A major part of the data required for assessing the economic benefits of public space programmes needs input from parties outside of ESA. However, valuable data is already available within ESA or could be collected by ESA with limited additional effort. This data is primarily linked to ESA’s own investment programmes, but addresses to some extent the wider economic status of the space sector. Detailed financial and economic data on the individual programmes executed by ESA is available, both looking at finance coming into the ESA organization, and payments going out of ESA.
For individual ESA programmes it is exactly known:
what the total budget is;
where the parts of this budget originate, i.e. which country and which organization.
In addition, when a funding agreement for a particular programme is established, the specific activities to be undertaken in the context of this programme are defined. Usually this is done through a number of individual but coherent projects (see Figure 6.1). For instance for a typical science mission, part of the budget is allocated to the manufacturing of the satellite platform, the manufacturing of the scientific instruments (satellite payload), acquisition of a launch vehicle, satellite operations, science support and the science teams themselves. This allows for a first budgetary subdivision between the space sector, space related sectors and other economic sectors. This kind of data aggregation is currently not normal practice within ESA, but could likely be undertaken with limited effort.
Figure 6.1 ESA programmes consist of several projects
ESA
Programme B
Programme C Programme
A
Project A1
Project A2
Project B1
Project B2
Project C1
Project C2
Project B3
The projects are typically assigned to industry through a competitive tendering process, although for specific cases direct negotiation is applied. The specific requirements that ESA applies to industrial tenders ensure that it is known to great detail how the project budget is spent. A tender typically specifies, among other things:
organisation of the industrial consortium;
budget allocated to individual parties within the consortium;
nationality of industrial parties and allocated budget per nation (geographic return);
cost per work-package;
man-hour cost (total and per labour category);
material cost (categorized);
external services / supplier cost;
travel and subsistence cost;
Although budgetary allocations may change from during the execution of a project, it may be assumed that they provide a reliable source of information on the way the investment funds are spent. ESA typically uses this budget breakdown before the start of a project, in order to evaluate the overall soundness of a project’s organisation, and the overall cost/performance ratio. Further on, not much use of this data is made. We advise ESA to combine the available project-level data to provide a higher level economic view (i.e. at programme level or even at ESA level).
Within each ESA programme (and associated to each project managed by ESA) a percentage of the overall programme budget is allocated to ESA itself. This budget is used to fund for instance the ESA staff responsible for managing individual programmes and projects (man-hour cost, office environment, travel and subsistence), or the ESA internal facilities (test and verification facilities, communication systems, ground operations equipment) to be used.
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Financial data on programmes and projects as described above is managed within ESA using financial data management systems. For larger projects all financial data linked to a Tender and the subsequent project is managed electronically through the ESA Costing Tool (ECOS). It is assumed that all available financial data at project level can be aggregated to programme level, but also categorized according to the items listed above. At the moment such aggregation of data is not routinely executed, with some exceptions. For instance, the national delegates are regularly informed of the geographic return status of individual ESA programmes.
All rates, tariffs and overheads (e.g. man hour cost, facility cost, material cost etc.) applied by entities doing business with ESA are periodically subjected to a (financial) audit41. In essence, this means an analysis of the suppliers cost structure as recorded in the cost accounting and time recording systems and as reconciled to the actual financial statements and/or budget forecast.
These audits provide ESA with knowledge regarding the audited entities on e.g.:
average labour cost per category of direct employees;
full time equivalent allocated to direct hours sold on projects, indirect hours, proposals &
tenders, applied research, product development;
overheads linked to indirect employees and company expenses;
financial statements;
personnel overview and statistics.
Organisations doing business with ESA are required to register using an ESA maintained electronic registration system (ESA Procurement Regulations and related Implementing Instructions, ESA-REG-001). This registration is commonly referred to as the EMITS Entity Questionnaire (http://emits.esa.int). Through this questionnaire, ESA has access to for instance detailed information on:
Staff and facilities; e.g. number of staff, male/female ratio, breakdown by staff function, staff dedicated to R&D / Space R&D, etc.
Key financial figures; e.g. turnover and profit (total vs. space, other sectors such as defence, customers, ESA programme), external financing vs. budget financing, etc.
Registered entities are required to maintain the data in the EMITS Entity Questionnaire on an annual basis. However, the data as provided is not strictly checked for consistency and accuracy by ESA. Note that part of this information is already available to ESA in its own databases; for instance the total contracted value for a specific company in the various ESA programmes. ESA could simplify the task of filling in the Entity Questionnaire, by generating part of the required data from ESA’s own data, and presenting this to the external entities for confirmation.
A further source of industrial information is the ESA Space Industry Questionnaire which collects general company information, data on the supply chain (sales and purchases) and on technologies and R&D. The questionnaire does not only address the traditional space companies, but also SMEs, research centers and institutions.
To a certain extent, data provided to ESA through financial audits, EMITS and the Space Industry Questionnaire overlap. It seems that within ESA these three efforts to collect data are not linked and focus on their own immediate goals. Note also that the level of trust that can be
41 Implementing instruction on Audit Rights, ESA/IPC(2009)97 Rev. 2, Paris, 26th November 2009.
put on the various datasets is different; there is a big difference between the results of the financial audits of individual companies (which certify the rates a company can charge to ESA) and the data available in the EMITS Entity Questionnaires (which sometimes are updated “just-in-time” for a proposal delivery deadline).
ESA is advised to consider these data collection efforts at a more holistic level. By tuning the focus of these various efforts and the way data is described and stored, it can be made sure that the collected data can be compared, checked for consistency and used to make valid assessments at a higher level than for individual companies. Note however, that specific attention will have to be paid to ensuring the confidentiality of data collected on individual entities.
On a regular basis, ESA reports the progress achieved in its programmes to the ESA Member States through the Programme Boards linked to the various programmes. The progress reports contain a breakdown of ESA’s expenses within a specific programme, detailed to show the financial return per nation and industrial entity. A short-list of (periodic) financial reports issued by ESA is given in Table 6.2. From the above it is clear that ESA may have a detailed view on the overall expenses associated with a specific programme. At the moment, however, all this data is not by default aggregated to a level that is suitable as input for the assessment of the benefits of ESA’s own programmes. Nevertheless, the richness of the available data provides a clear starting point for the economic evaluation of ESA’s own investment programmes.
Table 6.2 Available ESA financial reports.
Report Ref Available data
ESA Annual Report ESA
Statement of income and expenditure.
Statement of assets and liabilities.
Consolidated cash flow statement.
Statement of changes in net assets/equity.
Number of patent applications filed.
Status of confirmed subscriptions to optional
programmes. ESA/C
Tables of subscriptions to optional programmes as confirmed by the participating States.
As percentage.
As Euro corrected to reference economic conditions.
ESA Long Term Plan ESA/C
Projection of available resources from Member States, European Union, Other.
Long term expenditure corridors by programme categories.
Budget allocation and number of projects/activities per service domain and sub domain.
Budget per project/activity.
Current and target Technology Readiness Level (TRL) per project/activity.
Cost at completion and actual payments per annum at sub programme level, divided per cost code (staff, running, facilities, services), direct / indirect.
Project budget, project status, project planning.
The status of geographical return based on actual commitments to date.
Geo-Distribution (contract value) of Companies Participating in the Programme (linked to individual projects).)
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