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US DoD Official Gives Upbeat Forecast on Hosted Payload Market

By | August 6, 2013

      The U.S. Department of Defense (DoD) is taking significant steps to make hosted payloads a more likely reality in the coming months by doing a lot of work behind the scenes, which will make it easier to facilitate potential deals with the commercial satellite sector. Douglas Loverro, deputy assistant secretary of defense for space policy at the U.S. Department of Defense told Via Satellite’s Hosted Payloads E-Letter that the DoD has been making “incremental decisions and each of them re-affirms that hosted payloads are potential parts of the solutions that we see in the future.

           The new Hosted Payload Solutions (HoPS) indefinite delivery indefinite quantity (IDIQ) contract will provide the vehicle to bring about these deals, and could act as a catalyst for heightened activity in this area. “The IDIQ contract represents paced, intentional progress towards the goal of hosted payloads, but without a huge commitment of resources,” Loverro said.

           However, while Loverro talks of a methodical approach, he would not describe it as a huge transformation in thinking toward the concept on behalf of the U.S. DoD. “If I could contrast it with the sea change we saw in one area over the last decade, [it would be] unmanned aerial vehicles (UAVs). If you were around in 1999, and you asked the DoD, what they wanted to do with UAVs, they would have said they were not good for much. You would have been told manned aircraft is where it is at. Today, UAVs are 90 percent of what we talk about. That is a real sea change. I don’t see that happening yet for hosted payloads. That does not mean it won’t, but I see a sure and firm progression in a steady manner towards better acceptance for hosted payloads.”

           Loverro underlines the significance of the IDIQ contract, which he describes as the “lubrication on which future hosted payload decisions can be made. It is the vehicle that folks will use to go ahead and garner the information necessary to make those decisions.”

           With the IDIQ contract vehicle in place we could see early evidence of things starting to move over the next year, particularly in terms of protected satcom.

           “I spoke on the [July 11 Via Satellite] webinar about this Analysis of Alternatives (AOA) in terms of protected satcom. One of the really big changes that reflect this progress that we have seen in hosted payloads is that we are seeing it listed explicitly in the AoA study’s terms of reference. It talks about how hosted payloads could be included into this architecture. Out of that protected satcom AOA could come to a decision to do hosted payloads,” Loverro said. “What the hosted payload IDIQ does, and these AOAs do, is tell people that if they look at those mission needs and how to fulfill them, hosted payloads are part of the overall answer that they need to investigate. By making the whole process easier, in terms of finding out the costs for example, you have allowed that fuller discussion to occur. But, I can tell you that hosted payloads are now part of those discussions leading to those answers.”

           Another area where we might see progress in terms of hosted payload deals is in terms of weather satellites, according to Loverro. “I can say that with 99 percent certainty because we have already made some hosted decisions related to weather in relation to the Taiwanese satellites. It is an area that is primed for hosted payloads,” adds Loverro.

           But the relationship between the commercial satellite industry and the U.S. DoD could change given the changing dynamics of the landscape. 

           “One of the changes I have seen is that more satellites built these days are built by the commercial industry than by the U.S. government. That is the first time ever that has been the case. As a result, the commercial industry provides not only a vehicle we can host payloads on, but it provides a ready-made production line of buses that we can leverage, as either hosted or fully-owned entities. That is a big change from when the U.S. DoD had to build their own satellite bus for every mission that we flew. That dynamic, more than the dynamic of hosted payloads, is a big shift for the future,” Loverro said.

           Another shift is that the DoD leases most of its satcom from the commercial world than providing it itself. The U.S. now leases more than 80 percent of its capacity from the commercial world. “I think that arrangement is being looked at in the terms of how do we get better business deals out of that and change the way we work with the commercial satcom world, because it is such an important part of our overall information flow. We can’t afford to be leased in the on-the-spot market,” said Loverro. “The fact that the commercial world has become a majority producer of satellites buses, and the fact that commercial is a majority transport mechanism for the U.S. DoD, I think that changes the perspective on how we use commercial even more than the hosted payload discussion that we are having.”

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