OHB Technology is bidding
against a much larger consortium to build 28 Galileo navigation satellites as a
signal to European governments that the company should be viewed as a prime
contractor, OHB Chief Executive Marco Fuchs said.
But while the Bremen, Germany-based company intends to pursue the Galileo competition to the end, it is
concerned that its bid may be used simply to prevent the competing consortium,
led by Astrium
Satellites, from bidding an overly high price.
"Obviously we are
the outsider, that's clear," Fuchs said here Oct. 1 at the International
Astronautical Congress. "The biggest concern we have is: Are we really
just a rabbit to help get a lower price from Astrium?"
OHB has teamed with
Surrey Satellite Technology Ltd. of Britain in its bid to build 28 Galileo
satellites.
The European
Space Agency (ESA) and the European Commission are financing Galileo and
have set a budget of 3.4 billion euros ($4.7 billion) as total system costs
from 2007 through 2013, when the full constellation is expected to be in orbit.
Government and industry
officials say some of the Galileo satellite launches likely will slip into
2014, if only because that is when the European Commission will have fresh
financing available in the event the system cannot meet the budget target.
Astrium, teamed with
Thales Alenia Space of France and Italy, is building the four in-orbit
validation Galileo satellites to be launched in 2010. The consortium was
established after long negotiations with European governments on the roles of
different component builders, a way of assuring that ESA government
contributors could be guaranteed a return on their investment through work for
their domestic industries.
ESA and the European
Commission have said they want competitive bids wherever possible on Galileo,
but they also say a case can be made for selecting only one contractor for the
entire constellation.
"If ESA has to
oversee two industrial teams building satellites, it adds costs," said one
government official involved in Galileo. "Having two teams also means you
reduce your chance of getting economies of scale that you would expect if you
gave one team all 28 satellites."
Fuchs agreed that, to
defend its chances, OHB will have to persuade ESA that whatever additional
costs there are in selecting two contractors, there also will be long-term
savings.
"In the short term,
having two teams costs more but dual sourcing is much more attractive to the
taxpayers in the long term," Fuchs said. "Also, having a redundancy
built into the system with two prime contractors has an advantage, as we have
seen with the two experimental satellites."
Surrey Satellite
Technology and the Astrium-led consortium each built one experimental Galileo
satellite. Surrey's was finished first and permitted Europe to preserve Galileo
signal frequencies with international regulators. Both satellites now are
operating in medium Earth orbit.
OHB and Astrium are
scheduled to present preliminary bids by Nov. 7, with ESA then managing an
increasingly detailed series of negotiations with both teams — ESA uses the
term "competitive dialogue" to describe the process — until selecting
the winner in mid-2009.
How far apart the OHB and
Astrium proposals will be in price is unclear. Because of the limited supplier
base in Europe, the two teams will be soliciting bids from many of the same
component manufacturers, which presumably will submit the same prices to both
the prime contractor teams.
OHB has been growing its
space business by making acquisitions in recent years and, with Galileo, finds
itself in a situation similar to where it was in 2001 with a German Defense
Ministry contract to build five identical SAR-Lupe radar reconnaissance
satellites.
OHB was a clear underdog
in the competition, facing off against a well-proven Astrium team. But the
company won the contract and since has overseen the successful construction and
launch of the SAR-Lupe constellation. More recently, OHB has secured German
government backing to promote an ESA program, called Small-GEO, to design a
small commercial telecommunications satellite platform, bringing OHB squarely
into the commercial satellite market. Satellite-fleet operator Hispasat is the
first customer for the Small-GEO platform.
For Galileo, Fuchs said
the company will be spending perhaps 2 million euros on preparing the bid
documentation and negotiating with ESA and with component suppliers.
"We will
stay in the race until the end," Fuchs said. "The risk for us is not
that high: If we don't get any of the work, we have still made an investment
that will serve us in the future. The goal here is to position ourselves in Europe to be viewed by ESA as a prime contractor. This is strategic for us."
