1 Global navigation satellite
system
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7828/07
+ ADD 1
COM(07) 261
| Commission Communication: Galileo at a cross-road: the implementation of the European GNSS programmes
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| Legal base | — |
| Department | Transport |
| Basis of consideration | Minister's letter of 14 June 2007
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| Previous Committee Report | HC 41-xxiii (2006-07), para 2 (6 June 2007)
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| Discussed in Council | 8 June 2007
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| Committee's assessment | Politically important
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| Committee's decision | For debate on the Floor of the House (decision reported on 6 June 2007)
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Background
1.1 The Community has a two-phase policy for developing a global
navigation satellite system (GNSS). The first phase, GNSS 1, is
the European Geostationary Navigation Overlay System (EGNOS) programme.
The second phase, GNSS 2, is the programme, named Galileo, to
establish a new satellite navigation constellation with appropriate
ground infrastructure. It has been intended that a public private
partnership (PPP) be established for the Galileo programme and
for sometime inconclusive, and latterly stalled, negotiations
with a consortium about a concession have been underway.[1]
1.2 In March 2007 the Transport Council set a deadline of 10 May
2007 for the bidding consortium to put itself in a position to
resume meaningful negotiations and asked the Commission to report
back for the Council's 7-8 June 2007 meeting on how matters stood
on the whole Galileo project and on alternative scenarios for
carrying the project forward. This Commission Communication is
the response to the Council's March 2007 request. In essence the
Commission said that it is not satisfied that the consortium has
fulfilled the conditions laid down by the Council in March 2007
and recommended to the Council that it should end the negotiations
and reassess the way forward.
1.3 When we considered this document earlier this month we said
that we would not find it acceptable if a Council Resolution or
Conclusion at the June 2007 Council meeting went beyond accepting
that:
- the present PPP negotiations
should not be continued; and
- the Commission should produce a fully substantiated
case for continuing the Galileo project in terms of methods of
implementation (public procurement or PPP), governance and finances,
including the total cost of the programme required, the level
of risk, the sources of private sector revenue and the sources
of funding from the Community Budget.
We also said that whatever the outcome of the Transport
Council on 7-8 June 2007 we thought that Members would now want
to debate where matters stand on the Galileo project. Accordingly
we recommended that the Commission Communication be debated on
the Floor of the House and that this debate should take place
before the October 2007 Transport Council. We added that it would
be helpful if the Government were to let us have as soon as possible
an account of the June 2007 Council discussion so that we could
report it to the House in time for the recommended debate.[2]
The Minister's letter
1.4 The Minister of State, Department of Transport
(Dr Stephen Ladyman) writes now with the account we requested.
He tells us that the Transport Council adopted a Resolution which
meets the conditions we set. The Resolution:
- concludes that the current
concession negotiations have failed and should be ended;
- asks the Commission to prepare detailed alternative
proposals for taking the project forward, to be put to the October
2007 Transport Council;
- underlines that these should be based on an additional
thorough assessment of costs, risks, revenues and timetable; and
- asks the Commission to submit financing options,
a procurement strategy, concepts for the subsequent operation
and exploitation phase, and proposals for a sound public sector
governance structure.
The Minister adds that the Presidency made clear
the possibility that, if suitable answers were not found, the
project would be ended and that the Council should not rule out
the involvement of private finance.
1.5 The Minister also tells us that in debate the
Government:
- accepted that Galileo had the
potential to be a key project, as it is described in the Resolution,
but that it should not be proceeded with unless the costs were
justifiable;
- stressed that, while the Government accepted
that the current PPP negotiations had failed, it was committed
to a PPP model;
- argued that a PPP was the best way to ensure
risk and cost are effectively managed, that the risks in terms
of costs and timetable would not be reduced, and might be increased,
by moving to a public procurement, and that open tendering and
competitive procurement was essential;
- said the Council had to ensure that it learned
from the problems there have been, and improved governance and
risk management;
- said it was important that funding for Galileo
had to be found within the limits of the current budget allocations,
without reopening the current Community Financial Perspective;
and
- welcomed the Presidency's recognition that the
project could be ended if acceptable solutions were not found,
and that the involvement of private finance was not ruled out.
1.6 The Minister says that on this basis the Government
was able to accept the Resolution, a copy of which he sends us
and which we annex. He adds that the Government submitted, jointly
with the Netherlands (and supported by Slovakia and Cyprus), a
minutes statement. The statement:
- stresses the Government's commitment
to the PPP principle for major infrastructure projects, its concerns
about the potential increased costs of public procurement, the
need for a reassessment of the business case for Galileo, competitive
procurement, better governance and sound risk management; and
- requires that any additional funding be found
within the limits of the Community's Financial Perspective.
The Minister sends us a copy of this statement too,
which we also annex.
1.7 The Minister continues that in the discussion:
- a clear majority of Member
States underlined the strategic nature of the Galileo programme
and the importance they attach to the project;
- concerns were expressed that decisions should
be taken as quickly as possible in order to avoid further delays;
- the Government did, however, attract support
for its robust stance on risk, cost and competition in the programme;
but
- by contrast, several of the major partners emphasised
the need to respect existing industrial or infrastructure agreements.
1.8 Finally the Minister tells us that the Government:
- expects the Transport Council
to be asked in October 2007 to take a decision on the basis of
the Commission's detailed proposals;
- will continue to work to ensure there is a realistic,
timely and detailed assessment of all proposals for taking the
project forward;
- will continue to argue that a fully substantiated
case for continuing the Galileo project must be made by the Commission
for Transport and Finance Ministers to take an informed decision;
and
- remains committed to its priority objectives
for the programme.[3]
Conclusion
1.9 We are grateful to the Minister for this account
of the Transport Council discussion of Galileo earlier this month.
The information he gives us will be helpful to those participating
in the debate we have recommended.
1 The consortium comprises eight companies - Aena,
Alcatel, EADS, Finmeccanica, Hispasat, Inmarsat, Thales and TeleOp
- from the Member States with major space industries, France,
Germany, Italy, Spain and UK. Back
2
See headnote. Back
3
To achieve a robust and viable PPP, to influence the development
and financial control of the project to ensure a transparent process
which can deliver a value for money deal for the Community, to
maintain Galileo as a civil programme under civil control and
to secure maximum benefit for the UK and Community from Galileo,
including promoting the bid for Cardiff to host the GSA.
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