Report on the proposed regulation on the establishment of the GALILEO Joint Undertaking

January 21, 2002

Brussels 17 January 2002

REPORT on the proposal for a Council regulation on the establishment of the GALILEO Joint Undertaking (COM(2001) 336 - C5?0329/2001 - 2001/0136(CNS)) FINAL A5-0005/2002 10 January 2002 Full Text

EXPLANATORY STATEMENT

Introduction

The GALILEO Programme consists of four phases: a definition phase which was completed at the end of 2000, a development phase (2001-2005), a deployment phase (2006-2007) and an operational phase (from 2008).

Your rapporteur would like to stress once again that in order to ensure the relevance of the GALILEO programme it is important to adhere to this timetable. In 2010 the next generation of GPS (GPS II) is due to be completed. If GALILEO only becomes operational at that stage, there is a risk that the European system will be redundant. This would put an end to any hopes of a non-military satellite system.

This report focuses on the organisation of the development phase of the GALILEO programme. Your rapporteur welcomes the fact that the Joint Undertaking proposed by the Commission provides a single management structure for the development phase of the project. He also endorses the choice of Statutes for this structure, as it is intended to provide simple, unbureaucratic and management-oriented working procedures.

As it stands, the Commission proposal on the establishment of the GALILEO Joint Undertaking fails to provide answers to two fundamental questions the Council, COREPER, ESA, the Commission and private industry have focused on in their discussions. These concern the nature of the involvement of the private sector in the development phase of the GALILEO programme and Member States' controls on the Joint Undertaking.

Your rapporteur has therefore decided to concentrate on these two problems. Taking into account the Commission proposal, the position of the Council of Transport Ministers of 16 October 2001, the opinion of the Economic and Social Committee of 6 November 2001 and all the discussions held with each of the parties concerned, your rapporteur would like to use this report to suggest solutions to these two problems.

Involvement of the private sector in the development phase of the GALILEO programme

In its resolution of 3 October 2001 on the Commission's communication on GALILEO (COM(2000) 750, C5-0110/2001-2001/2059 (COS)), the European Parliament urged the Commission to ensure sufficient participation of private industry during each phase of the project. The Commission's proposal on the establishment of the GALILEO Joint Undertaking provides for the financial involvement of the private sector in the development phase of the programme. The Council supports it in principle.

However, membership of private companies in the Joint Undertaking would generate conflicts of interests:

In general:

The public and private sectors basically have different interests. While the private sector for the most part has a commercial interest in the programme, the public sector has to promote other applications of the programme which are in the public interest, namely concerning the environment, data protection, security and the protection of citizens.

Particularly as regards the invitation to tender:

An important task of the Joint Undertaking will be to prepare and carry out the invitation to tender necessary for the deployment and operational phases of the GALILEO programme. The main advantage of this invitation to tender is that it will make things clearer: the public sector will have to describe clearly how GALILEO will be implemented, while industry will apply for contracts by making well-defined bids. At the end of the invitation to tender a contract will be concluded between the public and private partners setting out all the substantive, technical and financial details of programme implementation. The aerospace industry has already agreed in the memorandum of understanding to co-fund the development phase of the programme. If this industry is directly involved in the Joint Undertaking it will also be involved in preparing for the invitation to tender. In the interests of fair competition, it would then have to be excluded from the application procedure for the public invitation to tender which is specifically directed at the aerospace industry! Under these circumstances the aerospace industry would have no interest in being involved in the development phase of the GALILEO programme.

A solution had to be found to allow the private sector to be involved in the development phase - in accordance with the wishes of both the public and private sectors - while avoiding these conflicts of interest. Your rapporteur therefore proposes that a development company be set up alongside the Joint Undertaking. Those industries already interested in this phase of the programme will be represented in the development company. The role and tasks of the development company are as follows: to advise the Joint Undertaking, to publicise the GALILEO programme and to carry out specific tasks (feasibility studies, technical studies, etc.). Your rapporteur does not wish to commit himself as regards the arrangements governing the financial involvement of the private sector in the development company: as far as he is concerned, assets in kind and a distribution of the contribution over the period of the development phase are conceivable. In addition to solving the problem of conflicts of interest, a development company would have further advantages:

1. It would institutionalise exchanges between the private and public sectors. It would therefore be the first step towards a public private partnership (PPP).

2. It would permit an official publicity campaign directed at future users (telecom, public transport, agriculture, insurance, etc.) and the public at large in the GALILEO programme. This publicity campaign would be conducted by the private sector which is more conversant with the market situation and commercial feasibility.

Controls by the Member States on the Joint Undertaking

In the Commission's proposal on the establishment of the GALILEO Joint Undertaking, the public sector is represented on the Administrative Board of the Joint Undertaking by the Commission and indirectly by the ESA (research ministers). The establishment of a monitoring committee in which each of the Member States is represented is intended to guarantee that programme implementation includes applications which are in the public interest. The monitoring committee has the task of ensuring that due attention is paid to public companies, the environment, the public interest, etc. in determining the contents of the programme and technical implementation. A second task of the monitoring committee is financial control. The committee will ensure that the funding of the programme proceeds as agreed. It also has the task of making sure that the future GALILEO system ensures protection of privacy and security for citizens.

Because timing is crucial for the success of the entire GALILEO programme, care must be taken to ensure that the advisory and controlling function of the monitoring committee under no circumstances paralyses the work of the Joint Undertaking. Steps must therefore be taken to ensure that decisions by the monitoring committee focus on essential issues and can be taken at short notice.

Concluding remarks

Following the events of 11 September 2001, the security precautions of the GALILEO system deserve more attention. The changes in the structures proposed by this report are now even more relevant:

- The direct involvement of the private sector in the Joint Undertaking is incompatible with the decision on security structures. In order to avoid this problem, your rapporteur advocates the establishment of the development company described in this report.

- The establishment of a monitoring committee in which each Member State is represented, will institutionalise preparations for security aspects of the GALILEO system.

Committee on Industry, External Trade, Research and Energy - Rapporteur: Norbert Glante Draftsman (*) Brigitte Langenhagen, Committee on Regional Policy, Transport and Tourism (*) Enhanced Hughes Procedure

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