Galileo contract faces Brexit crunch

The contract will be signed on Thursday giving a German-UK consortium the go-ahead to build another eight satellites for Galileo - Europe's version of GPS.

OHB System of Bremen and SSTL of Guildford have so far produced all of the fully operational satellites in the constellation.

This latest batch - assuming no launch failures - would take Galileo to the status of a full network with spares.

The deal will be done here at the Paris Air Show.

OHB, as prime contractor, will sign the paperwork with the European Space Agency. Esa acts as the technical and procurement agent for the European Commission, which owns Galileo.

So far, so good. But then comes the thorny issue of Brexit.

It is highly unlikely that SSTL, which assembles the timing and navigation payloads on the spacecraft at its Surrey factory, will have completed its share of the production effort by Friday 29 March, 2019 - the date for Britain's withdrawal from the EU.

That's problematic because there are restrictions on "third countries" working on classified EU information and technologies - which Galileo incorporates, specifically in the form of PRS.

Short for Public Regulated Service, this is a restricted, robust and high-precision signal that Galileo satellites will be transmitting to be used by government agencies.

In short, unless some way can be found to surmount the third country matter, it will become "illegal" for this classified work to continue in Guildford. Other work could, but not PRS.

You might ask therefore why SSTL was given the work as part of the OHB-led consortium knowing that Brexit is on the horizon? But the UK remains a member of the EU until it leaves, and as such its companies must be treated no differently than any other European firm in a tender process.

To display any bias would invite a legal challenge that has only one outcome. OHB-SSTL won the satellites fair and square.

Europe's Galileo system under construction

So, the pair of them, Esa, the European Commission and the UK government now have just over a year and a half to figure this one out.

For their part, British ministers seem very keen to keep the country inside the Galileo programme.

Continued collaboration on major science, research and technology initiatives was stated as one of the guiding principles in the Brexit White Paper last year. Galileo was named as an example.

No wonder. Satellites were recently touted as one of the "eight great technologies" that could help rebalance a services-heavy economy and deliver strong growth. Indeed, the UK space sector has outperformed the economy as a whole for quite some time now.

Esa and the Commission likewise are loath to lose the services of SSTL, which now has unrivalled expertise in what it does. Dropping SSTL on Brexit day would bring programmatic delay, as well as increased risk and cost to Galileo. And remember, this is a project that is already many years behind schedule and substantially beyond the budget originally envisaged for it.

The incentives are there on all sides to make something happen, but what?

As for so much that's related to Brexit, the clock is ticking.

The obvious solution is that the Commission and the UK reach an early deal or some transitional arrangement that allows the German-UK consortium to continue as before, moving components and people seamlessly between them across the Channel. But there is no guarantee at this stage that such an outcome will arrive in time.

Some creative solutions have been floated, such as SSTL setting up a subsidiary in an EU-27 member state (perhaps down the road from OHB in Bremen) to conduct sensitive work there; or for it to use its parent company in some way. This is the pan-European aerospace giant Airbus.

However, this may not be so straightforward either, not least because in some EU countries only their nationals are permitted to work on classified technologies. This could still frustrate the Guildford team in doing its job.

For everyone's sake, a satisfactory outcome must be found.

Positioning, navigation and timing (PNT) technologies are getting "under the skin" of everyday life, as every smartphone and every prototype driverless car will testify. And there are huge economic possibilities that have barely been imagined, let alone tapped.

I'm thinking here of the coming "internet of things", where absolutely everything is connected and all elements of a network know precisely where they are in relation to each other - even inside buildings and underground.

It's reckoned that by 2030, the global market in navigation services, equipment and applications will be worth some €250bn a year. As a developed, hi-tech bloc, Europe should expect to take a third share in that activity - about €70-80bn annually. It’s nowhere near that level currently. It can and should be doing better.

And it's part of the reason why the UK delegation that turned up to the Esa ministerial meeting in Lucerne, Switzerland, in December, committed more money than any other nation to the agency's future PNT programme.

It's going to look a bit strange if the country most invested in helping to scope the next-generation of Galileo suddenly finds itself not fully inside the first generation.

*Esa and the EU are separate legal entities, although they share many of the same member states. They cooperate under a framework agreement. The Commission relies on the technical competence of Esa to manage the EU's two big space programmes - Galileo and the Copernicus Sentinel Earth-observation satellites.

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