EU’s Failed Technology Projects Overshoot Planned Budget by £1.89 billion

The European Commission has, by its own admission, declared that the financing for two of its new and hugely unpopular EU technological programmes have alone exceeded their budget by a staggering £1.89 billion (€2.7 billion). Within a report, the Commission publicly asserts that “new developments relating to the financing of the Galileo Programme, for an additional amount of EUR 2,400 million, and the financing of the European Institute of Technology, for an additional amount of EUR 309 million, justify the revision of the financial framework.” It has been forced to significantly revise its existing budget to account for two major projects: the Galileo satellite navigation system and the development of a European Institute of Technology.

To put that in perspective, the UK’s net contribution to the EU Budget in 2007 is approximately £4.7 billion, so the total overshoot can be equated to over 40% of our net contribution.

GALILEO PLANNING DISASTER
For the EU’s Galileo satellite navigation system’s implementation, deployment and commercial operating phases, approximately £701.8 million (€1005 million) had been properly accounted for in the EU’s previously published Community financial framework for 2007-2013.

£1.67 billion (€2.4 billion) had not been accounted for in Galileo, for which the Commission has been forced to borrow £209 million (€300 million) from “transport related research activities” financed under an existing Research Framework Programme and £1.46billion (€2.1 billion) is being borrowed from elsewhere.

In total, the Commission communication sets the costs of procurement for the Full Operational Capability (FOC) of Galileo (which is supposed to be achieved by 2013), at £2.369 billion (€3.45 billion) for the period 2007-2013 which includes the costs for the procurement agent, programme management costs, and a contingency reserve. However, the Commission has stressed that even “these estimates are based on an immediate implementation of the procurement actions following an integrated EU political decision by the end of 2007.” Hence, “the prices offered by the private sector” and consequently “the costs to the Community, will only emerge during procurement negotiations.”

EUROPEAN INSTITUTE OF TECHNOLOGY BUDGET DISASTER
In the 2007-20013 financial framework, the EU had come to no conclusion for another technological project, the European Institute of Technology, and so had not budgeted any amount for its advancement or progress. An amount of €309 million has now been planned for the European Institute of Technology, since no concrete plans were originally made, given disagreements between the European institutions over the project.

PROPOSAL UNDER DEBATE
On 19 September 2007, the European Commission put forward several proposals in order to guarantee the maintenance of the European satellite radio navigation programmes. The Commission adopted a Communication Progressing Galileo: Re-Profiling the European GNSS Programmes which was a response to the June 2007 Council of Transport Ministers, requesting the Commission to present detailed proposals for financing Galileo, including the consideration of all options of public funding, based on additional comprehensive assessments of costs, risks, revenues and timetables as well as proposals for an implementation and procurement strategy. The rewritten EU budget will have to now be assessed by the European Parliament and the Council.

James McConalogue of the European Foundation
“If the Commission’s communication is a real reflection of the overshoot on these projects, then it was no small oversight. These are huge costs, which are catastrophic since a substantial portion will be paid for by British taxpayers who have historically been in the unfortunate position of paying dearly for the European Union’s idealistic projects. Nobody in the UK wanted either Galileo or the EIT. In fact, the UK Government has nonchantly accepted this state of affairs and it is up for them to get us out of it and to refuse the revision of the budget.”

Sources:
European Commission. Communication from the Commission to the European Parliament and the Council: Progressing Galileo: Re-Profiling the European GNSS Programmes. Brussels, 19/09/2007 [COM(2007) 534 final]. See: http://ec.europa.eu/dgs/energy_transport/galileo/documents/doc/com_2007_0534_en.pdf

European Copmmission. Brussels, Communication from the Commission to the European Parliament and the Council concerning the revision of the multiannual financial framework (2007-2013), 19/09/2007 [COM(2007) 549 final]. See: http://eur-lex.europa.eu/Notice.do?mode=dbl&lang=en&ihmlang=en&lng1=en,en&lng2=de,en,fr,&val=455921:cs&page=#top

Currency calculations were carried out on 07/11/07.