Procurement in the European Space Sector

Paper number

IAC-09.E8.4.12

Author

Prof. Stephan Hobe, University of Cologne, Germany

Coauthor

Mr. Jan Helge Mey, Institute of Air and Space Law, University of Cologne, Germany

Coauthor

Ms. Irina Kerner, Institute of Air and Space Law, University of Cologne, Germany

Year

2009

Abstract

Public procurement is a vital part of the tool box on which governments rely in order to foster key industries. This is especially true with respect to the space industry and commerce where the public sector represents a major source of investment. The paper will analyze the approaches to public procurement of both the European Community (EC) and the European Space Agency (ESA). In an era of an ever closer relationship between these two international organizations, ways are explored to find common ground among these distinct philosophies.
 
Initially, joint space programmes were mostly implemented by ESA. The organization’s procurement approach is characterized by fair distribution of contracts to the national industries according to the financial contribution by the respective Member States. While securing participation of national industries in ESA projects, the approach might place a burden on efficiency.

Recently, the European Community has become an additional space actor in Europe and engages in joint space projects with ESA such as Galileo and GMES. As an international organization with a focus on economic policies, the EC‘s procurement approach is based on competition, thus contradicting the ESA fair return approach. Admittedly, the drafters of the EC procurement law never intended these rules to be applied to space projects or any large infrastructure projects of the EC which led to problems and finally a compromise for the co-financed Galileo programme.
 
A viable procurement law takes not only government interests (best price/ cost effectiveness) but also industry policy interests (healthy competitive markets) and strategic considerations (national security of supply, technological know-how) into account. At the end of the day, space commerce will not only benefit from direct public investment but also from spill-over effects.

In order to encourage space commerce, we therefore propose to draft a third procurement approach for ESA-EC cooperation that would encompass the benefits of the two procurement schools of thought. Considering interests of the various stakeholders, this new way may eventually serve as an interesting example how procurement can serve as an instrument of industry policy. 

Abstract document

IAC-09.E8.4.12.pdf

Manuscript document

IAC-09.E8.4.12.pdf (🔒 authorized access only).

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