ESROS Crisis

Despite significant technical progress, in 1967 ESRO was an organization in crisis, for financial, scientific, technical, and political reasons. The member states kept a short rein on ESRO’s finances, even tightening their grip as time passed. Scientists fought among themselves about which ESRO satellite pro­grams would be considered top priority, and program costs escalated. ESRO’s administrative structure made decisions difficult, and its satellite operations were awkwardly organized. Finally, the emergence of communications satel­lites was a catalyst to expand ESRO’s mission from pure science to commer­cial technology development. Between 1966 and 1968, ESRO and the member states confronted these issues, leading to significant changes in ESRO’s role and organization.

Although always troubled, ESRO’s financial status worsened in 1966. Mem­ber states controlled ESRO’s budget by setting three-year and eight-year caps. During the first three-year period, ESRO underspent its financial cap by 120 million French francs because it did not build facilities as rapidly as planned. Much to the surprise of ESRO’s administrators, scientists, and engineers, the ESRO Council refused to carry the funds forward to the next three-year period, 1967-69. Because ESRO planners had assumed that they would be able to carry these funds forward, ESRO’s programs were in jeopardy. Shocked administrators canceled ESRO’s most expensive program, the Large Astro­nomical Satellite. In addition, ESRO reduced the three planned TD missions to two, then eventually one.41

These reductions exacerbated scientific struggles over payloads and ex­periments. ESRO could not satisfy the atmospheric researchers, astronomers, geophysicists, and cosmic ray physicists competing to fly experiments. Sound­ing rockets were cheap enough to fly frequently, but spacecraft were a different story. In the end, scientists flew fewer experiments than they desired and had to take turns with complex missions.42

Overruns on ESRO’s early projects contributed to ESRO’s cost problems. ESRO-II project manager Kutzer estimated his project’s cost overrun at 50% with a schedule slip of 10%. In addition to this, ESRO had to build a second ESRO-II satellite because of the loss of the first in a launcher failure. HEOS performed better from a cost standpoint. Its project manager estimated the increase of the prime contract at 18% after accounting for inflation, with a 13% schedule delay. He considered this excellent and credited it to ESRO’s authority to choose contractors based on factors other than the cheapest bid. The Junkers team did not have the cheapest bid, but it did have by far the most detailed one. Cost increases, along with the loss of carryover funds, resulted in an immediate cut in current projects and pressure to cut future ones.43 The first new project to feel ESRO’s pressure to accurately predict and control costs was the Thor-Delta 1 and Thor-Delta 2 (TD-1/2) project.

Based on the successful example of the Junkers team for HEOS, most firms organized themselves into consortia for the February 1967 TD-1/2 contract award. In the design competition, contractor cost estimates ranged from 99 million to 176 million French francs. With such widely varying estimates, ESRO managers and engineers could not predict the final cost. ESRO even­tually selected the MESH consortium, consisting of Matra, Entwicklungsring Nord (ERNO), Saab, and Hawker Siddeley.44 ESRO management soon rued this selection, as MESH’s cost estimates grew dramatically, even during nego­tiations. Technical problems of three-axis stabilization led to these ballooning costs, which induced ESRO management to cancel the preliminary contract in mid-1968 and reduce the two-spacecraft program to a single satellite, TD-1.45 By that fall, ESRO reentered into a contract with MESH for a single vehicle with a simplified stabilization system.46

The economic potential ofcommunication satellites also confronted ESRO. In the early 1960s, NASA’s Echo, Telstar, and Syncom projects demonstrated the reality of satellite communications. The United States led efforts to create Intelsat, a semiprivate organization to develop commercial satellite commu­nications. To prepare for Intelsat negotiations, the Europeans organized the Conference Europeene de Telecommunications par Satellites (CETS [Euro­pean Conference for Satellite Telecommunications]), which, in turn, con­tracted with ESRO to investigate communications satellite design. At the same time, the French and Germans developed their own bilateral program, known as Symphonie, and Italy started its own program, known as Sirio. By 1968, the CETS effort through ESRO focused on television broadcasting in conjunc­tion with the European Broadcasting Union. ESRO’s new director-general, the British scientist Hermann Bondi, concluded that politically ‘‘ESRO could not

survive on a very narrow base of pure scientific research.’’ He resolved to con­vince his scientific colleagues of that fact.47

In the fall of 1967, ESRO management proposed to manage the CETS pro­gram as it had its earlier projects, by giving out a number of associate con­tracts, one with the integration task. This was no longer acceptable to Euro­pean industry. Having whetted their appetites on ESRO’s scientific satellites, and sensing the possibility of commercial gain on a larger scale, the contrac­tors put pressure on ESRO to let a single prime contract. As stated by CETS spokesmen, ‘‘Although the advantages of the ESRO proposition have been recognized—in particular the flexibility in choosing contractors, the con­trol of program costs, and the geographic distribution of contracts — certain delegations expressed very clearly the opinion that industry should be con­ferred global system responsibility, because this task permits them to acquire a highly profitable experience in the domain of technical management and finance of complex projects.’’ ESRO management caved in and gave industry the prime contractor role. However, ESRO maintained the tasks of prepar­ing specifications, defining the entire system (including ground system and infrastructure), and providing detailed supervision of performance, cost, and schedule. The prime contractor prepared system specifications and approved subsystem designs in collaboration with ESRO but otherwise managed, inte­grated, and tested the satellite.48

Big projects such as the Large Astronomical Satellite held another dan­ger for ESRO. On this program, the British and French national delegations insisted on contracting through their national organizations, as they did in ELDO. Only project cancellation saved ESRO from this dangerous precedent, which might have doomed ESRO to ELDO’s fate.49

Uneven contract distribution also created political problems for ESRO. As French leaders had planned, France won a significant percentage of techni­cal and facility contracts, with ESRO headquarters in Paris, and contracts for ESRO’s first three satellites. The Netherlands, with ESTEC on its soil, also did well. British and Italian leaders complained bitterly to the ESRO Council, de­manding that contracts be distributed to more closely match contributions to the organization.

The loss of carryover funds from ESRO’s first three years of operation caused a major financial crisis for ESRO, leading to several project cancella­tions. Although its cost overruns were smaller than those of many comparable American spacecraft projects, ESRO’s stringent financial rules amplified their effect. Technical troubles on TD-1 led to further cost increases, adding more pressure. When combined with the growing importance of nonscientific ap­plications like satellite telecommunications, pressure grew among the mem­ber states and within ESRO itself for changes in its goals and management. In response, the ESRO Council commissioned internal and external reviews to improve ESRO’s organization and management.