European Court of Auditors Lambastes Galileo Satellite Navigation Program
March 26, 2009
Inside GNSS, May/June 2009
Here's an interesting document: Preliminary observations on “The management of the Galileo programme’s development and validation phase,” adopted at its January 21–22 meeting by the European Court of Auditors (ECA).
If you're the kind of person who wakes up in a strange room after a night on the town and wonders how you got there, you’ll want to take in the full 50-page report and six addenda.
However, if you’re the sort who, in those circumstances, just wants to know what’s going on and how to get out of there, you probably can get by with a lot less reading. The “Lessons for the Future” and five recommendations take up only 3-1/2 pages of the material.
For one who lived through the first 15 years of Europe’s GNSS efforts, the ECA report is a kind of post-mortem filled with ruefulness and might-have-beens.
The Galileo program is five years behind schedule and facing a current overrun of €2.25 billion (US$3.06 billion) above the 2000 cost projection of €3.33 billion for the definition, development and validation, and deployment phases.
And the auditors review and document the journey in achingly thorough detail — chronicling the delays, unanticipated costs, and postponed deadlines — before concluding that the roadmap to implementation, operation, and replenishment of the system is still not well defined.
The ECA is an official, but not particularly well-known organization based in Luxembourg and given powers under various European Union (EU) treaties to carry out independent audits of programs and their use of EU finances. In the ECA’s own words, “As the EU’s external auditor [the ECA] contributes to improving EU financial management and acts as the independent guardian of the financial interests of the citizens of the Union.”
Based on audit work was performed during 2007 and 2008, the preliminary observations will become a final published report to be made public within the coming months.
Although the audit covers the program from its origins in the early 1990s up to the end of 2008, it focuses on the EU’s satellite navigation programs — Galileo and the European Geostationary Navigation Overlay Service (EGNOS) — during the years 2003 to 2006.
And, through the eyes of the auditors, it’s not a pretty sight. Section headings in the table of contents foreshadow the ultimately dreary conclusions: “Concession negotiations failed,” “Technological development activities delayed and over budget,” “Limited usefulness of RTD [research and technological development] activities,” “EGNOS integration only partially successful,” “Poor public-sector governance.”
Particular attention (and opprobrium) is reserved for the effort to form a Public-Private Partnership (PPP) that sought to derive two-thirds of the cost of deploying the system from a private concessionaire that would operate the system at a profit. The PPP effort fell apart in mid-2006, when the program sponsors — the European Commission (EC) on behalf of the EU and the European Space Agency (ESA) — decided to transform the program into a more traditional public procurement.
The auditors point out that, despite recommendations in two studies prepared by PriceWaterhouseCoopers, the EC did not investigate traditional public procurement. Moreover, neither the EC nor the GJU constructed a public sector comparator, that is, an estimate for comparative purposes of what the project would cost if traditional procurement methods were used.
Instead, the ECA concludes (as was widely assumed at the time), “The Commission proposed, and the [EU] Council adopted, a PPP for the deployment and operational phases of Galileo in order to obtain a political consensus.”
The auditors cite the unclear mandate and conflicted governance structure of the Galileo Joint Undertaking (GJU) established in September 2003 to define technical requirements and oversee construction of prototype satellites and in-orbit validation (IOV), select private operators for Galileo and negotiate the concession agreement, oversee the RTD projects, gain the participation of non-EU members, and develop a business plan for Galileo operation.
The GJU was phased out in December 2006 without having accomplished many of these tasks. The causes for this failure, according to the ECA, were numerous:
• The presence of the ESA as half of the GJU’s governing board while also serving as the lead agency for the IOV activities that the GJU was supposed to supervise “resulted in a lack of accountability.
The ECA is blunt in its criticism of the EC, which it characterizes as “the programme’s key promoter.”
“The Commission failed to provide adequate leadership,” says the preliminary report. “Whereas, between 1999 and 2004, the Commission actively played its role of initiating the programme and getting it started, momentum was lost from 2005 onwards,” states the report. “Delays and cost overruns became apparent in the course of 2005, but no corrective action was taken until March 2007.”
The report identifies several main EC failings: not reconciling the “multiple objectives [of the the Galileo program], which resulted in a diverse range of stakeholder expectations”; not providing for risk management at the outset; failure to establish a permanent organization early on, instead charging six successive temporary structures with responsibilities for program management and technical support; not taking timely decisions or critically review and monitor the GJU’s progress reports.
Auditors charged that the EC lacked a “long-term strategic vision for the EGNOS and Galileo” programs but focused instead on short-term goals, for instance, being preoccupied “with navigating the programme from one Council meeting to the next. . . .”
Noting that the Galileo program organization “has changed markedly since 2007,” the ECA five recommendations reveal a continuing concern that the EC leadership has not completely figured out what it needs to do next.
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