Unique funding saves costs
- By Michael Hardy
- Jan 25, 2004
Once fiber-optic cable is laid to connect a remote polar satellite receiving station to the Norwegian mainland, NASA and other users of the site will begin saving. It costs about $6 million a year to transmit data from the station to a relay satellite and then on to other facilities.
Through a public/private partnership with a financial firm based in Annapolis, Md., the cable will cost the agencies $5 million a year each for five years. The agencies will then have almost free use of it for the next 15 years, under an agreement with the Norwegian Space Centre.
Hannon Armstrong, the financial firm, essentially borrowed funds for the $40 million project from large institutional investors, said Jeffrey Eckel, president and chief executive officer. The company then used the funds to pay for the cable project.
It will get its return as NASA and the Integrated Program Office (IPO), which includes the National Oceanic and Atmospheric Administration and the Defense and Commerce departments, repay a total of about $50 million over the next five years.
As a result, Congress
doesn't have to appropriate money for the project. The agencies will save about $1 million a year over the cost of using the relay satellite for five years, and then each will save the whole $6 million a year for 15 more years, said Bill Watson, program executive in NASA's Office of Earth Science.
For a total cost of $50 million, NASA and IPO will avoid about $190 million in future costs.
Decreasing budgets make it difficult for agencies to invest in infrastructure projects, Eckel said. "By using this unconventional financing approach, Norway and the U.S. government were able to access a critical service" without appropriated funds, he said.