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ESA UNCLASSIFIED - For Official Use Copernicus 4.0 Suppliers Industry Days| 26-27 March 2019 | Slide 1

Copernicus 4.0Suppliers Industry Days Presentation

As anticipated during the Copernicus 4.0 Suppliers Industry days, the presentation, made during the event, is hereby published in EMITS NEWS for the benefit of all interested economic operators.

Please note that the new elements requested and approved by IPC and the European Commission are presented in Slide 40.

ESA UNCLASSIFIED - For Official Use

Copernicus 4.0

Suppliers Industry Days

27-28 March 2019


Introduction & Welcome • Copernicus Space Component (CSC) has been established as the largest and most proficient

Earth Observation infrastructure in the world Seven missions, seven high-performance satellites already in orbit, thirteen in production

> 200000 registered data users only on the EU/ESA Copernicus data portal

A large number of sophisticated operational services

• Expectations for the future resulting in the need of Security continuity with existing missions while increasing quantity and quality of products and services

=> Next Generation (NG) missions

Expanding the number of missions to cover emerging and urgent needs for new types of observations => High Priority Candidate Missions (HPCM)

• Release of the first set of RFP’s for the HPCM’s approaching

• ESA organisation of these Copernicus Supplier Industry Days aims to facilitate the exchange and building relationships between prospective primes on one side and interested suppliers on the other side

• Large number of registered companies confirms the huge interest attracted by this event

• WELCOME TO ALL PARTICIPANTS!


Wednesday, 27 March8:00 registration starts9:00-10:30 presentation by ESA10:30-11:00 coffee break11:00-12:00 presentations by Airbus/OHB/Thales12:00-12:30 additional slot to book appointments for bilateral mtgs12:30-13:30 lunch buffet13:30-15:30 Primes/Suppliers bilateral meetings

15:30-16:00 coffee break

16:00-18:00 Primes/Suppliers bilateral meetings

Thursday, 28 March9:00-10:30 Primes/Suppliers bilateral meetings



12:30-14:00 lunch buffet




Agenda


Logistic

Your ESA contact points:

Claudia WILDNER

Caroline WILSON


Overview

Programmatic Overview• From Copernicus 1.0 to Copernicus 4.0

• Programmatic approach and key assumptions

Proposed Procurement Approach• Assumptions

• Calendar and content of the 6 Requests for Proposals

• Distribution of the Work (Industrial Policy Requirements)

• Risk Management

Conclusions


From Copernicus 1.0 to Copernicus 4.0

Programmatic Overview


S-1

Radar

A3 Apr. 2014

B25 Apr. 2016

S-2

High Resolution

Optical

A23 Jun. 2015

B6 Mar. 2017

S-3

Medium Resolution Optical & Altimetry

A16 Feb. 2016

S-4

Atmospheric Chemistry

(GEO)

A2021

B2027

S-5P


(LEO)

A13 Oct. 2017

S-5


(LEO)

A2021

B2027

S-6

Altimetry

A2020

B2025

Sentinels under Copernicus 1.0

C2022 (tent)

C2022 (tent)

D>2025

C2023 (tent)

D>2026

C> 2027

D> 2024

B25 Apr. 2018


Programme Key Assumptions• Current assumptions about the Copernicus 4.0 programme

are contained in the ESA document “Long Term Scenario” (ESA/PB-EO(2019)10, 7 Feb. 2019)(…being updated)

• Programme constituted by: 6 High Priority Candidate Missions (HPCM or “Expansion

Sentinels”) 4 Next Generation Missions (S1 NG, S2 NG, S3 OPT NG, S3

TOPO NG)

• ESA funds the Prototype satellites, COM funds recurrent models, launcher procurement, operations (at ESA + EUM)

• 10 RFP’s for the space segment (6 in 2019)


Copernicus 4.0 – Sentinels Families

Copernicus 1.0 Copernicus 4.0


Overall Schedule OverviewH

PCM


Programmatic Approach

Current Phases A/B1 of HPCM’s running until summer 2019 (ISRR)

All 6 RFP’s for the HPCM missions are released in Q3-Q4 2019 (Jul-Nov)

RFP’s to cover both prototype & recurrent satellites

Following evaluation of the received offers contracts are placed with the selected industrial consortium for each mission

A contractual breakpoint is inserted at the end of the Phase B2 of the prototype satellite development (planned to occur towards end 2021)

A ‘Programmatic Decision Point’ is placed in mid-2021 that will allow, once all the above elements would have been defined, to tune the programme to the available resources and according to the priorities set by the Commission


Overall Schedule OverviewIndustrial contracts for the satellites development have a contractual breakpoint at the end of Phase B2

CSC-4 “Programmatic Decision Point” mid-2021 to confirm/redirect the programme – if needed

By mid-2021, all key programmatic decision elements would be known/confirmed:

- Governance

- MFF funding

- ESA Space19+ subscription

- Brexit

- Actual Cost

- Consolidated development schedule

EU funding for

the recurrent

satellites

needed from

PDR (of the

PFM satellite)

onwards

=> not before

end-2021


Copernicus 4.0

Procurement Approach

Proposal to Member States


Key Assumptions

(Note: under discussion with ESA Member States and European Commission)


Procurement Key Assumptions (1/2)• Single procurement action for both prototype (funded by ESA) and

recurrent satellite(s) (funded by EU)

• Recurrent satellites offered by industry at the same time of the prototype satellite

• ESA is the Contracting Authority

• ESA (modified) procurement rules applicable (as per today)

• All procurements performed under competitive tender (at satellite level)

• Tender open to the participation of all EU MS + ESA MS + CDN

• Contract Award for ESA MS+CDN requires participation in the ESA CSC-4 programme


Procurement Key Assumptions (2/2)

• The above assumptions have been shared with the European Commission

• A short paper (called “Line To Take”) will jointly be presented by COM and ESA executive to the ESA MS (PB-EO) and to the EU MS (Copernicus Committee) on the 11 April 2019.

• Upon validation by MS, such document will constitute the high-level reference for the upcoming procurement action, while the Space Regulation (and the subsidiary legal instruments, such as the Framework Partnership Agreement) is being finalised.


Request for Proposals

Content and Proposed Calendar


Participation and Industrial Access• All EU member states and all states participating to the EU Copernicus programme will have

full access to all parts of the programme.

• Industries belonging to an ESA Member State and Canada will be allowed to bid and – if by the time of the evaluation the state has become a participating state to the ESA CSC-4 programme - will have full access to the industrial development work for the prototype satellite with no restriction

• Industries which resides in countries part of the ESA CSC-4 programme but that – by the time of the activation of the contractual option for the recurrent satellite, i.e. around end 2021 – will be neither an EU member state nor a participating state to the EU Copernicus programme will not be allowed to be awarded work for the recurrent satellite. Corresponding work packages (if any) in the prototype satellite will have to be moved to an eligible industrial centre for the recurrent satellite. Such ‘transfer clause’ will be inserted in the RFP. Decision point in 2021.


RFP Content

• RFP will cover the complete scope of work for each mission, namely:

Phases B2*, C/D of the prototype satellite

Phase E1** of the prototype satellite (as option in the contract)

Phase D of the recurrent satellite(s) (as option*** in the contract)

* = contractual breakpoint at the end of Phase B2.Authorisation of Phase C/D of prototype satellite subject to Programmatic Decision Point in 2021.

** = assuming a launch from CSG on board Vega-C*** = Authorisation of Phase D subject to Programmatic Decision Point in 2021


Perimeter of the Industrial Offer for Each Mission

• Prime offer shall include the complete industrial team (with the only exception of Ground Support Equipment, containers and SCOE).

• Prime encouraged to build industrial consortium via competition.

• Platform procurement activities to start later than instrument, driven by real platform need date

• Prime will be required to offer (as option) a second supplier for the majority of platform equipment – ESA will select the proposed one or the alternative supplier, based on consideration of distribution of the overall work (avoidance of peak of work that industry will later not be able to absorb while delivering quality product).

• No ceiling price conversion – full commitment by industry at the time of the offer (while in competition)


Procurement Calendar

• Calendar of RFP’s publication staggered purely for practical reasons.• The publication order is dictated by the readiness of the material and

has no priority connotation.MISSION ITT publication Proposals due dateCHIME end July 2019 mid Dec 2019LSTM end July 2019 mid Dec 2019CO2M begin Oct. 2019 mid Feb 2020

PICE/CRISTAL begin Oct 2019 end Jan 2020CIMR end Oct 2019 end Feb 2020

ROSE-L mid Nov 2019 end Feb 2020


Proposals Evaluation • Evaluation of offers organised in two phases:

1. Single Mission eval (TEB part 1) evaluating all mission specificrequirements– delivering a ranking of offers per each mission

2. Across Missions eval (TEB part 2) evaluating cross-RFP requirements,namely:

– max number of missions to the same industrial group– double-source at platform equipment level

• Output of the whole process is one single recommendation for the ensemble of the 6 missions

Contract Proposal to IPC: end April 2020

Kick-Off of Phases B2: May-June 2020


Distribution of the Work

(Industrial Policy Requirements)

(Note: under discussion with ESA Member States and European Commission)


Distribution of the Work

• Approach relevant to satellite procurement (operations and launch services procurement not affected, assumed to be fully EU funded as per today).

• In order to share a common procurement approach (for prototype and recurrent satellites) it is proposed not to impose georeturn requirement in the individual RFP’s (for each mission).

• This will prevent the proposal evaluation to be biased by georeturn considerations.

• The obligation for ESA to meet the overall georeturn targets at overall CSC-4 programme level remains.


Industrial Policy Principles (Space Regulation)

Shared

Procurement

=

Shared

Principles


Objectives of the Industrial Policy Requirements

• The industrial policy requirements aim at achieving the following

objectives:

Distribute work across industry groups and industry types

Favor new entrants / mid-size companies / SME’s

Avoid reliance on single source suppliers

Foster competition

requirements on each individual RFPrequirements on the ensemble of the 6 RFP’s


Industrial Policy Requirements (on each RFP)

1. max share limit for any industrial group:– 55% for LSTM, PICE, ROSE-L, CHIME– 70% for CO2M, CIMR

2. min share for “Other Companies” (not belonging to prime group) &not-SME:

– 25% for LSTM, PICE, ROSE-L, CHIME– 20% for CO2M, CIMR

3. min share for SME :5%4. max share of work in any single country : 60%5. work to be spread over at least 16 countries

KAF


Industrial Policy Specifications• Above percentages to be computed:

excluding Best Practices procurement from total (limited to GSE, Containers, SCOE)

excluding non-European companies (i.e. limited to EU MS + ESA MS + CDN)

on the baseline offer (excluding the option for the alternative set of suppliers required to meet the double sourcing requirement)

requirement for max share in any single country shall exclude SME’s share

• In addition:

Primes shall demonstrate they contacted more SME’s than those needed to

fulfill the min 5% requirement

No SME can be exchanged against a non-SME (for double sourcing)


Industrial Policy Requirements (on the RFP’s overall)

• Max number of RFP’s to the same industrial group : 3

• Max number of each type of platform equipment to same

supplier (out of 6 missions) : 4


Industrial Policy (Double Sourcing)

Double source suppliers shall be proposed for a minimum of 15 items

from this list

Should the swap of supplier be required, any justified delta cost will be recognized with a max cap as per Cat. 1 and 2 (see table)


Industrial Policy

• Companies having been awarded work for the prototype satellite and whichbelong to countries not being Participating State (PS) to the EU CopernicusProgramme by the time of the activation of the recurrent satellite option (around2nd half 2021) cannot perform the equivalent task on the recurrentsatellite/production work.

The corresponding work packages will need to be moved to a company based on an EU PS.

Such clause will be stipulated in the original RFP.• Should such transfer entail a justified cost impact, a delta cost will be recognised

Such delta cost is capped to the absolute maximum of 25% for an equipment and for a ‘forfait’ figure of 1 M€ in case of prime task.


Risk Management Approach


Risk Management Principles

• Risk Reduction Measures

re-enforcement of early phases by robust early technology developments

lead start to the most challenging tasks (‘instrument first’ approach)

• Full Commitment by industry

at the time of the (prime) competition

no later adjustment (eg no ceiling price conversion)

• Fairness towards Industry

Engagement shall be credible => fair risk sharing between industry and ESA


Class C CCN (1/3)

• In order for industry’s commitment to be credible and fair, the following (new)

risk sharing scheme (based on the introduction of a third class of CCN – Class C) is

proposed.

• With this scheme it is expected to achieve:

a formal, regulated process to better control the impact of key risks through

an early and full involvement of ESA.

no ‘conjure of optimism’ forced by competition

no unfair/unsustainable financial risks taken by Industry

clear assignment of ‘risk ownership’ between industry and customer

• Mechanism only applies to the prototype satellite


Class C CCN (2/3)• The scheme consists in including a contractual provision in the Contract, aiming at

assigning a few, major, well-identified risks to ESA through a formal, transparent and regulated process.

• Main features:

Exhaustive list of TOP TECHNOLOGICAL RISKS agreed at Kick-Off and recorded in the Contract

When/Should one of these risks materialize, it will be eligible for risk sharing by ESA

Industry to present in a CCN (Class C CCN) exclusively the direct impacts (no profit, only direct additional costs)

ESA to assess such CCN: only demonstrated direct costs will be allowable (no marching army)

ESA to bear 100% of recognized direct costs for these TOP TECHNOLOGICAL RISKS


Class C CCN (3/3)• Additional features:

No financial provision related to TOP RISKS in the proposal/contract price

ESA (in its role of Development Agency) is fully involved from the beginning in the management of the risk (eg definition of the risk retirement approach).

Full transparency achieved in monitoring and management of the key risks => ESA approval required for related mitigation actions

All other risks (Class B CCNs for technological risks other than TOP TECHNOLOGICAL RISKS, delays, subcontractors, marching army etc…) to be covered by a Management Reserve included in the contract price – under full industry responsibility (same as today)

Financial allocation for the TOP TECHNOLOGICAL RISKS will be covered within the ESA Programme Cost-At-Completion


Conclusions


Synthesis of the Proposed Approach

• Shared Procurement Approach COM/ESA

• ESA Contracting Authority using ESA modified rules (as per today)

• RFP’s publication before Space 19+

• RFP covering all mission components for both protoflight + recurrent satellites

• Platform procurement activities to start later than instrument

• Consortium bid approach

• Requirements on industrial groups and on industry types

• Double sourcing required for most platform equipment

• Full industrial commitment accompanied by fair risk sharing (Class C CCN)


New elements as requested and approved by IPC and the European Commission w.r.t original Industry Day Presentation (Slides 2-39)

Full Commitment by Industry• Prime offer shall provide evidence that at least 50% of the

suppliers have been selected via open competitive process and that, in addition, at least 30% (in value) of the subcontractors do not belong to the Prime’s group.

Double Source requirement for P/F Equipment supplier:• When an SME is selected as a baseline supplier for an equipment

the double sourcing requirement is waived for that equipment and minimum number for which double sourcing shall be offered, reduced accordingly.

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