The General Accounting Office issued a new report recommending that the Department of Defense (DoD) focus on developing and implementing a strategic approach to procuring commercial satellite bandwidth services.

The report specifically calls for the DoD to correct oversight and management weaknesses regarding purchases of satellite services. To ensure the successful implementation of a strategic management framework, GAO urged the development of performance metrics by the DoD to assess user satisfaction, strengthen core internal technical expertise and information systems, while determining if the existing acquisition process requires changes to facilitate a strategic approach.

The report comes in response to a dramatic rise in DoD’s demand for commercial satellite capacity as modern war fighting becomes more bandwidth-intensive. The GAO conducted the study at the request of Congress due to the DoD’s increased reliance on commercial satellite communications to plan and to support operations in a network-centric warfare environment.

Commercial satellite bandwidth services acquired by the DoD support a variety of critical missions, such as surveillance performed by unmanned aerial vehicles. During the past 12 years, DoD has experienced a ten-fold increase in the demand for telecommunication bandwidth from satellites to support the war-fighting combatant commands, the military services, and defense agencies, according to the GAO report. Certain experts predict another five-fold or six-fold jump in demand by 2010.

DoD satellites cannot satisfy all of the military’s telecommunication requirements. Sizeable shortfalls in bandwidth capacity are expected through 2010, according to the GAO.

In light of these challenges, the GAO looked into whether DoD’s process for procuring commercial satellite services is fair to vendors and providers, the process meets users’ needs, and spending on these services is managed effectively and efficiently.

The DoD for many years has augmented its own satellite communications capability by leasing commercial fixed satellite bandwidth services primarily through the Defense Information Systems Agency (DISA) and its Defense Information Technology Contracting Organization (DITCO).

However, DISA does not acquire commercial bandwidth directly from satellite service providers. Instead, it buys bandwidth through several competitively selected vendors that solicit bids from individual service providers.

The GAO found that the process for acquiring commercial satellite bandwidth is fair to DoD’s vendors and their subcontractors that serve as commercial satellite-bandwidth service providers. However, certain major DoD users of commercial satellite bandwidth services are dissatisfied with DISA’s process, according to the GAO.

Disgruntled bandwidth users view the process as too lengthy, particularly for time-critical military operations, and they believe that the cost is too high, the GAO found. They also indicated that the contracts resulting from the process are often too inflexible and cause some military users to bypass the DISA process altogether, either by obtaining a formal waiver or by procuring services without a waiver.

Nearly 20 percent of DoD’s spending on satellite bandwidth services during fiscal year 2002 occurred outside the DISA process. One DoD official said that the true percentage was probably much higher. By allowing users to bypass the DISA process, DoD is hampering its ability to ensure that its communications networks are interoperable and have an appropriate level of redundancies, according to the report.

In addition, the GAO found that the DoD does not know exactly how much it is spending on commercial satellite bandwidth services, nor does it know much about its service providers or whether customer needs are really satisfied. Without this knowledge, DoD cannot take steps to leverage its buying power, even though it is the largest customer for commercial satellite bandwidth, the GAO concluded.

Neither DOD nor DISA is making a concerted effort to collect forecasts of bandwidth needs from users and to ensure that those needs are met by the commercial sector, the GAO found. If DISA is to remain as DoD’s primary agent to acquire satellite bandwidth, then it must implement a more strategic management approach that ensures services can be acquired in a fair, timely, and cost-effective way to meet users’ needs, the report found. The “considerable challenge” of doing so can be met if senior leaders within DISA and DoD lend their support to overcome any internal resistance to adopting a strategic bandwidth-acquisition plan for the U.S. military, the GAO concluded.

Steve Symonds, a satellite consultant who heads Symonds Associates in Wilton, Conn., said, “This is the second major report from GAO in four months focusing on ways in which DoD can improve the acquisition and use of satellite systems and bandwidth. Little wonder since satellite technology provides DoD and other security agencies with extremely agile communications capabilities – virtually instantaneous coverage in even the most remote places on the planet, which have zero infrastructure.”

Three of the more interesting findings in the GAO studies, according to Symonds, are:

1. DoD is not making effective use of commercial or military satellite resources, in large part, due to its reliance on tools and processes that are the rough equivalent of “stone knives and bear skins.” It can take up to six months for DISA to activate a service that a commercial satellite operator can bring up in 24 hours. In addition, bandwidth management practices and tools used daily by commercial operators and their customers still appear to be a mystery to DoD.

2. Heightened expectations about increasing DoD procurement of commercial satellite bandwidth do not appear to be materializing. Historically, big jumps in demand have been unplanned due to wars. Otherwise, the outlook for demand is “steady as she goes,” at least until 2011 when DoD’s Advanced Wideband Gapfiller Satellites come on line.

3. Intelsat is no longer the dominant supplier of DoD satellite bandwidth, despite complaints to the contrary by its competitors. A dramatic decline from Intelsat’s 99.99 percent share of the DoD commercial bandwidth in the days before the emergence of private sector satellite operators, such as PanAmSat [NYSE: SPOT], has created what appears to be a “real marketplace” with healthy competition among multiple competitors.

–Paul Dykewicz

(William T. Woods, GAO, 202/512-4841; Steve Symonds, Symonds Associates, 203/834-2766)