New U.S. Government Satcom Contract Expected To Increase Competition

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WASHINGTON — The U.S. government is poised to purchase satellite communications services under a new contract vehicle that government and industry officials say will do a lot to improve market competition and save money.

The General Services Administration and Defense Information Systems Agency — the U.S. government’s primary purchasers of commercial satellite services — soon will issue two draft solicitations for end-to-end managed network services. One solicitation will be structured as an open competition while the other will be for small businesses, said Kevin Gallo, the General Services Administration’s satcom services program manager. He spoke on a March 16 panel at the Satellite 2010 conference here.

End-to-end services are one of three separate aspects of a new contract vehicle called the Future Comsatcom Services Acquisition (FCSA) program, which merges several previous government contracts. One of the most significant additions made under FCSA is the Defense Department’s ability to purchase satellite bandwidth directly from commercial satellite operators. The end-to-end services aspect of FCSA is complex and may take a while to implement, but the government is likely weeks away from issuing the first FCSA task orders for pure commercial bandwidth, industry sources said.

The military’s current vehicle for purchasing commercial satellite capacity is called the Defense Satellite Transmission Services-Global (DSTS-G) contract, which relies on companies known as integrators that do everything from purchasing and reselling pure commercial bandwidth to the government to delivering turnkey communications networks that may use a combination of satellite and terrestrial components. The DSTS-G contract was set to expire in February 2011, but integrators were recently notified that it will be extended by one year, industry sources said.

Under DSTS-G, there has not been much competition in recent years as “the industry got smarter and learned how to use it,” said David Cavossa, vice president of operations at CapRock Government Solutions, one of the integrators. The FCSA program will increase competition and drive prices down for the government, he said.

The integrators realize that without the likelihood of simply reselling capacity to the government, success will be determined by the level of customer service they can provide.

“Past performance will always be helpful in the beginning,” Cavossa said. “But at the end of the day, companies like CapRock are only going to be able to differentiate themselves in the areas of customer service. If a military user knows they can call one of us to get what they need, they will continue to do that.”

Michael Wheeler, chief executive of Segovia, agreed with those sentiments, saying any integrator that does not understand and support customers’ requirements will live a short and painful existence in this market. Herndon, Va.-based Segovia is an Inmarsat subsidiary hoping to provide managed network services to the government.

As the government’s use of commercial satellite services has gone from a stop-gap measure to a long-term requirement in recent years, increased communication is needed to ensure the government gets what it needs, said Tip Osterthaler, chief executive of Americom Government Services of McLean, Va., a subsidiary of satellite operator SES of Luxembourg. Government, and particularly military, communications inherently require more security than most commercial customers are willing to pay for, so the time has come for the government to agree to terms with satellite operators that will enable more information assurance to be built into the networks of tomorrow, he said.

“We are interested to know what kinds of structures [the Defense Department] needs,” Osterthaler said. “We are interested in the long-term implications for assured access and information assurance. My view is U.S. government dependency is not really sustainable for the long term if information security cannot be met.”

Commercial satellite capacity now accounts for more than 85 percent of what the government uses, and in the Southwest Asia region that figure is about 96 percent, said Rebecca Cowen-Hirsch, president of Inmarsat Government Services.

To truly drive down costs to the government, it must be permitted to enter into long-term agreements for capacity, which the law does not currently allow, said Dan Gager, the Defense Information Systems Agency’s deputy program manager for FCSA. Much of the commercial capacity that the government has bought in recent years has been paid for with supplemental war funding, which the Defense Department has started to scale back. Gager’s sentiments echoed those often heard from the satellite communications industry.

“We need to be able to lease comsatcom longer and in bigger quantities and manage it at a higher level,” he said. “There needs to be a big cultural change. … Month-to-month leases aren’t working for the U.S. government.”