Industry to feds: plan ahead
Satellite providers are urging federal agencies to rethink the way they plan and buy bandwidth.
Federal procurement practices, which may be suitable for many purchases, can make life difficult for satellite providers that are generally accustomed to planning launches and orbits of their big metal "birds" years in advance.
The technology has become an indispensable component of global communications and plays a role in almost everything the government does, especially internationally. Yet despite the need, the government still hasn't discovered a good way to buy satellite usage, industry sources say.
Government agencies, particularly in defense, often buy satellite bandwidth on short notice through the "spot market" when unexpected needs arise, such as the dispatch of troops to quell turmoil in a nation like Liberia, said Richard DalBello, president of the Satellite Industry Association (SIA). Even when the government signs multiple-year contracts, they typically include a one-year commitment and additional option years.
"Satellite capacity doesn't just happen," DalBello said. "It's like a 24-month cycle to make it available and get it into the sky." Once the satellites are launched, the communication capacity they can provide is sold to buyers, usually through long-term leases.
The situation has become more urgent now that the Bush administration has issued a policy that calls on agencies to rely on commercial firms to provide remote-sensing data as much as possible. That presents an even larger opportunity for companies but also elevates the importance of the difficulties they may face.
Some satellite firms, backed by SIA, are talking to Defense Department officials to try to find alternatives that will be more appealing to the industry. However, the problem stems from entrenched practices on both sides, according to Phil McAlister, director of space and telecommunications at Futron, a research firm based in Bethesda, Md.
"The [satellite] operators are blaming the government and their procurement processes, and the government is blaming the operators. It's a big finger-pointing game," he said. "In the meantime, the DOD is not getting the bandwidth they need and the satellite operators are missing this market opportunity."
Some providers do seem to be willing to take risks. Robert Turner, director of government services for the U.S. government division of Netherlands-based New Skies Satellites, is philosophical about the situation. Companies have to take responsibility for planning, he said.
"The government's needs are not always predictable. The need for communications and the procurement occur well in advance of the major event," he said.
Satellite providers, however, are sometimes stubborn, said one industry source.
"If the satellite operators were willing to accept more risk, then it wouldn't be a problem," the source said. "If you did an analysis of the government's buying practices, I think you would find that generally they are good long-term customers, generally they exercise all their options. The providers don't like that. They're used to customers coming and saying, 'I want a 15-year lease.' They don't like this option-year stuff."
Civilian agencies present satellite providers with some of the same challenges, but their needs are more predictable, McAlister said. "On the military side, their requirements are short-term, extreme and unplanned. All of those are hard for the commercial guys to do."
"It is helpful for carriers to be able to plan for this," said Leslie Blaker, market development director at Americom Government Services, a subsidiary of GE Americom. "Satellites are very expensive. [A commercial customer such as] CNN will plan and work with a carrier long before the satellite is even launched and make commitments to the end of life. The government assumes the capacity is there, yet provides little forecasting. Then, in times of war, the carrier industry is put on point to deliver assets."
DOD is missing opportunities to use its clout as a volume buyer, McAlister said. By buying so much capacity piecemeal, defense agencies can't leverage the $400 million of satellite services the department buys annually to negotiate better terms and pricing. The buyers are bound by federal rules that generally forbid agencies to commit funding that hasn't been appropriated.
"The spot market purchasing is just one symptom," said Kay Sears, vice president of government sales at satellite provider Verestar Government Services. "The larger issue is the relationship they have with the industry. That relationship is not as strong as it could be, and they end up having to procure the way they do. We can't get DOD to admit that they need a satellite industry."
Civilian agencies can pose some of the same challenges to the industry that defense does. The Centers for Disease Control and Prevention made several spot buys to broadcast information about anthrax during the anthrax attacks in 2001, said Sabrina Crane, program manager of the satellite services program at the General Services Administration.
Still, it hasn't become the same kind of issue for the civilian side of government as for the military, said April Ramey, director of GSA's Innovation Center.
"We're in a real uncertain world at this time. We can't predict when there will be a crisis and some part of the government will have to respond quickly," she said.
Cutting out the middleman
One challenge for satellite firms is that many Defense Department procurements go through the Defense Information Systems Agency, making it difficult for vendors to establish relationships with the agencies actually using the bandwidth, industry sources say.
However, some defense agencies have begun sidestepping DISA and doing their own procurements when they need to. The Navy's Space and Naval Warfare Systems Command (Spawar) is one of the most aggressive agencies in that regard, said Richard DalBello, president of the Satellite Industry Association.
Spawar goes through DISA when the procurement agency can meet the Navy's needs but doesn't hesitate to sidestep it when it can't, said Michelle Bailey, program manager for the Navy Satellite Communications Program Office.
Bailey, who is in charge of procuring bandwidth for the Navy, said she tries to project about two years ahead. Having one coordinating point for the whole service makes planning easier, she said. She has had to make only two or three spot buys in the four years she has held the position.
"We try to avoid it," she said. "It means a requirement came up that was unexpected. But, of course, in this business, that happens sometimes."