U.S. Probes Military's Use of Commercial Satellites
Workers monitor satellites at Intelsat Ltd.'s operations center. D.C.-based Intelsat was formed as an intergovernmental organization during the Cold War, but in the late 1990s Congress told it to cut its ties to the U.S. government. Some competitors say Intelsat retains an unfair advantage. (File Photo/ Dennis Drenner For The Washington Post)
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By Renae Merle
Washington Post Staff Writer
Friday, December 6, 2002; Page E05
The General Accounting Office is investigating the Defense Department's use of commercial satellites, after competitors complained that Washington-based Intelsat Ltd. has an unfair advantage in a growing market.
Intelsat, incorporated in Bermuda, is owned by companies and governments in 148 nations, including Iraq and Iran. Its satellites help the U.S. military communicate with soldiers in far-flung outposts.
The GAO investigation coincides with the Pentagon's increasing dependence on commercial satellite providers to provide extra bandwidth, industry experts say. Government satellite programs have faced delays and cost overruns even as information has become a key part of battlefield strategy, they said.
Although the amount of money that the Defense Department spends on commercial satellites is unknown, the Defense Information Systems Agency's budget for commercial capacity has increased from $57 million in fiscal 2000 to an estimated $170 million in 2003. The agency estimates that nearly 60 percent of its commercial satellite business goes to Intelsat. The National Imagery and Mapping Agency, also part of the Defense Department, anticipates a 13-fold increase in spending on commercial satellite capacity this year, a spokesman said.
The growth in government demand and the collapse of the telecommunications sector have created a fiercely competitive market, and rivals suspect Intelsat is favored because of its roots as an intergovernmental entity.
That premise will be addressed in the GAO study that Sens. James M. Inhofe (R-Okla.) and Daniel K. Akaka (D-Hawaii), ranking members of the Senate Armed Services Committee, requested earlier this month. Intelsat was formed as intergovernmental organization in 1964 at the height of the Cold War, when satellite technology was considered too risky for the private sector. After a 1996 GAO report found that the commercial satellite market lacked competition, Congress required the company to cut its ties to the U.S. government and go private, and to then launch an initial public offering of stock by the end of 2002. Congress has since extended that deadline to the end of 2003.
Competitors complain that Intelsat's privatization hasn't changed the competition.
Some federal contracts require capabilities unique to Intelsat's satellites and other contracts specify an Intelsat satellite, said James Cuminale, executive vice president of corporate development and general counsel of competitor PanAmSat Corp. Moreover, the culture of preferring Intelsat hasn't changed, he said. Intelsat was once one of the few providers capable of global satellite coverage, though that's no longer the case, said David Helfgott, president and chief executive of Americom Government Services Inc., a subsidiary of New Jersey-based SES Americom Inc.
"Sometimes it's hard for the DOD to recognize the alternatives when they have become accustomed to having their service from Intelsat," Helfgott said. "We would hope that the procurement process would be such that all comers would have an opportunity. I think the mindset is changing, but it's inertia."
Intelsat calls the criticism baseless and notes that its largest shareholder is Bethesda-based Lockheed Martin Corp. Lockheed owns 24 percent of the company's stock. Iraq and Iran each own only .05 percent, the minimum requirement to be a part of Intelsat, and they have no management role, said Tony A. Trujillo Jr., Intelsat's senior vice president of corporate services. He noted that it is U.S. policy for Intelsat to provide service to all countries on a nondiscriminatory basis.
"I believe than PanAmSat is engaged in a coordinated campaign to tarnish the Intelsat brand," Trujillo said. "We certainly don't believe we get preferential treatment from DOD."
Not all of Intelsat's competitors are complaining.
"We recognize that there have been some long-standing providers, and in any situation that is going to create some difficulty for new [companies]," said a spokesman for Loral Skynet of Bedminster, N.J. "But we're satisfied with the progress that we're making."
How the military contracts with the commercial sector has become increasingly important as it recognizes the limitations of its own capacity.
"There is a looming shortfall in spy satellite capacity that will have to be covered with commercial satellites," said Loren B. Thompson, a defense analyst for the Lexington Institute, an Arlington think tank.
At the launch of the war in Afghanistan, a satellite stationed over the Indian Ocean that had been taken out of service had to be brought back, said James A. Lewis, director for technology and public policy at the Center for Strategic and International Studies.
And for three months after the Sept. 11, 2001, terrorist attacks, every time Space Imaging Inc.'s satellite passed over Afghanistan, it was taking high-resolution images of the country's terrain for the U.S. military, said chief executive and chairman John R. Copple. That meant the firm had to deny requests from other countries and commercial customers while it gave the military priority, he said.
"They couldn't do everything they wanted to do in Afghanistan because they didn't have enough bandwidth," Lewis said. "And in future wars we are going to have even greater demand." |
