PARIS — The U.S. Government Accountability Office has sided with Intelsat’s protest of a multi-year U.S. Defense Department satellite bandwidth-provision contract award to competitor Inmarsat of London, a decision that apparently will at least suspend the award and may force a new competition.
The GAO decision – which was a surprise given the rarity of contract protest wins — was made Dec. 23 and subsequently published on the agency’s website. As of Jan. 4, GAO had included no supporting documentation explaining the decision to validate – GAO uses the term “sustain” — Intelsat’s protest of the U.S. Defense Information Systems Agency (DISA) contract to Inmarsat.
GAO officials did not immediately respond to requests for comment on the reasoning behind the decision.
London-based Inmarsat did not respond to requests for comment on Jan. 4.
DISA’s Commercial Broadband Satellite Program Satellite Service (CSSC) contract, guaranteed for at least one year, includes options for four annual renewals with a total value of up to $450 million. But the contract lists a minimum value of $150,000 — over five years — meaning its financial impact on the winner could be negligible.
McLean, Virginia-based Intelsat’s Intelsat General Corp. was the CSSC contract incumbent. Industry officials said Intelsat and its multiple partners, including SES of Luxembourg and Sky Perfect JSat Corp. of Japan, had booked a total of around $40 million per year from the contract.
Inmarsat’s bid for the CSSC contract renewal had surprised its competitors by its low price — more than $100 million less than the Intelsat-SES-JSat bid and a bid by Airbus Defence and Space.
The CSSC contract calls for bidders to stitch together guaranteed global satellite bandwidth for over specific geographic areas, in multiple frequencies. No single satellite operator — not even Intelsat’s 50-satellite fleet — is sufficient to provide the required coverage and frequencies.
Because of that, each of the three bidders included bandwidth they would lease from others — in many cases, from each other — at prices that would have been the same for all three of them.
Inmarsat — a global provider of L-band mobile satellite services and, more recently, Ka-band broadband mobile capacity — is no more capable than Intelsat or Airbus of meeting the contract’s full terms. It, too, was obliged to secure commitments from competitors and other satellite fleet owners to meet the contract’s coverage and frequency conditions.
That being the case, Inmarsat would have secured pricing terms for coverage it could not provide from its own fleet that are similar to what its competitors secured for the third-party capacity in their own bids.
Industry officials said that for all three bidders, the margin of maneuver in the contract was sharply reduced because of the amount of third-party capacity they would need to include.
Inmarsat officials have said they were willing to go the limit for the contract given the company’s long-term strategy of bringing in the U.S. Defense Department as a regular customer.
In a statement issued Jan. 4, Intelsat said:
“Intelsat General was notified by its counsel that the GAO had sustained our protest which was filed with respect to the DISA CSSC program. Until we receive the redacted GAO decision and DISA’s response we do not have any more information. We look forward to continuing to compete for this global network.”
