bundestag, or parliament, by September.

Satcom Bw will be Germany’s first dedicated military satellite communications system. Up to now, the German military forces have been leasing commercial capacity. But with Germany’s increasing military commitments taking its forces far beyond Europe — May said more than 7,000 German troops are now stationed in Afghanistan, the Balkans and elsewhere outside Europe — the military views a satellite communications system of its own as indispensable.

“In the Cold War it was viewed as acceptable to do without space assets,” May said. “Those days are gone. There is not yet any joint operations concept on military space in the German Air Force. But events, including the tsunami in Asia in December, have made clear the importance of space for rapid reaction.”

German military forces were called on to provide disaster relief for tsunami victims.