Report to Congressional Requesters

United States General Accounting Office 

GAO 

December 2003 SATELLITE 

COMMUNICATIONS 

Strategic Approach 

Needed for DOD’s 

Procurement of 

Commercial Satellite 

Bandwidth 

GAO-04-206 
www.gao.gov/cgi-bin/getrpt?GAO-04-206.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact William T. 

Woods at (202) 512-4841 or 

woodsw@gao.gov. 

Highlights of GAO-04-206, a report to 

congressional requesters 

December 2003

SATELLITE COMMUNICATIONS 

Strategic Approach Needed for DOD’s 

Procurement of Commercial Satellite 

Bandwidth 

DOD has for many years augmented its internally owned and operated 

satellite communications capability by leasing commercial fixed satellite 

bandwidth services primarily through the Defense Information Systems 

Agency (DISA) and its Defense Information Technology Contracting 

Organization (DITCO). DISA does not acquire commercial bandwidth 

directly from satellite service providers. Instead, it procures bandwidth 

through several competitively selected vendors, which, in turn, compete 

work among individual service providers. 

GAO found that the process for acquiring commercial satellite bandwidth is 

fair to DOD’s vendors and their subcontractors, which are the ultimate 

commercial satellite bandwidth service providers. 

However, some major DOD users of commercial satellite bandwidth services 

are dissatisfied with DISA’s process. They view the process as being too 

lengthy, particularly for time-critical military operations, and they believe 

that the cost is too high. They also indicated that the contracts resulting 

from the process are often too inflexible. As a result, some users are 

bypassing the DISA process, either by formally obtaining a waiver or by 

procuring services without a waiver. In fiscal year 2002, nearly 20 percent of 

DOD’s reported spending on satellite bandwidth services occurred outside 

the process, and one DOD official stated that the true percentage is probably 

much higher. By allowing users to bypass the DISA waiver process, DOD is 

hampering its ability to ensure that its communications networks are 

interoperable and to minimize redundancies. 

Further, DOD does not know exactly how much it is spending on 

commercial satellite bandwidth services, nor does it know much about its 

service providers or whether customer needs are really being satisfied. 

Without this knowledge, DOD cannot take steps to leverage its buying 

power, even though it is the largest customer for commercial satellite 

bandwidth. Moreover, neither DOD nor DISA is making a concerted effort to 

collect forecasts of bandwidth needs from users and ensure those needs can 

be met by the commercial sector. These are also important steps toward 

optimizing DOD’s spending. 

If DISA is to remain as DOD’s primary agent to acquire satellite bandwidth, 

then it must implement a more strategic management approach—one that 

ensures that services can be acquired in a fair, timely, and cost-effective way 

that meets users’ needs. Doing so will be a considerable challenge, however, 

given the current environment and potential resistance within DISA and 

from its users. Commitment is needed from senior leaders within DISA and 

DOD to overcome challenges associated with implementing a strategic 

approach. 

In recent years, the Department of 

Defense (DOD) has come to rely 

more heavily on commercial 

satellite communications to plan 

and support operations and move 

toward a network-centric warfare 

environment. DOD acquires 

commercial satellite bandwidth 

services to support a variety of 

critical missions such as 

surveillance performed by 

unmanned aerial vehicles. GAO 

was asked to assess (1) whether 

DOD’s process for acquiring these 

services is fair to vendors and 

providers, (2) whether the process 

meets users’ needs, and 

(3) whether spending on these 

services is managed effectively and 

efficiently. 

GAO’s recommendations to DOD 

focus on the need to develop and 

implement a strategic approach to 

acquire commercial satellite 

bandwidth services, along with 

correcting specific oversight and 

management weaknesses. To 

ensure the successful 

implementation of a strategic 

management framework, GAO 

recommends that DOD develop 

performance metrics to assess user 

satisfaction, strengthen core 

internal technical expertise and 

information systems, and assess 

whether the existing acquisition 

process requires changes to 

facilitate a strategic approach. In 

comments on a draft of this report, 

DOD generally concurred with 

GAO’s recommendations. 
Page i GAO-04-206 Satellite Communications 

Letter 1

Results in Brief 2

Background 4

DOD’s Process Is Fair to Both Vendors and Service Providers 8

Some Major Users Are Dissatisfied with DISA Process for 

Acquiring Commercial Satellite Bandwidth Services 13

Lack of Strategic Approach to Managing Services Diminished 

DOD’s Ability to Optimize Spending 18

Conclusions 25

Recommendations for Executive Action 26

Agency Comments and Our Evaluation 27

Scope and Methodology 28

Appendix I Comments from the Department of Defense 30 

Tables 

Table 1: Major Global and Regional Commercial Providers of Fixed 

Satellite Service Bandwidth 5

Table 2: Details on Key Players in the DISA Process 7

Table 3: Total Number and Dollar Value of DSTS-G Task Orders for 

Bandwidth Awarded, by Vendor 9

Table 4: Teaming among DSTS-G Vendors and Service Providers 11

Table 5: Proposal Submission Teaming among Vendors and 

Service Providers 12

Table 6: Time to Process Satellite Service Requests 14

Table 7: Options That Could Improve DOD’s Practices in 

Leveraging Its Buying Power 23

Figures 

Figure 1: Overview of DOD Commercial Bandwidth Acquisition 

Process 6

Figure 2: Highlights of Analysis of DISA’s Commercial Satellite 

Communications Utilization Report—Fiscal Year 2002 21

Contents 
Page ii GAO-04-206 Satellite Communications 

Abbreviations 

ASD/NII Assistant Secretary of Defense for Networks and 

Information Integration 

CIO Chief Information Officer 

DISA Defense Information Systems Agency 

DITCO Defense Information Technology Contracting 

Organization 

DOD Department of Defense 

DSTS-G Defense Information Systems Network Satellite 

Transmission Services-Global 

FAR Federal Acquisition Regulation 

GIG Global Information Grid 

IDIQ Indefinite-Delivery, Indefinite-Quantity 

MTC Managed Transponder Contract 

ORBIT Open-market Reorganization for the Betterment of 

International Telecommunications Act 

RFS Request for Service 

TR Telecommunications Request 

TSO Telecommunications Service Order 

TSR Telecommunications Service Request 

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Page 1 GAO-04-206 Satellite Communications 

December 10, 2003 

The Honorable John Ensign 

Chairman 

The Honorable Daniel K. Akaka 

Ranking Member 

Subcommittee on Readiness and Management Support 

Committee on Armed Services 

United States Senate 

The Honorable James M. Inhofe 

United States Senate 

The Honorable Joseph I. Lieberman 

United States Senate 

The Department of Defense (DOD) relies on a vast network of ground and 

space-based systems to meet its telecommunications needs—both for 

military and business operations. Over the past 12 years, DOD has 

experienced a ten-fold increase in the demand for telecommunication 

bandwidth1

 from satellites to support the war-fighting combatant 

commands, the military services, and defense agencies, and some experts 

predict another fivefold or sixfold jump in demand by 2010.2

 Currently, 

DOD-owned and -operated satellites cannot satisfy all of DOD’s 

telecommunication requirements, and both DOD and other sources project 

sizeable shortfalls in bandwidth capacity needed by the year 2010.3

 As a 

 1

 Bandwidth is the range of frequencies that can pass over a given transmission channel. In 

the commercial satellite bandwidth leases DOD acquires, it is usually measured in millions 

of hertz, or megahertz (MHz)—such as 36 MHz, 54 MHz, or 72 MHz—which determine the 

rate at which information can be transmitted through the circuit. 

2

 Andrew Bridges, “Pentagon Turns to Commercial Satellites to Ease Wartime Data 

Squeeze,” the Associated Press, Mar. 27, 2003, quoting United States Space Command 

sources and Rand Corporation experts. 

3

 The amounts of data that can be received, processed, and transmitted by a satellite are 

commonly stated in megabits per second (one million bits of data per second) or gigabits 

per second (one billion bits per second). By 2010, DOD planners foresee the need for 

approximately 16 gigabits per second (Gbps) of bandwidth to support a large joint-service 

operation. While DOD plans to have capacity of 11 Gbps, other sources earlier had 

projected that DOD’s capacity might be as low as 2 Gbps at that time. 

United States General Accounting Office

Washington, DC 20548 
Page 2 GAO-04-206 Satellite Communications 

result, DOD has been leasing bandwidth on commercial satellites to 

support a variety of critical missions such as surveillance being performed 

by unmanned aerial vehicles and communications between commanders 

and field units. 

Given the importance of DOD’s growing demand for commercial 

fixed satellite service4

 bandwidth, you requested that we assess the 

effectiveness of its process for acquiring this service—specifically 

(1) whether the process is fair to vendors and providers, (2) whether the 

process meets user needs, and (3) whether spending is managed 

effectively and efficiently. 

DOD’s process for acquiring commercial fixed satellite bandwidth services 

is fair to both its vendors and their subcontractors, which are the ultimate 

commercial satellite bandwidth service providers. Of 53 orders we 

reviewed that were issued between March 2000 and June 2003, all met 

general standards for ensuring fairness laid out in federal regulations. At 

the subcontract level, we also found that the satellite industry service 

providers have had ample and fair chances to create solutions and to 

compete for and win subcontracts under DOD’s newest contracts for 

bandwidth. In 48 of the orders we reviewed, 12 service providers offered 

DOD a total of 211 potential solutions. 

Some major DOD users of commercial satellite bandwidth services, 

however, are dissatisfied with the DOD’s process, which is managed by the 

Defense Information Systems Agency (DISA). They view the process as 

being too lengthy, particularly for time-critical military operations, and 

they believe that the cost is too high. In some cases, they reported that 

they could acquire services directly from providers for hundreds of 

thousands of dollars less per year than if they used DISA’s process and 

that they could do so in shorter time periods than DISA. They also 

indicated that the contracts resulting from the DISA process are often too 

inflexible. As a result, some users are bypassing the DISA process, either 

by formally requesting a waiver or by procuring services without a waiver. 

For fiscal year 2002, we were able to determine that, at a minimum, nearly 

20 percent of DOD’s reported spending on fixed satellite service 

 4

 Fixed satellite service refers to a radio communication service between fixed earth 

stations at specific locations by means of one or more satellites; mobile satellite service 

refers to a radio communication service between mobile earth stations at varying locations 

by means of one or more satellites. This report addresses fixed satellite service only. 

Results in Brief 
Page 3 GAO-04-206 Satellite Communications 

bandwidth occurred outside the DISA process, and one DOD official 

stated that the true percentage is probably much higher. 

We identified a number of management and oversight weaknesses that 

preclude DOD from assuring the mandated DISA process5

 is used, and 

more importantly, from optimizing its spending on commercial bandwidth 

services. Little attention is paid to collecting or addressing customer 

complaints; business processes are inefficient; and oversight is poor. In 

fact, DOD does not know exactly how much it is spending on commercial 

satellite bandwidth services, nor does it know much about its service 

providers or whether customer needs are really being satisfied. Without 

this knowledge, DOD cannot take steps to leverage its buying power, even 

though it is the largest customer for commercial satellite bandwidth. 

Further, neither DOD nor DISA is making a concerted effort to collect 

forecasts of bandwidth needs from users and ensure those needs can be 

met by the commercial sector. These efforts are also important steps 

toward optimizing its spending. 

Our past work6

 has identified specific practices that can be employed to 

manage services from a more strategic perspective, thereby enabling an 

organization like DOD to leverage its buying power and achieve significant 

savings. These practices include establishing a central agent or manager 

for acquiring services, gaining visibility over spending, and revising 

business processes to enable the organization to leverage its buying 

power. Our seven recommendations to DOD focus on the need to develop 

and implement a strategic approach, along with correcting specific 

oversight and management weaknesses. In comments on a draft of this 

report, DOD concurred with four recommendations and partially 

concurred with three recommendations. 

 5

 Users are required to use the DISA acquisition process by Assistant Secretary of Defense 

for Command, Control, Communications, and Intelligence memorandum, Policy for the 

Use of Commercial Satellite Communications (SATCOM), dated Nov. 8, 1993, and by 

a follow up memorandum, Policy Clarification Letter—Long Haul and Regional 

Telecommunications Systems and Services for the Department of Defense, dated 

May 5, 1997. 

6

 U.S. General Accounting Office, Best Practices: Taking a Strategic Approach Could 

Improve DOD’s Acquisition of Services, GAO-02-230 (Washington, D.C.: Jan. 2002); 

Best Practices: Improved Knowledge of DOD Service Contracts Could Reveal Significant 

Savings, GAO-03-661 (Washington, D.C.: June 2003); Contract Management: Taking a 

Strategic Approach to Improving Service Acquisitions, GAO-02-499T (Washington, D.C.: 

Mar. 2002); and Contract Management: High-Level Attention Needed to Transform DOD 

Services Acquisition, GAO-03-935 (Washington, D.C.: Sept. 2003). 
Page 4 GAO-04-206 Satellite Communications 

DOD has for many years augmented its internally owned and operated 

satellite communications capability by leasing additional external 

telecommunications capacity on commercially owned and operated 

satellites. Demand has been increasing in recent years, as the military has 

come to rely more heavily on commercial satellite communications to plan 

and support operations and move toward a network-centric warfare 

environment. According to industry sources, DOD’s current estimated 

$300-400 million spending on such services has made it the satellite 

communications industry’s biggest customer. 

DOD leases commercial satellite bandwidth services primarily through 

DISA and its Defense Information Technology Contracting Organization 

(DITCO). DISA does not acquire commercial bandwidth directly from 

satellite service providers. Instead it procures bandwidth through several 

competitively selected vendors, which in turn compete work among 

individual bandwidth service providers. 

There are two primary contract structures through which DISA procures 

bandwidth through these vendors. The first is known as the Managed 

Transponder Contract (MTC). It was competitively awarded in 1995 to 

one vendor, and served as the primary acquisition vehicle for several 

years. The second is an indefinite-delivery, indefinite-quantity (IDIQ) 

multiple-award contract structure known as the Defense Information 

Systems Network Satellite Transmission Services-Global (DSTS-G) 

contracts. They were awarded competitively in February 2001, after users 

found the MTC contract to be inflexible, too costly, and limited in terms of 

the breadth of services it could provide. Awards were made to three small 

business vendors that acquire bandwidth for DISA from the ultimate 

service providers. Recently, DISA has been relying more on this second 

contract structure. The agency placed 48 orders for bandwidth under the 

DSTS-G contracts through June 2003 versus only 5 new orders under the 

MTC contract from March 2000 through June 2003. 

Background 
Page 5 GAO-04-206 Satellite Communications 

DISA’s vendors obtain satellite services from a commercial satellite 

industry market segment that has been growing at a high rate. The 

commercial satellite industry is a global industry that includes many 

foreign-owned businesses as well as partnerships between U.S. and 

foreign corporations. Table 1 lists major global and regional satellite 

bandwidth providers. While there are 10 companies listed, only 6 of them 

have provided needed bandwidth through the DISA acquisition process 

during recent years. 

Table 1: Major Global and Regional Commercial Providers of Fixed Satellite 

Service Bandwidth 

Global Regional 

• SES Global • Eutelsat S.A. LLC 

• Intelsat • SES Americom 

• PanAmSat • Star One 

• Loral Global Alliance • Asiasat 

• New Skies Satellites N.V. • Arabsat 

Source: GAO analysis of Satellite Industry Association data. 

The acquisition process that DISA uses to determine user requirements 

and acquire bandwidth is similar to the process it uses to acquire other 

telecommunications services for its customers. Generally, the process 

begins with users identifying a need and contacting DISA to fulfill that 

need. Technical experts within DISA assist users in engineering a potential 

solution. Other offices within DISA decide how the service should be 

procured and prepare a request for the vendors to propose solutions. Once 

DISA has determined which contract structure to use and has asked for 

proposed solutions, an evaluation team within DISA reviews the proposals 

and awards a task order or delivery order under the winning vendor’s 

contract. Figure 1 and table 2 further detail this process. 
Page 6 GAO-04-206 Satellite Communications 

Figure 1: Overview of DOD Commercial Bandwidth Acquisition Process 
Page 7 GAO-04-206 Satellite Communications 

Table 2: Details on Key Players in the DISA Process 

Users Users are the operating level units within the various DOD combatant commands, military 

services, and defense agencies that have the actual communication need. Users contact 

their organization’s internal communications services focal point to begin processing their 

requirements. Each prepares an extensive document in accordance with DISA directives 

called a Request for Service (RFS), which is used to initially request telecommunications 

services. 

DISA or service provisioners DISA provisioners in regional offices around the world provide technical expertise to help 

decide how the user’s need can best be satisfied: existing terrestrial links, DOD-owned 

satellites, or commercial satellites. For those needs to be satisfied by a lease of 

commercial bandwidth, the provisioners review RFS documentation and validate user 

funding. Once funding is validated, the RFS becomes a Telecommunications Service 

Request (TSR) and is sent back to the provisioners, who then add necessary technical 

direction and information, turning the TSR into a Telecommunications Service Ordera

(TSO), which is then transmitted to DISA’s Commercial Satellite Communications Branch. 

DISA Commercial Satellite 

Communications Branch 

This office assists the user in preparing an accurate RFS that is subsequently converted 

into a TSR or TSO, decides whether the requirement can be best satisfied through the 

MTC, DSTS-G, or other contracts and transmits the final document and any additional 

procurement direction to its supporting contracting office. 

DITCO DITCO is a contracting organization within DISA. This office reviews the requirements, 

secures any needed contract action approvals, and creates a Telecommunications 

Request (TR), also known as an inquiry. This inquiry is then sent to either the MTC vendor 

or the three DSTS-G vendors, asking for technical solutions and prices for the specified 

requirements. 

Vendors (prime contractors) Vendors include the MTC contract holder, and the three DSTS-G contract holders, which 

are responsible for reviewing the requirement, formulating potential solutions, coordinating 

with various potential service providers, and submitting proposals to DISA. 

Service providers (subcontractors) Service providers are companies that receive requests for solutions from the vendors; help 

engineer the best (or lowest cost) solutions, depending upon the announced evaluation 

criteria; price the solutions; and submit one or more of them to the vendors. 

Evaluation team The team includes DISA’s Commercial Satellite Communications Branch, supported by its 

technical support contractor, and the contracting office, DITCO. The Commercial Satellite 

Communications Branch evaluates the technical soundness of proposed solutions and 

DITCO reviews pricing proposals. The selection of the winning vendor and its solution is 

usually a joint process, and DITCO then issues an order under the winning vendor’s 

contract. 

Award of subcontract This occurs when the winning vendor awards a commercial contract to the service 

provider that provided the winning solution input. 

Source: GAO. 

a

A Telecommunications Service Order is needed to start, continue, or stop the existence of a circuit. 
Page 8 GAO-04-206 Satellite Communications 

If circumstances dictate, users can request a waiver through DOD’s 

Global Information Grid (GIG) Waiver Panel7

 to use an alternative 

network and alternative acquisition process instead of the DISA process. 

A business case must be made for the requested waiver and there must 

be plans outlined to migrate the outlying network back under the 

telecommunications infrastructure and to bring the resulting contract 

under the control of DITCO. After a waiver is approved, the user’s 

procurement organization takes steps to procure the bandwidth. 

DOD’s process through DISA for acquiring commercial fixed satellite 

service bandwidth is fair to both its vendors and their subcontractors, 

which are the ultimate commercial satellite bandwidth providers. The 

majority of bandwidth orders in recent years have been made under the 

DSTS-G contracts, where competition exists at both the vendor and 

service provider levels. Only five orders have been placed under the MTC 

contract, which by its nature is not as competitive as the DSTS-G contract, 

since it was designed to obtain service through one vendor. 

The Federal Acquisition Regulation (FAR), as supplemented by DOD and 

DISA, requires DITCO to provide a fair opportunity to the three DSTS-G 

vendors at the prime contract level. Generally, this entails 

• writing broad, needs-based requirements able to be satisfied by multiple 

vendors rather than only one; 

• providing notice and opportunity to be considered8 to each of the vendors; 

• giving notice of the evaluation criteria to be used to select a winning 

vendor; and 

• evaluating proposals, conducting discussions, and awarding delivery 

orders or task orders in accordance with the evaluation criteria stated. 

 7

 The GIG waiver process employs a GIG Waiver Board and a working-level GIG Waiver 

Panel, made up of principals or representatives from pertinent DOD staff offices. The 

GIG Waiver Panel reviews initial waiver requests and associated business cases, hears 

arguments for and against the waiver request, and develops the recommended decision to 

be presented to the DOD Chief Information Officer (CIO) for approval. If there is an appeal 

of that decision, the GIG Waiver Board may be convened to advise the CIO on the appeal. 

8

 Effective October 25, 2002, the Defense Federal Acquisition Regulation Supplement, 

section 216.505-70, required fair notice and fair opportunity to submit an offer and have it 

fairly considered for each order exceeding $100,000. This provision implemented 

section 803 of the National Defense Authorization Act for Fiscal Year 2002 (Pub. L. 107-107, 

Dec. 28, 2001). DISA Acquisition Regulation Supplement, section 16.102, has imposed a 

similar requirement on all orders exceeding $2,500 since March 1997. 

DOD’s Process Is Fair 

to Both Vendors and 

Service Providers 
Page 9 GAO-04-206 Satellite Communications 

We analyzed 48 task orders that were awarded under the DSTS-G contract 

from its inception in February 2001 through June 2003 to determine 

whether these criteria were generally followed. 

We found that the acquisition process employed by DISA and DITCO 

generally met FAR criteria, as supplemented, and was fair to competing 

vendors under the DSTS-G contracts. Though we found some orders 

awarded under exceptions established in FAR, the rationale for these 

exceptions was documented in each task order file. 

The common set of technical questions that users are required to answer 

when submitting their bandwidth requests helps not only to document 

their technical environment but also to preclude writing an overly narrow 

or restrictive requirement. While a few valid user situations demanded a 

repeat solution or narrowed the range of possible solutions, they did not 

unduly impair the vendors’ fair opportunity to compete. 

Of the 48 task orders for bandwidth, 41 were competed among the 

three vendors; six were renewals of previously competed task orders; 

and only one was sole-source, awarded without vendor competition. 

Documentation justifying the one sole-source action was included in the 

task order file, as required. 

The distribution of task order awards among the three vendors is 

illustrated in table 3. The table shows the number and percentage of the 

48 task orders awarded to each of the three vendors under their respective 

DSTS-G contracts along with the associated dollar values and percentages. 

Table 3: Total Number and Dollar Value of DSTS-G Task Orders for Bandwidth 

Awarded, by Vendor 

Number of task 

orders 

Percent of total 

task orders 

awarded 

Dollars 

awarded 

Percent of 

dollars 

awarded 

Vendor A 11 23 $17,255,942 11 

Vendor B 14 29 58,632,446 36 

Vendor C 23 48 87,562,627 54 

Total 48 100 $163,451,015 100a

Source: GAO. 

a

Percentages of dollars awarded do not add to 100 percent due to rounding. 

DSTS-G Vendors Had 

Fair Opportunity to Win 

Task Orders 
Page 10 GAO-04-206 Satellite Communications 

The evaluation criteria DISA used to select a winning vendor were 

contained in each inquiry that was competed. Evaluation of the proposals, 

discussions, and the award of task orders complied with the stated 

evaluation and selection criteria. 

DISA used the following two selection frameworks to evaluate proposals: 

• DISA awarded 18 of the 41 competitive task orders worth $54,255,114 

under a source selection process called “best value,” using a cost/technical 

trade-off process. Under this approach, the selection official trades off 

cost and non-cost factors, identified in the inquiry, in determining award 

decisions. In some cases, greater weight may be placed on a contractor’s 

technical approach resulting in the selection of what may not be the 

lowest priced proposal. 

• DISA awarded the remaining 23 competitive task orders worth $78,645,239 

under the “lowest price technically acceptable” framework. Under this 

approach, the technical solution proposals are all evaluated by DISA’s 

Commercial Satellite Communications Branch and its supporting 

contractor and placed in either a “technically sufficient” category or “not 

technically sufficient” category. The winner is that proposal in the 

“technically sufficient” category with the lowest total evaluated cost. 

While both evaluation methods are common under FAR procurements, 

best value with tradeoffs is more suitable where the risk of potential 

substandard performance does not leave room for errors or service 

degradation. Either method of evaluation requires a high level of technical 

expertise to effectively evaluate proposed solutions. 

At the subcontract level where the FAR criteria regarding fair opportunity 

generally do not apply to the business arrangements among commercial 

companies, we also found that commercial satellite service providers have 

had ample and fair chances to team with the three DSTS-G vendors to 

create solutions and to compete for and win subcontracts. All three 

vendors stated that they are motivated by competition to find technically 

sufficient and low-cost solutions to DOD’s needs and to involve all feasible 

service providers in doing so. Further, the vendors are also required by a 

FAR clause in their DISA contracts to select their subcontractors on a 

competitive basis.9

 To determine which service providers are potentially 

 9

 FAR 52.244-5, Competition in Subcontracting, requires that contractors shall select 

subcontractors on a competitive basis to the maximum practical extent consistent with the 

objectives and requirements of the contract. 

DSTS-G Subcontractors Have 

Also Had Ample and Fair 

Chances to Team with Vendors 
Page 11 GAO-04-206 Satellite Communications 

capable of fulfilling a given DISA requirement, the vendors told us they 

consider many factors, such as 

• location of satellites, 

• “look angle” at the desired location, 

• power, 

• bandwidth, 

• age and condition of satellites, 

• available capacity on satellites, and 

• other factors, such as meeting schedule, acceptance of government terms 

and conditions, business relationships, and prices. 

Our analysis showed that six different service providers have won 

subcontracts from one or more of the DSTS-G vendors. Each vendor has 

won task orders using at least four of the six providers, although more 

than 70 percent of the wins have been with just two providers. The 

distribution of task order awards to vendors and the service providers 

with which they teamed for each of the 48 task orders is illustrated in 

table 4. 

Table 4: Teaming among DSTS-G Vendors and Service Providers 

 Satellite service providers 

Winning vendor Task orders won A B C D E F 

Vendor A 11 1 4.5 3 0.5 0 2 

Vendor B 14 0 5 6 1 2 0 

Vendor C 23 4 9 7 1 2 0 

Total 48 5 18.5 16 2.5 4 2 

Percent of total 100a 10.4 38.5 33.3 5.2 8.3 4.2 

Source: GAO analysis of DISA data. 

Note: In the columns showing the teaming arrangements for each provider, a 0.5 is credited where 

the satellites of two different service providers were needed to satisfy a DISA requirement. 

a

Percentage totals do not add to 100 percent due to rounding. 

Another indicator of participation among service providers and access to 

the DSTS-G vendors is the opportunity to propose a solution for a DISA 

requirement. We determined that there were 211 bandwidth solutions 

proposed to DISA for the 48 task orders, or approximately 4.4 per task 

order. Removing the seven instances where there was only one proposed 

solution (because they were renewals of previously competed 

requirements or sole-source), the average number of proposed solutions 
Page 12 GAO-04-206 Satellite Communications 

per competitive task order was 4.9, with a range from 2 to 15. Moreover, 

there were several additional potential teaming proposals considered by at 

least one of the vendors, but not ultimately submitted to DISA. Table 5 

illustrates the teaming arrangements in the 211 proposed solutions. 

Table 5: Proposal Submission Teaming among Vendors and Service Providers 

 Satellite service providers 

Vendor 

Number of 

proposals A B C D E F G H I J K L 

Vendor A 63 2 24.5 23.5 3 5 5 0 0 0 0 0 0 

Vendor B 52 4 21 19 3 4 1 0 0 0 0 0 0 

Vendor C 96 12 32 28 4 10 3 2 1 1 1 1 1 

Total 211 18 77.5 70.5 10 19 9 2 1 1 1 1 1 

Percent of total 8.5 36.7 33.4 4.7 9.0 4.3 1.0 0.5 0.5 0.5 0.5 0.5 

Percent of proposed 

solutions resulting in 

subcontracts 27.8 23.9 22.7 25.0 21.1 22.2

No 

award 

No 

award 

No 

award 

No 

award 

No 

award

No 

award 

Source: GAO. 

Note: In the numbers of proposals for each provider, a 0.5 is credited where the satellites of two 

different service providers were needed to satisfy a DISA requirement. 

We noted that the top two service providers in terms of proposals 

submitted, labeled B and C in table 5, had more than 70 percent of the total 

proposals submitted. According to the vendors, this was because those 

two providers had large numbers of satellites located in the areas of 

interest to DOD over the past 2 years, were willing to offer multiple 

solutions, and had low prices for bandwidth. Some service providers did 

not always see DOD as a preferred customer, did not always have 

available capacity in the required areas, or declined to propose because 

they knew they did not have the best coverage or prices. All six of the 

service providers that won subcontracts had very similar percentages of 

winning proposals, all between 21 and 28 percent. 

Despite the involvement of a number of competitors at the subcontractor 

level in the DISA acquisition process, we found several occasions where 

DISA directed and justified the use of a specific service provider. This 

occurred in 15 of the 41 competitive DSTS-G task orders. In all 15 of those 

cases, however, the acquisition team had adequate justifications in files to 

explain the need for directing that subcontract. Specifically, in 11 of the 

justifications, users or DISA technical staff determined that only one 

particular satellite could adequately satisfy certain technical parameters 
Page 13 GAO-04-206 Satellite Communications 

contained in the requirement. In three cases, customers explained that any 

deviation from the existing satellite provider could cause an interruption 

of service and could potentially cause loss of life. In the remaining case, 

both justifications applied. These requirements were submitted by 

responsible officials in the combatant commands or military services and 

concurred in by the DISA provisioners, the DISA Commercial Satellite 

Communications Branch engineers, and the DITCO contracting officer. 

Directed subcontracts were justified for three different service providers, 

with none getting a disproportionately large share. 

The MTC contract was structured to award delivery orders to one vendor, 

thus competition, after the initial competition to select a vendor, has 

been limited. From March 2000 to June 2003, DISA awarded only five 

new delivery orders for bandwidth under the MTC contract. All were 

awarded directly to the incumbent contractor that had previously won a 

competition among four companies in 1995 to manage this contract for 

up to 10 years. These five new orders totaled $17.8 million. There was also 

limited competition at the subcontract level. Three orders were awarded 

directly to service providers without competition. The remaining two 

orders were competed between two providers. 

Some major users of commercial satellite bandwidth services are 

dissatisfied with the DISA process. In particular, they view the process 

as being too lengthy and costly. They also believe that the process 

results in contracts that are often too inflexible. As a result, some users 

have bypassed the process, either by formally requesting a waiver or by 

procuring services without a waiver. For fiscal year 2002, we determined 

that, at a minimum, nearly 20 percent of DOD’s reported spending on 

services occurred outside the process, and one DOD official stated that the 

true percentage is probably much higher. 

According to some major users, DISA’s process takes too long to meet 

their needs, particularly for time-critical operations. Our analysis showed 

that on average from submittal of a request for service to the award of a 

task order under the DSTS-G contract took 79 days—more than a month 

longer than the average of 42 to 45 days advertised by DISA.10 Moreover, as 

 10 DISA Briefing, “DISA’s Response to Navy Concerns,” undated, p. 2; DISA Network 

Services Standing Operating Procedure (SOP) 02-02 (Apr. 15, 2002, encl. 2, p. 1). 

MTC Contract Is the Result 

of an Earlier Competition 

Some Major Users 

Are Dissatisfied with 

DISA Process for 

Acquiring Commercial 

Satellite Bandwidth 

Services 

Users Do Not Believe 

Process Meets Their Needs 
Page 14 GAO-04-206 Satellite Communications 

table 6 shows, only 18 of the 48 task orders we reviewed were awarded in 

less than a month. In addition, only 29 were awarded within the DISA 

advertised time frame of 45 days. 

Table 6: Time to Process Satellite Service Requests 

Days to process Number of actions Percent of actions 

30 days or less 18 37.5 

31-60 days 15 31.3 

61-90 days 5 10.4 

91-120 days 5 10.4 

Over 121 days 5 10.4 

Total 48 100.0 

Source: GAO analysis of DISA data. 

Further, users told us they have to spend additional time before a Request 

for Service is submitted to DISA to seek out and determine all of the 

technical information required in that document, and there is also 

additional time between the task order award and the subcontract award 

to the winning service provider and for the set up or preparation before 

the start of the service. For example, under the DSTS-G contracts, the 

vendors have up to 30 days to provide required service in normal 

circumstances, or 5 days in emergencies. According to DISA, when users 

are not familiar with RFS development or satellite services, DISA spends 

substantial amounts of time educating users on requirement development, 

the acquisition process, and available satellite services. Timelines can also 

be extended for other reasons, according to DISA, including instances 

where customer equipment is not on hand when the service is available. 

Therefore, the actual time to fully satisfy a customer’s request from 

realization of the need to initiation of the service is even longer than the 

mean 79-day paperwork flow time. 

By contrast, users told us that the time to receive bandwidth services 

outside the DISA process was considerably shorter. In one U. S. Army 

example, the user was able to acquire satellite bandwidth needed to 

operate a multimedia communications system during Operation 

Enduring Freedom in Afghanistan within a few weeks. In another 

example, a U.S. Navy office was able to acquire service to support its 

commercial wideband satellite program in less than a month after 

receiving the GIG waiver approval. It was critical that the Navy acquire 

this service quickly as it was notified that one of its leased satellites would 

fail within 30 days. 
Page 15 GAO-04-206 Satellite Communications 

Users also reported that estimated prices they received under the DISA 

process were sometimes significantly higher than those that would be 

paid directly to a commercial company for the same or similar services. 

For example, the Army was able to acquire satellite services for the 

communications system supporting Operation Enduring Freedom for 

about $34,700 a month. DISA had quoted a price estimate earlier at 

$139,000 a month. When the Army later found it needed to install another 

ground terminal for this system, it acquired services for about $240,000, 

whereas DISA’s initial price estimate was $579,000. In another example, in 

acquiring service to support its commercial wideband satellite program, a 

U.S. Navy office found that the monthly price for the service it could 

acquire outside the DISA process ranged from $30,000 to $90,000 a month 

less than the initial DISA estimate. Over the 5 years projected for the task 

order, the savings on bandwidth was nearly $4.6 million. These projected 

savings, while not always calculated on a strict “apples-to-apples” basis, 

were nevertheless deemed significant enough that the GIG Waiver Panel 

used them when deciding to grant waivers to these organizations to buy 

outside the DISA process. 

The current pricing structure of the DISA acquisition process can result in 

users being charged from 9 to 12 percent more than the bandwidth cost 

from the service provider. Part of this added cost is due to profit and 

overhead charges that DISA vendors add on to bandwidth cost. This can 

total between 1 and 4 percent of the price of the service and is kept low 

because of the competition among vendors to win each task order. 

Another part of the added costs is attributable to surcharges that DISA 

adds to prices in order to recoup their costs for tasks they perform in 

acquiring the service. The surcharges—6 percent of the total price from 

the vendor for DISA’s Commercial Satellite Communications Branch’s 

efforts and another 2 percent for DITCO’s efforts—are a normal practice 

for DISA and other DOD activities that operate under the Defense Working 

Capital Fund, which is designed to ensure that defense activities that carry 

out business operations for others can recover their costs—neither 

making a profit nor incurring a loss in the course of their work. If 

users acquired the service themselves, they may well incur similar 

administrative costs, but those costs would not be as visible to them as 

when receiving an itemized bill from DISA for services. However, they 

would not normally have to pay extra for an intermediary agent when 

procuring services directly from industry. 

Some portion of the user-reported projected savings may be attributable 

to high initial estimates provided by DISA based on outdated pricing 
Page 16 GAO-04-206 Satellite Communications 

proposals of vendors’ contract line item prices. While DISA stated that 

users were advised that the actual prices might be significantly lower, 

users still had to commit their budget in the amount of the original 

estimate. Use of this high initial estimate has been a long-standing flaw in 

the DISA acquisition process that DISA has only recently taken steps to 

correct. However, DISA’s solution to this problem—asking the vendors to 

produce more detailed and more realistic original price estimates—will 

likely result in more days added to an already lengthy process. 

Another reason for the difference between DISA’s estimates and industry 

quotes may be that DISA’s estimates are based on features in its contracts 

with vendors that may call for a different level of services or equipment 

than required. For example, in one U.S. Army case, the bandwidth 

acquired to operate its communications network was less than the 

minimum bandwidth capacity that satellite providers were required to 

provide under the DSTS-G contract. 

In addition, users told us that the DISA process results in contract terms 

that are often too inflexible. Some of the features that are common in 

commercial contracts for satellite services are not in the contracts 

awarded through the DISA process. For example, DISA’s contracts for 

commercial bandwidth, according to the three DSTS-G vendors, do not 

contain the common commercial clause, “Portability of Services,” or 

anything comparable. This clause would typically allow a user to transfer 

the remaining time from one satellite, in an area no longer requiring 

coverage, to another satellite, where service is now required, at no 

additional cost. Industry representatives cited this clause as an example of 

flexibility that commercial customers have sought, as a best practice, but 

DOD has not. 

Further, DOD users often do not have the ability to change or cancel 

requirements, if necessary, without continuing to pay for the original 

ones. For example, while DISA’s contracts with vendors contain the 

“Termination for Convenience” clause, which should allow the 

government to terminate service that is no longer needed and to stop 

incurring costs for the unused portion, vendors’ contracts with service 

providers do not have this clause. In fact, the contracts that vendors have 

with the service providers reflect an industry practice that holds the 

vendors responsible for the remainder of the noncancelable lease, 

regardless of whether the government terminates the vendors’ contract. 

Therefore, any remaining lease costs would be paid to the service provider 

by the vendor and then submitted as part of the vendor’s termination 
Page 17 GAO-04-206 Satellite Communications 

settlement proposal to DOD, which would then bear some or all of these 

costs as agreed to in the negotiated termination settlement. 

Some users are bypassing the DISA acquisition process to acquire 

commercial bandwidth through alternative processes, either by formally 

requesting a waiver from the DISA process or by improperly procuring 

services without a waiver. We identified 10 instances where bandwidth 

was procured through an alternative process. In four of these, waiver 

requests were submitted and approved in advance of the procurement 

action, as called for in DOD policy. In the remaining six instances, 

however, users had independently procured bandwidth without 

processing waivers, inconsistent with DOD policy. 

We were initially given access to information on the four procurement 

actions with approved waivers and on three of the actions that had 

occurred without waivers. These latter three procurements had been 

brought to the attention of the Chairman of the GIG Waiver Panel, who 

then made the offending organizations process “after-the-fact” waivers. 

While we were interviewing user organization representatives on these, we 

uncovered three additional procurement actions that should have had 

waivers processed, but had not. We turned this information over to the 

Chairman of the GIG Waiver Panel, who will determine whether “after-thefact” waivers are also to be processed for these cases. Representatives of 

the offices that had bypassed the DISA process and used an alternative 

acquisition process to acquire needed bandwidth indicated in interviews 

and in briefing documents that they had been able to achieve faster 

procurements, often resulting in more flexible contract instruments, and at 

lower (sometimes significantly lower) prices. 

According to DOD officials, users throughout DOD have been 

independently acquiring bandwidth, without an approved waiver, for 

years. One knowledgeable DISA official estimated that, if all the services 

and DOD entities had accurately reported their fixed satellite service 

bandwidth usage costs for fiscal year 2002, the total would likely have 

been $200 million higher than the amount actually reported, nearly 

doubling the reported amount of $221.7 million. As it was, we determined 

that, at a minimum, $42.4 million, or nearly 20 percent of the $221.7 million 

self-reported dollars spent, was spent outside the DISA process. 

Some Users Are Bypassing 

the DISA Process to Get 

Timely, More Flexible, and 

Less Costly Services 
Page 18 GAO-04-206 Satellite Communications 

Our past work has identified specific practices that can be employed to 

manage services from a more strategic perspective, thereby enabling an 

organization like DOD to leverage its buying power and achieve significant 

savings.11 These include establishing a central agent or manager for 

acquiring services, gaining visibility over spending, and revising business 

processes to enable the organization to leverage its buying power. While 

there are challenges to implementing this process, DOD has recognized its 

importance and called on agencies to embrace a strategic approach for 

acquiring services. Even though DISA is supposed to serve as a central 

manager for the acquisition of satellite bandwidth services, it is not 

following a strategic approach. Little attention is paid to collecting or 

addressing customer complaints, business processes are inefficient, and 

oversight is limited. Moreover, neither DOD nor DISA is making a 

concerted effort to collect forecasts of bandwidth needs from users, 

ensure those needs can be met by the commercial sector, and take steps 

needed to leverage its buying power with commercial providers. 

Our previous work has found that leading organizations have adopted 

practices and activities that enabled them to acquire services in a more 

strategic manner and in turn achieve dramatic cost reductions and service 

improvements. Faced with an increased dependence on services, growing 

market pressures, and an economic downturn, the companies we studied 

examined their service spending and found that they did not have a good 

grasp of how much was actually being spent and where these dollars were 

going. These companies found that responsibility for acquiring services 

resided largely with individual business units or functions, hindering 

efforts to coordinate purchases across the company. They also came to 

realize that they lacked the tools needed to make sure that the services 

they purchased met their business needs at the best overall value. 

To turn this situation around, these companies reengineered their 

approaches to buying services. This began with taking a hard look at 

how much they were spending on services and from whom. By arming 

themselves with this knowledge, the companies could identify 

opportunities to leverage their buying power, reduce costs, and better 

manage their suppliers. The companies also instituted a series of 

structural, process, and role changes aimed at moving away from a 

 11 U.S. General Accounting Office, Best Practices: Taking a Strategic Approach Could 

Improve DOD’s Acquisition of Services, GAO-02-230 (Washington, D.C.: Jan. 2002). 

Lack of Strategic 

Approach to 

Managing Services 

Diminished DOD’s 

Ability to Optimize 

Spending 

Strategic Approach Is 

Paramount to Optimizing 

Acquisitions of Services 
Page 19 GAO-04-206 Satellite Communications 

fragmented acquisition process to a more efficient and effective 

enterprisewide process. For example, the companies we studied often 

established or expanded the role of corporate procurement organizations 

to help business managers acquire key services and made extensive use of 

crossfunctional teams to help the companies better identify service needs, 

select providers, and manage contractor performance. These companies 

also developed information systems to enable them to track their spending 

and better match their needs with potential providers. They also 

implemented performance measures to track their progress and make 

further enhancements to their processes wherever needed. Taking a 

strategic approach clearly paid off, as companies found that they could 

save millions of dollars and improve the quality of services received by 

instituting these changes. 

DOD’s current process for acquiring commercial satellite bandwidth is not 

strategic. While DISA is supposed to serve as a centralized acquisition 

function, some users are, in effect, allowed to bypass the process, and 

there is little visibility over what is actually being spent on commercial 

satellite bandwidth services. 

For example, DOD has a formal waiver process—the GIG waiver 

process—in place to ensure that any acquisition made outside the DISA 

process is justified and that the service being procured is not duplicative 

of other existing services, preserves interoperability, and meets network 

control requirements. But the waiver process, at least until recently, has 

not been enforced. This past year, officials who manage this process 

recognized the problem and are now requiring users that already 

bypassed the process to obtain waivers after-the-fact. According to DOD 

officials, some users have been acquiring services outside the DISA 

process for years. 

In addition, other DOD organizations responsible for overseeing the DISA 

process—including the Assistant Secretary of Defense for Networks and 

Information Integration and the Office of the Chairman of the Joint Chiefs 

of Staff—have not been enforcing requirements for reporting, nor have 

they developed, nor required DISA to develop, performance metrics that 

could be used to assess user satisfaction, timeliness, and other factors that 

would give them a better sense of whether the process is efficient and 

effective. DOD directives since at least 1998 have required that DISA 

prepare a use and associated cost report on commercial bandwidth. DISA 

only recently submitted its first report. Further, no acquisition process 

measures exist at the oversight level, and DISA itself has not yet developed 

DOD Process Is Hampered 

by Oversight and 

Management Weaknesses 
Page 20 GAO-04-206 Satellite Communications 

performance metrics to measure customer satisfaction. Officials indicated 

that preliminary data have been collected from customers, but there was 

no evidence of their being used to improve any parts of the process. 

Moreover, neither DOD nor DISA has developed a complete picture of 

what is being spent on bandwidth—the cornerstone to identifying what 

can be done to improve the process and to leverage DOD’s buying power. 

Our analysis indicated that the information contained in the fiscal year 

2002 report on users and costs is incomplete, inaccurate, lacks proper 

identification of users, and contains costs associated with fiscal year 2003, 

impairing its reliability. Figure 2 highlights examples of our findings. 

Moreover, the self-reported user information that DISA collected did not 

reflect many purchases that were made outside of the DISA process. A 

1998 DOD Inspector General report also found that DOD could not 

determine the total leased satellite communications bandwidth used 

among component commands or the total costs associated with obtaining 

that capacity. 
Page 21 GAO-04-206 Satellite Communications 

Figure 2: Highlights of Analysis of DISA’s Commercial Satellite Communications Utilization Report—Fiscal Year 2002 
Page 22 GAO-04-206 Satellite Communications 

DOD also does not routinely maintain information on its ultimate 

providers of bandwidth services. While DOD maintains summary totals 

for task orders awarded to its three DSTS-G vendors, these data do not 

provide detailed information such as which actual bandwidth service 

providers competed the most, or least, or which ones were actually 

providing the most or next most service in terms of numbers of 

procurements or dollars to DOD. 

Even though DOD is the largest buyer of bandwidth in the commercial 

market, neither DOD nor DISA has taken steps essential to fully leveraging 

that buying power and to ensuring that future needs can be met by the 

commercial sector. There are options based on common commercial 

practices that are available to DOD for doing so, such as requesting most 

favored customer status with providers or maximizing business volume 

discounts. Table 7 discusses several of these options and their possible 

application to DOD’s current practices in more detail. 

Steps Have Not Been Taken to 

Leverage Buying Power 
Page 23 GAO-04-206 Satellite Communications 

Table 7: Options That Could Improve DOD’s Practices in Leveraging Its Buying Power 

Alerting current and new providers about projected 

requirements to provide them the opportunity to develop 

additional capabilities. Application: While there have been 

isolated instances of this practice occurring, it was initiated by the 

DSTS-G vendors, not DOD. This could include launching new 

satellites or repositioning current assets, focusing more on DOD’s 

security needs, and creating more flexible solutions. 

Requesting “Most Favored Customer” status with service 

providers. Application: Through DOD’s mandated DISA process, 

DOD typically cannot order bandwidth in large quantities or for 

long durations as commercial customers can do. However, DOD, 

in the aggregate, is the market segment’s largest single 

customer, which should warrant DOD some favored status. DOD 

could use its position to request such treatment; however, it does 

not, according to two major service providers we spoke with. 

Maximizing business volume discounts. Application: Some 

large service providers do provide DOD some volume discounts. 

However, total DOD spending volume is fragmented among three 

DSTS-G vendors, the MTC prime contractor, and an unknown 

number of individual procurement organizations that are used by 

those customers/users that avoid the DISA process. By 

eliminating this fragmentation, DOD could aggregate its buying 

power to obtain better business volume discounts. 

Requesting portability of services to other satellites or other 

areas of coverage. Application: A couple of the service 

providers, which have larger numbers of satellites in various 

locations, have been willing to offer bandwidth on alternate 

satellites when the original satellite and its location were no 

longer needed. DOD could request that all service providers 

agree to this provision in its subcontracts. Such a request, 

however, would probably have a cost associated with the risk to 

the service providers, but the added flexibility may well be worth 

the increased cost. 

Obtaining “Promised Duration” discounts. Application: Two 

major service providers told us they would be willing to give 

discounts for lease durations of more than 1 year, the standard 

ordering term for DOD. They said that DOD could obtain better 

prices by committing to longer lease periods, thus getting it out of 

the “spot market” and into the long-term market, where most of 

their commercial customers operate. DOD cannot normally 

commit to periods of service beyond 1 year, because DOD gets 

its operations and maintenance funding 1 year at a time and 

current law requires funding to be available up front to cover 

multiple-years’ obligations of termination liability. 

Requesting discounts for use of new satellites and/or older 

satellites. Application: Being the first or one of only a few 

customers on a new satellite, or likewise being willing to use an 

older satellite which has gone into an inclined orbit can result in 

substantial savings. Such instances are rare, but if DOD is in a 

position to know about the possibility and can make quick 

decisions, DOD can benefit. This requires up-to-date knowledge 

of the service provider industry. 

Obtaining “Termination for Convenience” protections.

Application: Currently, DOD is not fully protected in the event it 

must terminate a task order before its completion. DOD has 

required the three DSTS-G vendors and the MTC contractor to 

accept this clause and the risk that goes along with it. The 

vendors do not have such a clause with their providers, so the 

vendors are potentially in the position of receiving a Termination 

for Convenience from the DOD but having to continue to pay for 

the leased bandwidth with the provider for the remaining lease 

period. DOD allows these payments on the remainder of the 

lease period to be submitted by the vendor as part of the 

termination settlement proposal, and thus DOD would bear some 

or all of the costs for the unused portion of the lease. 

Source: GAO. 
Page 24 GAO-04-206 Satellite Communications 

While these options would position DISA to achieve cost savings, they 

require DISA to be able to project its future requirements and to be more 

proactive in dealing with its vendors. This is not being done. Instead, 

bandwidth is usually purchased on the “spot market” on an as-needed 

basis—when it is most expensive compared to longer duration leases. 

With few exceptions, individual small requirements are not aggregated by 

DISA to take advantage of DOD’s potential leverage in acquiring 

bandwidth in larger and less expensive quantities. According to DISA, 

users often decline opportunities to aggregate their requirements with 

other users. Two providers we interviewed indicated that they would be 

willing to develop creative solutions for consolidated requirements but 

would need to know in advance about future requirements to do so 

effectively. 

Several DOD and industry officials told us that DOD could benefit if 

bandwidth were acquired through a program office with central funding 

authority for that bandwidth. In this situation, it would be necessary for 

users to submit their plans and forecasts of requirements to the central 

program office. Currently, users have their own bandwidth funding and 

generally do not forward forecasts of requirements to DISA. If all user 

requirements were submitted to this single program office, it would then 

be able to aggregate bandwidth requirements in order to leverage buying 

power. In addition, some of these officials indicated that such a program 

office could allow increased visibility and control over DOD-wide 

bandwidth acquisitions. 

Longer-term changes to the DISA process that are necessary to implement 

more strategic management processes—including establishing better 

visibility over spending, revamping business processes, strengthening 

technical expertise within the agency, and securing a commitment from 

senior leadership—will be challenging to implement. DOD is aware of 

these challenges and has begun to study its processes. 

We found that leading organizations that applied a strategic approach to 

their purchases of services often spent months piecing together data from 

various financial and management information systems and examining 

individual orders just to get a rough idea of what they were spending 

on services. The companies found it was necessary to develop new 

information systems that could provide them with reliable spending data 

in a timely fashion. The task of gaining accurate visibility over spending 

will be equally, if not more, difficult for DOD given the lack of information 

Adopting a Strategic 

Approach Will Be 

Challenging 
Page 25 GAO-04-206 Satellite Communications 

systems available to provide spending data and the magnitude and breadth 

of spending involved with commercial satellite bandwidth services. 

Companies we studied also found that in establishing new procurement 

processes, they needed to overcome resistance from individual business 

units reluctant to share decision-making responsibility and to involve staff 

that traditionally did not communicate with each other. While DISA will 

likely face similar resistance within the agency, we believe it will also need 

to overcome resistance from users that manage their own operations and 

maintenance funds and have long been dissatisfied with the DISA process. 

Another challenge for DISA is obtaining the expertise needed to review 

complex technically sophisticated solutions proposed by vendors. 

Industry representatives and some vendors believe that DISA currently 

lacks the appropriate level of expertise. 

Lastly, the companies we studied found that they needed to have sustained 

commitment from their senior leadership; to clearly communicate the 

rationale, goals, and expected results from reengineering efforts; and to 

measure whether the changes were having their intended effects. We 

believe similar commitment will need to be secured not only from DISA 

leadership, but also from leaders within DOD and the user communities. 

DOD has recognized many of these challenges and is in the process of 

awarding a contract for a study to determine if it should change its 

approach to identifying, acquiring, and managing commercial satellite 

services. According to a DOD official, DOD has also initiated a study that 

will address ways to arrange for multiyear leasing and bulk discounts 

based on projected customer requirements. 

DOD recognizes it has an increasing need to supplement its own satellite 

bandwidth capacity with capacity from the commercial sector. But it does 

not have a firm idea on how much bandwidth it will require in the short or 

long term or whether the private sector can even continue to support its 

requirements. Moreover, though it has become the largest consumer of 

satellite bandwidth, it still buys its bandwidth on an as-needed basis, 

thereby missing significant opportunities to leverage its buying power and 

to achieve considerable savings as a result. Moreover, by allowing users to 

bypass the DISA waiver process, DOD is hampering its ability to ensure 

that its communications networks are interoperable and to minimize 

redundancies. If DISA is to remain as DOD’s primary agent to acquire 

satellite bandwidth, then it must implement a more strategic management 

approach—not only one that continues to ensure that acquisitions are 

Conclusions 
Page 26 GAO-04-206 Satellite Communications 

processed fairly, but also one that ensures services can be acquired in a 

timely and cost-effective way that meets users’ needs. Doing so will be a 

considerable challenge, however, given the current environment and 

potential resistance within DISA and from its users. Commitment is 

needed from senior leaders within DISA and DOD to overcome challenges 

associated with implementing a strategic approach. 

To strengthen DOD’s ability to obtain commercial bandwidth effectively 

and efficiently, we recommend that the Secretary of Defense direct the 

Assistant Secretary of Defense for Networks and Information Integration 

to develop, in coordination with the Joint Staff and the Director of DISA, 

a strategic management framework for improving the acquisition of 

commercial bandwidth. Specifically, this framework should include 

provisions for 

• inventorying current and potential users of commercial bandwidth 

to determine their existing and long-term requirements; 

• identifying and exploiting opportunities to consolidate the bandwidth 

requirements of combatant commanders, the military services, and 

defense agencies; 

• adopting, when appropriate, commonly used commercial practices, such 

as conducting spend analyses and negotiating pricing discounts based on 

overall DOD volume, to strengthen DOD’s position in acquiring bandwidth; 

and 

• improving the current funding structure by considering new funding 

approaches, such as centralized funding of commercial bandwidth, and 

seeking legislative authority for multiyear procurements. 

To ensure the successful implementation of this strategic management 

framework and to better leverage DOD’s buying power and increase 

user satisfaction, we recommend that the Secretary of Defense direct 

the Assistant Secretary of Defense for Networks and Information 

Integration to 

• develop performance metrics to assess user satisfaction with the 

timeliness, flexibility, quality, and cost in acquiring commercial satellite 

services; 

• strengthen DOD’s capacity to provide accurate and complete analyses of 

commercial bandwidth requirements, spending, and the capabilities of 

commercial satellite providers by enhancing core internal technical 

expertise and information systems; and 

Recommendations for 

Executive Action 
Page 27 GAO-04-206 Satellite Communications 

• assess, and implement as needed, changes to the key elements of the 

existing acquisition process—including requirements generation, solution 

development and evaluation, and contract vehicles—to facilitate a more 

strategic approach to bandwidth acquisition. 

DOD, in commenting on a draft of this report, generally concurred 

with our findings, conclusions, and recommendations. Specifically, DOD 

concurred with four of our recommendations and partially concurred with 

the remaining three recommendations. 

DOD concurred that a strategic management framework for improving 

the acquisition of commercial bandwidth be developed to include 

inventorying current and potential users to determine their current 

and future needs, and adopting, where appropriate, commonly used 

commercial acquisition practices. It also concurred in developing 

performance metrics to assess user satisfaction with its process and in 

assessing and changing its process to facilitate a more strategic approach 

to commercial bandwidth acquisition. 

DOD partially concurred with our recommendations addressing 

consolidating user requirements, improving the current funding structure,

and enhancing core internal technical expertise and information systems. 

In its comments DOD indicated it had initiated a review of its current 

approach to determine if process changes were necessary and is waiting to 

decide whether or how to act on these three issues until after the review is 

complete. While we agree it is important to review these issues, we also 

believe that actions, along the lines of our recommendations, will be 

necessary in order to develop a strategic framework to acquire 

commercial satellite bandwidth more efficiently and effectively. 

DOD also provided informal technical comments, which we incorporated 

as appropriate. 

Agency Comments 

and Our Evaluation 
Page 28 GAO-04-206 Satellite Communications 

To determine whether DOD’s process for acquiring fixed satellite services 

is fair and meets the needs of DOD users, we met with officials from DOD 

component organizations involved in procurement of these services, 

including officials from agency contracting offices, DISA, Assistant 

Secretary of Defense for Networks and Information Integration, and Joint 

Staff. We also interviewed the four DOD vendors (Lockheed Martin Global 

Telecommunications; Arrowhead Global Solutions, Inc.; Artel, Inc.; and 

Spacelink International, L.L.C.) that procure the needed bandwidth from 

industry, and officials from three commercial service providers, which are 

major suppliers of commercial bandwidth to DOD. We obtained available 

DISA data on all contractual actions awarded since enactment of the 

Open-market Reorganization for the Betterment of International 

Telecommunications (ORBIT) Act in March 2000, the beginning date 

given to us by our congressional requestors. We reviewed contract 

file documentation, as well as applicable sections of the FAR, as 

supplemented, and DOD policies and procedures, to determine the extent 

to which competition was obtained for each delivery or task order 

included in the universe under either the MTC or the DSTS-G contracts. 

For those orders not awarded competitively, we reviewed task order files 

to obtain sole-source or directed subcontractor justifications. We obtained 

details on all GIG waiver requests for fixed satellite service commercial 

bandwidth procurements processed since enactment of ORBIT. To 

determine the elapsed calendar days required to award the 48 DSTS-G task 

orders, we reviewed task order files to extract pertinent dates. For 11 of 

the task orders where we were unable to obtain the start date, we imputed 

the start date (request for service) based on 37 task orders for which we 

had actual start dates. 

To determine what DOD does to oversee spending on fixed satellite 

services and ensure cost-effective results, we reviewed policies and 

procedures DOD uses and interviewed DOD officials on oversight 

practices. We obtained and analyzed cost data reported by combatant 

commands, military services, and defense agencies. We reviewed task 

and delivery order documentation, including applicable modifications 

and amendments, awarded under the MTC and DSTS-G contracts since 

enactment of the ORBIT Act. We analyzed the current DSTS-G contract 

to identify the terms, conditions, and benefits available to large volume 

customers and compared our results to the reported practices of private 

sector buyers purchasing similar bandwidth capacity. We reviewed 

available contracts for bandwidth from U.S. Army and U.S. Navy sources, 

and we analyzed reported cost data to see if they included satellite 

bandwidth capacity obtained through sources outside of the DISA process. 

Scope and 

Methodology 
Page 29 GAO-04-206 Satellite Communications 

We conducted our review from February to October 2003 in accordance 

with generally accepted government auditing standards. 

We are sending copies of this report to other interested congressional 

committees; the Secretary of Defense; the Deputy Secretary of Defense; 

the Secretaries of the Army, Navy, and Air Force; the Under Secretary of 

Defense (Acquisition, Technology, and Logistics); the Under Secretary of 

Defense (Comptroller); and the Director of the Defense Information 

Systems Agency. We will also provide copies to others on request. In 

addition, the report will be available at no charge on the GAO Web site 

at http://www.gao.gov. 

If you have any questions regarding this report, please call me at 

(202) 512-4841 or John Needham at (202) 512-5274. Other major 

contributors to this report are Gary L. Delaney, John D. Heere, 

Oscar Mardis, Marie P. Ahearn, and Gary Middleton. 

William T. Woods 

Director 

Acquisition and Sourcing Management 
Appendix I: Comments from the Department 

of Defense 

Page 30 GAO-04-206 Satellite Communications 

Appendix I: Comments from the Department 

of Defense 
Appendix I: Comments from the Department 

of Defense 

Page 31 GAO-04-206 Satellite Communications 

Note: Page numbers in 

the draft report may differ 

from those in this report. 
Appendix I: Comments from the Department 

of Defense 

Page 32 GAO-04-206 Satellite Communications 
Appendix I: Comments from the Department 

of Defense 

Page 33 GAO-04-206 Satellite Communications 
Appendix I: Comments from the Department 

of Defense 

Page 34 GAO-04-206 Satellite Communications (120200) 
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