UPDATED June 13 at 10:16 a.m. EDT
WASHINGTON — The U.S. military took an important step toward changing how it buys commercial satellite bandwidth by awarding SES Government Solutions an $8.2 million contract for capacity aboard an aging satellite covering western Africa.
The contract is the first in a series of so-called pathfinders developed by the Defense Department to test out new ways of doing business with commercial satellite operators, who have long criticized the Pentagon’s buying habits as outdated and inefficient.
“It’s an important breakthrough,” Tip Osterthaler, president and chief executive of SES Government Solutions of McLean, Virginia, a subsidiary of European satellite operator SES, said in a June 9 interview. “It’s a new way of envisioning what commercial satcom is.”
The bulk of the contract, about $8 million, covers the marginal cost of the transponder being used, Osterthaler said. He declined to identify the satellite in question.
The firm, fixed-price contract for Ku-band capacity includes a one-year base period and four one-year options. The contract will be managed at Ramstein Air Base in Germany and U.S. Africa Command, the Pentagon said in a June 6 press release.
Africa Command was the end customer for a controversial bandwidth lease involving APT Satellite Holdings Co. of Hong Kong, which is 40 percent owned by the Chinese government, that came to light last year.
The capacity aboard APT’s Apstar 7 satellite had been leased through a third party, Harris CapRock Government Solutions of Fairfax, Virginia, which arranges satellite services for military and other government users. Pentagon officials defended the arrangement, saying that when they solicited bids for coverage supporting Africa Command, Harris CapRock offered the only viable solution and that the deal did not violate any rules.
Nonetheless, the Pentagon in March said it had made significant progress in moving that bandwidth requirement to other commercial satellite providers in the region.
David Cavossa, president of Harris CapRock Government Solutions, said in a June 12 email that the company had already offloaded all of the communications services in question from Apstar 7 to alternatives by the time the deal with SES was signed.
The SES lease marks the first of five planned “pathfinder” contracts that Teri Takai, the Pentagon’s former chief information officer, recently said would explore new ways of doing business with the commercial satellite industry.
Industry sources have said a request for information for the second pathfinder contract is expected in the next several weeks and that the deal will feature the purchase of a transponder before the construction of a satellite. Commercial satellite executives have long complained that the Defense Department’s reluctance to make up-front leasing commitments makes it difficult for companies to invest in infrastructure that is suited to the military’s needs.
“That’s an inducement for us to build it how the government wants it,” Osterthaler said.
Executives said the SES contract also is the first time U.S. Air Force Space and Missiles Systems Center in Los Angeles has purchased commercial satellite communications services, which typically are procured by the Defense Information Systems Agency. SMC’s traditional role is as a purchaser of military space hardware and related software and services.
Osterthaler said because of the pioneering nature of the contract, SMC had worked for more than a year to ensure the mission’s requirement and acquisition method met legal standards.
Two companies bid on the request for proposals for the lease, according to the Pentagon’s press release.
In that solicitation, the Air Force said it was looking for a satellite in a fuel-saving inclined orbit, meaning not stabilized on its north-south axis, which is typical for geostationary-orbiting satellites nearing the end of their service lives.
Inclined-orbit satellites are of limited utility for many applications but can support airborne surveillance and short-term surge requirements, industry sources said.
The contract is the second experimental demonstration-type contract in recent years for SES Government Solutions. The company previously hosted an experimental missile warning sensor for the Air Force aboard one of its telecommunications satellites.
Lt. Gen. Ellen Pawlikowski, commander of SMC, told reporters in May that the Commercially Hosted Infrared Payload program allowed the Air Force to overcome a series of contractual hurdles and learn how to better work with companies besides its traditional hardware and software suppliers.
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