Attachment comments

comments

COMMENT submitted by The Boeing Company

comments

2005-03-07

This document pretains to SAT-MOD-20050110-00004 for Modification on a Satellite Space Stations filing.

IBFS_SATMOD2005011000004_421611

Before the FEDERAL COMMUNICATIONS COMMISSION MAR ~7 2 Washington, DC 20554 Fotiny 0 Ofee rogeit Cimmituy, In the Matter of ) ) 1CO Satelite Services, G.P. ) ) Application for Modification of Authority ..) File No SAT—MOD—20050110—00004 For Use of the 2 GHz Bands to Provide ) Mobile Satellite System ) ) Petition for Declaratory Ruling, or ) File No. SAT—PDR—20050110—00024 Alteratively, for a Waiver ) comMENTs or THE BOEING COMPANY The Bocing Company (‘Bocing"), by its attomneys, and pursuant to Section 25.154(a) of the Commission‘s rules, 47 C.F.R. § 25.154(a), hereby submits the following comments on the above—captioned application and petition of ICO Satellte Services, G.P. (‘ICO®).‘ Bocing is filing these comments to correct certain misstatements by ICO regarding ICO‘s prior contractual relationship with Bocing‘s subsidiary, Bocing Satellte Systems International, Ic. (‘BSS") L ICO®$ APPLICATION AND PETITION CONTAIN MISSTATEMENTS OF FACT REGARDING 1CO‘$ PRIOR CONTRACTUAL RELATIONSHIP WITH BSS BSS was the manufacturer for 1CO‘s 2 GHz Mobile Satellite System (°MSS") unti January 29, 2004, when ICO sent BSS a notice terminating the satellte contract for 1CO‘s convenience. A copy of ICO‘s notice is attached. ! See Public Notice, PolicyBranch Information, Satellte Space Applications Acceptedfor Filing, Report No. SAT—00269, at 1 (Feb. 4, 2003)

On April 28, 2004, ICO paid BSS the termination linbility associated with 1CO‘s termination of the contract for its convenience. On May 3, 2004, ICO and BSS entered into a satellte storage contract and ICO‘s uncompleted satellites are now in storage. On July 23, 2004, ICO delivered to BSS a "dispute notice" claiming a right to arbitration under the previously—terminated contract. BSS responded by filing a Complaint for Declaratory Judement with the Superior Court for the State of Califoria, in which BSS is seeking a judicial ruling that, inter alia, 1CO‘s termination of the contract for its convenience invalidated the arbitration clause and extinguished all rights, obligations and disputes of the parties under the contract. 1CO filed an answer and a cross—complaint.? In 1CO‘s application and petition which are the subject of these comments, 1CO misrepresents and essentially reverses the order ofthe above—described events. 1CO claims that it "invoked the dispute resolution process""y3 with BSS to resolve "construction—related difficulties and other events beyond 1CO‘s control."* 1CO also claims that it "worked diligently to resolve * See 1CO Global Communications (Operations) Limited‘s Answer to Complaint, Boeing Satellite Systems International, Inc. v. ICO Global Communications (Operations) Limited, Cal. Super. Ct. Case No. BC 320115 (Sept.16, 2004) ("ICO Answer");ICO Global Communications (Operations) Limited‘s Cross—Complaint for: 1. Breach of Contract; 2. Economic Duress; 3. Negligent or Fraudulent Misrepresentation; 4. Misappropriation of Trade Secrets; 5. Breach of Covenant of Good Faith and Fair Dealing; 6. Declaratory Relief for Invalid Liquidated Damages; 7. Unfair Competition; 8. Declaratory Relief Regarding Arbitration and Confidentiality, Boeing Satellite Systems International, Inc. v. ICO Global Communications (Operations) Limited, Cl Super. Ct. Case No. BC 320115 (Sept. 16, 2004) ("ICO Cross—Complain?") 5 ICO Satellite Services, G.PApplication for Modification ofAuthority For Use of the 2 GHez Bands to Provide Mobile Satellite System, RCC File No. SAT—MOD—20050110—00004, at 3 (Jan. 10, 2008) ("ICO Application"). * ICO Satellte Services, G.P., Pettion for Declaratory Ruling, or Alternatively, for a Waiver, FCC File No. SAT—PDR—20050110—00024, at 8 (Jan. 10, 2005) ("ICO Periion"); see also ICO Application at 3 (claiming that "[i)n an attempt to resolve this dispute, 1CO early last year involed the dispute resolution process" with BSS). 2

the disputed issues with its satellte manufacturer,"" but that it "unexpectedly has reached a contractual impasse"" with BSS involving "unforesccable contractual obstacles that are beyond its control.""_ As a consequence, 1CO further claims that, "[dJespite its efforts to resolve contract performance and related issues with the manufacturer and to proceed with construction, ICO could not reasonsbly avoid suspension of further work on its {non—geostationary satelite orbit (‘NGSO®)) system."* As detailed above, at the time ICO terminated the satellite contract for its convenience, there were no disputed issues, contractual obstacles or construction—related difficulties between 1CO and BSS. There was also no contractual impasse or suspension of work on the satellites. 1CO terminated the satelite contract on January 29, 2004, six months prior to invoking "the dispute resolution process.". Contrary to 1CO‘s claims, its unilateral decision to terminate the contract for ts convenience was neither unexpected, unforeseeable, nor beyond ICO‘s control. *1CO Application at 3. °14. at6; see also id. at 3 (claiming that "ICO has reached a contractual impasse with its NGSO satellite manufacturer ... that preclude further progress on its NGSO system for the immediate fature"). " Id. at 21; see also ICO Petition at 8 (claiming that "the circumstances preventing 1CO from achieving full compliance with its remaining milestones were unforeseeable and beyond 1CO‘s control") * ICO Perition at 8; see also id. at 1 n3 (claiming "further work on the ICO NGSO system has been suspended);id. at 3 (stating that "events giving rise to an unresolved dispute between ICO and its NGSO system manufacturer have resulted in a temporary suspension of further work on the NGSO system"); 7CO Application at 1 (stating that "ICO secks this modification because of events giving rise to a dispute with ts satellite manufacturer have foreed the suspension of work on its NGSO system");id. at 3 (claiming that "(a}s a result ofthese events,additional work under the manufacturing contract has been suspended").

Prior to ICO‘s termination of the satellite contract, BSS was actively engaged in the construction of ICO‘s satellites pursuant to Amendment 25 ofthe contract. Amendment 25 was signed by ICO and BSS on July 25, 2003 to resoive then outstanding issues. As the Commission is aware, the nearly cight years that had transpired since ICO first entered into a satellite manufacturing contract with Hughes Space and Communications Interational, Inc. (*Hughes") were not without incident." On August 27, 1999, 1CO filed for bankruptey protection. On September 5, 2000, after ICO emerged from bankruptey, ICO and Hughes signed Amendment 7 of the contract, which established the terms for the resumption of work. As ICO acknowledges in court filings, "after entering into Amendment 7, [ICO] directed [Hughes/BSS] to modify or delay production and launch schedules resulting in numerous amendments to the Satellite contract."" ICO and BSS accordingly entered into Amendment 22 of the contract, which directed the parties to negotiate new terms addressing "the contract price, delivery schedules, and other issues."" The subsequent negotiations culminated in the execution of Amendment 25 of the contract. As ICO acknowledges in court filings, "foJne of 1CO‘s main goals in negotiating * In October 2000, Bocing purchased Hughes Space and Communications Company, the parent company of Hughes. Hughes Space and Communications Company was renamed BSS. ‘° ICO Answer at 4. " tdards.

Amendment 25 was to stretch out the project schedule.""". 1CO also used Amendment 25 to negotiate a new termination libility provision." Specifically, ICO demanded and received a termination lisbility clause that provided "a fixed schedule ofthe sums ICO would owe for terminating the Satelite contract for convenience at various points in the future.""". Under the original contract, ICO‘s termination liability was determined based on the contract—related expenditures of BSS up untilthe point of termination. After signing Amendment 25, BSS worked for more than six months on the construction of ICO‘s satellite network. The efforts by BSS continued up until the point when ICO issued the notice of termination for its convenience to BSS. 1CO claims in court filings that it was "coercefed}" and "compelled®" by BSS into signing Amendment 25. 1CO also claims thatit "could not change vendors" for satelite manufacturing services and that, as a consequence, BSS held "monopoly supplier status" over ICO during the negotiation process."" By contrast, in its pending application and petiion, ICO asserts that it "not only has actively worked to renegotiate a new manufacturing contract, but in fact has executed a non— " ICO Cross—Complaint at 8. * See id at 11. " 14. m 2s * tdat 37 and 43. * 24. at 28 and 30.

contingent manufacturing contract with Loral that will allow ICO to meet the final milestone deadline of July 2007.""" As set forth above, ICO has presented entirely different facts to the Commission and the Superior Court of Califomia. 1. CONCLUSION Bocing respectfully requests that the Commission take into account ICO‘s misstatements of fact,detailed above, when considering the merits of ICO‘s application and petition. Respectfully submitted, THE BOEING COMPANY Marylou Cahir, Boq. m _RaFPruQO Joseph P. Markoski Counsel Bruce A. Olcott Bocing Satellite Systems Intemational, Inc. Squire, Sanders & Dempsey LLP. The Bocing Company 1201 Pennsylvania Avenue, NW. 2260 East Imperial Highway P.0. Box 407 El Segundo, CA 90245 Washington, D.C. 20044—0407 (202) 626—6600 Its Attomeys March 7, 2005 ‘ ICO Petition at 8; see also id.at3—4.

dderiene tesliri AhObEgle River saue—azz—inte ra hamn mm d January 29, 2004 €4 BosiogSatellze Systems Inernational Ic. IC Bg 552. Mz103 Post Office Bor $2919 Airport Surion 1co GotetCommuntcations Los Angeles, CA 90009 (@ooritiony Linies Aueation: Denais R. Becson m cantenroi Manager, Conaets ta, wa stenon us To esmeno rec csmmc vabie {imniccon Reference: Contract Number: 1000/95—1002NR, Amended and Resuted Contract Amendiment 25 effectve as of 25 July, 2003 (ih "Sarellite Contrct") by and between Boeing Sarelite Systems Interntional, nc. (‘Boeing") and 1CO Global Commonications (Operations) Limted (100%5 DerMr. Beeson: ‘We refeto the above mentioned Satellte Contzact. Capitalized terms not otherwise define in this leter havethe meaning given in the Satelite Contmet Punuent to Andele 17.1 of the Satelite Contact, ICO hereby terminates the remaining Work with respect to the Sarelite Contraict This notice consttutes the 0O Termination Norice, an 1CO Whole Termination and Termmination for Convenieace as those terms are used in Aricle 17.1 of the Sitelite Comuet, To the extent additional otice of termination is necessuy,in aecordance with Artcle 41.6 of the Satelite Contract, ICO hereby terminates for conventence all work under Aricle 41 of the Sacllie Conmer Futihe, ICO hereby gives notice of termination of sutelite operations porsuent to Anicle 42 of the Satelite Contract. Terzmination is tobe effective 45 days from the date hereof asprovided in Aricle 42.2 of the Siellite Contret. TCO has been compelied to take this action to mitignte iss loses arsingfrom Inunch and satelite failures and other events ht have occurred during the course o ts relarionship with Bosing. This termination is effected withouprejudice to and witha full seservation of all ights of 1CO arising from such events and othernise. This louer is welten in cosjumetion with the lever from 1CO of even date made with respect to the Contract Number:_1C0O05—1003/¥W, Amended and Restated Conttact Amendinent 5 (the "Launch Conmact") dated effective 28 Jaly 2008. Brent Abrahamsen, Director

CERTIFICATE OF SERVICE 1hereby certify that a copy of the foregoing Comments ofthe Bocing Company to Petition For Declaratory Ruling or, Alternatively, For a Waiver and Response to Application to Modify Letter ofIntent Authorization of ICO Satellite Services G.P., was mailed this 7th day of March, 2005 by U.S. mail to the following: Chery! A. Trit Phuong N. Pham Morrison and Foerster LLP 2000 Pennsylvania Avenue, NW Sure 5500 Washington, DC 20006 Suzanne Hutchings Malloy Senior Regulatory Counsel 1CO Satelite Services, G.P 2000 Pennsylvania Avenue, NW Suite 5500 Washington, DC 20006


Document Created: 2005-03-10 10:06:48
Document Modified: 2005-03-10 10:06:48
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