The final €950 million ($1.11 billion) contract for the €1.1 billion Galileo satellite navigation system in-orbit validation (IOV) phase should be signed by the end of year if political disputes can be resolved, says the European Space Agency.

The contract was originally due to be signed by ESA and European consortium Galileo Industries last June (Flight International, 4-10 January), but has been held up by wrangling between European Union member states over the location of the headquarters and other operational centres for the satellite navigation project.

In an effort to resolve the situation EU transport commissioner Jacques Barrot has appointed former European Commission competition chief Karel Van Miert to mediate between member states.

“Some member states have forgotten that the EC rules are for best value and ESA’s are for geographic return,” says a source within ESA. The significance of Galileo as the first pan-European industrial space project has seen national pride become a predominant factor in decision making. Galileo Industries says that the longer the member states delay the process, the more expensive it will become, and the later global positioning service revenues will be generated.

ESA awarded the initial €150 million IOV contract to Galileo Industries in December 2004. However, development of the Galileo satellites has cost €400 million more than expected. Half of this overrun should be paid by the EC and half by the ESA member states.

At the ESA programme board meetings held in November member states voted to fund their €200 million share using monies already allocated to the €950 million IOV phase, by postponing payment for Arianespace Ariane 5 or Starsem Soyuz launches not required until 2008.

Source: Flight International