Satellite Communications:

Strategic Approach Needed for DOD's Procurement of Commercial Satellite Bandwidth

GAO-04-206: Published: Dec 10, 2003. Publicly Released: Dec 10, 2003.

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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.

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.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The process used to acquire and provision commercial SATCOM bandwidth is being revised by planning to respond to user service requests through parallel processing activities to develop technical solutions, negotiate Host Nation Agreements, and consolidate similar requirements, which will ensure timely access to satellite capacity. Negotiating with service providers, through a single point of contact, for bulk capacity purchases for Layer 1 and Layer 2 requirements will increase competitiveness and will result in favorable contract terms and conditions that will enable flexible responses to crisis situations. The new strategy will restructure the approach to acquire and provision Commercial SATCOM FSS to provide a responsive yet stable methodology that provides competitive, rapid, and reliable access to Commercial SATCOM FSS resources. This restructuring is to be completed by October 2004, with a negotiated contract awarded by February 2006. DOD has not completed its new strategy. DOD was required by Section 803 of the FY 05 Defense Authorization Act (P.L. 108-375) to submit a report to Congress by April 2005 on (1) alternative means for procuring commercial bandwidth, (2) rationale and guidance to be given to DOD agencies, and (3) how the new guidance addresses each of the recommendations in GAO's report. DOD was given an extension of the time within which to submit this report through June 2005. However, according to DOD officials, DOD will not meet that extended reporting date due to extensive coordination within the Pentagon. GAO will review the new strategy, and its adherence to GAO's recommendations, as soon as it is made available to Congress. On July 29, 2005, DOD submitted to Congress and to GAO its report entitled Defense Commercial Communication Satellite Services Procurement Process. In response to Senate Report No. 109-69 dated May 17, 2005, we reviewed DOD's report to determine the extent to which it addressed our seven recommendations. On September 2, 2005 we briefed the Committee, and on September 27, 2005, we issued a letter report GAO-05-1019R, regarding the results of our review. As to this recommendation, we determined that it was partially addressed. While it incorporated some elements of commercial practices into its requirements document and the cost/benefit analysis included some commonly used commercial practices in the 10 procurement options evaluated, we found that a comprehensive acquisition strategy had not been finalized and that greater benefits could be obtained by doing a thorough spend analysis of awarded procurements and then using those results to exploit opportunities to leverage DOD's buying power in the future. On June 7, 2006, in its report Commercial Satellite Communications (COMMSATCOM) Spend Analysis and Strategy Report, in response to Section 818 of the National Defense Authorization Act for FY 2006, DOD incorporated its completed assessment of DOD's spending on FSS services. For the fiscal years 2000 through 2005, nearly $1.4B was identified, with approximately $330M having been spent in fiscal year 2005. Most of this (87 percent) was spent on bandwidth services as compared to the other categories of satellite services. DOD's report incorporates an acquisition strategy and considers methods for aggregating purchases and leveraging DOD's buying power. Although we have not reviewed the report in detail, the presentation of an acquisition strategy and the results of its spend analysis seem to fully address the last remaining segments of the recommendation.

    Recommendation: To strengthen DOD's ability to obtain commercial bandwidth effectively and efficiently, the Secretary of Defense should 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 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.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: In July 2005, DOD submitted to Congress and to GAO its report entitled "Defense Commercial Communication Satellite Services Procurement Process." We reviewed this report to determine the extent to which it addressed this recommendation and reported our results to the Senate Armed Services Committee in September 2005. At that time, we determined that this recommendation had been partially addressed. Specifically, while DOD's analyses of SATCOM leases had indicated potential savings when requirements are consolidated and while DOD had taken steps to identify current requirements and estimate future requirements for funding purposes, it had not specified how future consolidation opportunities could be exploited. For example, it does did not describe the mechanism for translating newly categorized requirements into lower prices and favorable contract terms. In its June 2006 report, "Commercial Satellite Communications (COMMSATCOM) Spend Analysis and Strategy Report," prepared in response to Section 818 of the National Defense Authorization Act for FY 2006, DOD outlined its approach to further leverage its significant purchasing power by 1) further concentrating expenditures within its principal SATCOM contract, and 2)further consolidating requirements by aggregating prospective task orders within the principal contract to create larger individual orders. DOD's June 2006 report also discussed in detail the limits and potential negative impacts of certain task order consolidations, including the potential for overly ambitious task order consolidation to limit competition and thereby increase the prices DOD pays for commercial SATCOM services. More recently, DISA completed the consolidation of two task orders prior to placing this consolidated order on contract. DISA representatives also believe that the best opportunity to consolidate bandwidth requirements begins with the military services and combatant commands - DOD's principal customers for commercial SATCOM - at the beginning of the requirements definition process. DISA representatives have taken steps to educate the military services and combatant commands on ways they can improve consolidation during the SATCOM requirements development process and believe that these efforts are paying off.

    Recommendation: To strengthen DOD's ability to obtain commercial bandwidth effectively and efficiently, the Secretary of Defense should 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 identifying and exploiting opportunities to consolidate the bandwidth requirements of combatant commanders, the military services, and defense agencies.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: DOD has completed a comprehensive review of commercial SATCOM practices, including planning and requirements analysis, acquisition strategies and contract vehicles, operations management and the relationship to collateral programs such as the Teleport program. The results of this review were used by the Department to develop an Action Plan and Policy Memo that articulates the approach and processes for integration of commercial SATCOM into the overall SATCOM architecture. These documents are currently being reviewed within the Department. As of June 30, 2005, DOD has not completed its new strategy. DOD was required by Section 803 of the FY 05 Defense Authorization Act (P.L. 108-375) to submit a report to Congress by April 2005 on (1) alternative means for procuring commercial bandwidth, (2) rationale and guidance to be given to DOD agencies, and (3) how the new guidance addresses each of the recommendations in GAO's report. DOD was given an extension of the time within which to submit this report through June 2005. However, according to DOD officials, DOD will not meet that extended reporting date due to extensive coordination within the Pentagon. GAO will review the new strategy, and its adherence to GAO's recommendations, as soon as it is made available to Congress. On July 29, 2005, DOD submitted to Congress and to GAO its report entitled "Defense Commercial Communication Satellite Services Procurement Process." In response to Senate Report No. 109-69 dated May 17, 2005, we reviewed DOD's report to determine the extent to which it addressed our seven recommendations. On September 2, 2005 we briefed the Committee, and on September 27, 2005, we issued a letter report, GAO-05-1019R, regarding the results of our review. As to this recommendation, we determined that it was partially addressed. DOD had completed the assessment part and proceeded with a two-phase implementation. Analysis of the 10 acquisition options used the eight attributes, as appropriate, desired by the warfighter for assessing the benefits of each option. Success of the option selected, however, will depend on realization of planned process improvements. A policy memorandum and action plan issued in December 2004 covered requirements planning, provisioning and acquisition, operations management, and alignment with military satellite programs. Implementation of planned improvements in the provisioning process should resolve many previous user complaints. However, phase II acquisition strategy was still needed. On June 7, 2006, in its report "Commercial Satellite Communications (COMMSATCOM) Spend Analysis and Strategy Report," in response to Section 818 of the National Defense Authorization Act for FY 2006, DOD provided its acquisition strategy and its plans to update it as needed. DOD indicated that transitioning to the end-state operating framework will require periodic, recurring processes as detailed in the DOD policy on commercial SATCOM to institutionalize and codify the new DOD strategic approach. The report also says DOD will conduct an annual review of these processes to evaluate their effectiveness and develop recommendations as necessary to keep the policy relevant and responsive to DOD's requirements. While we have not reviewed this strategy in detail, it does seem to satisfy our call for an enhanced, more strategic and more leveraged approach and therefore fully addresses our recommendation.

    Recommendation: To ensure the successful implementation of this strategic management framework and to better leverage DOD's buying power and increase user satisfaction, the Secretary of Defense should direct the Assistant Secretary of Defense for Networks and Information Integration to 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.

    Agency Affected: Department of Defense

  4. Status: Closed - Implemented

    Comments: In July 2005, DOD submitted to Congress and to GAO its report entitled "Defense Commercial Communication Satellite Services Procurement Process." We reviewed this report to determine the extent to which it addressed this recommendation and reported our results to the Senate Armed Services Committee in September 2005. At that time, we determined that this recommendation had been partially addressed. Specifically, the revised SATCOM requirements determination process required users to stratify requirements and DOD was modernizing the satellite database to allow better requirements analyses. DOD was also collecting information from industry on its capabilities and had established plans for an initial industry forum. However, DOD's July 2005 report did not state how the budget process and acquisition strategy would yield better spending analyses and did not state how internal expertise would be enhanced. In June 2006, DOD submitted a second report to Congress entitled, "Commercial Satellite Communications (COMMSATCOM) Spend Analysis and Strategy Report" in response to Section 818 of the National Defense Authorization Act for FY 2006. While this report did not address this recommendation directly, it did identify efforts to enhance internal technical expertise. In particular, the report provided the first comprehensive assessment of DOD's requirements for and spending on commercial SATCOM services and the capabilities of commercial satellite providers to deliver those services. More recently, DOD has taken additional steps to improve the overall commercial SATCOM provisioning process. In April 2007, DOD's Joint Staff issued a formal revision to the guidance used to prepare commercial SATCOM requirements submissions for the satellite database. In December 2006, DOD held its first annual commercial SATCOM users' workshop with broad participation from both the military services and the commercial satellite industry. In addition, senior DOD officials have held discussions with the chief executive officers from many commercial SATCOM providers through the Mission Assurance Working Group - an on-going forum for DOD and the commercial SATCOM industry to discuss potential improvements to policies, programs, and processes for enhanced mission assurance of DOD's commercial SATCOM services. According to a DISA representative, these forums have significantly improved DOD's understanding of the capabilities of commercial satellite providers. With respect to specific efforts to enhance its core internal technical expertise, DISA's SATCOM program management office has hired a number of senior engineers with experience in the commercial SATCOM industry, and has established a systems engineering and technical assistance (SETA) contract with a contractor who can provide additional commercial SATCOM engineers with industry experience. The DISA SATCOM program management office has also taken steps to grow its level of expertise internally by providing both basic SATCOM training to all of its personnel, and advanced training to selected personnel as necessary based on their responsibilities. Finally, while its June 2006 report provided no indication as to the actions taken, if any, to upgrade its information systems, DISA is now in the process of completing a business process reengineering (BPR) effort that is designed to improve the overall provisioning process for commercial SATCOM services. As part of this BPR effort, DISA is reexamining its knowledge management strategy and supporting processes and procedures, and developing an Information Technology (IT) Requirements Plan and an IT Metric Plan. These plans, when completed, will guide DISA's future information systems investments related to the commercial SATCOM provisioning process.

    Recommendation: To ensure the successful implementation of this strategic management framework and to better leverage DOD's buying power and increase user satisfaction, the Secretary of Defense should direct the Assistant Secretary of Defense for Networks and Information Integration to 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.

    Agency Affected: Department of Defense

  5. Status: Closed - Implemented

    Comments: In July 2005, DOD submitted to Congress and to GAO its report entitled "Defense Commercial Communication Satellite Services Procurement Process." We reviewed this report to determine the extent to which it addressed this recommendation and reported our results to the Senate Armed Services Committee in September 2005. At that time we determined that this recommendation had been partially addressed. Specifically, while DOD had developed metrics and established a quarterly customer survey on service quality, it had not yet developed specific performance metrics on timeliness, flexibility, or cost. Since that time, DOD has taken several additional steps to address this recommendation. DOD's Joint Staff has validated a set of seven commercial SATCOM attributes including "responsiveness" and "flexibility/optimization" and has incorporated these attributes into the guidance used to prepare commercial SATCOM requirements submissions. The Defense Information Systems Agency (DISA) has also recently modified its principal SATCOM contract to include this set of attributes. Several of these attributes have selectable options which can be tailored to the needs of specific users. Use of these attributes should help DISA to better define desired contractor performance for each task order awarded under its principal SATCOM contract. DISA has continued to collect quarterly measurements on 1) procured transponder prices, 2) provisioning cycle time, and 3) overall customer satisfaction with each of the three principal SATCOM contractor's performance. DISA is also in the process of completing a business process reengineering (BPR) effort that is designed to improve the overall provisioning process for commercial SATCOM services. One of the changes DISA plans to implement is an improved customer satisfaction survey that will seek customer evaluations for each of the performance metrics identified in our recommendation - timeliness, flexibility, and cost - as well as an overall assessment of customers' degree of satisfaction with the services provided by the contractor and services provided by DISA's SATCOM program management office.

    Recommendation: To ensure the successful implementation of this strategic management framework and to better leverage DOD's buying power and increase user satisfaction, the Secretary of Defense should 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.

    Agency Affected: Department of Defense

  6. Status: Closed - Implemented

    Comments: DOD is in the process of coordinating a segmented planning strategy for Commercial SATCOM, consisting of three separate layers. These three layers take advantage of known and lasting requirements to leverage the resultant consumer power for discount rates and favorable contract terms on the less well-known surge requirements of the warfighter. Tasks planned to implement this strategy will include periodic assessment of planned versus actual commercial SATCOM use and recommendations for future capacity needs. DOD has not completed its new strategy. DOD was required by Section 803 of the FY 05 Defense Authorization Act (P.L. 108-375) to submit a report to Congress by April 2005 on (1) alternative means for procuring commercial bandwidth, (2) rationale and guidance to be given to DOD agencies, and (3) how the new guidance addresses each of the recommendations in our report. DOD was given an extension of the time within which to submit this report through June 2005. However, according to DOD officials, DOD will not meet that extended reporting date due to extensive coordination within the Pentagon. GAO will review the new strategy, and its adherence to GAO's recommendations, as soon as it is made available to Congress. On July 29, 2005, DOD submitted to Congress and to GAO its report entitled "Defense Commercial Communication Satellite Services Procurement Process." In response to Senate Report No. 109-69 dated May 17, 2005, we reviewed DOD's report to determine the extent to which it addressed our seven recommendations. On September 2, 2005 we briefed the Committee, and on September 27, 2005, we issued a letter report GAO-05-1019R, regarding the results of our review. As to this recommendation, we determined that it was fully addressed. DOD's three-layer planning approach coupled with the changes to the determination process and the annual revalidation of requirements should allow DOD to determine existing and long-term commercial satellite communications requirements. Further, to establish an overall set of requirements DOD identified the warfighter's requirements by defining eight "attributes desired by the warfighter." These attributes are the criteria for assessing 10 options for acquiring commercial satellite communications as well for establishing and updating the three layers of requirements on an annual basis.

    Recommendation: To strengthen DOD's ability to obtain commercial bandwidth effectively and efficiently, the Secretary of Defense should 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.

    Agency Affected: Department of Defense

  7. Status: Closed - Implemented

    Comments: At this time DOD is evaluating the use of base year contracts with negotiated options for future years to obtain favorable contract terms and conditions. DOD is also planning to request funds for Layer 1 and Layer 2 requirements in the FY 2006-2011 budget. Determination of the appropriate contract method is planned for completion by October 2004. Budgeting for Layer 1 and Layer 2 requirements will also be completed by October 2004. DOD has not completed its new strategy. DOD was required by Section 803 of the FY 05 Defense Authorization Act (P.L. 108-375) to submit a report to Congress by April 2005 on (1) alternative means for procuring commercial bandwidth, (2) rationale and guidance to be given to DOD agencies, and (3) how the new guidance addresses each of the recommendations in GAO's report. DOD was given an extension of the time within which to submit this report through June 2005. However, according to DOD officials, DOD will not meet that extended reporting date due to extensive coordination within the Pentagon. GAO will review the new strategy, and its adherence to GAO's recommendations, as soon as it is made available to Congress. On July 29, 2005, DOD submitted to Congress and to GAO its report entitled Defense Commercial Communication Satellite Services Procurement Process. In response to Senate Report No. 109-69 dated May 17, 2005, we reviewed DOD's report to determine the extent to which it addressed our seven recommendations. On September 2, 2005 we briefed the Committee, and on September 27, 2005, we issued a letter report GAO-05-1019R, regarding the results of our review. As to this recommendation, we determined that it was fully addressed. Alternative funding strategies for acquiring commercial SATCOM services were evaluated. DOD considered centralized funding and multiyear procurement but decided to retain the current funding structure. DOD did improve the funding process to ensure that the military departments and defense agencies included funding for commercial SATCOM in developing their program objective memorandum. On June 7, 2006, in its report Commercial Satellite Communications (COMMSATCOM) Spend Analysis and Strategy Report, in response to Section 818 of the National Defense Authorization Act for FY 2006, DOD further analyzed the potential for use of multiyear contracting and determined that its long-term requirement layer may provide "excellent candidates." DOD agreed to identify candidates, and systematically encourage multiyear contracting where requirements and funding are stable.

    Recommendation: To strengthen DOD's ability to obtain commercial bandwidth effectively and efficiently, the Secretary of Defense should 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 improving the current funding structure by considering new funding approaches, such as centralized funding of commercial bandwidth, and seeking legislative authority for multiyear procurements.

    Agency Affected: Department of Defense

 

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