PARIS — Boeing is arguing to the U.S. Department of Defense that the company can build another Wideband Global Satcom (WGS) Ka- and X-band satellite for the same price as the agency would pay for a commercial satellite with equivalent capability.
Boeing officials did not directly respond when asked if the company had been lobbying the U.S. Congress to kill a U.S. Defense Department proposal to partner with a commercial satellite operator that would build and launch a satellite which U.S. defense forces would then lease for 15 years.
The idea of the program is to allow the Defense Department to cut its satellite bandwidth costs by leasing Ku- and Ka-band capacity over the life of a satellite rather than buying higher-priced, short-term bandwidth.
At a Sept. 13 briefing here during the World Satellite Business Week, organized by Euroconsult of Paris, Boeing officials said that if the contract was managed under commercial terms, building a WGS satellite would cost no more than a commercial spacecraft.
El Segundo, Calif.-based Boeing Space and Intelligence Systems already has delivered three WGS satellites and has three more in production. A seventh spacecraft and long-lead components for an eighth were part of a $1.1 billion contract with the U.S. Air Force, announced Sept. 9.
The contract, which includes launches as well as an option for a ninth WGS, does not spell out the cost of building another WGS satellite that is nearly identical to the previous six.
At the same time as it has been preparing the WGS follow-on contract, U.S. defense authorities have been trying to sell the U.S. Congress on a novel idea for securing satellite bandwidth for the U.S. Central Command in the Middle East, South and Central Asia and North Africa.
The U.S. Defense Information Systems Agency (DISA) has argued that its Advanced Satcom Services in a Single Theater (ASSIST) proposal represents a smarter way for the U.S. military to purchase satellite capacity.
Instead of building its own satellite, the Defense Department would order a commercial satellite operator to provide a certain amount of Ku- and Ka-band capacity in the region over the 15-year life of a satellite for $440 million.
Commercial satellite operators have said none of them has access to sufficient Ka- or Ku-band frequency in the region to give DISA what it wants, especially given that DISA has asked that the satellite bandwidth be available by December 2014.
That alone may have made ASSIST a nonstarter. But Boeing officials said even the economics of ASSIST can be bested by the purchase of an identical WGS satellite.
“We have completed all the non-recurring engineering on the program, and if a procurement for a recurrent satellite was conducted on a commercial basis, we could bring down the cost further,” Craig R. Cooning, general manager of Boeing Space and Intelligence Systems, said. “It seems to us that this is the moment to be taking advantage of those savings. And do you know of any operator that has Ka- and Ku-band rights in the region? I don’t.”
Cooning said that to bring down the cost of a WGS satellite as far as possible, the Air Force would need to waive many of the usual procedures it imposes on industry, which add considerable costs to the program and which, he said, are not needed given the maturity of the WGS system.
Handling a WGS procurement at this point in the program, and adopting commercial procedures with lighter customer oversight, could end up with a satellite that costs less than $300 million. “How much do you think it would cost to purchase a satellite with WGS’s capabilities on the commercial market?” Cooning asked.
Boeing and Bethesda, Md.-based Lockheed Martin have been proposing that, to accommodate the U.S. defense budget to leaner times, defense procurement adopt practices from the commercial sector including leaner program management and bulk purchases.
Boeing is also turning greater attention to the commercial satellite market to compensate at least partially for the expected downturn in defense orders. Cooning said that five years ago, Boeing’s commercial satellite business represented perhaps 10 percent of its revenue. In 2011 that figure is expected to be about 16 percent, rising to 26 percent in 2012 as the company digests multi-satellite orders for its newly designed 702b satellite platform.
Lockheed Martin officials said here that they too are taking a fresh look at the commercial satellite market, but the company has not yet been as aggressive as Boeing in pursuing commercial orders.
