Page 1 GAO-06-480R Status Report on Commercial Communications Satellite Services 

United States Government Accountability Office

Washington, DC 20548 

April 17, 2006 

Congressional Requesters 

Subject: Department of Defense Actions to Modify its Commercial Communications 

Satellite Services Procurement Process

The Department of Defense (DOD) continues to rely on commercial satellite 

communications to plan and support operations. DOD use of commercial satellite 

bandwidth has increased over the past few years, making the department the largest 

single customer of commercial satellite bandwidth. In recent years, DOD’s process for 

acquiring commercial satellite communications has received criticism for being 

lengthy, inflexible, and costly. DOD is now reexamining how it procures commercial 

satellite services to address these issues. You asked us to summarize the actions that 

DOD has taken to date in revising its requirements and acquisition approach for 

commercial satellite services. 

Summary

DOD has taken several actions to develop a new approach for procuring commercial 

satellite communications services. On December 14, 2004, the department issued a new 

policy for implementing an approach for planning, acquiring, and managing commercial 

fixed satellite services. To address the cost-effectiveness element of the new policy, in 

July 2005, the Defense Information Systems Agency (DISA) completed a cost-benefit 

analysis that considered multiple options for procuring satellite services. Summaries of 

these documents are presented below.1

 

DOD is working to determine how to improve its procurement processes by studying 

different acquisition methods. Also, DOD has been reaching out to industry in order to 

learn about capabilities and costs related to the planning, acquisition, and management 

of commercial fixed satellite services. DOD will make a final determination on whether 

the existing or modified contracts can meet the full range of capabilities needed by the 

warfighters or whether any successor contracts will be required. In parallel, DOD and 

DISA officials are working with the Navy to consolidate the Navy’s worldwide satellite 

communications requirements under one task order.2 Upon completing the above 

mentioned analysis and determining the success of the Navy consolidation effort, DOD 

 

1

Assistant Secretary of Defense for Networks and Information Integration, Policy for the Planning, Acquisition, 

and Management of Commercial Satellite Communications Fixed Satellite Services (FSS), (Washington, D.C.: 

Dec. 14, 2004). 

2

A task order is an order for services placed against an established contract or with government sources. 
 Page 2 GAO-06-480R Status Report on Commercial Communications Satellite Services

expects to have the information necessary to finalize its approach for acquiring 

commercial satellite communications. 

DOD Moving to a More Strategic Approach

On July 29, 2005, DOD issued a report to Congress on how it would implement a more 

strategic approach for the planning, acquisition, and management of commercial fixed 

satellite services.3

 The report summarized DOD’s new policy, which includes four 

overarching elements that frame its approach for acquiring commercial fixed satellite 

services: 

• planning to integrate well-defined, long-term needs; flexible requirements of 

intermittent users; and surge capacity requirements for satellite communications; 

• acquiring cost-effective services through leveraging the department’s buying power 

while providing the warfighter with timely access to leased services; 

• integrating the management of commercial fixed communication satellite services4

and DOD-owned satellite services; and 

• aligning collateral programs, such as earth terminals, that are affected by the type 

and amount of commercial satellite communications services leased. 

DOD’s policy identified several steps that would be needed to implement a new 

strategic approach to plan, acquire, and manage commercial satellite communication 

services. It emphasizes that the processes for acquiring commercial satellite 

communications need to be responsive to the users while leveraging DOD’s buying 

power and sets out a study process to accomplish these goals. The policy goes on to 

task DISA and others to develop plans for integrating commercial satellite 

communications operational control with other DOD satellite operations centers. The 

new approach will be phased in and is intended to be the only mechanism available to 

DOD components to acquire commercial satellite services. Both the policy itself and its 

implementation are to be reevaluated annually. 

Cost-Benefit Analysis Considered 10 Options

In order to address the cost-effective component of the new policy, DISA, in 2005, 

completed a cost-benefit analysis that considered 10 options for procuring systems 

engineering, integration services, and commercial satellite bandwidth. In developing 

the 10 acquisition options in the cost-benefit analysis, DISA took into account the four 

procurement mechanisms outlined in Section 803 of the Ronald W. Reagan National 

Defense Authorization Act for Fiscal Year 2005 (Pub. L. No. 108-375): 

• procurement under indefinite delivery, indefinite quantity contracts of other 

departments and agencies of the federal government; 

 

3

 The Ronald W. Reagan National Defense Authorization Act for Fiscal Year 2005, Pub. L. No. 108-375, § 803, 

October 28, 2004, directed DOD to study alternative acquisition mechanisms and to provide this report. 4

 Fixed satellite service refers to a radio communication service between fixed earth stations at specific locations by 

means of one or more satellites. 
Page 3 GAO-06-480R Status Report on Commercial Communications Satellite Services

• procurement directly from commercial sources that are qualified as described in 

subsection (b) of Section 803, using full and open competition (as defined in section 

4(6) of the Office of Federal Procurement Policy Act (41 U.S.C. 403(6))); 

• procurement by any other means that had been used by DISA’s Director or the 

Secretary of a military department to enter into a contract for commercial 

communications satellite services that is in force on October 28, 2004, including 

through commercial communications satellite service integrators and resellers; and 

• procurement under the method used as of October 28, 2004, the date of the 

enactment of Section 803, modified with streamlined processes to ensure increased 

efficiency and cost effectiveness. 

When looking at the full and open competition options, DISA took into account 

whether the government or the contractor had responsibility for procuring bandwidth 

for the users and whether the work was allocated to a single global contractor, multiple 

regional, or multiple global contractors. 

The costs considered in the analysis included government management costs, 

contractor management costs, satellite bandwidth costs, ground segment operations, 

and protection costs for the options considered. Also, the cost-benefit analysis 

evaluated contracting and commercial satellite bandwidth funding strategies used by 

other U.S. government organizations. Each option was qualitatively evaluated against 

the seven capabilities derived from stakeholder and user interviews and endorsed by 

the Net-Centric Functional Capabilities Board.5

In addition, each option was assessed against its ability to support a strategic approach 

to acquiring systems engineering and integration services and commercial satellite 

bandwidth, and whether the option was consistent with or contrary to the commercial 

market. 

DOD’s Implementation Actions Focus on Warfighter 

Requirements and Industry Involvement 

Since the issuance of its July 2005 report to Congress, DOD has taken a number of 

steps to implement its new approach. Initially, the agency is focusing on improving the 

operational effectiveness of the existing Defense Information Systems Network 

Satellite Transmission Services-Global (DSTS-G) contract vehicles and associated 

processes, by: 

• incorporating changes to the DISA requirements and provisioning processes to 

reduce costs by improving responsiveness and aggregate bandwidth, and 

• implementing as many warfighter requirements as possible within the constraints of 

current contracts. DISA assessed whether or not the new warfighter requirements 

would lie within the scope of its current contracts and briefed DISA senior 

 

5

 A permanently established body, chaired by Joint Staff J-6, that is responsible for the organization, 

analysis, and prioritization of joint warfighting capabilities for communications and computers as well as 

information technology systems. The board focuses on capabilities that include data transport, 

information services and dissemination, as well as information assurance and information sharing. 
 Page 4 GAO-06-480R Status Report on Commercial Communications Satellite Services

acquisition officials, who concurred with the assessment and authorized a meeting 

with vendors. 

As a part of DOD’s strategy to involve industry, in October 2005, DISA and the Navy 

met with DSTS-G vendors on potential modifications of the existing contract vehicles 

to incorporate warfighter requirements and to achieve economies by leveraging the 

volume of bandwidth. According to a senior DOD official, the vendors were very 

receptive to these changes. Once these current contracts have been modified, DOD will 

determine how best to craft successor contracts, assuming that a new vehicle would be 

needed to satisfy warfighter requirements. As part of this effort, DISA has been 

reaching out to industry: 

• In August 2005, DISA requested information from small businesses to determine 

their interest in and capability to provide commercial satellite communications 

services. Only small businesses that can provide services under the North American 

Industry Classification System Code 517410, Satellite Telecommunications 

Carriers/Resellers, with an associated size standard of $12.5 million receipts per 

year or less, or other qualified and capable businesses, such as veteran-owned small 

businesses and women-owned small businesses, were asked to respond.6

 Small 

businesses were asked to describe their demonstrated ability to perform the work 

in five specific areas: 

• leasing satellite bandwidth on a worldwide basis from multiple global and 

regional providers; 

• determining feasibility and leasing technical solutions in response to highlevel communications requirements; 

• implementing strategies that optimize performance or minimize overall lease 

costs; 

• providing fixed satellite services quickly to a customer; and 

• developing an enterprise-level situational awareness picture from various 

sources, including monitoring and reporting performance. 

• In October 2005, DISA requested commercial satellite communications industry 

experts to provide technical descriptions and general cost data regarding their 

commercial satellite capabilities. Also, DISA and the Navy met with the DSTS-G 

vendors on plans for consolidating 16 Navy contracts into a single task order using 

the DSTS-G contract vehicles. Subsequently, DISA issued a task order solicitation 

under the DSTS-G contract vehicles to obtain proposals for this consolidated 

requirement. According to DOD, the DSTS-G vendors welcomed the opportunity to 

bid for this work and offer technical solutions to meet the Navy’s needs. This is an 

important step because it will aid DOD in determining if it can consolidate 

requirements using these contract vehicles. 

 

6

 The North American Industry Classification System is a system for classifying establishments by type of 

economic activity. It was developed as the standard for use by federal statistical agencies in classifying 

business establishments for the collection, analysis, and publication of statistical data related to the U.S. 

business economy. The Small Business Administration establishes size standards for whether a business 

entity is a small business by types of economic activity, or industry, generally under the North American 

Industry Classification System. 
Page 5 GAO-06-480R Status Report on Commercial Communications Satellite Services

• In November 2005, DISA met with commercial satellite communications industry 

experts to obtain information regarding industry capabilities to enable DOD to 

further refine the warfighter requirements and capability attributes in preparation 

for review by the Net-Centric Functional Capabilities Board. 

Finally, the Network-Centric Functional Capabilities Board endorsed the commercial 

satellite communications capabilities, contained in table 1, on February 21, 2006. Upon 

completion of the study of alternative acquisition mechanisms, DOD will make a final 

assessment to determine if the existing or modified contracts will meet the full range of 

capabilities needed by the warfighters. If a successor contract is required, DISA would 

plan for and schedule the appropriate acquisition activities. According to DOD, any 

successor contract would have to meet the full range of warfighter requirements and 

capabilities as defined by the Network-Centric Functional Capabilities Board, achieve 

cost savings from leveraging bandwidth requirements, be consistent with applicable 

statutes, including the Small Business Act, and capitalize on the lessons learned from 

the earlier operational effectiveness modifications to make the new contract most 

effective. 

Table 1: DOD Commercial Satellite Communication Attributes 

Capability Requirement 

Coverage 

Floor:a

 C-, Ku, Ka- and X Band from 70o N to 70o S worldwide, subject to 

availability, and position of satellite and the location of the user 

Selectable:b

 Above and below 70o N to 70o S per specific need, subject to 

availability, and position of satellite and the location of the user 

NetOps 

Floor: Monitoring (near real time), fault reporting 

Selectable: Situational awareness (access to spectrum monitoring 

detail) 

Flexibility/ 

Optimization 

Floor: "Regrooming" space segment and earth terminal / teleport 

resources for spectral, operational, and price efficiencies selectable upon 

request within same provider 

Selectable: Specific terms and conditions for unique situations to be 

negotiated up front 

Capacity 

Floor: Ability to lease commercial satellite communications capacity as 

needed 

Selectable: Not applicable 

Protection/Operations 

Security 

Floor: Satellite operations clearances; operations security clearances; 

telemetry, tracking, and control encryption on command link; 

electromagnetic interference/radio frequency interference geolocation 

Portability 

Floor: Portability of bandwidth from one region to another, user invoked 

when needed subject to availability 

Selectable: Specific portability terms and conditions for unique 

situations to be negotiated up front. 

Responsiveness 

Floor: Transponder available less than or equal to 30 days from task 

order award 

Selectable: Time critical requirements–7 days, 4 hours 

Source: Department of Defense.

a

”Floor” refers to the capability that all the contracts must provide for all users. b

”Selectable” refers to capability that the contracts must make available as an option to the user.
 Page 6 GAO-06-480R Status Report on Commercial Communications Satellite Services

Agency Comments 

We provided a draft of this letter to DOD for comment, and the department provided 

technical comments, which we incorporated where appropriate. DOD indicated by 

e-mail that it would not be submitting any official comments. 

Scope and Methodology 

To accomplish our objective, we analyzed DOD’s December 2004 commercial satellite 

policy describing DOD’s new approach for acquiring commercial satellite 

communication services. We reviewed DOD’s July 2005 report to Congress and 

analyzed the supporting cost-benefit analysis to determine the extent of the options 

DOD considered in its analysis for acquiring fixed satellite services. We did not validate 

the results of the cost-benefit analysis. We interviewed DOD and Joint Staff officials to 

discuss the process used in developing the user requirements. We interviewed officials 

from the Office of the Assistant Secretary of Defense for Networks and Information 

Integration and the Defense Information Systems Agency to ascertain their plans for 

implementing a new strategic approach for acquiring commercial satellite services. We 

conducted our work at the Wireless Directorate of the Office of the Assistant Secretary 

of Defense for Networks and Information Integration, Washington, D.C., and the 

Defense Information Systems Agency, Falls Church, Virginia, from August 2005 to 

March 2006 in accordance with generally accepted government auditing standards. 

___ ___ ___ 

We plan no further distribution of this report until 6 days from the report date. At that 

time, we will send copies of this report to other interested congressional committees 

and members and to the Secretary of Defense. In addition, the report will be available 

at no charge on the GAO Web site at http://www.gao.gov. 

If you or your staff have any questions regarding this letter, please contact me at 

(202) 512-4841 or woodsw@gao.gov. GAO staff who made contributions to this letter 

were John Needham, Assistant Director, and Jose Ramos. 

William T. Woods 

Director, Acquisition 

 and Sourcing Management 
Page 7 GAO-06-480R Status Report on Commercial Communications Satellite Services

List of Congressional Requesters

The Honorable Olympia J. Snowe 

Chair 

Committee on Small Business 

 and Entrepreneurship 

United States Senate 

The Honorable Donald A. Manzullo 

Chairman 

Committee on Small Business 

House of Representatives 

The Honorable Tom Davis 

Chairman 

Committee on Government Reform 

House of Representatives 

The Honorable James M. Talent 

United States Senate 

(120433) 
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