European Space Agency

ESA/C-M/CXXIX/Res. 1 (Final)

Resolution on the European Space Agency's industrial policy

(adopted on 4 March 1997)

Council, meeting at ministerial level,

RECOGNISING that the Agency is the means of keeping Europe at the forefront of space activities with an outstanding reputation in scientific missions, launchers manned spaceflight and microgravity, navigation, communication and Earth observation satellites and, at the same time, RECOGNISING that the Agency has played a leading part in the development of the European space industry,

CONSIDERING it essential that the Agency maintain its leading role in promoting space activities in Europe,

RECOGNISING that it is of utmost importance for the Agency to move resolutely forward in shaping its future and accordingly take steps to adapt its industrial policy for the purpose of responding more effectively to the current profound changes in the economic and industrial environment and CONVINCED that this will serve not only to provide the Agency with a firm basis on which to decide and execute its future programmes and activities but also to reinforce the competitiveness of Europe's industry on international markets,

RECOGNISING that decisions on the adaptation of the Agency's industrial policy will contribute significantly to the Agency's evolution towards the twenty-first century,

INTENDING to move for the future towards a more competitive and open system of project procurement in which fixed expectations will play a less dominant role than they have in the past,

RECALLING Article VII of the Convention setting out the objectives of the Agency's industrial policy, and Annexes II and V Convention,

HAVING REGARD to the continuous interest it has taken in all aspects of the industrial policy conducted by the Agency, as expressed in the relevant provisions of Resolution No. 1 adopted in Rome on 31 January 19985 and subsequently in Resolutions adopted at each meeting at ministerial level,

HAVING REGARD to the Resolution concerning decisions on Agency programmes and finances (ESA/C-M/CXXII/Res. 1 (Final) adopted in Toulouse on 20 October 1995, and in particular Chapter II.C Thereof providing for a review of the Agency's industrial policy,

HAVING REGARD to the Resolution on the terms of reference for the Council Working Group on Industrial Policy (ESA/C/CXXIII/Res. 5 (Final)) adopted on 14 December 1995 and NOTING the outcome of the discussions in the Working Group as well as the Director General's proposal for the Agency's industrial policy outlined in ESA/C-M(94)4,

WELCOMING the results brought about by measures applied since the Council meeting at Toulouse in October 1995 to correct geographical return imbalances resulting from the distribution of contracts and to improve the Agency's procurement procedures and NOTING the return imbalances remaining at 31 December 1996,

NOTING the Communication entitled "The European Union and Space: Fostering Applications, Markets and Industrial Competitiveness" approved on 4 December 1996 by the European Commission,

Chapter I: General Decisions

  1. DECIDES to start an adaptation of the Agency's industrial policy on the basis of the principles outlined in Chapter II and AGREES that relevant rules and procedures shall be modified accordingly by Council as preparations begin for future decisions on new optional programmes.

  2. DECIDES to establish a transition period from 1997 to 1999 during which:

    with the objectives of applying the industrial policy derived from this Resolution to all programmes and activities as from 1 January 2000 and starting a new set of geographical return statistics on that date.

  3. INVITES the Director General to conduct a comprehensive review of the results of the implementation of the principles of industrial policy during the course of the transition period, in good time to put proposals to Council for decisions in 1999 on the Agency's industrial policy to be implemented from 1 January 2000, ti being understood that an interim report will be presented to Council.

  4. INVITES Council at delegate level to start an overall examination of the evolution of the Agency, in close consultation with national bodies and other European bodies engaged in space activities, including the European Commission, addressing a range of aspects including:

    This examination shall be conducted, based in particular:

and the means needed by the Agency to perform the resulting role should be evaluated;

INSTRUCTS the Director General and the Chairman of Council to define a procedure for that examination, taking into account the deliberations of the Long-Term Space Policy Committee, and to proceed with a view to submitting recommendations to the next Council meeting at ministerial level planned for early 1998.

CHAPTER II: Principles for the Agency's future industrial policy

DECIDES the following principles for adapting the Agency's industrial policy with a view to optimising the performance-to-cost ratio of the Agency's programmes, improving the worldwide competitiveness of European industry, ensuring equitable participation by all Member States an exploiting the advantages of free competitive bidding:

A. Improvement of implementation procedures applied to optional development programmes:

  1. The necessary framework for carrying out one optional preparatory programme in each field of space activity in order to properly define and prepare future development programmes shall be put in place; the resulting preparatory programmes shall include feasibility and system studies and related technology activities, thus creating wide opportunities for all types of industry to be involved in early phases of the Agency's programmes, and thus stimulating innovations;

  2. The Agency's future optional development programmes shall be implemented:

B. Actions to improve European industry's worldwide competitiveness:

  1. A partnership scheme involving the Agency, industry and other interested parties shall be defined and established in an appropriate Agency programme dedicated to improving the worldwide competitiveness of Europe's space industry, due account being taken of similar schemes being developed at national level;

  2. Measures shall be defined and established to ensure that the technologies developed under the Agency's programmes benefit Europe's industrial competitiveness on commercial markets and that the choice of new technologies to be developed takes this objective into account, with a view to facilitating their application to new products and services;

C. Actions to ensure fair allocation of activities among all industrial firms:

In accordance with the Director General's proposals outlined in Chapter 3.3 of ESA/C-M(97)4:

  1. The Agency shall guarantee fairness in the competitive bidding process organised by prime contractors and early access for other industrial firms to work generated by the Agency's optional and mandatory programmes, through implementation of the following measures:

  2. Competitive procurement shall be organised in such a way that industrial bidders will be able to offer the benefit of pre- existing industrial teaming arrangements and other relationships, when consistent with the declared objectives of the Agency's industrial policy;

  3. Small and medium-size enterprises (SMEs) shall be given within the Agency a special place and balanced access to technological support actions by:

D. Introduction of increased flexibility in the implementation of rules pertaining to overall geographical return and contributions:

Improved performance-to-cost ratios should be sought through competitive bidding, on the basis of principles to be further elaborated but including a combination of guaranteed minimum return and adjustments of contributions for each category of the Agency's programmes and activities, providing at the same time the flexibility required for organising industrial competitions and the means of aiming for the ideal overall geographical return coefficient of 1:

  1. As for the mandatory programmes and activities, each Member States and Canada shall be guaranteed a minimum return coefficient of 0.9 at the end of each formal review taking place every three years; any deficit registered on that occasion with respect to the above guaranteed return coefficient shall be compensated for over the following three-year period, through special measures. By this procedure, industrial return statistics for mandatory programmes and activities shall be every three years;

  2. As for optional preparatory programmes, the geographical returns, which shall not be taken into account in the selection of industrial teams, shall be calculated in two parts, corresponding to system studies and related technological activities; at the end of each three-year period, the part corresponding to technological activities shall be restored to balance through adjustment of contribution scales for the next period;

  3. As for optional development programmes, the initial contributions declared by participating States shall be used as a basic for organising the leading to complete and binding industrial offers, and:

Chapter III: Implementation of the principles during the period 1997-1999

INVITES the Director General and Council at delegate level, during the period 1997-1999:

  1. to define appropriate procedures for implementing the principles outlined in Chapter II, including in particular:

    and to test the feasibility of those procedures when setting up new optional programmes during that period;

  2. to pursue the examination of, and prepare decisions on, the following aspects of the Agency's industrial policy:

Chapter IV- Measures to be taken to discontinue the current return statistics

NOTING that, in spite of the measures implemented since the Council meeting at ministerial level held at Toulouse in October 1995, at the end of 1996 the overall return coefficients of Sweden and Switzerland were below the lower limit of 0.96 established pursuant to Article IV.6 of Annex V to the Convention, the corresponding combined return deficit representing 33 million ECU in industrial contracts, and that Finland's overall return coefficient, while improving was also below that limit,

  1. DECIDES, for the purpose of correcting the geographical return imbalances of Sweden and Switzerland at 31 December 1996, in order to bring the overall return of each to 0.96, to set up special measures involving a total of 33 million ECU to be covered by Member States having a return surplus above 10 million ECU at 31 December 1996, each in proportion to its surplus, and INVITES the Director General to submit expeditiously, by the end of 1997 at the latest, proposals for implementing those special measures in a manner that will optimise the benefits for all Member States;

  2. DECIDES to discontinue as of 31 December 1999 the cumulative geographical return statistics maintained by the Agency since 1972 and to start a new set of geographical return statistics on 1 January 2000 so that the principles for adaptation of the Agency's industrial policy can be applied to all programmes and activities without being constrained by past return imbalances.

  3. DECIDES that if the cumulative geographical return coefficient as at 31 December 1999, excluding optional programmes whose Declarations will be opened for subscription after the present Council meeting, is not satisfactory for any Member States with regard to Article IV.3 of Annex V to the Convention, special measures shall be defined to bring the return coefficient of that Member State to such satisfactory level; these special measures shall be covered by Member States having a cumulative return surplus above 10 million ECU at 31 December 1999;

    INVITES the Director General, in order to minimise the need for special measures as described above in this paragraph, to take all steps necessary during the period 1997- 1999 to ensure that the distribution of contracts by the Agency results in all countries having an overall return coefficient satisfactory with regard to Article IV.3 of Annex V to the Convention;

    and DECIDES:

    1. to give priority during the period 1997-1999 to the overall geographical return rather than to the return from each programme; and

    2. to set up special measures, to be covered by participating States with surplus returns agreeing to such measures, on the understanding that these measures shall not have an impact on the industrial return of the other participating States;

      • involving, in the METOP-1 development programme, 20 million ECU of industrial activities for the benefit of Italy and 2.5 million ECU of industrial activities for the benefit of Sweden;

      • involving in the European participation in the International Space Station programme, 40 million ECU of industrial activities for the benefit of Italy through the activities currently under discussion with NASA, such as the construction of nodes, and 3 million ECU of industrial activities for the benefit of Sweden;

        and INVITES the Director General to submit expeditiously proposals for adding provisions on these measures in existing legal instruments governing the relevant programmes;

    3. to carry out a first review of the situation in association with next Council meeting at ministerial level planned for early 1998.

  4. INVITES the Director General to pursue his efforts to ensure a fair industrial return to Canada to the same extent as provided to Member States, it being understood that additional efforts after 1998 will be part of the negotiations leading to the renewal of the Cooperation Agreement between Canada and the Agency.

  5. CONCLUDES that the principles contained in Chapter II and the above measures for clearing up past imbalances establish a basis on which new optional programmes can from now on be started and implemented by exploiting the advantages of free competitive bidding, thus obtaining best value for money and at the same time improving the worldwide competitiveness of European industry, and on which those advantages can be extended to all programmes and activities of the Agency as from 1 January 2000.

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Right Left Up Home ESA Bulletin Nr. 89.
Published February 1997.
Developed by ESA-ESRIN ID/D.