Galileo constellation opened to competitive bids

European governments agreed to allow competitive bidding for the future Galileo satellite navigation constellation, clearing the way for Europe’s two most successful small-satellite builders to make a joint bid against Europe’s two biggest space-hardware builders.

The Nov. 29 decision, which was reached after a compromise between Britain and Germany, means that OHB System of Germany and Surrey Satellite Technology Ltd. (SSTL) of Britain are free to bid on contracts to build Galileo spacecraft without having to prove they can construct the entire 26-satellite constellation.

“Germany had wanted the choice to be a single contractor for the entire constellation, which would have favored a bid by Astrium GmbH,” said one European industry official. “It would have allowed people to say that Astrium was the only reasonable choice given that OHB and SSTL are incapable of building the entire constellation.”

The decision, reached late Nov. 29 during a meeting of European transport ministers, gives wide leeway to the European Space Agency (ESA), which will manage the system’s construction using European Commission funds, to decide whether to contract with a sole satellite manufacturer or with two.

The 26 Galileo satellites will be purchased in three batches. The first 10 satellites could go to a single contracting team, or be split between two competitors, at the discretion of ESA and the European Commission.

“We are free to do whatever makes most sense,” a European government official said Nov. 30. “It could be all 10 for one company, or an even split, or eight and two. We will decide when we see the final bids.”

The new Galileo procurement program throws open a contract that had once been closed to OHB and SSTL. Previously, a consortium of large European space-hardware companies was to deliver the entire Galileo infrastructure, including the satellites.

In an informal briefing held in Brussels Nov. 28, OHB and SSTL officials said they are confident they can build Galileo satellites more quickly, and less expensively, than the current consortium of large companies led by Astrium Satellites and Thales Alenia Space. The consortium, called European Satellite Navigation Industries, was created by ESA.

“We consider that our combined capabilities can bring value for money to this emblematic European program,” OHB Strategy Director Alain Bories said. “Competition is the key to keeping costs down and delivering the constellation on time, so that we don’t blow the credibility of the European Union and the European space industry.”

European Satellite Navigation Industries, meanwhile, will be dismantled in December in the interest of introducing more competition into the Galileo procurement.

Government and industry officials said that despite the disappearance of this consortium, Astrium Satellites and Thales Alenia Space are likely to retain their current roles — Astrium as prime, Thales Alenia Space as principal subcontractor — for the fresh competition in 2008.

Davies said SSTL already has proved itself capable of building a Galileo spacecraft by delivering — on time and within budget — the Giove-A Galileo demonstration satellite in December 2005. The satellite has been in orbit since then, assuring that Europe maintains access to the Galileo signal frequencies accorded by international regulators.

In February, ESA contracted with SSTL to build components for a Giove-A2 satellite, which may or may not be launched depending on the performance of a similar satellite, called Giove-B, under construction by Astrium and Thales Alenia Space.

Giove-B is more than two years behind schedule and ultimately is expected to cost more than 100 million euros ($148 million) — more than double the cost of the Giove-A satellite.

Bories said OHB, Bremen, Germany, has a sufficient plant and equipment to process eight or 10 Galileo-size satellites at a time, and that the OHB-SSTL team could build the entire 26-satellite Galileo constellation if the European Commission opts for a winner-take-all strategy.

Davies said that while it may be more expensive in the short term to enlist two prime contractors to build Galileo satellites in parallel, the competitive pressures that would be injected into the program would save money in the longer term.

Source: P. B. De Selding - DefenseNews

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