The U.S. government’s procurement process for commercial satellite communications is badly in need of reform. This was the consensus of panelists at an event last week sponsored by the Society of Satellite Professionals International and held at Intelsat’s headquarters in Washington, D.C.

Susan P. Miller, president of Intelsat Government Solutions, said that the commercial sector should work with the government toward more long-term contract arrangements. “In the long run, if we continue with one-year or six-month contracts with options to renew, the operators will have difficulty redesigning their systems.”

Donald A. Gonzales, senior vice president at PanAmSat’s [Nasdaq: SPOT] G2 Satellite Solutions unit, said that the commercial satellite sector needs to “organize” as an industry when it comes to the U.S. government as a customer. “The commercial industry has the ability to innovate more rapidly than the government,” he said. Gonzales called for the U.S. government to adopt a new telecom policy that brings commercial practices into the government.

Leslie P. Blaker, market development director at Americom Government Services, a unit of SES Americom, said that part of the problem is a budgeting issue. There are no line items in the budget for satellite communications services. The money is budgeted under the “Defense Working Capital Fund,” which is the equivalent to an “American Express” card, she said. The Defense Information Systems Agency is the managing agency for this fund. Many users would like to pursue opportunities with the private sector but they have to work through DISA. And DISA is operating under rules that were established in 1994 when the commercial satellite industry was much different. “It has been very frustrating,” she added.

She has been participating in talks with the Satellite Industry Association and the Department of Defense (DoD) about improving the procurement process. “There should not be any barriers in terms of procurement policy. But we are finding that there is ‘disinformation’ out there in terms of what people who are working for the government believe they can and can’t do,” she said.

From the audience, Kay Sears, vice president of government services at Verestar, told the panelists that there are “two camps” in DoD. One camp believes that it is “better” for DoD to make and launch its own communications satellites. There is another camp that supports the U.S. commercial satellite industry and continues to rely on the industry. “We have to face reality that there are six Gapfiller satellites going up beginning next year, each of which can handle the capacity that DoD gives to the commercial satellite industry today. A lot of the commercial programs will be transferred to the Gapfiller system,” Sears said. “We need to convince the DoD that we are part of the critical infrastructure.”

The panelists concurred that the increase in U.S. government demand for satellite communications capacity that resulted from military use in the Iraqi war would ease but still continue to grow.

Blaker expects an initial decline in demand.

“But there will be a lot of reconstruction activities that will require communications in the region,” Blaker said. “You will see some reduction in use in the region, but the U.S. military will be using capacity to monitor the situation in Iraq.”

Miller said that Intelsat has seen a decline in the military and strategic use of satellite capacity since the war ended, “but there has been interest [by the military] in maintaining capacity and applying it toward complex network solutions such as reconstruction activities.” She added that U.S. military use of satellite capacity is a “growing — not quickly growing but growing – portion of what we do in terms of government business.”

Gonzales said there may be some “ebb and flow” in demand; that is the “cyclical nature” of the business. He expects the U.S. government demand for bandwidth to continue. “The U.S. military has learned how to integrate larger systems and networks. So I see growth with different applications.”

–Fred Donovan

(Susan Miller, Intelsat, [email protected]; Donald Gonzales, G2 Satellite Solutions, [email protected]; For Leslie Blaker, contact Susan Gunther, [email protected])