EU’s Tajani Faces Potential Political Battle Over Galileo Budget Fix

[Satellite News 10-26-10] European Union (EU) Industry Commissioner Antonio Tajani is faced with a difficult challenge in solving the Galileo satellite navigation system’s budget problems and keeping the program’s contributors happy. However, with the way the European Space Agency (ESA) program is structured financially, cost-cutting measures for the ambitious U.S. GPS rival program will most likely not receive unanimous approval from EU member states.
    One example of the potential political uproar over the matter is an Oct. 25 proposal to the European Commission (EC) by The German Transport Ministry, which requested the EC enact cost-cutting measures after a commission report confirmed the program was over budget and behind schedule.
    While the proposal was expressed as an effort to benefit the entire program, Germany’s suggestions to shrink the costs of program by 500 million to 700 million euros ($696 million to $974 million) included scrapping plans to use Arianespace’s Ariane 5 launcher in favor of the Russian Soyuz launcher, which would see Galileo launch from Baikonur, Kazakhstan, instead of from French Guiana.
Even though the German government said the measures are needed after its own research showed that the program faces further delays and additional costs of between 1.5 billion and 1.7 billion euros ($2 billion to $2.3 billion), the German government did not make specific recommendations to reduce satellite-manufacturing costs in the proposal.
    In March, Germany’s OHB System won an EU order for 14 satellites for Galileo. The unlikely contract winner delivered a welcomed boost to the German economy, beating out Europe’s largest space companies, such as EADS Astrium, for the award. “We were able to offer a price that was approximately 100 million euros cheaper than EADS,” OHB spokesman Steffen Leuthold told Satellite News, “The program should provide around 100,000 new jobs in Europe as a whole. German economists are already rubbing their hands because, as the EU has declared, the remaining satellites will be developed in Germany as well, either by OHB or Astrium.”
    But OHB and the EU are also well aware of Galileo’s potential complications with costs. Tajani said he is approaching the management of the program very carefully. “We can not say for sure whether the estimated costs could be met by 3.4 billion euros in EU funds. The main focus for controlling costs is on the launchers. Fuel costs could endanger the project. In that case, the carrier could be fitted with only two instead of four satellites. In addition, the EU has not yet decided who to transfer the responsibility of satellite operation over to and who to name as a subcontractor to provide services,” said Tajani.
    According to Leuthold, OHB is well aware of the launch-related obstacles as it has already supplied components for Arianespace’s Ariane 5 launcher and co-developed the European Columbus research module. “Surely the EU can not afford to postpone the project a second time. Compass and Glonass from China and Russia are also ready to go and GPS will not sit and wait too long. The first launch is scheduled for October 2012. The EU should have a plan of action concerning the budget by then.”
    In May, the European Court of Auditors criticized the Galileo project as “ill-prepared and badly managed” and was skeptical that the EC would be able to begin Galileo operations in 2014. Overall, the EC estimates that the Galileo project’s development, construction and operating costs will cost EU taxpayers about 20 billion euros ($27.7 billion) over the next 20 years in development.
    But these reports have not stopped the Galileo contract flow. A joint venture between the German Aerospace Center’s SpaceOpal and Finmeccanica’s Telespazio SpA won a 194 million euro ($271 million) contract on Oct. 26 to provide space and ground infrastructure for the EU’s Galileo land- and air-traffic control network observation platform.
    The contract – the fourth of six contracts for the procurement of Galileo’s operational capability starting in 2014 – covers industrial services needed to support the ESA in operating the satellites and ground system. In January, the EC awarded three Galileo contracts worth a total of about 1 billion euros ($1.38 billion) for engineering support, launchers and satellites. The two remaining contracts, which will cover the completion of the ground-mission and ground- control infrastructure, will be awarded in early 2011.
    “We are fully committed to the roll-out of the system. Europe will have its own independent satellite navigation system capable of high precision and reliability,” said Tajani.