Changes in government procurement policies may play critical role.
After years of economic stagnation, the satellite industry could find that a turnaround is about to begin. Early returns point to a resurgence in interest and visibility for a weathered, yet optimistic, industry. Now more than ever, the government community recognizes that the commercial satellite industry plays an essential role in both international and homeland security. Several important occurrences in 2003 have set the stage for a turnaround.
Following the shattering events of September 11, 2001, and the resulting formation of the Department of Homeland Security, the nation turned its eyes to the Middle East and the preparation for what became operation Iraqi Freedom. This combination of global events and the nation’s focus on its own homeland’s safety sheds new light on a less visible component of the government’s telecommunications capability—commercial satellite communications (COMSATCOM).
In legacy use and policy, COMSATCOM was a recognized asset in many aspects of federal telecommunications planning and execution. This became especially evident following studies of the first Gulf War, where COMSATCOM played an invaluable role assisting deployed U.S. military forces. Another example of this recognition is the Critical Infrastructure Protection Act of 2001, which identified commercial satellites as assets whose loss “would have a debilitating impact on [the] security” of the United States.
While the Department of Homeland Security was emerging as a new cabinet-level department from 22 collective government agencies, Pentagon planners prepared for what would become the Iraq War. During the course of the action in Iraq, the Defense Department consumed an impressive 3 gigahertz of commercial bandwidth, which is equivalent to nearly three commercial satellites. Stated another way, 80 percent of the satellite capacity used in support of operation Enduring Freedom in Afghanistan was supplied from commercial versus military satellites. As demonstrated repeatedly in the Iraq theater, as warfighters grow more dependent on information technology, their demand for satellite bandwidth increases exponentially.
The December 2003 General Accounting Office (GAO) report, “Satellite Communications—Strategic Approach Needed for DOD’s Procurement of Commercial Satellite Bandwidth,” may be the pivotal event that provides the basis for much-needed reform for the commercial satellite industry and its largest global customer, the U.S. government.
One key GAO recommendation is an accounting of all current and future use of commercial satellite bandwidth to establish how best to support both immediate and long-term requirements. The GAO also recommends that, when possible, the various commands, services and agencies should consolidate their bandwidth requirements to take advantage of discounted commercial bulk buying practices based on overall Defense Department volume. The department has concurred on both of these points.
The GAO report also cites the need for centralized funding of commercial bandwidth, recommending that the Defense Department ask Congress for the authority to make multiyear procurements. The department partially agreed to this recommendation.
Retiring Pentagon Chief Information Officer John Stenbit’s opinion on Defense Department strategy for commercial satellite communications aligns with many of the GAO’s findings. In a letter to the audit agency, Stenbit says, “satellite communications requirements are ever expanding and … commercial systems will and must play a strategic role in the overall Defense Department satellite communications architecture in the foreseeable future.” Testimony from respected authorities such as Stenbit has encouraged a new era of cooperation and mutual understanding, which characterizes the growing relationship between government and the satellite industry today.
In parallel to the activities of the GAO, the Defense Information Systems Agency (DISA) reached its own decision in late 2003 to restructure to serve the user community of COMSATCOM and other telecommunications better. The commercial satellite industry views this as a clear signal that DISA is committed to partnering with industry and to reforming procurement processes going forward.
As evidence of this new spirit of cooperation, the Defense Department undertook two recent studies in an attempt to resolve problems in procurement policy. In November 2003, DISA contracted with the Titan Corporation to study “current acquisition, operation, maintenance and management processes related to the use of commercial satellite communications resources, both fixed and mobile (narrowband and wideband).” In a complementary decision, the Office of the Secretary of Defense (OSD) also began its own assessment of all aspects of current policy regarding the department’s use of commercial satellite communications. The OSD directly questioned the fixed satellite service providers to learn how the industry would improve the existing procurement process. They asked, for example, “What are the pluses and minuses of direct acquisition versus the role of integrators and brokers?”
OSD made further inquiries on commercial bandwidth procurement practices in general that the department could use to obtain capacity effectively in both peacetime as well as during surge demand on a worldwide basis. In addition, commercial satellite bandwidth management tools and processes were addressed so that the department could evaluate its methodology on managing acquired commercial bandwidth more efficiently.
Industry expects these studies will result in an effective procurement policy for COMSATCOM that will proactively benefit both the Defense Department and the satellite industry. How much COMSATCOM capacity the department will require will be in the capable hands of OSD for military missions and ongoing support.
Change was not limited to the Defense Department, however. The lessons of September 11 and the resulting communications disruption caused Congress in the Homeland Security Act of 2002 to designate satellite communications as a critical infrastructure that will provide information to the public during national emergencies. The Department of Homeland Security also will require services from fixed commercial satellite service providers for critical infrastructure needs.
The department formally recognized its COMSATCOM needs through National Security Emergency Preparedness (NS/EP). The president’s National Security Telecommunications Advisory Committee (NSTAC) was directed to create a tenured industry and government panel of experts to assess COMSATCOM NS/EP implications and report their findings.
The resulting Satellite Task Force (STF) kicked off this evaluation in October 2003. The STF participants agreed that the recommendations in the pending report will promote lasting and positive change in national policy with respect to procuring NS/EP commercial satellite services. This report also will recognize the satellite industry’s unique capability to provide for diplomatic missions and homeland security contingency support. The NSTAC STF is expected to issue a final report followed by a briefing to the White House staff this year.
The Pentagon’s evolutionary thinking on procurement policy reform of commercial satellite communications bandwidth is not new. After the release of the GAO report in December 2003 and the initiation of the several studies now ongoing, the Defense Department examined the past procurement practices of several legacy programs involving the acquisition of commercial satellite capacities.
Because of the successful use of COMSATCOM during operation Desert Storm in the early 1990s, the collective military departments regularly planned ahead for the sourcing of commercial satellite bandwidth. As a result of this practice, the formation of a bulk commercial satellite bandwidth program was created and became known as the Commercial Satellite Communications Initiative (CSCI).
The procurement vehicle for this program was called the Managed Transponder Contract (MTC). DISA—and its predecessor, the Defense Communications Agency (DCA)—would acquire bulk bandwidth through this vehicle on a longer term basis, often including a base year with options up to five years. The MTC program was funded through congressional appropriation. Bandwidth was acquired in aggregate to gain carrier economies for the entire Defense Department and was not limited to a specific military department. The practices and efficiencies of the MTC parallel many of the concepts being sought for procurement reform of COMSATCOM today.
A follow-on MTC II procurement vehicle that affords healthy competition among multiple carriers could be one solution. Encouraging competitive market pricing while discouraging a monopoly also would avert another notable concern for defense acquisition policy. Programs such as the DISA Defense Satellite Telecommunications Systems–Global (DSTS-G) program continue to offer value as an effective procurement vehicle for other integrated satellite services, including direct satellite hardware acquisition and turnkey solutions for channel services as required.
Programs such as the original MTC may well be the model of a successful procurement process going forward for the Defense Department and other agencies. A general recommendation shared by the commercial satellite carrier industry is the return of a bulk capacity procurement program for the department that is not unlike the original intent of the MTC program for transponder bandwidth capacity services.
A second procurement recommendation that is consistent among satellite carriers is for longer term bulk capacity procurements consisting of a base year and a minimum of five additional option years. The benefits of the longer term capacity buy include increased purchasing power to reduce price, tailored services unique to the Defense Department and ensured out-year bandwidth availability.
The spot market procurements of today greatly constrain the satellite industry by severely limiting its ability to plan for needed future regional capacity. Today’s commercial satellite carriers are not unlike U.S. fiber carriers. When the government purchases bulk fiber service, direct procurements are made with industry giants such as AT&T, Sprint and MCI. When that same government customer wants hardware or integrated telephony services, it goes to an integrator. Because fiber and satellite services are both considered mission-critical infrastructure for the Defense Department and other federal civilian agencies, it makes sense to procure their services similarly.
Direct government acquisition from satellite carriers will justify further their taking on the risks involved in planning for next-generation technologies. Examples of these technologies include new frequency considerations, piggy-back payloads on commercial satellites of desired frequencies to include X and Ka bands, assisted network management and control of utilized bandwidth with emphasis on transponder planning for government users, and flexible allocation of bandwidth to provide for transitions of service within multiple regional theaters along with potential real-time allocations for surge bandwidth on demand.
The commercial satellite communications industry has an earnest desire to play a vital role in augmenting the government’s communications needs in the United States and abroad. The procurement policy changes now under consideration are seen by industry as a positive move in building the necessary partnership between government and industry.
David Helfgott is the president and chief executive officer of Americom Government Services Incorporated (AGS), a wholly owned subsidiary of SES Americom.