ARGOS O/C 37, NOAA

Prepared by: S. Auer

Date: May 19, 2003

**Agenda Item G-1.2: Status of U.S. processing agreement**

**[EXECUTIVE SUMMARY]{.underline}**

This describes the U.S. portion of the Argos Joint Tariff Agreement
(JTA). In 2002, the U.S. used 1402.8 Platform Years (Ptt/yr) and 41,305
Active Platform Months. For 2003, the U.S. has agreed to purchase 790.0
Ptt/yr and expects to use 1500 Ptt/yr and 43,400 Active Platform Months.

**[ACTION REQUIRED]{.underline}**

The JTA will investigate and agree upon a follow-on global JTA tariff to
the 5-year plan that is fair and is the most preferential tariff within
the entire CLS/SAI JTA/non JTA Argos usership.

**[STATUS OF U.S. PROCESSING AGREEMENT]{.underline}**

The 2003 Terms and Conditions which define the preferential tariff
afforded to U.S. Government users by the MOU between NOAA and CNES
concerning the Argos Data Collection and Platform Location System were
signed by Kenneth A. Mooney, Acting Director, Office of Global Programs,
for NOAA and by William E. Woodward, President, Service Argos, Inc.
(SAI), acting as agent for CNES.

Although the U.S. Argos Joint Tariff Agreement is negotiated in
conjunction with, and therefore nearly identical to, the global
agreement, the actual costs are computed based on the U.S. dollar since
payment is made directly to Service Argos, Inc.

In 2002, the U.S. contracted for 685.0 platform years (Ptt/yr) and
actually used 1402 PTT/yr, thereby enjoying a full bonus of 570 Ptt/yr
(82% of commitment). The U.S. use showed an increase of 14% over 2001.
The total U.S. JTA cost for 2002 was \$3.3M for 833.0 Ptt/yr and 41,305
Active Platform Months.

For 2003, the U.S. committed to 790.0 Ptt/yr and expects to use 43,400
Active Platform Months for a total estimated JTA cost of \$3.3M. The
latest U.S. projection is 1,500 Ptt/yr which would be a 7% increase over
the 2002 usage and 90% above the negotiated baseline (790 Ptt/yr). For
future years, the U.S. is anticipating continued growth particularly in
the biologist research community and in NOAA for building a sustained
ocean observing system for climate.

The U.S. Representative of Country (ROC) and Service Argos Inc., have
further developed their partnership toward delivering the most efficient
user service. A new JTA invoice collection option was implemented in
January 2003. Under this option, users can choose to have SAI bill them
directly on the SAI quarterly invoice for JTA use during the prior
quarter. These users "pay as they go" and eliminate the second billing
cycle (ROC annual invoice). This is particularly attractive to small
users and users with highly uncertain/problematic use. SAI now handles
about 44% of the JTA invoices. This helps the ROC deal with the dramatic
JTA user growth. It also virtually eliminates the risk of a SAI
quarterly invoice payment delay as ROC-invoiced users pay in advance and
SAI-invoiced users pay quarterly. This is beneficial to all \-- users
can "pay as they go", ROC has less invoice/collection responsibility,
and SAI is in a healthier financial position.

The US JTA comprises the oldest sector of users who helped establish and
develop the Argos system. It is also the largest segment of users in the
JTA and possibly still within the overall (JTA / non JTA)Argos.

In the past 5-year (1999-2003), the US JTA commitment has increased by
21% while the useage has increased by 85%. The associated payment to SAI
(INCOME) has increased by 43% (\$/M USD more)!

During the first 2 years (1999-2000), the effective (average) platform
year rate decreased by 32% (\$ 2971 to \$ 2103). But in the most recent
2 years (2001-2002), the effective platform year rate has increased by
12% (to \$ 2353)! This average rate increase is [of concern to the
ROC]{.underline} and users who anticipated costs to DECREASE as the
usership grew \-- a 12% effective rate increase during 17%.

A new global JTA tariff structure is expected to implemented when the
5-year plan ends in 2004. In investigating and agreeing upon this new
tariff, it is imperative that one requirement be that we satisfy to
ourselves that the JTA users are receiving the [most]{.underline} fair
preferential tariff within the entire CLS/SAI JTA/non JTA Argos
usership.