https://www.ft.com/content/2f0e7a6e-...4-ab04428977f9*
Britain's essential role in global aerospace may come under pressure from Brexit
*FT article reprinted here if you dont have access:
"The European Commission is demanding the right to cancel existing contracts without penalty if a supplier is no longer based in an
EU member state.
It is also insisting that any supplier ejected from the programme should repay all costs to the EU of finding a replacement,
according to companies that have been asked to agree to the conditions.
Europe’s global satellite navigation system is an EU-funded project, managed by the European Space Agency, with work shared out
between member states. To retain access to Galileo after Brexit, the UK would have to negotiate a new security relationship with the EU.
However, the break clause has raised concerns in government and industry circles because it in effect rules out UK access to work
on Europe’s global navigation system even while it remains an EU member. Contracts under the Galileo programme are designed to run
for several years but under the new terms could be cancelled with immediate effect at any time after 2019, when the UK is set to leave
the EU.
The clause “makes it quite difficult for a company in the UK to contemplate bidding”, said one supplier who has been asked to agree
to the new terms. The risks presented by a potential ejection from an existing contract were unacceptable, he said. His comments were
echoed by other sector players.
The clauses have been presented as a condition for winning work on the final eight satellites to complete the Galileo constellation,
a tender that is already overdue and could be worth €400m to UK companies. Jo Johnson, UK science minister, recently met EU commissioner
Elzbieta Bienkowska to voice the government’s concern over the implications of the proposed new conditions.
The clause now threatens to spur a flight of high-tech space companies from the UK, jeopardising the British government’s ambition to
take 10 per cent of the £400bn a year global space market.
Executives from two space companies said they were considering whether to relocate their UK activities to EU member states, or to
choose different partners in a bid to ensure eligibility for future procurement. The tender for the next generation of satellites
is set to be launched later this year, while the industry estimates that Galileo-related services and applications could be worth
up to €6bn by 2025.
“We may be forced to consider withdrawing from our UK market operations,” said a senior executive from a UK-based space systems company.
“We will be looking at . . . who is best placed to participate,” said another. “If you have the option not to do work from the UK
this gives you a reason to think that is safer.”
A commission spokesman said that “similar” termination clauses have been standard since 2003, and insisted that the new clause was
“not prepared in view of Brexit”.
However both UK companies and government officials see its recent introduction as a move to squeeze them out in favour of continental
rivals, who do not face the same prospect of suddenly becoming ineligible.
“It feels like the UK is being targeted,” said a UK government official. “We have been fighting to stay involved in Galileo whereas
some European partners are working to push us out.”
Richard Peckham, head of UKspace, the trade association, said: “Since the UK government has so far failed to make any clear statement
of intent or even a wish to remain in these important EU space programmes, it is not surprising that the EU is cautious about UK
industry participation.”
The majority of Galileo’s existing satellites have been provided by a consortium of the UK’s SSTL, a subsidiary of Airbus which
integrates the payload on the constellation’s spacecraft, and Germany’s OHB. Other companies with UK interests that could be
affected include Qinetiq, CGI, Airbus and Scisys.
People familiar with the EU’s position said the clause was aimed at protecting classified information, for example in the event
of a UK contractor being acquired by a company from a non-EU country such as China.
Galileo’s navigation services include a heavily encrypted, jam-resistant capability designed for government use that is reserved
for EU member states and where UK industry has had a significant role. However, without a security agreement dictating the
relationship between a post-Brexit UK and the EU, British companies could not be involved in work that touched on classified
information, one person with knowledge of the situation said.
“The issue for the moment appears to be the absence of agreements on security,” the person said. The consequences of the current
uncertainty were not good for either the Galileo programme or the UK, he said. “The commission may be forced . . .
not to accept UK companies. It was always clear there would be a price to pay for Brexit and this is the price.”
Britain's essential role in global aerospace may come under pressure from Brexit
*FT article reprinted here if you dont have access:
"The European Commission is demanding the right to cancel existing contracts without penalty if a supplier is no longer based in an
EU member state.
It is also insisting that any supplier ejected from the programme should repay all costs to the EU of finding a replacement,
according to companies that have been asked to agree to the conditions.
Europe’s global satellite navigation system is an EU-funded project, managed by the European Space Agency, with work shared out
between member states. To retain access to Galileo after Brexit, the UK would have to negotiate a new security relationship with the EU.
However, the break clause has raised concerns in government and industry circles because it in effect rules out UK access to work
on Europe’s global navigation system even while it remains an EU member. Contracts under the Galileo programme are designed to run
for several years but under the new terms could be cancelled with immediate effect at any time after 2019, when the UK is set to leave
the EU.
The clause “makes it quite difficult for a company in the UK to contemplate bidding”, said one supplier who has been asked to agree
to the new terms. The risks presented by a potential ejection from an existing contract were unacceptable, he said. His comments were
echoed by other sector players.
The clauses have been presented as a condition for winning work on the final eight satellites to complete the Galileo constellation,
a tender that is already overdue and could be worth €400m to UK companies. Jo Johnson, UK science minister, recently met EU commissioner
Elzbieta Bienkowska to voice the government’s concern over the implications of the proposed new conditions.
The clause now threatens to spur a flight of high-tech space companies from the UK, jeopardising the British government’s ambition to
take 10 per cent of the £400bn a year global space market.
Executives from two space companies said they were considering whether to relocate their UK activities to EU member states, or to
choose different partners in a bid to ensure eligibility for future procurement. The tender for the next generation of satellites
is set to be launched later this year, while the industry estimates that Galileo-related services and applications could be worth
up to €6bn by 2025.
“We may be forced to consider withdrawing from our UK market operations,” said a senior executive from a UK-based space systems company.
“We will be looking at . . . who is best placed to participate,” said another. “If you have the option not to do work from the UK
this gives you a reason to think that is safer.”
A commission spokesman said that “similar” termination clauses have been standard since 2003, and insisted that the new clause was
“not prepared in view of Brexit”.
However both UK companies and government officials see its recent introduction as a move to squeeze them out in favour of continental
rivals, who do not face the same prospect of suddenly becoming ineligible.
“It feels like the UK is being targeted,” said a UK government official. “We have been fighting to stay involved in Galileo whereas
some European partners are working to push us out.”
Richard Peckham, head of UKspace, the trade association, said: “Since the UK government has so far failed to make any clear statement
of intent or even a wish to remain in these important EU space programmes, it is not surprising that the EU is cautious about UK
industry participation.”
The majority of Galileo’s existing satellites have been provided by a consortium of the UK’s SSTL, a subsidiary of Airbus which
integrates the payload on the constellation’s spacecraft, and Germany’s OHB. Other companies with UK interests that could be
affected include Qinetiq, CGI, Airbus and Scisys.
People familiar with the EU’s position said the clause was aimed at protecting classified information, for example in the event
of a UK contractor being acquired by a company from a non-EU country such as China.
Galileo’s navigation services include a heavily encrypted, jam-resistant capability designed for government use that is reserved
for EU member states and where UK industry has had a significant role. However, without a security agreement dictating the
relationship between a post-Brexit UK and the EU, British companies could not be involved in work that touched on classified
information, one person with knowledge of the situation said.
“The issue for the moment appears to be the absence of agreements on security,” the person said. The consequences of the current
uncertainty were not good for either the Galileo programme or the UK, he said. “The commission may be forced . . .
not to accept UK companies. It was always clear there would be a price to pay for Brexit and this is the price.”
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