Page images


1. This Article specifies the types of in-plant Contract Administration Services (CAS) the Government will provide to users under this Agreement, and outlines the terms and conditions under which those services will be provided. To the extent that the terms and conditions for providing CAS as specified within this Article conflict with any other provision of the Agreement, this article shall govern. The Government shall not be liable, or otherwise responsible for, damages incurred by or caused by the GOVERNMENT or by the User or the User's contractors or any User or User's agents or employees resulting from Government participation in in-plant CAS including, but not limited to quality assurance.

2. Conditions under which CAS will be provided:

a. CAS will be provided at user production facilities only if the user has ongoing Government contracts at such facilities for the same or similar component items.

b. CAS will be provided only for common component items if commercial components are produced and configured similar to components coproduced for use on Government launch vehicles. The point at which particular components are considered sufficiently distinguishable will be determined by the Government and that determination will not be subject to Article IX, Disputes.

c. CAS will be provided only if requested from the GOVERNMENT in writing by the user. Such request should specifically identify services desired, the place or places of production, and the anticipated period over which the services will be needed.

(1) Approval of the request is contingent upon determinations by the Government that CAS support for the launch vehicle is (a) in the best interests of the Government and (b) sufficient resources are available to provide the requested services.

(2) CAS will normally be limited to quality assurance (QA) oversight of quality and production systems and hardware inspection, configuration management, and oversight of the user's management of government property in their possession. Additional contract administration services may be requested but should be limited to the responsibilities cited in FAR 42.302.

(3) Contract administration services will be provided at the same level and to the same extent as for launch vehicles being produced under the Government contract(s).

(4) all government approvals and procedures required under Government contracts will apply.

d. Users may request CAS support at the user's subcontractor and/or vendor production facilities, provided that the subcontractor or vendor is producing components, hardware, software, or technical data for the related

Government program.

(1) The Government will make the final determination of whether CAS will be provided at a particular subcontractor or vendor using the criteria outlined in paragraphs c(1) and c(2) above.

(2) CAS will be provided for common component items only if the subcontractor or vendor is producing commercial components configured similar to those components produced for use on Government launch vehicles.

[blocks in formation]

a. The user agrees to reimburse to Air Force on the same basis as that used for providing CAS to NASA using the rate in effect as of the date of the billing for such reimbursements. The user will be charged an amount which represents the cost of CAS for the commercial items proportional to the cost of CAS for all (commercial and Government) common components produced.

b. The user agrees that this method reasonably and accurately reflects that actual direct cost of CAS provided in support of commercial work.

[blocks in formation]

As a very interested member of the audience at your subcommittee's hearings of Tuesday, September 15 and Thursday, September 17, I feel it necessary to call to your attention several areas of incomplete and potentially misleading information which could result in reaching erroneous conclusions on these important issues.

The most important area is that of the threat, to both the U.S. and western Europe, posed by the Soviet Proton and Chinese Long March launch vehicles. My concern stems from the very specific comments in the testimony (for the record) of Mr. Murphy of General Electric, the implicit and explicit comments of Mr. Dorfman of Hughes Aircraft, and the flavor of some of the responses to questions at Tuesday's hearing, especially from Dr. Lovelace and Mr. Brakeen.

A recurrent theme has emerged with two main threads: there is not, or will not be in the future, adequate launch capacity in the west to meet the needs of western satellite owners and operators, and "the Europeans" may be planning to use Soviet Proton launches to assemble very attractive package deals, thereby threatening the ability of U.S. satellite builders, such as Hughes and GE, to compete for this important market segment. This "threat" has been used by both of these companies in an attempt to rationalize and justify a change in the basic U.S. policy against both technology transfer and unfair trade practices. The second area of particular concern to me are the repeated allegations, all still totally unsubstantiated, of various forms of "subsidy" of Arianespace by either ESA or France. This issue has arisen most recently in connection with the question of the U.S. position on limits on third party liability, in which the U.S. ELV operators point to the fact that Arianespace and its customers are not required either to obtain extreme amounts of insurance or indemnify the government(s) involved in the launches. It is important to note that the historical basis for our requiring our customers to obtain 400 million French franc (equivalent) coverage is very simply that when we began writing our first commercial contracts, the only model was NASA. At that time, in the 70's, NASA required a coverage of $100 million, the Franc was four to the dollar, and the simple arithmetic gave us 400 million francs. Under the 1973 treaty covering third party liability, the "launching states" are absolutely liable for damage to third parties caused by any space vehicle launched under their auspices. The real question is not subsidy, but risk-sharing by the private and public sectors. If the insurance is capped at $100 million, or any other amount, no one is required to spend any money unless there is a catastrophic accident, which has never occurred.

ARIANESPACE, Inc., 1747 PENNSYLVANIA Avenue, N.W., Suite 875, WASHINGTON, D.C. 20006 (202) 728-9075 Tlx ARIANE WSH 897006

84-644 88 - 10

The Honorable Bill Nelson
Page Two
October 7, 1987

The famous "level playing field", invoked so often and so readily in these discussions, is a matter of great concern to Arianespace as well as to our U.S. competitors. It should be remembered that the "rules of the road" discussions now in progress between the U.S. and European representatives are the result of an initiative on the part of Europe, arising from the TCI Section 301 petition. It is our hope that these ground rules, when mutually established and agreed upon, will form the basis for a common western position with which to confront the predatory positions of the Soviet Union and the Peoples Republic of China. Other comments were made during the course of your hearings relative to keeping the launch business from going "offshore". This term has a very definite two way connotation, since, as Mr. Brackeen pointedly noted in his testimony, all of the new commercial launch business Martin has obtained, and much of the potential business as well, comes from foreign or "offshore" sources. From the perspective of Europe, this is business that has gone "offshore". Fair trade does not imply closed trade, and it is noteworthy that the business to which Mr. Brackeen refers is, in many cases, with governmental agencies or quasigovernmental organizations such as Intelsat and Eutelsat. The U.S. government has closed its bidding on the NOAA GOES launch services procurement to non-U.S. entities. Is this a "level playing field"?

Allegations were also made concerning "agencies of the French government supporting the competition" through offsets and financing. These allegations seem to imply that U.S. firms engaging in overseas commerce do not use offsets or Export/Import Bank financing whenever possible. Surely, this is not the case, and to allow such implications to stand unchallenged is grossly unfair. In any case, financing by the banks of either Europe or the U.S. in this area requires adequate credit capability on the part of the borrowers, and does not in any case represent financial support to the companies doing the selling of the goods or services.

Since I represent a commercial organization with a substantial stake in the results of these hearings and discussions, I would very much appreciate your consideration of these comments, and their inclusion in the record. You know from several past conversations that we are ready to discuss these, and any related issues, with you and your staff at any time. Our opinions on these subjects may differ, but I believe we both recognize the benefits and value of continuing dialog.

Thank you for your interest and attention.


Douglas A. Haydon

Douglas A. Heydon




MEMORAMDUM FOR RECORD (In response to a question from Mr.



Dr. Cook, there was a UPI story that said- this is dated February the 7th--that the Air Force is studying whether to expand a Shuttle launch safety zone. Naturally, at home this has gotten all kinds of press. It's a move that would keep reporters and other folks that would be down there watching the next Shuttle launch from the existing press site. Do you have any comments or any questions or anything that you would like to state for the record with regard to the Air Force considerations? I assume that this will ultimately be a NASA decision, not an Air Force decision. But the Air Force, as I understand it, is going to be making the recommendatins. Would you shed any light on that for us?

Two key events have prompted the Air Force to revaluate it position on the safety zone for shuttle launches. The first was the ":Challenger" failure in which the solid rocket motors continue intact and in-flight following the explosion instead of breaking up as expected. The second was the failure of the Titan 34D mission at Vandenberg AFB, in November 1986, in which the large a aft segment one of the solid rocket motors fell to the ground intact with propellent. The resulting impact explosion was very large and caused extensive damage to the launch facility and surrounding area. The explosive power observed in this failure would be equaled or exceeded if a shuttle rocket motor aft segment were to impact the ground. the event of a massive failure this is highly possible since break up or range safety destruct action on a solid rocket motor leaves the aft segments intact.


Because of these experiences during the first two inflight failures ever experienced for large segmented rocket motors in flight, the Air Force is concerned about nonessential personnel being allowed in the proximity of the launch site. If a failure occurred that drove the Shuttle over these densely populated areas there would not be any way to protect these people should a "Challenger" type disaster


The Air Force Range Safety mission is to protect people and property from errant missile flights. Our methid of doing this is to destoy the errant missile when it becomes a threat to the public. On past Shuttle launches we allowed an errant Shuttle to fly over populated areas as long as it was identified by NASA as being under control. "Challenger" was under control at the time of its explosion. The Air Force does not want to be placed in the situation where an errant Shuttle would be allowed to fly over highly populated areas under the belief that it was still controlable and then incur a disaster that could result in large debris and Solid Rocket Motor Aft Segment impacts and explosions, in a populated area.

Estimates show a potential for each aft segment to destroy up to five city blocks. The only way to remove this threat is to move nonessential personnel further away fromthe launch site to an area where the chance of a Shuttle deviating far enough off course to overfly is very small.

In defining nonessential personnel in our discussion with NASA we will be addressing the press, VIPs, non-launch involved KSC personnel, and the large groups of visitors given special access to KSC property to view the launch. Our intent is to allow the orbiter the most room to fly and provide the maximum safety available.

« PreviousContinue »