European Scrutiny Committee Contents

2   Global navigation satellite system




COM(10) 550




COM(11) 5

Draft Decision on the detailed rules for access to the public regulated service offered by the global navigation satellite system established under the Galileo programme

Commission Report: Mid-term review of the European satellite radio navigation programmes

Legal base(a) Article 172 TFEU; co-decision; QMV

(b) —

Document originated(b) 18 January 2011
Deposited in Parliament(b) 25 January 2011
Basis of consideration(a) Minister's letter of 15 February 2011

(b) EM of 15 February 2011

Previous Committee Report(a) HC 428-viii (2010-11), chapter 5 (17 November 2010) and HC 428-xiii (2010-11), chapter 4 (19 January 2011)

(b) None

To be discussed in Council31 March 2011
Committee's assessmentPolitically important
Committee's decisionFor debate in European Committee A


2.1  The EU 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. Galileo is based on the presumption that Europe ought not to rely indefinitely on the GPS (the US Global Positioning System) and GLONASS (the Russian Global Navigation Satellite System) systems, augmented by EGNOS. Galileo is being carried out in conjunction with the European Space Agency[12] and there are a number of agreements in place or being negotiated with third countries about cooperation in the project.

2.2  It is intended that Galileo will allow provision of five services. These are known as the:

  • Open Service, free of charge at the point of use — a basic service, but it is expected to potentially offer greater accuracy and coverage than GPS;
  • Commercial Service, offering for a fee added value for more demanding uses — that is expected to be professional users who need superior accuracy and guaranteed service;
  • Safety of Life Service, for safety-critical applications that require high integrity — this will have the same accuracy as the Open Signal, but with a service guarantee providing high reliability;
  • Search and Rescue Service, to complement the current COSPAS-SARSAT system (International Satellite Search and Rescue System founded by Canada, France, the former USSR and the USA in 1988 and with 33 countries now participating) — the service is more advanced than any comparable existing service: it relays the distress signal and location to the nearest rescue centre and informs the sender that that signal has been received and that help is on its way; and
  • Public Regulated Service, a high-performance, encrypted service for authorised civil government applications — such as for such as national security, law enforcement agencies, customs and excise. The potential users will need a service which is useable, available, reliable and secure. The main benefit of this service will be its greater resistance to jamming and interference than the other four services, the fact that it will remain operational if other services are turned off or locally denied (jammed) in times of crisis and the ability to deny signals to specific receivers and user groups.

2.3  From early in 1999 previous Committees have reported to the House on many aspects of the Galileo project, most recently in October 2009.[13] The matter has been debated four times in European Standing Committee, most recently on 26 November 2007,[14] and once on the Floor of the House.[15]

2.4  We ourselves have reported on Galileo matters a number of times, most recently in January 2011, about the draft Decision, document (a), relating to the Public Regulated Service, which will provide a highly accurate positioning service to specific government-designated users requiring a high continuity of service and access to which will be controlled. The draft Decision sets out the proposed high-level rules governing access to the service. Member States will be able to take their own decisions regarding the use, or not, of the Public Regulated Service and the nature of its use. When we considered this document, in November 2010, we heard that:

  • the Government was considering its approach to the Public Regulated Service in the light of this proposal, including the potential user organisations in the UK, the likely costs and potential charges for the service and the most appropriate organisation to deliver Public Regulated Service management in the UK;
  • the Government would also consider the issue of security-related use of the Public Regulated Service — an important factor in this assessment was the successful joint bid by the UK and France to host the Galileo Security Monitoring Centre, referred to in the proposed Decision as the "Security Centre"; and
  • the Commission's Explanatory Memorandum noted that the draft Decision had not been subjected to an impact assessment and the Government would push for transparency over the assessments made by the Commission in support of its proposal.

We noted that the Government was considering its position in relation to the Public Regulated Service and security-related use of the service and was pressing the Commission for information which should have been in an impact assessment. So we said that before considering this draft Decision further we wanted to hear from the Government about developments on these matters.

2.5  In January 2011 we had an interim account of developments from the Government, when we heard that:

  • the Commission had undertaken to provide a paper on costs at the next Transport Council Working Group, scheduled for 20 January 2011;
  • following receipt of the Commission's paper on costs the Government would seek to identify possible groups of users of the Public Regulated Service in the UK;
  • in the meantime, it was working closely with the Commission and the Hungarian Presidency to ensure that the provisions in the draft Decision relating to the manufacture of Public Regulated Service receivers and associated security modules would not be overly restrictive;
  • UK industry was regarded as an expert in the field of Public Regulated Service technology and the Government was keen to facilitate industrial return; and
  • its aim was to negotiate a suitable form of wording which balanced the need for appropriate security controls of manufacturers against favourable conditions in which a market for Public Regulated Service receivers could grow.

We said that we would continue to hold the document under scrutiny whilst awaiting further information on the Commission's paper on costs and the Government's position in relation to the Public Regulated Service and security-related use of the service. Meanwhile the document remained under scrutiny.[16]

The new document

2.6  In the Report, document (b), the Commission discusses its mid-term review of the EGNOS and Galileo programmes and sets out progress since 2007 with these programmes and the Commission's view of how they should continue in future. The mid-term review is a requirement of Regulation (EC) 683/2008, "on the further implementation of the European satellite navigation programmes (EGNOS and Galileo)",[17] to be carried out in 2010 and to cover the system's costs, risks and the likely revenues generated by the operation of Galileo's services.

2.7  The Commission says that the key achievements since 2007 have been:

  • establishing a new governance framework for the programme;
  • significant progress towards operating EGNOS Safety of Life service (due to begin in early 2011);
  • completing work on building the first four Galileo satellites with the first two due to launch in August 2011; and
  • letting four of the six contracts necessary to build and operate the system with the remaining due to be completed early this year.

The Commission indicates that this progress means it is on-track for the system to begin initial operation in 2014, based on a reduced constellation of 18 satellites.

2.8  In more detailed comments the Commission:

  • reflects on its role since it took over as programme manager in 2008, following the collapse in 2007 of the public private partnership intended to deliver Galileo;
  • says that the Commission's remit in Galileo is now 'well beyond' its normal grant-funding role in other projects;
  • describes how its relationship with the European Space Agency has evolved and the risk management system it has developed;
  • sets out several risks with negative consequences for the budget which have materialised;
  • highlights, in particular, to the work undertaken to launch and operate the first four validation satellites leading to an additional €500 million (£430 million) cost, an increase in the cost of the launchers for the satellites (a further additional €500 million or £430 million) and a lack of competition for the other contracts let;
  • indicates that the complex requirements of Galileo's Safety of Life service are continuing to impact on the programme's budget;
  • says that, in total, an additional €1.9 billion (£1.64 billion) is needed in order to complete construction of the 30 satellite system as originally envisaged — this is additional to the €3.4 billion allocated in 2007 (£2.93 billion at February 2011 prices);
  • says that it "has not so far proposed the reallocation of additional funding for the programmes under the current financial framework" and, accordingly, has not accompanied the mid-term review with a feasibility study of the advantages and disadvantages of the use of service concession contracts or public service contracts with private sector entities as required by Regulation (EC) 683/2008;
  • shows its estimate of the operating costs of Galileo and EGNOS, which includes the design, construction and launch of replacement satellites, at €800 million (£689 million) annually at 2010 prices, not adjusted for inflation;
  • asserts that funding through the Framework Research and Development Programme or the successor to the Competitiveness and Innovation Framework Programme will be needed to support the downstream user market for Galileo, but does not give a figure for the level of support needed;
  • sets out the programmes' potential revenues, confirming that users will not be charged for the use of the EGNOS and Galileo's Open Services, suggesting that a royalty should not be charged on the chips which enable devices to receive the EGNOS and Galileo signals, as this could be a disincentive to the take up of services, saying that no charges for use of the Search and Rescue Service are envisaged, noting that the EGNOS Safety of Life Service is unlikely to generate revenue, as similar systems are provided elsewhere free of charge, adding that there is the possibility to derive revenue from the separate Galileo Safety of Life Service remains and concluding that the only direct revenue likely is from the Galileo Commercial Service and Public Regulated Service — these could, over time, deliver a direct revenue of €70 million (£60.3 million) annually;
  • suggests, in its view, that Galileo and EGNOS will create benefits to the EU of between €60-90 billion (£52-78 billion) between 2010-2027, although the delay to delivery of the services will reduce this benefit;
  • shows in an annex the widespread use that is expected to be made of the systems once operational;
  • notes that the satellite navigation market has grown at 30% per annum for the past few years;
  • identifies some short-term goals for the programmes, including launching the first Galileo services in 2014-2015 and adaptation of EGNOS to operate with these services
  • shows the Commission's longer term goal of completing the system as originally envisaged, although noting that a review is underway to see if costs can be reduced;
  • notes that a full Galileo system is undeliverable before 2019-2020; and
  • shows that this provisional timetable depends on the availability of additional funding, industrial performance and the absence of significant technical problems.

2.9  Although the Commission says that it has improved its risk management processes, it takes the view that it is not advisable to have all the costs and risks associated with the programmes borne in future solely by the EU budget in future, referring to its Communication The EU Budget Review, where it suggested a potential approach to sharing the risks of large scale projects.[18] In that context the Commission suggests in the present document how risks might be shared between the EU Budget and the Member States putting forward three options:

  • a continuation of the current arrangements whereby the EU Budget is solely responsible for all risks;
  • the EU Budget being responsible for all risks, except major risks unconnected with management of the programme, for which the Member states would assume responsibility; and
  • the EU Budget making a fixed annual contribution, with the Member States being responsible for any funding shortfall.

The Commission says that it will examine these options in an impact study and the solution it chooses will be included in the next draft Regulation it proposes to amend Regulation (EC) 683/2008.

2.10  Finally, the Commission, although it does not set out any specific proposals, sets out some principles with which it believes management of the operational phase should comply:

"it must be compatible with the EU's role as owner of the systems and that of the Commission as the organisation responsible for managing the programmes, with the Commission as the sole decision-making body;

"it must be based on a simple integrated model which provides a clear, single approach by the public sector;

"it must ensure a stable long-term framework; afford a degree of flexibility with regard to financial management and staff management; be organised on an effective, reliable and transparent basis; have clear procedures allowing swift decision-making;

"it must be able to retain all the expertise and knowledge built up in the course of the programmes; in particular, ESA [European Space Agency] know-how must be preserved;

"it must enhance the sense of responsibility on the part of industry and the prime contractor;

"it must ensure the independence of the activities concerning accreditation of the security of the systems;

"it must take due account of the public nature of the services provided;

"it must be able to coordinate measures to protect the systems at European level, since they are highly sensitive."

The Minister's letter

2.11  The Minister of State, Department for Transport (Mrs Theresa Villiers), writing about the draft Decision, document (a), tells us that:

  • in response to the Government's request at the December 2010 Transport Council for more detail on the estimated costs of the Public Regulated Service, the Commission has now shared a cost analysis paper with Member States and it has become clearer that the costs associated with the service will relate mainly to the setting up costs of a national competent authority to oversee the security and operation of the manufacture and use of Public Regulated Service receivers;
  • the Government is currently examining who will perform the role of competent authority in the UK;
  • all of the proposed functions are already carried out in the UK and it is not expected that there will be any significant start-up costs;
  • the Government will not be carrying out an impact assessment at this stage — however, if it decides it necessary to legislate for the role of national competent authority it will provide an analysis of costs;
  • the Hungarian Presidency has scheduled weekly working group meetings to discuss the proposal, with a view to a general approach at the Transport Council on 31 March 2011;
  • in addition, and with a view to securing a text which will be effective at the operational level, the Government has asked the Presidency and the Commission to engage with national experts to examine some of the more technical elements of the draft Decision; and
  • this is resulting in a significant re-draft of the proposal and the Government is pleased that its efforts are proving fruitful with the emerging text addressing its earlier concerns.

The Minister concludes that she will write to again ahead of the March 2011 Transport Council to keep us informed of the progress in negotiations.

The Government's view of the new document

2.12  In her Explanatory Memorandum about the Commission Report, document (b), the Minister first says that:

  • this mid-term review of the EU's satellite navigation programmes was an opportunity for the Commission to set out, as programme manager, its proposals on a number of important outstanding questions for the future, such as the scope to bring the programme back within budget and the governance arrangements for the operational phases;
  • the Commission has instead outlined, however, the challenges the programme faces and has only offered initial thoughts on a way forward; and
  • further work and discussion is needed.

2.13  The Minister then comments that:

  • it is clear that the Commission has made progress with the programmes since it became programme manager in 2008;
  • important milestones such as the award of contracts for the majority of the six work packages have now been reached, some of which represent significant contracts for UK industry; and
  • the EGNOS Safety of Life Service should be declared open for use early this year and the launch of the first set of British-built validation satellites in August 2011 will mark an important step in the construction of the system.

2.14  The Minister continues that the Government is, however, deeply disappointed and concerned that the Commission has not been able to deliver the construction of the full Galileo system within the €3.4 billion (£2.93 billion) budget agreed in 2007 by the Commission, the Council and the European Parliament. She says that;

  • it is the Government's view that overspending of the scale indicated, particularly in the current fiscal climate, €1.9 billion (£1.64 billion) is simply unacceptable;
  • the Commission's Report should have done much more to explain the reasons for the overspend and proposed means to correct them, together with improvements to the management of the programme to contain future costs;
  • the Government, together with other Member States, has already stressed the importance of this analysis in informing discussions on the future budgeting of the programme;
  • the Government's approach on this issue is shaped by its objective for the next Financial Framework, where it will seek restraint in the growth of the EU Budget — reducing wasteful spending can most importantly reduce budget size, but can also free up resources to support EU activities that boost economic growth and competitiveness;
  • although the Commission sets out what resources it believes would be required now to complete the Galileo system, it does not analyse the alternatives to completing the system in full as it was originally envisaged, nor does present specific proposals to reduce costs and find offsetting savings;
  • the Government considers that, in the current fiscal climate, such avenues must be explored;
  • in particular, it believes that the programme should be reduced in scope if it cannot be delivered within the allocated budget;
  • the Commission says that it intends to present options, including simplifying the Galileo Safety of Life Service, as part of an impact assessment later this year in preparation for its formal proposals for the next Financial Framework;
  • the Government will continue to press the Commission to reduce the level of ambition for Galileo, to see the extent to which it can be brought back within budget;
  • the Government will seek to ensure that the final impact assessment evaluates a full range of options and gives detailed information on the levels of performance achievable from reduced Galileo constellations for each of the Galileo services;
  • it also wants to see proper analysis of the levels of performance users can expect with reduced Galileo constellations augmenting the American GPS system;
  • the Government will press the Commission to provide thorough justifications for the figures for the overspend and for the operating costs set out in its Report; and
  • only a superficial explanation is provided for these figures, from which it is not possible to assess their robustness — given previous experience, it will be important to assess the confidence that can be placed on the Commission's estimates.

2.15  In relation to timescale, the Minister tells that the Government supports the Commission's wish to begin Galileo services as early as possible, that is 2014-15, saying that:

  • this will provide industry with the confidence to invest in downstream uses of the system so that the indirect benefits that the Commission outlines are realised — the Government will continue to work with the Commission to achieve this objective;
  • the Government will continue to support the Commission in improving its management of the programme — it has already seconded a programme manager to work on Galileo in the Commission;
  • it notes the Commission's commitment to putting risk management at the heart of its work; and
  • the Government agrees with the Commission's view that further changes to the governance structures for the programmes at this stage could adversely affect progress.

2.16  In further elaboration of the financial issues the Minister says that it is important to recognise that the Report of the mid-term review is not a formal request by the Commission for additional funds. She comments that:

  • the Government notes the Commission's view that it is no longer advisable to have all the costs and risks associated with the programmes borne solely by the EU Budget;
  • however, the Government is unable to offer an analysis at this stage given the lack of information in the review — it will provide us with an Explanatory Memorandum when the Commission produces a detailed impact study, as part of the next legislative proposal to amend Regulation (EC) 683/2008;
  • the Government will work with the Commission and other Member States to understand and influence the former's thinking as these proposals develop;
  • the Government welcomes the acknowledgement that reform is necessary to improve the management of large scale projects such as Galileo;
  • the Government is willing to consider proposals but would require further detail, particularly on questions raised by the suggestions in the Communication The EU Budget Review, relating amongst other things to project monitoring and financial accountability;
  • very importantly, any organisational change must not distract from the fundamental need for improved project management practice, financial management and budget discipline, and
  • the Government will continue to work with other Member States and the Commission to see whether the programme can be brought back within budget.

2.17  On the operational phase of the programmes the Minister says that:

  • the Government notes the Commission's initial thinking on the necessary structures; and
  • it will continue to urge the Commission to maximise private sector involvement in the operation of Galileo as appropriate.

2.18  The Minister concludes by saying that:

  • the Government has significant concerns about the findings of the mid-term review;
  • it continues to believe, however, that the EU's satellite navigation programmes have the potential to bring useful benefits to citizens and business in the UK, and wider EU, through better signal availability and greater resilience, particularly as satellite navigation and timing is becoming increasingly important in a range of different sectors; and
  • it will work with other Member States to urge the Commission to address the concerns raised in response to the review.


2.19  The EGNOS and Galileo projects remain very important, and expensive, projects. Thus we think that it would be timely to have another debate on the subject and that these two documents provide the scope for a useful discussion. Therefore we recommend them for debate in European Committee A, which should take place before the March 2011 Transport Council.

2.20  On the draft Decision, document (a), the Minister undertakes to let us have information about further developments in working group discussion of the proposal. However we think it better, given timing constraints, that the Government impart the latest information possible to Members participating in the European Committee debate. We expect that Members would wish to hear particularly about the improvements secured in the proposed text which are meeting the Government's earlier concerns, including the issue of security-related use of the Public Regulated Service.

2.21  As for the Commission Report, document (b), we suggest that the debate would provide the opportunity to examine both the scope for reducing cost pressures by scaling back the programme and the Commission's suggestions about the need for and how to fund extra expenditure.

12   See and  Back

13   (30902) 13066/09: see HC 19-xxix (2008-09), chapter 8 (28 October 2009). Back

14   See Gen Co Debs, European Standing Committee, cols. 3-40. Back

15   See HC Deb, 2 July 2007, cols. 763-87. Back

16   See headnote. Back

17   See  Back

18   (32097) 15285/10 + ADD 1: see HC 428-xi (2010-11), chapter 4 (15 December 2010). Back

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