Senate appropriators take a dim view of Pentagon satellite lease plans

The Senate Appropriations Committee viewed with skepticism plans by the Defense Information Systems Agency to spend $416 million on a long-term lease of a commercial communications satellite to serve forces deployed to Afghanistan and Iraq, according to its report on the 2012 Defense Department budget approved by the committee last Thursday.

Bruce Bennett, DISA's director for satellite communications told Nextgov in April that forces deployed to Afghanistan and Iraq expect the same kind of broadband experience they have in the United States, and the only way to do that is with a satellite. But, Bennett said, short-term satellite leases are expensive, which is why the agency kicked off a project to lease a commercial satellite to serve forces deployed in the U.S. Central Command area of operations for 15 years in March.

The Senate Appropriations Committee said in its report that DISA did not factor in the drawdown of troops in Afghanistan and Iraq "nor the possibility of more efficient, multiyear leases of satellite communications from existing constellations" in its break-even analysis.

The committee directed DISA to examine a number of alternatives to the long-term lease plan, such as buying additional military satellites, adjusting the acquisition strategy for services currently provided to CENTCOM, adopting longer term contracts for services on existing constellations, and requesting innovative proposals from industry.

Commercial communications satellite operators such as SES SA, Intelsat General and Telesat Holdings Inc. all face a glut of capacity with a record number of launches planned over the next several years, Bloomberg reported last Friday. These commercial firms also have extremely high profit margins exceeding 70 percent, Bloomberg reported, compared to a profit margin of 29.8 percent for Apple.

The appropriations committee's concerns also were shared by the House and Senate armed services committees. The Senate Armed Services Committee, in its report on the 2012 Defense authorization bill, directed DISA to examine alternatives to a long-term satellite lease and consider purchasing services on multiple satellites through multiyear contracts "to ensure lower cost and increased flexibility or other creative approaches to providing reliable communications."

The House Armed Services Committee, in its report on the 2012 funding bill, prohibited DISA from spending more than 20 percent of the 2012 satellite lease budget "until the secretary of Defense provides an independent assessment of the acquisition strategy."

DISA wants to lease a satellite with Ku-band and Ka-band transponders with a total throughput of 6.37 gigabits per second, or about the same capacity as the Defense-owned Wideband Global Satcom satellite serving Afghanistan and Iraq today.

On Sept. 13, the Air Force issued Boeing a $1 billion contract modification for launch and on-orbit activation of the seventh Wideband Global SATCOM satellite and procurement of long-lead materials for an eighth satellite. The funding also includes options for the full production, launch and on-orbit activation of satellites eight and nine, Boeing said.

"Satellites seven and eight will address the growing demand for high-data rate services worldwide," said Craig Cooning, vice president and general manager of Boeing Space and Intelligence Systems.