Sat Service Providers See Opportunity in Tight Budgets

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WASHINGTON — Satellite service providers said they believe the across-the-board budget cuts hitting U.S. government agencies this year under sequestration are just the beginning of a prolonged federal spending downturn that ultimately could benefit those firms that are the most efficient and cost effective in providing bandwidth to the military.

“It’s not the end of the drawdown, but the beginning,” Lyle Bien, a retired U.S. Navy vice admiral and satellite communications consultant, said March 20 during a panel discussion at the Satellite 2013 conference.

Panelists pointed to a long-term budget situation featuring sequestration cuts and a U.S. Congress that has become accustomed to funding government operations through short-term spending bills known as continuing resolutions.

“I don’t think this is going away anytime soon,” said Sonny Marshall, president and chief executive of Marshall Communications of Ashburn, Va.

Panelists agreed that satellite companies must view the current budget reality as a catalyst for improving how they do business. Many pointed to the growing need for satellite bandwidth for military operations, declining budgets notwithstanding.

“It’s getting bigger and bigger and bigger,” Marshall said. “We have to do more with less and we have to do it smarter.”

Tip Osterthaler, president and chief executive of SES Government Solutions, said the current budget environment will “start to feel like the new normal” and, if properly navigated, could provide “a groundswell to change how we do business.”

Panelists also agreed that as budgets for satellite services become leaner, companies have to do a better job of understanding government missions and requirements. Without that clarity, contractors will have a tougher time winning new government business.

Michael Pollack, vice president of Gaithersburg, Md.-based UltiSat, warned that the budget crisis could force government agencies to choose the lowest-priced technically acceptable solution over the best value. As budgets get leaner, he said, federal agencies have shown a willingness to dump incumbents in favor of new providers.

Pollack suggested the budget situation provides an opportunity for small businesses to flourish by boasting less bureaucracy, avoiding protests of government decisions and focusing more on the customer.