Identifier
Created
Classification
Origin
09BERLIN1324
2009-10-22 15:40:00
CONFIDENTIAL
Embassy Berlin
Cable title:
OHB-SYSTEM CEO CALLS GALILEO A WASTE OF GERMAN TAX PAYER MONEY
how-toVZCZCXYZ0001 PP RUEHWEB DE RUEHRL #1324/01 2951540 ZNY CCCCC ZZH P 221540Z OCT 09 FM AMEMBASSY BERLIN TO RUEHC/SECSTATE WASHDC PRIORITY 5555 INFO RUCNFRG/FRG COLLECTIVE RUEHFR/AMEMBASSY PARIS 0892 RHEHNSC/NSC WASHINGTON DC RUEHNO/USMISSION USNATO 1417 RUEKJCS/HQ USEUCOM LO WASHINGTON DC RUEKJCS/SECDEF WASHINGTON DC RUEHRL/USDAO BERLIN GE RUEHBS/USEU BRUSSELS RUCUSTR/USSTRATCOM OFFUTT AFB NE
C O N F I D E N T I A L BERLIN 001324
SIPDIS
STATE FOR EUR/CE PETER SCHROEDER
STATE FOR OES/SAT DAVID TURNER
STATE FOR EUR/ERA AND EB/IFD/OMA
E.O. 12958: DECL: 10/22/2034
TAGS: ETTC, PGOV, PINR, MCAP, PREL, TSPA, FR, GM
SUBJECT: OHB-SYSTEM CEO CALLS GALILEO A WASTE OF GERMAN TAX
PAYER MONEY
REF: A. BERLIN 1319
B. BERLIN 1207
C. BRUSSELS 1153
D. BERLIN 655
E. BERLIN 430
F. BERLIN 429
G. 08 BERLIN 899
H. 08 BERLIN 897
I. 08 BERLIN 264
J. 08 BERLIN 243
Classified By: Acting Global Affairs Unit Chief David L. Fisher
for reasons 1.4 (b) and (d).
C O N F I D E N T I A L BERLIN 001324
SIPDIS
STATE FOR EUR/CE PETER SCHROEDER
STATE FOR OES/SAT DAVID TURNER
STATE FOR EUR/ERA AND EB/IFD/OMA
E.O. 12958: DECL: 10/22/2034
TAGS: ETTC, PGOV, PINR, MCAP, PREL, TSPA, FR, GM
SUBJECT: OHB-SYSTEM CEO CALLS GALILEO A WASTE OF GERMAN TAX
PAYER MONEY
REF: A. BERLIN 1319
B. BERLIN 1207
C. BRUSSELS 1153
D. BERLIN 655
E. BERLIN 430
F. BERLIN 429
G. 08 BERLIN 899
H. 08 BERLIN 897
I. 08 BERLIN 264
J. 08 BERLIN 243
Classified By: Acting Global Affairs Unit Chief David L. Fisher
for reasons 1.4 (b) and (d).
1. (C) SUMMARY: Berry Smutny, the CEO of Germany's top
satellite manufacturer, OHB-System, called the EU's Galileo
global navigation satellite system (GNSS) "a waste of EU tax
payers' money championed by French interests." Nevertheless,
Smutny said his company would gladly accept contracts to
build the satellites. Smutny anticipates the EU Commission
(EC) will award his company a contract this December to build
a significant portion of the Galileo satellites. According
to a recent media report, the EC is scaling back the Galileo
project by about 25 percent off the previously planned 30
satellites ($1.24 billion) due to budget overruns.
2. (C) On October 2, EconOffs met with OHB-System CEO, Mr.
Berry Smutny for general consultations. Smutny became CEO of
OHB-System in June of this year and was previously the CEO of
Tesat Spacecom, a German subsidiary of the European
Aeronautical Defense and Space Company (EADS). When Smutny
arrived at the Berlin Embassy on October 2, he had just
finished a high-level meeting with the German Transportation
Ministry for Transportation, Building and Urban Development
(BMVBS) to discuss OHB-system's bid on the Galileo satellite
build contract. Smutny said the meeting went "very well" and
his expectation is that OHB will be awarded 40-60 percent of
the satellite build. END SUMMARY
GALILEO IS A STUPID IDEA BUT OHB WILL TAKE THE BUSINESS
-------------- --------------
3. (C) Smutny stated frankly, "I think Galileo is a stupid
idea that primarily serves French interests" given that GPS
already supplies all of Europe's position, navigation and
timing (PNT) needs. He claimed the EU desire to develop a
redundant but alternative to GPS was spearheaded by the
French after an incident during the Kosovo Conflict when the
US military "manipulated" GPS to support military operations
(NFI). Since this time, he said France has aggressively
corralled EU support to invest in Galileo development --
something Smutny said France wants to ensure their missile
guidance systems are free of any GPS reliance. Smutny added,
the irony for German investment in Galileo is that some of
France's nuclear missiles are aimed at Berlin.
THE EC COMMISSION IS SCALING BACK GALILEO TO CUT COSTS
-------------- --------------
4. (U) Space News reported that at an October 15-16
conference on European space policy, the EC announced they
will reduce the number of Galileo satellites to be built from
28-30 to a maximum of 22 satellites due to cost overruns
elsewhere in the program. In addition to soliciting a quote
for the entire satellite build, the EC asked both OHB-System
and Astrium-Satellites to quote blocks of eight and 16
satellites in the event that the contract is divided.
Best-and-final offers are due in November and a final
decision on the contract is expected in late December.
5. (C) Smutny said the EC is steadfast that the entire
Galileo system stay within the allotted 3.4 billion euro
budget. In Smutny's opinion, the EU has grossly
underestimated the complexity of the complete Galileo system
and additional cost overruns and schedule slips are likely.
He said industry experts estimate the final Galileo cost to
be about 6.5 billion euros (assuming the previously desired
32 satellite constellation),but in his opinion the final
cost will balloon to around 10 billion euro.
GALILEO CAN NOT BE BUILD ITAR FREE
--------------
6. (C) Smutny said no matter how much the French would like
Galileo to be built International Traffic in Arms Regulation
(ITAR)-free, this is highly unlikely given that there are not
sufficient replacements for some radiation-hardened US
ITAR-controlled components that Galileo will need. Smutny
pointed out that the EU already strayed from the concept of a
completely indigenous EU system when they procured the
Galileo clock - the heart and soul of the system - from the
Swiss. Smutny said he recommended early on that Galileo try
an procure an US-origin clock, but this idea was immediately
rejected by Galileo decision makers (NFI).
7. (C) Smutny feels that the Galileo program, as it
currently looks, is either doomed for failure or will have to
undergo drastic scalebacks for survival. He said OHB-System
is serious about their bid and will deliver contracted
product "on time, within budget, and per requirements"
(something OHB-System has a good track record of),but his
company is preparing for the possibility that the contracts
will be canceled if the EC can no longer stomach the
ballooning costs.
Murphy
SIPDIS
STATE FOR EUR/CE PETER SCHROEDER
STATE FOR OES/SAT DAVID TURNER
STATE FOR EUR/ERA AND EB/IFD/OMA
E.O. 12958: DECL: 10/22/2034
TAGS: ETTC, PGOV, PINR, MCAP, PREL, TSPA, FR, GM
SUBJECT: OHB-SYSTEM CEO CALLS GALILEO A WASTE OF GERMAN TAX
PAYER MONEY
REF: A. BERLIN 1319
B. BERLIN 1207
C. BRUSSELS 1153
D. BERLIN 655
E. BERLIN 430
F. BERLIN 429
G. 08 BERLIN 899
H. 08 BERLIN 897
I. 08 BERLIN 264
J. 08 BERLIN 243
Classified By: Acting Global Affairs Unit Chief David L. Fisher
for reasons 1.4 (b) and (d).
1. (C) SUMMARY: Berry Smutny, the CEO of Germany's top
satellite manufacturer, OHB-System, called the EU's Galileo
global navigation satellite system (GNSS) "a waste of EU tax
payers' money championed by French interests." Nevertheless,
Smutny said his company would gladly accept contracts to
build the satellites. Smutny anticipates the EU Commission
(EC) will award his company a contract this December to build
a significant portion of the Galileo satellites. According
to a recent media report, the EC is scaling back the Galileo
project by about 25 percent off the previously planned 30
satellites ($1.24 billion) due to budget overruns.
2. (C) On October 2, EconOffs met with OHB-System CEO, Mr.
Berry Smutny for general consultations. Smutny became CEO of
OHB-System in June of this year and was previously the CEO of
Tesat Spacecom, a German subsidiary of the European
Aeronautical Defense and Space Company (EADS). When Smutny
arrived at the Berlin Embassy on October 2, he had just
finished a high-level meeting with the German Transportation
Ministry for Transportation, Building and Urban Development
(BMVBS) to discuss OHB-system's bid on the Galileo satellite
build contract. Smutny said the meeting went "very well" and
his expectation is that OHB will be awarded 40-60 percent of
the satellite build. END SUMMARY
GALILEO IS A STUPID IDEA BUT OHB WILL TAKE THE BUSINESS
-------------- --------------
3. (C) Smutny stated frankly, "I think Galileo is a stupid
idea that primarily serves French interests" given that GPS
already supplies all of Europe's position, navigation and
timing (PNT) needs. He claimed the EU desire to develop a
redundant but alternative to GPS was spearheaded by the
French after an incident during the Kosovo Conflict when the
US military "manipulated" GPS to support military operations
(NFI). Since this time, he said France has aggressively
corralled EU support to invest in Galileo development --
something Smutny said France wants to ensure their missile
guidance systems are free of any GPS reliance. Smutny added,
the irony for German investment in Galileo is that some of
France's nuclear missiles are aimed at Berlin.
THE EC COMMISSION IS SCALING BACK GALILEO TO CUT COSTS
-------------- --------------
4. (U) Space News reported that at an October 15-16
conference on European space policy, the EC announced they
will reduce the number of Galileo satellites to be built from
28-30 to a maximum of 22 satellites due to cost overruns
elsewhere in the program. In addition to soliciting a quote
for the entire satellite build, the EC asked both OHB-System
and Astrium-Satellites to quote blocks of eight and 16
satellites in the event that the contract is divided.
Best-and-final offers are due in November and a final
decision on the contract is expected in late December.
5. (C) Smutny said the EC is steadfast that the entire
Galileo system stay within the allotted 3.4 billion euro
budget. In Smutny's opinion, the EU has grossly
underestimated the complexity of the complete Galileo system
and additional cost overruns and schedule slips are likely.
He said industry experts estimate the final Galileo cost to
be about 6.5 billion euros (assuming the previously desired
32 satellite constellation),but in his opinion the final
cost will balloon to around 10 billion euro.
GALILEO CAN NOT BE BUILD ITAR FREE
--------------
6. (C) Smutny said no matter how much the French would like
Galileo to be built International Traffic in Arms Regulation
(ITAR)-free, this is highly unlikely given that there are not
sufficient replacements for some radiation-hardened US
ITAR-controlled components that Galileo will need. Smutny
pointed out that the EU already strayed from the concept of a
completely indigenous EU system when they procured the
Galileo clock - the heart and soul of the system - from the
Swiss. Smutny said he recommended early on that Galileo try
an procure an US-origin clock, but this idea was immediately
rejected by Galileo decision makers (NFI).
7. (C) Smutny feels that the Galileo program, as it
currently looks, is either doomed for failure or will have to
undergo drastic scalebacks for survival. He said OHB-System
is serious about their bid and will deliver contracted
product "on time, within budget, and per requirements"
(something OHB-System has a good track record of),but his
company is preparing for the possibility that the contracts
will be canceled if the EC can no longer stomach the
ballooning costs.
Murphy