Pentagon’s Lease of Chinese Bandwidth Arouses Concern

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UPDATED May 3, 12:28 p.m. EDT

WASHINGTON — The Pentagon’s indirect lease of capacity aboard a Chinese-owned telecommunications satellite, which has drawn criticism from Capitol Hill, is a situation that could become commonplace absent reform in the way the military procures commercial satellite capacity, industry officials said.

Unless the U.S. Department of Defense (DoD), which gets most of its satellite bandwidth from the commercial sector, works more closely with industry to ensure that capacity is available when needed, it might not be in a position to choose who it does business with, if only indirectly, officials said.

“Buying commercial satellite services is not like buying janitorial services,” said Tip Osterthaler, president and chief executive of SES Government Solutions of McLean, Va., a subsidiary of European satellite operator SES. The process is complicated and requires massive infrastructure and preparation, Osterthaler said in an interview. “If we don’t begin now, we’ll have nothing but bad choices,” he said.

The lease in question is for transponder capacity aboard the Apstar 7 satellite owned by APT Satellite Holdings Co. of Hong Kong. The capacity was acquired by the Defense Information Systems Agency (DISA) through Harris CapRock Government Solutions of Fairfax, Va. 

APT is nearly 40 percent owned by the China Aerospace Corp., which is in turn owned by the Chinese government.

The leasing arrangement first came to light at a hearing of the House Armed Services strategic forces subcommittee April 25.

Under questioning from lawmakers, Doug Loverro, deputy assistant secretary of defense for space policy, explained that U.S. forces operating in an unspecified region — the Pentagon later said it was Africa — had a requirement for satellite capacity that could only be met by the Chinese company.

“We recognize that there is concern across the community on the usage of Chinese satellites to support our warfighter, and yet as I expressed, we also recognize that our warfighters need support and sometimes we must go to … the only place that we can get it from,” Loverro said.

“All of the correct procedures were followed in putting those leases together,” Loverro said. “We reviewed all the security concerns, all the business concerns, with such a lease.”

Loverro said the Pentagon will be reviewing its satellite leasing procedures.

After the hearing, Rep. Mike Rogers (R-Ala.), chairman of the House Armed Forces strategic forces subcommittee, issued a statement indicating his displeasure with the Pentagon’s process.

“I am deeply concerned a low-level DOD agency was able to enter into a contract with a Chinese company to use a Chinese satellite launched by a Chinese missile seemingly with no input from the political appointees in DOD,” he said in a statement. “Not only does this contract undermine our military embargo with China, it exposes our military to the risk that China may seek to turn off our ‘eyes and ears’ at the time of their choosing. It sends a terrible message to our industrial base at a time when it is under extreme stress.”

Osterthaler said the situation is preventable if the DoD works more closely with commercial companies to describe its needs. He gave the DoD credit for recent efforts to work more closely with industry, but warned that without reforms, the Pentagon is likely to find itself doing business with unlikely or unwanted partners in the future.

Industry has long urged DISA to be more receptive to multiyear satellite leases and to make up-front commitments to procuring capacity at a given location, even if that bandwidth is not needed at the moment. DISA is the Pentagon’s contracting agency for commercial satellite capacity.

In a written statement, U.S. Air Force Lt. Col. Monica Matoush, a DoD spokeswoman, said U.S. Africa Command required coverage of the entire continent using a single satellite and that Harris CapRock, through the Apstar 7 satellite, was the only authorized provider able to meet that requirement. The one-year lease, which began in May 2012, is worth $10.6 million and could be extended for three more years, she said.

“It’s s a tough requirement,” Diego Paldao, a vice president at Australian satellite operator NewSat, said of the Africa coverage. “There’s nothing else you can do.”

Matoush said DISA and Africa Command assessed the operational security risks involved in the leasing arrangement and implemented appropriate protective measures. All signals to and from the satellite are fully protected with what she characterized as additional “transmission security.”

DoD “has undertaken a review of the procedures that DISA uses to satisfy SatCom service requests to see if changes are needed to enhance [the] decision process,” Matoush said.

Harris CapRock Government Solutions is one of 18 companies authorized to provide commercial satellite services to U.S. government customers under the new Future Comsatcom Services Acquisition contract, Matoush said.

In a statement, Harris CapRock said its leasing arrangements are evaluated under “rigorous processes and stringent information assurance standards.” The use of “non-U.S. IT infrastructure” is a practice that “is not uncommon in either commercial offerings or government selections. Harris CapRock designs and engineers all solutions to comply with the information assurance and security needs of our government customers and did so in this particular case,” the statement said.