Best Deal for DoD

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  Space News Business

Best Deal for DoD

By Mary Ann Elliott

posted: 08 August 2005
12:06 pm ET


In his Space News Commentary [“DoD Increasingly Dependent on Satcom Services,” July 11, page 19], SES Americom’s David Helfgott articulates a flawed proposition regarding the commercial satellite bandwidth purchased by the U.S. military. While David was correct in stating that DoD is seeking to more fully integrate commercial satellite communication (Satcom) services into its long-term strategic considerations, his advocacy that the DoD should do away with the current commercial Satcom procurement practice and instead engage in long-term bulk buys directly from the carriers ignores both marketplace realities and the military’s unique requirements.

As many satellite industry observers know, in 2001 the Defense Information Systems Agency awarded the valuable Defense Information Systems Network Satellite Transmission Services-Global (DSTS-G) contract to three small business prime contractors; Arrowhead Global Solutions, Artel and Spacelink. Under the guidelines of DSTS-G, all DoD commercial Satcom bandwidth and services must be procured through this contract. And this has led to more than 30 percent cost savings for the government when compared to other less competitive procurement arrangements.

DSTS-G’s innovative two tiers of competition was designed specifically to serve the government’s best interests. Under DSTS-G, the satellite carriers offer their best prices for bandwidth to the prime contractors, who act as brokers, integrators and solution providers, and the primes then compete against one another to provide the government with the total, end-to-end, best-value Satcom solutions for every individual task order.

Under this contract structure, the DSTS-G prime contractors succeed and win task orders only when they can provide the lowest price, best value, total Satcom solutions. The structure of this procurement process ensures that the most competitive pricing for technically compliant solutions will prevail. The process also has admittedly decreased profit margins for the carriers, (which is the underlying reason for Mr. Helfgott’s commentary) but that is the way things work in the government market space.

Furthermore, the government also has very unique requirements and restrictions that the long-term, bulk bandwidth buys advocated in the Helfgott’s commentary cannot address. As John Stenbit, the former undersecretary and chief information officer of the DoD has said, “The current business model for acquiring commercial Satcom services is generally based on the philosophy of ‘acquire as needed.'” The warfighter’s needs in military theater operations are often transient, unpredictable and require highly complex Satcom solutions.

The government recognizes that it often takes multiple operators to provide the global coverage or capacity required to meet the DoD’s needs. Yet, the satellite operator’s primary business mission is to sell their own capacity first — at the highest possible price and in the greatest amount possible. And when the operators can’t satisfy particular coverage capacity requirements, they too must buy and integrate bandwidth from others. By inserting the DSTS-G prime contractor integrators in the process as honest brokers of bandwidth and as providers of engineered solutions, the government has ensured the best end-to-end solutions — at the lowest possible cost.

The two-tier competitive process has lowered the carriers margins, and the satellite operators would like to see DSTS-G just go away. This will not happen as long as well-informed government decision-makers continue to recognize DSTS-G as a best practice procurement process that provides the government and the U.S taxpayer, with the lowest cost, best value commercial Satcom solutions for our nation’s military.

Mary Ann Elliott

Chairman of the Board

Arrowhead Global Solutions

Falls Church, Va.