Large military satellite manufacturers impede meaningful change to the way the Defense Department purchases commercial satellite communications (SATCOM) bandwidth from commercial satellite operators, according to the executive of a commercial satellite operator.
SES Government Solutions President and CEO Tip Osterthaler told Defense Daily last week shaking up the status quo creates winners and losers and with defense budgets tightening large military satellite manufacturers will do whatever it takes to keep their businesses alive.
“You have industry segments who have made a very good living building multi-billion dollar government-owned spacecraft that are, in many ways, indistinguishable from commercial spacecraft that could be built for substantially less money and much faster,” Osterthaler said. “There’s a lot of resistance to change, there’s (potentially) a lot of losers and when the defense budget is contracting and you’re worried about the future of your business, you’re going to do everything you can to sustain it with whatever arguments that seem to work.”
Commercial satellite operators have been pushing DoD to change the way it procures commercial SATCOM because it waits until the last minute, harming satellite operators and inflating DoD costs. Intelsat General CEO Kay Sears told Defense Daily in November spot market buying results in higher costs for DoD as it is buying limited bandwidth resources at the last minute. Sears also said it hurts operators as they don’t know where, nor when, to invest in infrastructure to better support future DoD needs. Intelsat General is a wholly-owned subsidiary of Intelsat S.A.
Osterthaler said there are numerous ways DoD and commercial satellite operators can get more creative with procurement, among them new ways of buying things and longer-term contracts. But Osterthaler said those methods aren’t used because of entrenched ways of doing business at the Pentagon.
“We could do those things today to some extent, so then that prompts the question: Why don’t we do that,” Osterthaler asked. “I think a lot of that has to do with habits, organizational structures…they’re a bit inflexible and convoluted.”
A Boeing [BA] spokeswoman declined comment. Boeing is a major manufacturer of military satellites and is building the Global Positioning System (GPS) IIF series of satellites and the Wideband Global SATCOM (WGS) constellation. Lockheed Martin [LMT], another major manufacturer who is building the Advanced Extremely High Frequency (AEHF) and Space Based Infrared System (SBIRS), did not respond by press time.
Osterthaler and four other major commercial satellite operator CEOs in January developed recommendations for how DoD could become a better buyer of commercial SATCOM. They are:
* Establish a baseline of how much commercial SATCOM DoD needs and then budget and contract for it.
* Develop accurate comparisons of the cost of commercial versus the cost of military SATCOM.
* Use indefinite delivery/indefinite quantity (ID/IQ) contracts only to supply baseline requirements.
* Built an architecture that fully integrates commercial and military capabilities.
* Partner with industry to build protected communications infrastructure for space systems.
* Use hosted payloads.
* Have a single office that handles all commercial and military satellite capabilities.
“These proposals are about getting more value right now,” Intelsat General Vice President for Legal and Governmental Affairs Rich DalBello said last week. “This isn’t like you have to invest in a system and you’ll get more value later. These are proposals where you’re going to get greater value today.”
DoD seems to have acknowledged the plight of commercial satellite operators. Deputy Defense Secretary Ashton Carter in September asked the Defense Business Board (DBB) to conduct a study to identify impediments to DoD’s ability to better utilize the commercial satellite sector. Carter specifically asked the DBB to review opportunities, internal obstacles to implementation and any corrective actions required to enable the Pentagon to rapidly evaluate and take advantage of potential commercial SATCOM services.
Air Force Space Command (AFSPC) Director of Requirements Maj. Gen. Martin Whelan told Defense Daily in November SATCOM might be a good place for DoD to begin a potentially new, and improved, approach to acquisition, calling the field “ripe for the next victory” (Defense Daily, Nov. 29).
Osterthaler said he ultimately doesn’t blame large satellite manufacturers for the way they handle their business.
“Given a choice of whether to charge the government a billion dollars for a specific kind of (satellite) bus or having to sell it to a commercial space (satellite) operator for $100 million, I’d want to sell the billion dollar spacecraft, too,” Osterthaler said.