The European Court of Auditors has recently published a report analyzing the development and validation phase of the Galileo programme. The European Commission and the European Space Agency (ESA) set up a body, the Galileo Joint Undertaking (GJU), to manage this phase of the Galileo programme, which operated from September 2003 until the end of 2006. The Court of Auditors report addressed the different tasks of the GJU during this period.
The development phase of Galileo was intended to be carried out by a Public Private Partnership (PPP) and to be completed by 2008, at a total estimated cost of €2.1 billion, with the private sector contributing €1.4 billion. The GJU was tasked to negotiate a PPP. However, it is well known that negotiations with the private sector on a concession agreement collapsed in 2007. Consequently, according to the Court “Technological development has been set back five years” since “at the end of 2008, no operational satellites have been launched and cost estimates for the development and validation phase have almost doubled from 1,1 to 2,1 billion euro.”
It should be recalled that Brussels agreed to fund the deployment phase of Galileo entirely from the Community budget which means that EU taxpayers will pay a bill of €3.4 billion.
The Court deemed the management of the development and validation phase of the Galileo programme inadequate. According to the Court the “GJU was not a strong programme manager nor was any other body assigned this role” and concluded that “The GJU did not achieve most of its objectives.”
The report states “The programme lacked a strong strategic sponsor and supervisor.” The Court slammed, therefore, the Commission stressing that it “did not proactively direct the programme, leaving it without a helmsman.” The Court also pointed out the lack of realistic and acceptable objectives and insufficient preparatory work.
The Court concluded that “the PPP was inadequately prepared and conceived” consequently, “the GJU was required to negotiate a PPP which was unrealistic.”
The Court stated that the task of the GJU in supervising technological development activities was adversely constrained by “governance issues, an incomplete budget, delays and the industrial organisation of the development and validation phase.”
Moreover, the Court found that the Galileo Research and Technological Development results were of “limited usefulness” due to “discontinuities, the inappropriateness of FP6 for funding market development activities, the absence of a comprehensive market development approach and delays.”
The Court concluded that the Galileo programme was inadequately governed and stressed the lack of clear division of the roles between the entities involved in the development and validation phase of the programme including the European Commission, the ESA, the member states and the joint undertaking.
According to the Court “The Commission did not provide adequate leadership in developing and managing Galileo.”
One cannot forget that the Commission took over the programme management of Galileo. The Court has stressed that the role as programme manager is “a challenging role for which [the Commission] has little experience.” Furthermore, it stated “While this may be an expedient solution for the short term, the Commission should consider whether this would be the most appropriate long-term management.”
The report includes several recommendations for the Commission and states “If the mid-2007 redirection of the EGNOS and Galileo programmes is to succeed, the Commission must considerably strengthen its management of the programmes.”
Moreover, the Court pointed out that the EU has two options, or it works toward fostering early market development of Galileo, to generate direct revenues, or it will have to accept to fund Galileo’s costs, “potentially 10 billion euro over the coming 20 years.”
