Briefing on DOD's Report on Commercial Communications Satellite  
Services Procurement Process (27-SEP-05, GAO-05-1019R). 	 
                                                                 
The Department of Defense (DOD) submitted to the Congress on July
29, 2005 a report entitled Defense Commercial Communications	 
Satellite Services Procurement Process. In response to direction 
from the Committee on Armed Services, United States Senate, we	 
reviewed DOD's report to determine the extent to which it	 
addressed the seven recommendations contained in our December	 
2003 report on how DOD procures fixed commercial satellite	 
bandwidth services. On September 2, 2005, we briefed the	 
Committee on the results of our review. This letter summarizes	 
and transmits that briefing.					 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-05-1019R					        
    ACCNO:   A38360						        
  TITLE:     Briefing on DOD's Report on Commercial Communications    
Satellite Services Procurement Process				 
     DATE:   09/27/2005 
  SUBJECT:   Communication satellites				 
	     Defense procurement				 
	     Defense capabilities				 
	     Defense cost control				 
	     Department of Defense contractors			 
	     Procurement planning				 
	     Procurement practices				 
	     Military communication				 

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GAO-05-1019R

United States Government Accountability Office Washington, DC 20548

September 27, 2005

The Honorable John Warner
Chairman
The Honorable Carl Levin
Ranking Minority Member
Committee on Armed Services
United States Senate

Subject: Briefing on DOD's Report on Commercial Communications Satellite
Services Procurement Process

The Department of Defense (DOD) submitted to the Congress on July 29, 2005
a report entitled Defense Commercial Communications Satellite Services
Procurement Process.1 In response to direction from your committee,2 we
reviewed DOD's report to determine the extent to which it addressed the
seven recommendations contained in our December 2003 report3 on how DOD
procures fixed commercial satellite bandwidth services.4 On September 2,
2005, we briefed the Committee on the results of our review. This letter
summarizes and transmits that briefing. The full briefing, including our
scope and methodology, is reprinted as appendix I. We conducted our review
during August 2005 in accordance with generally accepted government
auditing standards.

                                   Background

DOD has for many years augmented its internally owned and operated
satellite communications capability by leasing commercial fixed satellite
services. 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 as DOD moves toward a network-centric

1DOD prepared the report in response to section 803 of the Ronald W.
Reagan National Defense Authorization Act for Fiscal Year 2005, Pub. L.
No. 108-375, October 28, 2004.

2Senate Report No. 109-69, May 17, 2005.

3GAO, Satellite Communications: Strategic Approach Needed for DOD's
Procurement of Commercial Satellite Bandwidth, GAO-04-206 (Washington,
D.C.: Dec 10, 2003).

4Bandwidth is the range of frequencies that can pass over a given
transmission channel. Fixed satellite service refers to a radio
communication service between fixed earth stations at specific locations
by means of one or more satellites.

warfare environment. In our 2003 review, we found that although DOD was
the largest single consumer of such services, it acquired its bandwidth on
an as-needed basis, thereby missing significant opportunities to leverage
its buying power to achieve considerable savings and more favorable terms
and conditions. Additionally, DOD did not know exactly how much it was
spending on commercial satellite services, nor did it know much about its
service providers or whether customer needs were being satisfied. As a
result, we made seven recommendations for developing a strategic
management framework and improving the acquisition of fixed commercial
satellite services. In commenting on a draft of the report in December
2003, DOD generally concurred with our recommendations. Section 803
required DOD to review potential procurement mechanisms and develop
guidance to its buying agencies that addresses our seven recommendations.

Summary 	Our analysis of DOD's report indicates that DOD either fully or
partially addressed the seven recommendations from our December 2003
report. As indicated in table 1, DOD fully addressed our recommendation on
the need to inventory users to determine existing and long-term
requirements and our recommendation on improving the current funding
structure. However, DOD did not address all elements of the remaining five
recommendations, so they are identified as partially addressed.

Table 1: Summary of GAO's Assessment on Whether DOD Addressed GAO's
Recommendations

Recommendation Extent addressed

1. Inventory current and potential users of commercial bandwidth to
determine existing and long term Fully addressed requirements.

2. Identify and exploit consolidation opportunities for bandwidth
requirements of combatant Partially addressed commanders, military
services, and defense agencies

3. Adopt, when appropriate, commonly used commercial practices, such as
conducting spend Partially addressed analyses and negotiating pricing
discounts based on overall DOD volume, to strengthen DOD's position in
acquiring bandwidth.

4. Improve the current funding structure by considering new funding
approaches, such as centralized Fully addressed funding of commercial
bandwidth and seeking legislative authority for multiyear procurements.

5. Develop performance metrics to assess user satisfaction with the
timeliness, flexibility, quality, and Partially addressed cost in
acquiring commercial satellite services.

6. Strengthen DOD's capacity to provide accurate and complete analyses of
commercial bandwidth Partially addressed requirements, spending, and the
capabilities of commercial satellite providers by enhancing core internal
technical expertise and information systems.

7. Assess, and implement as needed, changes to the key elements of the
existing acquisition process- Partially addressed including requirements
generation, solution development and evaluation, and contract vehicles-to
facilitate a more strategic approach.

Source: GAO analysis

Agency Comments 	We provided a draft of this letter and the attached
briefing to DOD for comment. DOD indicated by email that it had no
substantive issues with the documents and would not be submitting any
official comments.

We are sending copies of this report to other interested congressional
committees and Members, and to the Secretary of Defense. We will make
copies available to others upon request. In addition, the report will be
available at no charge on the GAO Web site at http://www.gao.gov.

If you or your staff have any questions regarding this letter, please
contact me at (202) 512-4841 or [email protected]. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on the
last

page of the letter. GAO staff who made contributions to this letter were
John Needham, Assistant Director; Gary Delaney; John Heere; and Jose
Ramos.

William T. Woods, Director Acquisition and Sourcing Management

                                Briefing Slides

                            Briefing to Staff of the
                        Senate Armed Services Committee

                       Observations on the Department of
                      Defense's Commercial Communications
                                   Satellite
                                Services Report

                               September 2, 2005

                                Briefing Outline

o  Introduction

o  Objective, Scope, and Methodology

o  Results

o  Background

o  Observations on DOD's Responses

o 	Appendix: DOD Commercial Satellite Communication Attributes

                                       1

                                  Introduction

o 	For many years, DOD has leased commercial fixed satellite services to
augment its internally owned and operated satellite communications
capability.

o 	Our December 2003 report--Satellite Communications: Strategic
ApproachNeeded for DOD's Procurement of Commercial Satellite Bandwidth-

recommended that DOD develop and implement a strategic management
framework for improving the approach for acquiring commercial satellite
services, along with correcting specific oversight and management
weaknesses.

o 	Section 803 of the Ronald W. Reagan National Defense Authorization Act
for Fiscal Year 2005 required DOD to

o 	review all potential mechanisms for procuring commercial communications
satellite services and provide guidance to the Director of the Defense
Information Systems Agency and the Secretaries of the militarydepartments
on how such procurements should be conducted.

o 	submit a report to Congress that included a discussion of the rationale
for the guidance developed and how the guidance addresses the
recommendations made in GAO's December 2003 report.

o  The committee directed GAO to review DOD's report to the Congress to

determine the extent the report addressed our recommendations.1 1Senate
Report 109-69, (accompanying S.1042, National Defense Authorization Act
for Fiscal Year 2006).

                                       2

Our objective was to determine the extent that DOD's report -Defense
Commercial Communications Satellite Services Procurement Process
-addressed the recommendations contained in our December 2003 report
Satellite Communications: Strategic Approach Needed for DOD's Procurement
of Commercial Satellite Bandwidth (GAO-04-206).

To accomplish our objective:

o 	We analyzed DOD's report against the elements in each of the
recommendations contained in our December 2003 report to determine the
extent to which DOD addressed the recommendations. If DOD addressed all
elements in a recommendation we determined that it was fully addressed; if
DOD did not address all elements we determined that it was partially
addressed.

o 	We analyzed DOD's December 2004 commercial satellite policy memorandum
and action plan to understand the context for DOD's new approach for
acquiring commercial satellite communication services.

o 	We analyzed the supporting cost-benefit analysis to determine 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.

                                       3

o 	We analyzed the Commercial Satellite Communications Services
Requirements Synopsis and interviewed DOD and Joint Staff officials to
discuss the process used in developing the user requirements.

o 	We interviewed officials from the Office of the Assistant Secretary of
Defense for Networks and Information Integration and the Defense
Information Systems Agency(DISA) to ascertain their plans for implementing
the recommendations contained in the DOD report.

o 	Our analysis does not address whether DOD's report fully complies with
all requirements of Section 803 of the Ronald W. Reagan National Defense
Authorization Act for Fiscal Year 2005.

We conducted our work at the Wireless Directorate of the Office of the
Assistant Secretaryof Defense for Networks and Information Integration,
Washington, D.C., and the Defense Information Systems Agency, Falls
Church, Virginia, in August 2005 in accordance with generally accepted
government auditing standards.

                                       4

                                    RESULTS

    DOD's report:

o 	fully addressed two of the seven recommendations in GAO's report,

o  partially addressed five of the seven recommendations

                                       5

                                   Background

o  In our 2003 report we found that

o  DOD was the largest consumer of commercial fixed satellite services.

o 	DOD was buying its satellite services on an as-needed basis, thereby
missingsignificant opportunities to leverage its buying power and to
achieve considerable savings as a result.

o 	Some users viewed the process for acquiring commercial fixed satellite
services as being too lengthy, particularly for time-critical military
operations, and they believed that the cost was too high.

o 	DOD did not know exactly how much it was spending on commercial
satellite services, nor did it know much about its service providers or
whether customer needs were really being satisfied.

o 	Neither DOD or DISA was collecting forecasts of users' needs for
commercial fixed satellite services, which is an important step toward
optimizing DOD's spending.

o 	GAO's recommendations to DOD focused on the need to develop and
implement a strategic approach to acquire commercial satellite services,
along with correcting specific oversight and management weaknesses.

                                       6

                                   Background

Congress directed DOD, in Section 803, to include the following
procurement mechanisms in its review:

1.	procurement under indefinite delivery, indefinite quantity contracts of
other departments and agencies of the Federal Government, including the
Federal Technology Service of the General Services Administration.

2.	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)).

3.	procurement by any other means that has been used by the Director of
the Defense Information Systems Agency or the Secretary of a military
department to enter into a contract for the procurement of commercial
communications satellite services that is in force on the date of the
enactment of this Act, including through commercial communications
satellite service integrators and resellers.

4.	procurement under the method used as of the date of the enactment of
this Act,modified with streamlined processes to ensure increased
efficiency and cost effectiveness.

Congress required DOD to submit a report that included the rationale for
any guidance it developed and a discussion of how the guidance will
address GAO's recommendations.

                                       7

                                   Background

Actions taken by DOD:

o 	Issued in December 2004 a policy memorandum for the planning,
acquisition, and management of commercial satellite communications fixed
satellite services.

o 	Prior studies from GAO's December 2003 report, the Joint Staff and
others identified opportunities for improvements

o  Published action plan for implementing new policy.

o  Defined baseline requirements for commercial satellite communication
services.

o  Completed cost-benefit analysis.

o  Submitted report to Congress on July 29, 2005.

                                       8

                                   Background

DOD's Report to Congress:

o 	Defined how DOD was planning to implement a more strategic approach for
the planning, acquisition, and management of commercial fixed satellite
services.

o 	Included, in developing its new strategic approach for commercial fixed
satellite services, the following four overarching elements:

1. integrated planning;

2. cost-effective acquisition and effective provisioning;

3. integrated management of commercial and military operations; and

4. alignment of commercial and military satellites and earth equipment.

o 	Reported that DOD reviewed potential mechanisms for future procurement
of commercial satellite services, including the four options that Congress
specified in Section 803 of the fiscal year 2005 defense authorization
act, and concluded that two options (full and open competition and
improved version of current contract) were viable.

o  Discussed the recommendations made in our December 2003 report.

                                       9

                                   Background

o 	Advised Congress of its intent to proceed with the following two-phased
approach for procurement of commercial fixed satellite services:

1.	improve the effectiveness of the current process by incorporating
changes to the DISA requirements and provisioning processes to improve
responsiveness and aggregate bandwidth to reduce costs; and

2.	examine how best to craft a successor contract by obtaining input from
the satellite industry, including small business, with potential issuance
of a request for proposal for a new competitive procurement intended to
meet the full range of warfighter requirements and enable cost savings
through bandwidth aggregation and lessons learned.

                                       10

                             First Recommendation1

First GAO Recommendation:

Inventory current and potential users of commercial bandwidth to determine
existing and long term requirements.

DOD's reported actions GAO Observations

o 	Instituted a three-layer planning  o  DOD's reported actions fully
address the approach that defines long-term recommendation. The
three-layer planningrequirements, preposition capacity approach coupled
with the changes to the

requirements for intermittent users, determination process and the annual

and surge requirements for crises. 	revalidation of requirements should
allow DOD to determine existing and long-term

o 	The Joint Staff has revised the current commercial satellite
communications satellite communications requirements
requirements.determination process, as it relates to

Commercial Satellite Communications  o  To establish an overall set of
requirements(SATCOM) fixed satellite services, to DOD identified the
warfighter's

align with the three-layered approach. 	requirements by defining eight
"attributes desired by the warfighter". These attributes

o 	The Joint Staff will annually revalidate are the criteria for assessing
10 options for warfighter satellite communications acquiring commercial
satellite

requirements. This requires combatant communications as well for
establishingcommanders and the military services and updating the three
layers ofto review all requirements entered into requirements on an annual
basis.the Satellite Data Base for currency,

changes and revalidation.

1GAO, Satellite Communications: Strategic Approach Needed for DOD's
Procurement of Commercial Satellite Bandwidth, GAO-04-206 12 (Washington,
D.C.: Dec 10, 2003).

1

                             Second Recommendation

Second GAO Recommendation:

Identify and exploit consolidation opportunities for bandwidth
requirements of
combatant
commanders, military services, and defense agencies.

DOD's reported actions GAO observations

o 	DISA is evaluating the current commercial  o  DOD's actions partially
address the SATCOM leases to determine how to recommendation. best
aggregate bandwidth requirements.

o  DOD analyses of current SATCOM

o 	Analysis of the expiration dates of a leases indicate potential savings
when number of current leases, when combined requirements are
consolidated.

with knowledge of the mission supported
in a particular area of responsibility could  o  DOD has taken steps to
identify current

provide information about aggregating for requirements and has estimated
future
future leases. requirements for funding purposes.

o  This analysis will be performed against all  o  DOD's report, however,
does not specify

current on-contract leases to determine how future consolidation
opportunities are future bandwidth aggregation to be exploited; for
example, it does not

opportunities. 	describe the mechanism for translating newly categorized
requirements into lower

prices and favorable contract terms.

1GAO, Satellite Communications: Strategic Approach Needed for DOD's
Procurement of Commercial Satellite Bandwidth, GAO-04-206 13(Washington,
D.C.: Dec 10, 2003).

                             Third Recommendation1

Third GAO Recommendation:

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.

DOD's reported actions GAO observations

o 	DISA tasked to conduct a  o  DOD actions partially address the
cost/benefit analysis and to recommendation by incorporatingdevelop a
comprehensive commercial practices into its requirements acquisition
strategy to restructure document. the contracting method for commercial
SATCOM.  o  The cost/benefit analysis included

commonly used commercial practices in the

o 	The commercial SATCOM policy 10 procurement options evaluated as
directed users to include funds in appropriate. However, a comprehensive
their program objective acquisition strategy has not been finalized.
memorandums consistent with the layered approach to  o  DOD as part of its
cost/benefit analysis has communications requirements and included some of
the elements of a spend their satellite database entries, and analysis.
However, greater benefits could to be able to report on the total be
obtained by doing a thorough spend amount of funds budgeted. analysis of
awarded procurements and then

using those results to exploit opportunities to leverage DOD's buying
power in the future.

1GAO, Satellite Communications: Strategic Approach Needed for DOD's
Procurement of Commercial Satellite Bandwidth, GAO-04-206 14(Washington,
D.C.: Dec 10, 2003).

                             Fourth Recommendation1

Fourth GAO Recommendation:

Improving the current funding structure by considering new funding
approaches, such as centralized funding of commercial bandwidth, and
seeking legislative authority for multiyear procurements.

DOD's reported actions GAO observations

o 	Cost/benefit analysis evaluated  o  DOD's report fully addresses the
contracting and commercial SATCOM recommendation. Alternative
fundingbandwidth funding strategies used by strategies for acquiring
commercial other U.S. government organizations. SATCOM services are
evaluated.

o 	Looked at multiyear contracts and found  o  DOD considered centralized
funding and that multiyear contracts were only used multiyear procurement
but decided to in cases where the organization had retain the current
funding structure. funded the contract using funds appropriated
specifically for these  o  DOD did improve the funding process to
contracts. Only 10 percent of DOD ensure that the military departments and
funding fits this model. DOD plans to defense agencies include funding for
contract for bandwidth to support commercial SATCOM in developing their
multiple year requirements using a Base program proposals, known as the
year and negotiated option year contract program objective memorandum.
structure.

o 	DOD concluded that that centralized funding of commercial bandwidth
does

not provide significant benefit over the current approach.

1GAO, Satellite Communications: Strategic Approach Needed for DOD's
Procurement of Commercial Satellite Bandwidth, GAO-04-206 15(Washington,
D.C.: Dec 10, 2003).

1

                              Fifth Recommendation

Fifth GAO Recommendation:

Develop performance metrics to assess user satisfaction with the
timeliness, flexibility, quality, and cost in acquiring commercial
satellite services.

DOD's reported actions GAO observations

o  Policy memorandum and action plan  o  DOD has partially addressed the

directed DISA to develop performance recommendation by developing metrics
metrics to assess user satisfaction. and a customer survey on service
quality.

However, DOD has not yet developed performance metrics on timeliness,

o  DISA will actively seek customer flexibility, or cost. DOD plans to do
so

feedback through customer surveys to after validating the eight warfighter
determine how well the process is attributes.

working to satisfy their needs, and use
the information to iterate process  o  On timeliness, DOD is tracking the

improvement activities. 	elapsed times from a request for service to when
a task order is awarded. However, there are no standards, as of now, for
assessing timeliness.

1GAO, Satellite Communications: Strategic Approach Needed for DOD's
Procurement of Commercial Satellite Bandwidth, GAO-04-206 16 (Washington,
D.C.: Dec 10, 2003).

1

                              Sixth Recommendation

Sixth GAO Recommendation:

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.

DOD's reported actions GAO observations

o 	Revised process for defining user  o  DOD has partially addressed the
requirements to ensure accurate recommendation. The revised SATCOM

information on potential commercial requirements determination process
bandwidth requirements. Plans to requires users to stratify requirements.

conduct annual reviews of planned  o  DOD is modernizing the
satelliteversus actual bandwidth usage. database to allow better
requirements

o  Spending assessments to be analyses.

enabled through budget process  o  DOD's report does not state how theand
acquisition strategy. budget process and acquisition strategy

o  DOD plans to institute a regular will yield better spending analyses.

forum with industry to exchange  o  DOD's report does not state how
internal
information regarding DOD
requirements, commercial system expertise will be enhanced.
capabilities, and future technology

needs and plans.  o 	DOD is collecting information from industry on its
capabilities. Plans for an

initial industry forum are in place.

1GAO, Satellite Communications: Strategic Approach Needed for DOD's
Procurement of Commercial Satellite Bandwidth, GAO-04-206 17 (Washington,
D.C.: Dec 10, 2003).

                            Seventh Recommendation1

Seventh GAO Recommendation:

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

DOD's reported actions GAO observations

o 	Policy memorandum/action plan outlines  o  DOD partially addresses the
recommendation by changes to acquisition and provisioning completing the
assessment part and proceeding with approach to obtain favorable terms and
a two-phased implementation. conditions and improve timely services.

o  Analysis of the 10 acquisition options used the eight

o 	Planned improvements for provisioning, to attributes, as appropriate,
desired by the warfighter include parallel provisioning activities, for
assessing the benefits of each option. Success automated workforce
management, user-of the option selected, however, will depend on friendly
forms and input methods, and cost-realization of planned process
improvements. focused and speedy action.

o  A policy memorandum and action plan issued in

o 	Cost-benefit analysis considered 10 December 2004 cover requirements
planning, alternative acquisition options and DOD's provisioning and
acquisition, operations report announced a two-phased acquisition
management, and alignment with military satellite approach. programs.

o  Assessment of warfighter needs included  o  Implementation of planned
improvements in the

notional responsiveness timelines. provisioning process should resolve
many previous user complaints. Phase II acquisition strategy still needed.

1GAO, Satellite Communications: Strategic Approach Needed for DOD's
Procurement of Commercial Satellite Bandwidth, GAO-04-206 18 (Washington,
D.C.: Dec 10, 2003).

      GAO's Mission