BRUSSELS -(Dow Jones)- The European Union Monday accepted a joint bid for the Galileo satellite system contract from consortia Eurely and Inavsat, making the partnership the single remaining bidder for the contract.
The Galileo Joint Undertaking, the body awarding the satellite contract, failed in March to select a preferred bidder from the two groups, saying that it needed extra time to decide which provided the best value for taxpayers. Earlier this month the two consortia decided to join forces rather than submit new offers individually.
Rainer Grohe, GJU Executive Director, said the "joint proposal clearly showed better value for the public, the overriding criterion in the decision-making process."
Grohe expects the contract to be finalized before the end of 2005 as planned. Galileo, a 30-satellite system, is due to go into service in 2008.
The European Commission proposed Galileo as an independent European presence in space and Europe's own version of the U.S. Defense Department's Global Positioning System seven years ago, but the EUR3.2 billion project has been repeatedly stalled.
There have been internal divisions among E.U. governments over the cost to taxpayers and, once that was resolved, more recently over how lucrative technology contracts should be shared out among European companies.
Galileo is Europe's largest-ever public-private project and aims to end its reliance on the U.S. GPS system, as it says the Pentagon doesn't guarantee uninterrupted service. Europe also aims to build a more accurate satellite system that can detect the exact positioning of users to within a meter.
Reacting to Monday's announcement, E.U. Transport Commissioner Jacques Barrot said: "Galileo is an exciting technological revolution. It will generate many industrial spin-offs and benefits for European companies."
Since the beginning, Galileo has put the spotlight on Europe's relations with the outside world. Initially, the U.S. was concerned Galileo might interfere with the military applications of its GPS, which is used by its troops and the North Atlantic Treaty Organization. A technical fix was eventually found. However, Washington remains uneasy about China's participation in research and development of Galileo, fearing it could help Beijing close the technology gap with the U.S. on missile guidance. Galileo will have both civil and defense capabilities.
The merged-offer to run Galileo brings together a group, comprising Franco-German concern European Aeronautic Defence & Space Co. (5730.FR), U.K. satellite-communications provider Inmarsat Ventures Ltd. (IMR.YY) and French defense company Thales SA (12132.FR) with a second group, comprised of Italian defense company Finmeccanica SpA (FNC.MI), French telecommunications concern Alcatel SA (13000.FR), Spain's state-run airport authority Aena and Spanish satellite group Hispasat.
The bidding process has been colored by politics. The Italian and German governments have been lobbying particularly hard, with Rome throwing its weight behind the consortium containing Finmeccanica and Berlin backing the rival group led by EADS.
The acceptance of the merged-offer is likely to ease national rivalries by ensuring that lucrative technology contracts - and the jobs they are expected to create - are spread more evenly across Europe, according to analysts.
-By Victoria Knight, Dow Jones Newswires; 322-741-1488; victoria.knight@dowjones.com
(END) Dow Jones Newswires"
Posted to the site on 27th June 2005
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