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Defense > 1. DOD Commercial Satellite Communication Procurements

Enforcing existing acquisition policy and identifying opportunities to centralize the Department of Defense's procurement of commercial satellite communications services could create opportunities to potentially save tens of millions of dollars annually.

Why This Area Is Important

The Department of Defense (DOD) uses satellite communications (SATCOM) to support land, sea, air, and space operations. For example, DOD utilizes SATCOM to support a variety of mission critical needs, such as surveillance being performed by unmanned aerial vehicles and communications between commanders and field units. DOD partially meets these communication needs through leasing commercial SATCOM services. This analysis focuses on the Fixed Satellite Service (FSS) portion of commercial SATCOM because it represents the largest percentage (over 70 percent) of DOD’s annual expenditures for commercial SATCOM for fiscal year 2012—the most recent year for which data are available—and also because it favors long-term purchases of bulk commercial SATCOM capacity that might benefit from a multi-year contracting strategy. DOD has become increasingly reliant upon commercial SATCOM, which now represents a significant portion of the DOD SATCOM architecture.[1] For fiscal year 2012 DOD reported that it spent over $1 billion to lease SATCOM services from commercial providers. According to a 2013 Defense Business Board report, DOD’s SATCOM requirements are expected to grow by nearly 70 percent over the next decade.



[1] DOD’s military SATCOM architecture consists of three segments: a protected segment that provides secure, jam-resistant communications; a wideband segment, which supports Army mobile ground terminals and Navy ships and submarines, among other things; and a narrowband segment, which provides complementary capability to the other segments, such as beyond line-of-sight secure tactical communications capabilities. In comparison, the commercial SATCOM architecture consists of two segments—fixed and mobile satellite services—which provide functions similar to the military wideband and narrowband segments, respectively. There is no commercial counterpart to the military protected segment.

What GAO Found

As GAO reported in July 2015, guidance from the Chairman of the Joint Chiefs of Staff requires the Defense Information Systems Agency (DISA) to procure all of DOD's commercial SATCOM. However, because DOD has not enforced this policy, the combatant commands and military services (known as DOD components) independently procure commercial SATCOM to meet their individual needs. As a result, DOD misses opportunities to achieve cost savings by consolidating its commercial SATCOM purchases.

Once commercial SATCOM is procured, U.S. Strategic Command, the DOD agency responsible for providing satellite capability for military operations, assumes operational responsibility. Although the Joint Chiefs' policy sets the foundation for a centralized commercial SATCOM acquisition and management approach, according to DISA and Strategic Command officials, neither DISA nor Strategic Command has enforcement power to ensure that all components adhere to the policy. To begin addressing this policy goal, the Joint Requirements Oversight Council recently approved the commercial SATCOM Centralized Management Concept of Operations, which intends to implement a three-phased approach to centralize management of military and commercial wideband SATCOM.

Some combatant commands and military services believe they can acquire commercial SATCOM faster, better, and cheaper than DISA. Moreover, having an ability to quickly procure commercial SATCOM on their own has helped the military services meet pressing needs in recent military conflicts. While we recognize DOD is often confronted with addressing immediate needs to help ensure mission effectiveness, particularly in times of conflict, this fragmented approach to acquiring commercial SATCOM places DOD at risk of not leveraging its own buying power through efficiencies, such as combining acquisitions. Utilizing a central point of contact could better position DOD to not only meet mission needs but to do so both effectively and efficiently. In the most recent commercial SATCOM usage report, DOD reported that—contrary to the Joint Chiefs' requirement—approximately 34 percent (about $290 million) of its fixed satellite commercial SATCOM services was procured outside of DISA in 2012. The usage report also indicated that these services acquired though DISA result in an approximate 15 percent cost savings versus those not acquired through DISA. Comparatively, in 2011, about 32 percent of commercial SATCOM was procured outside of DISA, illustrating that the condition had worsened in 2012.

Over the past decade, several entities, including GAO, have recommended that DOD move toward a more strategic approach for commercial SATCOM procurement. For example, the Defense Business Board found in 2013 that DOD’s strategy and management structure for procuring commercial SATCOM was not optimized and recommended that DOD designate a single lead organization for overall satellite communication strategy.[1] Specifically, the report recommended that DOD designate and resource a single organization, possibly DISA, to acquire and manage all SATCOM assets—including fixed and mobile services as well as DOD’s procurement of commercial satellites—under a managed service-type approach in the same manner that the Defense Logistics Agency is a one-stop shop for the military services' common logistical commodities. Under this construct, all commercial SATCOM acquisition and management would be handled in a managed service type approach, with the designated organization maintaining an inventory of available resources, ensuring their disciplined use, and procuring SATCOM resources in manner to obtain the best value. Additionally, in 2013, executives from five leading commercial satellite operators co-authored a paper stating that a single focal point would be better positioned to determine how to best meet the overall demand for SATCOM.[2] While DOD is investigating ways to how best meet overall demand, it will be several years before these efforts are expected to be completed.

Although DOD has several initiatives under way aimed at improving the procurement of commercial SATCOM, to date, DOD has not performed its own assessment to identify procurement inefficiencies and opportunities to consolidate purchases. As a result, DOD may be missing opportunities to further save money and improve efficiency. However, DOD faces considerable challenges in making these improvements, including a lack of data needed to support spend analyses. While DOD has recently initiated a number of small scale approaches to address fiscal, operational, and policy challenges that could potentially improve commercial SATCOM acquisition and management, DOD still does not know what it spends annually on commercial SATCOM. Without this knowledge, DOD cannot effectively manage and plan for its SATCOM procurement.



[1] Defense Business Board. Report to the Secretary of Defense: Taking Advantage of Opportunities for Commercial Satellite Communications Services, Report FY13-02.

[2] Seven Ways to Make the DOD a Better Buyer of Commercial SATCOM (Jan. 14, 2013).

Actions Needed

To reform DOD's commercial SATCOM procurement processes and better leverage DOD's buying power, GAO recommended in July 2015 that the Secretary of Defense—in coordination with stakeholders including the Joint Chiefs of Staff, U.S. Strategic Command, combatant commands, the military services, and DISA—should take the following actions:

  • Enforce current policy requiring DISA to acquire all commercial SATCOM for DOD.
     
  • Conduct a spend analysis that identifies procurement inefficiencies and opportunities to consolidate purchases. Specifically, the analysis should identify how much is being spent for which services, who the buyers are, who the suppliers are, duplicative contracts and opportunities to aggregate demand, and where the opportunities are for leveraged buying and other tactics to save money and improve performance.

Implementation of these recommendations could help the government more efficiently and effectively procure commercial SATCOM, potentially saving tens of millions of dollars annually. GAO estimated that if, in 2012, DOD had procured all of its fixed satellite commercial SATCOM services through DISA, as required by guidance from the Chairman of the Joint Chiefs of Staff, the department may have realized a savings of almost $44 million.

How GAO Conducted Its Work

The information contained in this analysis is based on findings from the product in the related GAO product section. To assess the extent to which DOD efficiently procures bandwidth, GAO reviewed DOD guidance and recent DOD studies and reports to identify criteria for procuring commercial satellite services as well as for evidence DOD has identified its future SATCOM requirements. GAO met with agency officials from DISA, the U.S. Strategic Command, DOD’s Chief Information Officer, Joint Staff, Combatant Commands, and the military services to obtain their perspectives on how DOD procures bandwidth. Additionally, GAO reviewed recent DOD studies and reports, such as its August 2014 Satellite Communications Strategy Report and its Fiscal Year 2012 Commercial Satellite Communications Usage Report, as well as DISA’s April 2013 Commercial Satellite Communications Analysis of Alternatives Final Report, in which past and current acquisition strategies are described. GAO then compared these acquisition strategies to the prescribed Chairman of the Joint Chiefs of Staff Instruction procurement policy.

Table 1 in appendix V lists the programs GAO identified that might have opportunities for cost savings or revenue enhancement.

Agency Comments & GAO Contact

In commenting on the July 2015 report on which this analysis is based, DOD concurred with GAO's recommendations to improve the department’s procurement of SATCOM, stating that (1) enforcing current policy requiring DISA to procure all commercial SATCOM for DOD makes the best use of taxpayer dollars and supports acquisitions that are fully compliant with applicable laws and regulations; and (2) a spend analysis could help the department understand its military and commercial SATCOM spending and leverage its buying power.

GAO also provided a draft of this report section to DOD for review and comment. DOD provided technical comments and in response GAO made changes to this report section where appropriate.

For additional information about this area, contact Cristina Chaplain at (202) 512-4841 or chaplainc@gao.gov.

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