Foreign Relations of the United States, 1969–1976, Volume E–3, Documents on Global Issues, 1973–1976

121. Memorandum From David Elliott of the National Security Council Staff to the President’s Assistant for National Security Affairs (Scowcroft)¹ ²

Washington, January 14, 1976

SUBJECT:

• Aerosat Meeting, Wednesday, January 14, 1976, 4:00 p.m.

You are hosting a meeting regarding Aerosat on January 14 at 4:00 p.m. Attending will be Ingersoll, Barnum, McLucas, Fletcher and Egers. Lynn is planning to come; but if he is diverted by the budget preparation, Cal Collier will attend in his place. (Collier is the Associate Director handling DOT.)

The purpose of the meeting is to see if agreement can be reached on the U.S. position for the conference on January 21 of the Aerosat partners (the U.S., most European countries, and Canada). Since the program will soon be entering the hardware procurement stage, the Europeans have (rightfully) demanded a statement of U.S. commitment. If an agreement cannot be attained, it may be necessary to move the issue quickly to the President.

AEROSAT BACKGROUND

In the late 60s, the growth of North Atlantic air traffic and the advent of communications satellites led to interest in the U.S. and Europe in the development of an aeronautical satellite and ground system to improve transoceanic air traffic control and communications. The HF channels are congested and sometimes unreliable. Satellites provide continuous, high quality communications, and the use of dual communication satellites also allows air traffic controllers to fix aircraft positions.

Agreement was reached in principle that the U.S., Europe, and Canada would jointly develop an experimental aeronautical satellite system and conduct pre-operational air traffic control tests over the Atlantic. (The program is called Aerosat.) Because of difficult policy, managerial, and economic aspects of such a joint venture, it took over four years of hard international negotiations before the Memorandum of Understanding (MOU) was finally consummated in 1974. Along the way, it was necessary to call upon the President, the White House staff, NASA and the State Department for help in resolving a number of thorny problems; and there was considerable heart-burn on both sides of the Atlantic during this process. (Our Aerosat file is one foot thick.)

The total U.S. cost of the program was estimated in 1974 to be $104 million. For the space segment of the program the U.S. cost share is 47%, Canada 6%, and Europe 47%. Each participant will fund its own ground and airborne equipment and its portion of the test and evaluation program.

Up to the present, work on the project has been related primarily to planning and design, with little or no hardware development. This lead-in phase of the project is nearing completion and within the next two months an RFP for the space segment of the system is scheduled to be issued. A decision to proceed with the RFP will require a full commitment to the program.

Late last year it became apparent that the total cost of the Aerosat program would have to be revised upward due to the worldwide inflation cost escalations that have occurred in high technology projects of this type. With some adjustments to the program structure, such as the proposed method of lease payments to COMSAT General and the NASA launch billings, this cost escalation was held to about $21 million, bringing the total program cost to $125 million.

ENTER OMB

During the FY 1977 budget negotiations, the FAA requested a commitment of approximately $25 million in FY 1978 and 1979 to cover Aerosat. OMB did not accede to this request and told FAA to reassess the need for the program. If the assessment was still favorable, OMB has indicated that the FAA should be prepared to trade off other of its R&D programs to pay for Aerosat.

McLucas carried out a quick reassessment and is convinced that the program should be continued. He cannot, however, absorb the outyear costs within a fixed R&D budget without jeopardizing or cancelling other programs which have considerable domestic airline support—such as the microwave landing system.

In a letter to you and Lynn, John Barnum has objected to the OMB attitude toward Aerosat (Tab B). He indicates that if OMB were to force U.S. withdrawal from the program, it could well be considered a breach of faith by our Aerosat partners. For although the MOU states that financial obligations are subject to the availability of funds, this escape clause was understood by Europe and Canada to cover the contingency that the Executive Branch could not guarantee future year appropriations which must come from the Congress. However, it was assumed that the Executive Branch in signing the MOU intended to honor it to the full extent of its ability. Barnum argues that if the Executive Branch—not the Congress—now decides not to seek future year funds, our allies will question whether Executive Branch agreements can be relied upon.

Bob Ingersoll seconds this view and stresses the importance of the program in relation to our broader interests in Europe (Tab C).

NASA has expressed concern over the possible impact of an Aerosat withdrawal on the other cooperative space activities we have with Europe—in particular on the $500 million spacelab being built by Europe for our space shuttle.

THE OTP ANGLE

OTP has interjected an extraneous note into the Aerosat issues (Tab D). Much to State’s annoyance, OTP has been trying to obstruct U.S. participation in an international maritime satellite communications system (INMARSAT) on complex philosophical grounds that need not be analyzed here. However, the faltering of Aerosat has offered OTP another argument in its INMARSAT battle; namely, that before proceeding with INMARSAT or Aerosat, the two projects should be (protractedly) studied for possible coalescence into one system.

The two programs are really quite different. Aerosat is an experimental system for limited use in the North Atlantic involving only Western Europe, Canada, and the U.S. INMARSAT is an operational system involving 35 countries around the world. Furthermore, coalescence would be hard to sell politically. Europe can only achieve its sought-after major role in the development of the technology for Aerosat if the partnership is limited. Europe would be expected to object to a coalesced system with large membership. On the other side, the USSR wants to play a significant role in INMARSAT and would resist the diminution in that role if the program were to shift part of its orientation to Atlantic air traffic control in which the USSR is not involved.

Since OTP suggestion is basically disingenuous, I don’t think it should be given much attention in the meeting, if it is raised.

ALTERNATIVES FOR OUR POSITION ON THE 21st

1. Full commitment.

This alternative would be the most satisfactory from a programmatic and foreign relation viewpoint, and is the position recommended by DOT. OMB would have to provide full incremental funding of Aerosat in the outyears, which thus far OMB has resisted. If, after hearing the arguments at the meeting, you feel a full commitment is in order, you may want to suggest seeking a Presidential decision.

2. A qualified commitment.

If we cannot make an unqualified commitment to Aerosat, we can propose to the Europeans that the RFP be issued, bids received and evaluated, and a contractor selected. This process will take a good portion of a year without costing much money, and in the meantime the U.S. will try to work out its funding problem. There are a few possibilities in that regard:

• —A thorough cost/benefit study carried out over the next few months might convince OMB that Aerosat should be incrementally funded.
• —Some of the FAA’s other programs now being funded out of R&D might be shifted to another trust fund account (F&E) thereby making room for Aerosat in the R&D budget. OMB has not declared itself on this possibility.
• —NASA, which is keen to get back into experimental communication satellite development, could become a technical and financial partner in Aerosat and relieve FAA of some of the funding requirement. This alternative would necessitate a restructuring of the program, but the Europeans might be agreeable since they like working with NASA.
• —And finally, in spite of its protestations, the FAA could be required to fund Aerosat preferentially because of the foreign commitment involved.

There may be other possibilities because all budget questions are soft. The real unknown, however, is Europe willingness to give us a year’s grace. They may well not want to continue tying up their money and people in such an uncertain arrangement. They might either terminate the program or go it alone on a more modest basis as they have considered in the past.

3. Withdraw from the project.

If the prospect of our long term commitment to the program is bleak, we might serve our interests by acknowledging the poor outlook and cutting our losses by terminating the program and the arrangement with Europe and Canada.

RECOMMENDATION:

Based on a consensus hopefully achieved at the meeting, you should decide to (1) move the issue to the President, seeking a full commitment to Aerosat, (2) try a qualified commitment with the Europeans on the 21st, with some understanding on how we might proceed here to firm up the commitment, or (3) withdraw from the program. Your talking points are structured along these lines (at the marked tab).

1. Source: Ford Library, National Security Adviser, Presidential Subject Files, Box 1, Communications (2). Confidential. Sent for action. Attached but not published at Tab A are the undated talking points for Scowcroft. Attached but not published are Tabs B through D. Tab B is a January 9 memorandum from Barnum to Lynn and Scowcroft that recommended affirming U.S. commitments to the development of AEROSAT. Tab C is the December 11, 1975 memorandum from Ingersoll to Coleman that advocated proceeding with AEROSAT funding to avoid international diplomatic complications. Tab D is the January 9 memorandum from Egers to Kissinger that registered several objections to concluding AEROSAT and INMARSAT negotiations.
2. Elliott outlined inter-agency disagreements to aid Scowcroft’s preparation for a meeting designed to forge a unified position on support for the AEROSAT program.