PARIS — The European Space Agency on July 16 approved nearly 4.2 billion euros ($4.6 billion) in contracts to design and build Europe’s next-generation Ariane 6 rocket, the associated launch base and a more-powerful version of the current Vega small-satellite launcher.

Meeting a deadline that ESA and industry had set for themselves – and that many thought would not be respected – ESA’s Industrial Policy Committee approved the joint proposal of the agency’s launcher directorate and Ariane 6 designer and builder, Airbus Safran Launchers.

The contract, to be signed in August, will carry an initial value of 3.215 billion euros, of which some 400 million euros is to be financed by Airbus Safran Launchers and its industrial team.

A further 200 million euros of the total may be trimmed following an ESA-Airbus Safran Launchers joint assessment of what work can be removed from the contract, at least for now. The contract agreement makes more credible the commitment by industry and ESA that Ariane 6 will make its first flight in 2020, and perhaps in late 2019.

The French space agency, CNES, is prime contractor for the Ariane 6 ground infrastructure, a green-field operation now being carved out of the bush and marsh of French Guiana, on the northeast coast of South America. The CNES contract, as expected, is valued at about 600 million euros.

Gaele Winters, ESA’s launcher director, said the CNES work may yet be fine-tuned to reflect the fact that, breaking with the European tradition, Ariane 6 will almost certainly be integrated horizontally, not vertically.

The switch to horizontal integration may add to the capital investment in the Ariane 6 launch installation but will result in substantial savings in Ariane 6 production and operating costs, Winters said.

That’s one reason why Airbus Safran Launchers, which will have to make a profit on Ariane 6 without the annual price supports that ESA provides for Ariane 5, was so much in favor of the switch to horizontal integration.

The third contract is for the upgrade of the Vega rocket. A contract valued at 370 million euros will be signed with the Vega team, led by ELV SpA of Italy – a joint venture of Italy’s Avio and the Italian Space Agency. Colleferro, Italy-based Avio is Vega’s prime contractor. The enhanced Vega, called Vega-C, is expected to make its first flight in 2018.

The Vega contract figure includes some 225 million euros dedicated to the P120 Vega first stage. In one of the synergies that European government and industry officials hope will keep down launch costs, Vega’s first stage will be used as the strap-on booster for Ariane 6.

ESA Director-General Johann-Dietrich Woerner said in a July 14 interview that because Ariane 6 development is being handled in a new way, with industry taking charge of the design and production, certain details on how to organize ESA’s geographic-return principle have yet to be finalized.

This is the rule guaranteeing ESA governments that their national industries will receive program contracts in proportion to their governments’ investment. For Ariane 6, France and Germany alone account for about 75 percent of the investment, which makes geographic-return allocation somewhat simpler.

But Airbus Safran Launchers has not concluded terms with all of its subcontractors, Winters said, meaning some second- and third-tier component builders’ roles – and how they match their governments’ investment – have yet to be settled.

“What we have done here is agree to the full contract values for the Ariane 6, the ground segment and the Vega upgrade,” Winters said. “As was agreed to by our governments in Luxembourg [at a December 2014 meeting of ESA governments], there will be a pause point in 2016 as we undertake the Program Implementation Review.”

ESA governments had asked for the review to assure themselves that Ariane 6 in particular was on the track that governments had set, and to which Airbus Safran Launchers had agreed: a firm fixed-price contract with the approved ceiling, no government subsidies once the vehicle is in operations, and a first flight in 2020.

The first priority for Ariane 6: Reduce by 50 percent the cost of launching a heavy telecommunications satellite compared to today’s Ariane 5 and keep pace with the competition, especially SpaceX of Hawthorne, California.