2 Global navigation satellite system
(a)
(32068)
14701/10
COM(10) 550
(b)
(32460)
5530/11
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
|
Department | Transport
|
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 Council | 31 March 2011
|
Committee's assessment | Politically important
|
Committee's decision | For debate in European Committee A
|
Background
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.
Conclusion
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 http://www.esa.int/SPECIALS/About_ESA/SEMW16ARR1F_0.html
and http://www.esa.int/esaNA/index.html. 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 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2008:196:0001:0011:EN:PDF.
Back
18
(32097) 15285/10 + ADD 1: see HC 428-xi (2010-11), chapter 4 (15
December 2010). Back
|