Department of Defense Actions to Modify its Commercial Communications Satellite Services Procurement Process
Gao ID: GAO-06-480R April 17, 2006The 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. Congress asked us to summarize the actions that DOD has taken to date in revising its requirements and acquisition approach for commercial satellite services.
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. 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. Upon completing the above mentioned analysis and determining the success of the Navy consolidation effort, DOD expects to have the information necessary to finalize its approach for acquiring commercial satellite communications.
GAO-06-480R, Department of Defense Actions to Modify its Commercial Communications Satellite Services Procurement Process
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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.[Footnote 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.[Footnote 2] Upon completing the above mentioned
analysis and determining the success of the Navy consolidation effort,
DOD 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.[Footnote 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 services[Footnote 4] 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;
* 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.[Footnote 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 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.[Footnote 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 high-level 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.
* 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: Coverage:
Requirement: 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.
Requirement: 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.
Capability: NetOps:
Requirement: Floor: Monitoring (near real time), fault reporting.
Requirement: Selectable:Situational awareness (access to spectrum
monitoring detail).
Capability: Flexibility/ Optimization:
Requirement: Floor: "Regrooming" space segment and earth terminal /
teleport resources for spectral, operational, and price efficiencies
selectable upon request within same provider.
Requirement: Selectable: Specific terms and conditions for unique
situations to be negotiated up front.
Capability: Capacity:
Requirement: Floor: Ability to lease commercial satellite communications
capacity as needed.
Requirement: Selectable: Not applicable.
Capability: Protection/Operations Security:
Requirement: Floor: Satellite operations clearances; operations
security clearances; telemetry, tracking, and control encryption on
command link; electromagnetic interference/radio frequency interference
geolocation.
Capability: Portability:
Requirement: Floor: Portability of bandwidth from one region to
another, user invoked when needed subject to availability.
Requirement: Selectable: Specific portability terms and conditions for
unique situations to be negotiated up front.
Capability: Responsiveness:
Requirement: Floor: Transponder available less than or equal to 30 days
from task order award.
Requirement: 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.
[End of table]
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[Hyperlink, 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.
Signed By:
William T. Woods:
Director, Acquisition and Sourcing Management:
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):
FOOTNOTES
[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.
[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.
[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.
[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.
