Transforming DoD Satcom Procurement

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The U.S. Department of Defense (DoD) has released its strategy to meet national security needs in the face of substantial budget reductions. The decade ahead will require significant modernization of front-line weapons systems that have endured the enormous stresses of long-term combat operations. At the same time, the department will need to acquire new weapons to support a smaller force structure capable of meeting continuing and emerging threats around the globe.

As the Defense Department focuses on this new national security strategy it is faced with many challenging resource decisions, including how to manage intense competition for capital to fulfill its modernization needs. The DoD is currently consuming scarce modernization capital, government contracting resources, and program management capabilities to acquire large satellite communications platforms and systems. One sector that will be a part of this discussion is military satcom.

There are indications that the DoD is beginning to alter its satcom buying practices. These include a movement toward the use of hosted payloads and serious consideration of “commercial-like” acquisition of a communications satellite. The wheels of change turn very slowly in large, complex organizations, but the signs are promising. The DoD recognizes that it must transform its acquisition process, even though it will be very difficult — unfortunately, more difficult than it needs to be, given today’s fiscal pressures. However, there is a simpler and more proven method of achieving procurement reform: The department could turn to the commercial satellite communications industrial base to meet most of its satcom needs.

Private industry uses acquisition models that are mature enough for the department to quickly apply to its satcom requirements. These models can deliver the capacity the DoD needs and do it while reducing capital outlays. The commercial satcom industrial base can offer lower costs, faster cycles and more flexible alternatives to the burdensome Defense Department acquisition process. The time is now for the DoD to take better advantage of this strong commercial satcom base, a base that is already meeting more than 80 percent of DoD bandwidth needs in overseas contingency operations.

The current procurement system for delivering satcom capabilities to our warfighters, based on the DoD Major Systems Acquisition Process, is simply too expensive and excessively long. The department needs to consider streamlined acquisition models that balance two new approaches. First, apply a capabilities-based method to building and fielding satcom systems. Second, graduate to a model that acquires satcom services, not systems, to meet DoD needs. Movement towards these two approaches is encouraging, but still in the very early stages. These procurement reform efforts must be stepped up and take effect sooner rather than later.

What is a capabilities-based approach? This is a procurement method that recognizes the maturity of the commercial satcom manufacturers and their ability to build and field capacity that is compatible with military needs and requirements. While there are many options for executing this approach, the bottom line is that the commercial satcom industry can deliver a defined capability on orbit, on a time-definite schedule, and at an affordable and set price. Clearly the military must, and should, build to its specific military requirements when there is no commercial solution. However, most current and anticipated military satcom needs can now be met by commercial solutions.

The second procurement reform approach involves purchasing satcom services — as opposed to systems — to meet military needs that are reasonably identifiable in terms of location, service requirements, and duration. This concept is straightforward: Specify what you need, pay for what you use.

The DoD has acquired telecommunications as services (telephony and long-haul communications capability) for quite some time. The process is well defined and the contractual instruments are mature. This service procurement capability allows the government to treat telecommunications purchases as an operating expense with Operations and Maintenance budget authority, instead of as a capital expense with program-specific budget authority. Those rooted in the telecommunications business recognize this procurement process as obtaining “dial tone” using a Communications Service Authorization (CSA), or ordering long-haul circuits using a Telecommunications Service Request (TSR). The DoD/General Services Administration partnership on the Future COMSATCOM Services Acquisition framework is encouraging, but it must be backed by a long-term resource commitment to buy commercial satcom. To deliver the economies the government needs, DoD cannot continue spot-market buying with emergency supplemental dollars or Overseas Contingency Operations funding; longer-term planning, budget action and a commitment to the services model can deliver the economic advantage the DoD needs.

Managed service models have matured in a number of industries. In the aircraft simulator world, for example, the customer buys simulator rides rather than the simulator. The U.S. Air Force uses an innovative “service” model in its Distributed Mission Training program, paying for aircrew training events rather than owning and maintaining individual simulators. We would not expect the government to design and build a car, or even employ a taxi, for repeated trips between two locations that are well served by commercial transportation such as metro, rail or bus. So why should the DoD pursue a similarly inefficient procurement method to provide routine, predictable satcom services for the warfighter?

Government and the commercial satellite industry are at a crossroads in their relationship. The DoD has spent enormous resources meeting satellite communications needs for our warfighters over the last decade without a coherent commercial satcom purchasing strategy. I purposely and carefully use the term “strategy” because arguably there is a good policy in place. However, despite some positive signs of change in its satcom acquisition methods, genuine reform and the reach for efficient ways of buying satcom capability are not going to happen fast enough unless the DoD accelerates its transformation processes. The opportunity exists now for real change, for real economies, for real flexibility in meeting operational needs. These changes are even more imperative in view of the new National Security Strategy and the defense strategy report “Sustaining U.S. Global Leadership: Priorities for 21st Century Defense.”

In conclusion, the DoD should increase its dialogue with industry, accelerate the pace in pursuing capabilities-based purchasing of systems and platforms, and shift the purchasing paradigm from systems to services to meet its satellite communications needs and requirements.

The window of opportunity to effect these changes will not be open indefinitely. If that window closes without the satcom procurement reforms cited here, precious modernization dollars will continue to be consumed by large, complex satcom platforms at a time when capital is truly scarce. The government must create a formal satcom capabilities and services procurement strategy with commercial industry so the limited funds available can be applied to other pressing defense modernization requirements.

 

Retired U.S. Air Force Lt. Gen. William J. Donahue served in a variety of communications, information, and command and control positions during a 33-year career. He has an extensive background in Air Force information technology, telecommunications and space-based systems, and currently advises a range of clients including commercial satellite operator Xtar LLC, for whom this piece was written.

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