You are Ops 51 or higher and you run the V'Ger Challenge Track and Challenge Refinery. The Signal Observatory makes that loop pay off faster. It boosts Challenge Track rewards, Challenge Refinery payouts and late-game FKR (Federation/Klingon/Romulan) progression. It does not depend on your alliance.
The Observatory is available when you reach Ops 51. No alliance ownership or event participation is needed. It has 80 levels. You upgrade it like other late-game buildings.
The payoff comes in steps, at levels 20, 30, 40, 60, 70 and 75. Each step raises your Challenge Credit payouts and FKR Credit exchange rewards. It also grants a one-time bonus bundle through the Challenge Refinery. It permanently raises your payout each time the Challenge Track resets. Time your upgrades around these six levels.
Every 10 building levels give a milestone Gift. It holds shards of the Prototype Tech Neural Neutralizer, Veil Warp Tolls and other V'Ger materials. At Ops 71 the Observatory unlocks the Daily V'Ger Bounty Challenge for free. It is worth 50 Challenge Track Points a day. Otherwise you would buy it as a Store contract.
Upgrading the Observatory gives permanent buffs. You get more base damage against V'Ger hostiles. G5+ FKR ships get more critical damage against non-Armada hostiles and more Isolytic Defense against other players. G7 Uncommon station materials get better cost efficiency. These stack with your ships and officers.
Combine the Observatory with the USS Excelsior's V'Ger Challenge Sweep research. Then you can clear several V'Ger daily challenges in one pass and maximize Challenge Track points, Challenge Credits and FKR Credit gains. None of this is required. You can progress through V'Ger content without the Observatory. But it speeds that progress up and cuts how much you buy from the Store.