After hard negotiations, the European Space Agency and Galileo Industries have signed a preliminary contract for the in-orbit validation (IOV) phase of the Galileo satellite navigation programme. The initial €150 million ($200 million) contract allows work to begin on the first four Galileo satellites. The full €950 million contract for the IOV phase is expected to be finalised by the middle of the year.
The IOV phase covers construction of the four satellites, their launch in 2008 and the development and operation of the initial ground infrastructure. This will be followed by a deployment phase, when 26 more satellites will be launched to complete the constellation and the full ground network will be installed. ESA and the European Commission are conducting a separate competition to award the concession to operate the Galileo system commercially.
Under a test phase contract awarded in July 2003, two different Galileo test satellites are being built, the first scheduled for launch by a Russian Soyuz booster this year. At 38%, EADS Astrium has the largest stake in the Galileo Industries consortium responsible for building the system.
The EU Council of Ministers has approved funding for the deployment phase. When it goes operational in 2008, Galileo will be fully compatible with the USA's global positioning system, but Europe claims its system will have higher built-in integrity and greater accuracy. Recurrent system costs will be funded in the first few years by a €500 million grant, then by users.