Industry Officials Predict Current Procurement Plan Will Delay Galileo

The heads of Europe's two biggest satellite prime contractors urged the European Commission to accelerate its procurement of the Galileo satellite navigation system or face what might become politically unacceptable delays in getting the service started.

Attending an information conference of European Union space ministers here July 20-22, the chief executives of Astrium Satellites and Thales Alenia Space said the current Galileo procurement process, which began July 1 and is scheduled to continue through May 2009, is unnecessarily slow.

"The procurement has been substantially delayed and this schedule introduces more delays," said Evert Dudok, chief executive of Astrium Satellites. "We need procurement decisions in 2008 to keep to the service introduction date." Dudok made his remarks here July 21 during a tour of Europe's Guiana Space Center spaceport as part of a delegation that included French Research Minister Valerie Pecresse and European Commission Vice President Guenter Verheugen.

Dudok was addressing Pecresse because France assumed the six-month rotating presidency of the European Union July 1. Dudok said France, which has identified space policy as one of the key priorities of its six-month presidency, could use its influence to accelerate the Galileo procurement. Dudok urged Pecresse and Verheugen to use their influence to get the European Commission permission to remove what he said were needlessly complicated rules on the Galileo procurement.

In an interview, Dudok said it is his understanding the commission has the leeway to bypass some of its procedures to speed up the procurement as long as the major concerns — fair bidding and inclusion of subcontractors that are not part of the prime contractor's corporate family — and other concerns are respected.

Thales Alenia Space Chief Executive Reynald Seznec agreed. In an interview, Seznec said Astrium Satellites, Thales Alenia Space and its major subcontractors have assembled a contract proposal that distributes work throughout Europe and limits the prime contractors' dominance in a way that complies with European Commission concerns. "We really believe we have come up with a contracting profile that responds to the commission's concerns and that we could negotiate a final contract much sooner" than mid-2009, Seznec said.

The European Commission, which has assumed overall authority for Galileo and has delegated the European Space Agency (ESA) as contract oversight authority, issued detailed procurement rules July 1 for the six Galileo work packages.

Neither the commission nor ESA knows how many credible bids will be submitted for each of the six work areas, but the commission has set aside 2.145 billion euros ($3.37 billion) on the assumption that this budget, in addition to what already has been spent by the commission and by ESA, will be sufficient.

The six work packages are system support, ground mission infrastructure, ground control segment, satellite construction, launch services and operations.

The commission proposes to enter into what it calls "competitive dialogue" with bidders after receiving an initial indication of contractor response in mid-August. Further negotiations will continue through the fall and into early 2009 before an expected contractor choice by June.

Only one of the work segments — building the 26 Galileo satellites not yet contracted — is certain to feature two competing bidders. The commission has set aside a budget of 840 million euros for the satellites' construction. Four system validation satellites are already under construction.

Both Astrium Satellites, with Thales Alenia Space as a major subcontractor, and OHB System of Bremen, Germany, have indicated they will submit bids on the other 26 satellites.

Asked to respond to the concerns of Dudok and Seznec, ESA Director-General Jean-Jacques Dordain, who was part of the delegation to the ministerial meeting here, said some work packages could be contracted earlier, while others might require the allotted time.

"If you tell me how many bids we are going to receive for each work package, I can give you an idea of how quickly we can conclude the negotiations," Dordain said. "But the commission's rules on this are very clear, and I do not see at this point how we can save a lot of time from the current schedule."