From: <a href="http://www.aftenposten.no/spesial/wikileaksdokumenter/article3985637.ece">Aftenposten</a><br>
Date: 14.01.2010
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C O N F I D E N T I A L SECTION 01 OF 02 BERLIN 000043 
SIPDIS
STATE FOR EUR/CE PETER SCHROEDER
STATE FOR OES/SAT RAYMOND CLORE AND DAVID TURNER
STATE FOR ISN/MDSP DICK BUENNEKE 
E.O. 12958: DECL: 01/14/2035
TAGS: ETTC, PGOV, PINR, MCAP, PREL, TSPA, FR, UK, GM
SUBJECT: OHB ECLIPSES ASTRIUM FOR GALILEO CONTRACT BUT
BOTH END UP WINNERS 
REF: A. BERLIN 1324 B. BERLIN 1207 C. BRUSSELS 1153 D. BERLIN 655
E. BERLIN 430 F. BERLIN 429 G. 08 BERLIN 899 H. 08 BERLIN 897
I. 08 BERLIN 264 J. 08 BERLIN 243 
Classified By: Global Affairs Unit Chief Don L. Brown for reasons 1.4 (d). 

1. (SBU) SUMMARY: Germanys OHB-Technology GmbH, in partnership
with Surrey Satellites Technology Limited (SSTL), recently
pulled off an underdog victory over industry giant
EADS-Astrium for a majority of the EUs heralded Galileo
satellite contract worth around 850 million euro.
Interestingly, this is not a total loss for Astrium, as it is
the majority shareholder of SSTL and is entitled to a share of
the OHB/SSTL profits. Industry observers believe OHBs bid was
superior to that of Astrium in terms of cost and that OHBs
established reputation of delivering product on-time and
within budget ultimately sealed the deal. END SUMMARY

2. (C) On January 7, the European Commission awarded
OHB-Technology a contract worth 566 million euro to build at
least 14 of the currently planned 22 Galileo position,
navigation, and timing (PNT) satellites. The French newspaper
Le Monde reported that Astriums bid for the 14 satellites was
valued at 100 million euro higher than OHBs and that this was
likely the salient factor in the cost-conscious European
Commissions (EC) decision. (COMMENT: OHB is a conservative,
family-run company about one tenth the size of Astrium. Some
insiders view OHBs victory as a serious blow to Astrium, as it
was always considered the favorite to win the contract. END
COMMENT)

A WIN/WIN FOR EVERYONE
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3. (C) XXXXX, told us that since
Astrium is the majority shareholder of SSTL, a win for the
OHB/SSTL partnership is an indirect win for Astrium as well.
XXXXX estimated that up to 40 percent
of the OHB/SSTL profits will wind up in Astriums hands.

OHB IN PARTNERSHIP WITH ITS COMPETITION?
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4. (C) A couple years ago, when OHB was positioning itself to
compete for the Galileo contract, it formed a strategic
partnership with SSTL, in which SSTL would integrate the
payloads OHB would take care of the satellite buses. As part
of this partnership, XXXXX said that
OHB tried to purchase SSTL, but Astrium swooped in with its
deeper pockets and outbid OHB. XXXXX
emphasized that the Fuchs family, OHBs owners/operators, has a
standing policy to not get in bidding wars for
companies/assets, and that once the SSTL price reached OHBs
limit, it politely stepped aside. XXXXX
said that as a condition of the SSTL sale to
Astrium, the EC and British Parliament specified that OHBs
prior arrangement with SSTL on Galileo would hold and that all
of SSTLs involvement with Galileo must be firewalled-off from
Astrium.

COMMENT
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5. (C) OHB will continue to compete with Astrium for the
remaining eight satellites, but if price remains the ECs
primary criteria, OHB may very well get the rest of the
contract. On the other hand, the EC also values multiple

BERLIN 00000043 002 OF 002 

sources for the satellites and if Astrium can close its price
gap with OHB, it may get the upper hand. While it is true that
the OHB/SSTL victory is also a win for Astrium in terms of
profits, job creation is the other prize. If OHB/SSTL wins the
rest of the satellite competition, it is clear that a bulk of
the resultant job creation will reside in Germany and the UK
and not in France.

MURPHY
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