Responding to complaints of favoritism in the Department of Defense’s (DoD) commercial satellite service procurement process, Intelsat told the General Accounting Office that a contract it received to provide satellite transponder service to the DoD was awarded based on merit. The GAO became involved in the matter after Sens. James Inhofe (D-Hawaii), Daniel Akaka (D-Hawaii) and Joseph Lieberman (D-Conn.) sent letters in mid-November asking the GAO to review DoD commercial- satellite procurement practices.

In a letter sent to the GAO March 17, Tony Trujillo Jr., Intelsat’s senior vice president and chief administrative officer, countered that “there is no reason to conclude that DoD contracting has been anything but fair to all qualified participants.” According to Trujillo, “DoD has global satellite communications needs that require mission- critical reliability, coverage and service quality. Intelsat meets these needs better than our competitors. In the satellite business, location and reliability are paramount factors for success and Intelsat offers unrivalled global coverage and industry leading reliability.”

The Intelsat letter singled out rival PanAmSat Corp. [SPOT] for criticism. PanAmSat’s past complaints about unfairness in the procurement process were found to lack merit by federal regulators, Trujillo said. Specifically, the award of a DoD contract in 1995 prompted PanAmSat to seek intervention from the Federal Communications Commission (FCC) due to allegations that the recipient, Comsat RSI, had violated the Communications Act by engaging in anti-competitive conduct. The FCC dismissed the complaint.

“The location of PanAmSat’s satellites renders the company much less capable of providing the coverage or robustness needed to satisfy the DoD global service requirements,” Trujillo argued. PanAmSat’s capacity also is skewed toward the Ku-band that focuses on video and broadcast services, and PanAmSat is low on C-band capacity that is a more economical way of providing telecommunications services, he added.

Further, Intelsat’s network and service reliability has topped 99.99 percent since 1985 and the company’s satellites have never had an in-orbit failure in more than 30 years of continuous service, Trujillo explained. PanAmSat, however, has suffered a number of in-orbit anomalies that include the failure of the Galaxy IV satellite during May 1998 when both its primary and backup spacecraft control processors malfunctioned.

“As this letter demonstrates, the contract awards to date have been entirely consistent with DoD’s global satellite service requirements, especially given that coverage and reliability are mission-critical to DoD communications needs,” Trujillo said.

PanAmSat rejected Intelsat’s claims as out-dated. The GAO’s review of DoD procurement practices to ensure a level playing field exists is warranted, said Kathyrn Lancioni, PanAmSat’s vice president of corporate communications. Intelsat’s letter does not address the procurement issue at all, she added.

“While many of the issues Intelsat brings up in its letter were true five to seven years ago, they are not today,” Lancioni said. “Deficiencies cited by Intelsat about PanAmSat are no longer valid.” –Paul Dykewicz

(Tony Trujillo, Intelsat, 202/944-7835; Kathryn Lancioni, PanAmSat, 203/210-8000)