Spacecom’s New Satellite Contract Ignites a Ministerial Tiff

On Sunday, Israel-based satellite operator Space Communication Ltd., known as Spacecom, announced it awarded a $112 million contract for the design and manufacture of its new communication satellite AMOS-8 to Palo Alto, California-based Space Systems/Loral LLC. AMOS-8 is expected to launch in February 2021.

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Government-owned Israel Aerospace Industries Ltd. (IAI) was one of four companies vying for the contract. The company designed and manufactured the majority of Spacecom’s satellites, but was unable to make a competitive offer due to financial repercussions arising from the 2016 destruction of its AMOS-6 satellite in a SpaceX rocket explosion.

Now, the Israeli Ministries of Finance and Science are attempting to shift responsibility for IAI’s failure to secure the coveted contract. Two people familiar with the matter told Calcalist on Monday on condition of anonymity that IAI requires financial assistance of $20.1 million (NIS $70 million) a year, over several years, to be able to take on the AMOS-8 project. These two people said that the government approved financial support of only $4.3 million (NIS 15 million) annually.

A January Calcalist article listed the same sums, which were not finalized at the time.

On Monday, one government employee who is familiar with the matter and who spoke to Calcalist on condition of anonymity said that Spacecom’s Sunday announcement was intended to pressure the government into providing the financial support IAI requires to qualify for the contract. Spacecom can reverse its decision and void the contract with Loral within 60 days, according to its stock exchange filing.

Spacecom finances the construction and launch of commercial satellites, contracting third-party suppliers. The company was spun-off from IAI in 1993 with the goal of marketing AMOS-1, the first Israel-made satellite, which was manufactured by IAI.

Loral is a spacecraft and communication systems manufacturer that lists NASA as one of its customers. According to its website, Loral manufactured over 270 satellites to date and has over 80 geostationary satellites currently in orbit.

On Monday, a spokesperson for the Ministry of Science told Calcalist that it was the Ministry of Finance that decided on the budget and the scope of assistance the government would grant for the satellite project, adding that the science ministry pleaded with the finance ministry for additional assistance, to no avail.

Also on Monday, a spokesperson for the Ministry of Finance told Calcalist the ministry was not aware of any conflict regarding the sum budgeted for the satellite. “In meetings between the finance and science ministries, the two ministries agreed on a budget necessary to support the AMOS-8 project,” the Ministry of Finance said. “To date, the ministry is unaware of any request for additional funds.”

A spokesperson for the science ministry then said, “the finance ministry’s offers are not acceptable and do not allow for real assistance to the Israeli space industry.”

On Sunday, a spokesperson for IAI responded to Spacecom’s announcement, saying that IAI has offered Spacecom a sophisticated satellite to meet the needs of the Israeli government that was based on governmental support. “Once the government decided not to financially support the project, IAI did not stand a chance to compete with the offers made by foreign companies,” the spokesperson said.