Selling Satellites in a World of Tight Budgets

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  Space News Business

Selling Satellites in a World of Tight Budgets

By JEREMY SINGER
Space News Staff Writer
posted: 07 April 2008
03:06 pm ET




Profile:
Craig R. Cooning

 

Vice President and General Manager

Boeing Space and Intelligence Systems

 

D
uring his last stint in uniform as a two-star Air Force general serving as director of space acquisition in the office of the undersecretary of the U.S. Air Force, Craig Cooning oversaw a portfolio of programs riddled with cost overruns due to technical difficulty.

 

T
oday he credits the back-to-basics philosophy of
space acquisition, which
was implemented shortly after he left the service in late 2005, for helping to address the technical issues. However,
tight budgets now present another potent threat to satellite efforts, particularly those early in development, Cooning says.

Boeing is competing for major Air Force contracts expected to be awarded shortly for both the next generation of GPS satellites and the Transformational Satellite (T-Sat) Communications System.
�Cooning believes that funding could prove to be an obstacle to getting the latter effort off the ground.

The Boeing Space and Intelligence Systems
sector primarily deals with national security programs, with 75 percent of its business with the military and intelligence communities. The remaining
�25 percent of the sector’s business comes from commercial customers.

Cooning also has his eyes on
the contract for the Geostationary Operational Environmental-R series of satellites for the National Oceanic and Atmospheric Administration, which is expected to be awarded early next year.
�In addition to the contracts they are vying for, Boeing also
won a contract in December 2007 to build up to four more Tracking and Data Relay Satellites for NASA.

He declined to talk about the controversial classified programs the company has worked on, such as
the Future Imagery Architecture, other than to say that customer satisfaction is his No. 1 priority.

 

Cooning talked about his agenda with Space News staff writer Jeremy Singer during a March 28 telephone interview.

Why do you think support for the T-Sat program appears to be waning within the military?

 

I’m very concerned about the planned reduction in funding for the T-Sat program. T-Sat was the poster child for how to do things right, and I think the Air Force set the stage for doing everything right with things like the $500 million spent on each company to get the technology readiness levels right and retire risk.

This is the Pentagon’s first opportunity to deploy a satellite constellation with onboard routers that will give them tremendous flexibility. I liken it to GPS in the 1980s, which also did not get a lot of support, but a group of people saw it for what it could offer in the future. T-Sat has the same opportunity in that it may be used in the future in ways that we haven’t dreamed of, as was the case with GPS.

 

The support issue is tied to budget pressure. I’m told that the Air Force has competing priorities on the aircraft side, including a huge fuel cost increase as a result of current operations in Iraq and fighting terrorism. New programs without a lot of metal bent are always first to be looked at for budget cuts.

 

I don’t have a crystal ball, but I’ve seen what happens to programs in this type of situation. The wounded rabbit becomes the one easiest to hunt. I just hope that doesn’t happen here with T-Sat.

 

Is there a downside to having so many major contract awards at the same time?

 

It would be nice if they were more spread out. New programs are different than programs in production. If people are worried about industrial base – and they ought to be – they should know that new programs keep engineers busy honing their skills on what it takes to start the new efforts. You need a blend of new and continuing programs to balance the base.

 

How will your engineers stay sharp?

It’s clear on the Air Force side that the new communications and navigation programs are all laid out on top of each other, but there may be some opportunities in the classified world that might help bridge the gap.

 

We also have new developments on the commercial side, with the world demand for high-definition television and other opportunities that will require the deployment of an amazing amount of capacity to deliver the supporting capabilities.

 

As a former military official who now heads an organization that builds both military and commercial communications satellites, what is your view on the military’s heavy reliance on commercial services for its satellite communications needs?

The military spends about $300,000 per transponder equivalent on the Wideband Global Satcom system satellites. I think the lowest price per transponder equivalent that the Defense Information Systems Agency gets on commercial satellites is about $1 million.

 

It’s clear to me that there is value in
having a larger number of military satellites like Wideband Global to swing the ratio from 80/20 to something else. There will always be the need for surge capability and commercial services are appropriate for that purpose, but it would be wise for the Defense Department to have more assets that it owns to give itself capability for lower prices.

 

It’s like buying something by the drink versus by the bottle. You need to have money up front to do that.

 

Do you expect to sell more Wideband Global satellites to the military beyond the six that are currently under contract?

 

Based on demand forecasts, it would make sense for the Air Force to buy three to six more satellites. Defense Department officials have indicated interest in buying more satellites, but it’s not real until it’s in the budget, and it’s not in the budget request that was submitted to Congress
for 2009.

 

We’re coming to the point where there would be a production break after the sixth satellite if the Pentagon does not budget money by 2010 for more Wideband Global satellites. There was a similar issue between the third and fourth satellite in the Wideband Global
constellation that caused parts obsolescence issues and drove up the cost of the satellites.

 

What is your view on the outlook for the Space Radar program?

 

Obviously, it’s a capability that the warfighter needs. However, it appears that collectively, we have not been able to design a Space Radar program that has been able to get adequate support from Capitol Hill. Part of the problem
may be reaching for too big a program, or too much capability too quickly. It certainly makes sense to scale back our appetite and pursue it on a smaller scale or more evolutionary scale.

Do you envision competing for Space Radar as a prime contractor?

 

We’re currently on the Northrop Grumman Space Technology team, which is still together at the moment. We certainly have the skill sets to compete as a prime. I don’t want to say for sure, but I think that in the future, we will certainly look at that opportunity.

Would you like to build anti-satellite weapons?

 

I don’t want to answer that question. I think there may have been a recent demonstration of that capability with the Aegis ship that shot down the falling intelligence satellite, but I don’t want to start a policy debate with what our company might be thinking about.