Potential FCSA bidders question size, scope and procurement model

GSA and DISA are moving forward with a $10 billion satellite program. But providers question its size, scope and funding model.

The General Services Administration and Defense Information Systems Agency have been pushing ahead on their Future Comsatcom Services Acquisition (FCSA) and presenting results of their labors at a series of industry days, two in the past month alone. And industry has been dotting the proposals with red flags.

DISA and GSA are rolling provisions of three soon-to-expire commercial satellite communications contract vehicles together as FCSA. As part of the FCSA umbrella, there will be two new special item numbers (SINs) on GSA’s Schedule 70, expected to top $5 billion, and a two-part, multiple-award, indefinite-delivery, indefinite-quantity contract vehicle worth $3.5 billion. Together, the four components will provide transponded capacity, subscription services, custom solutions and professional services.

FCSA will be open to defense and civilian agencies; state, local and tribal governments; public schools and colleges; and public authorities.

The acquisition’s breadth and flexibility make it difficult to delineate where one contract area begins and another ends. That, in turn, makes it difficult for prospective bidders to decide how and where to concentrate their efforts. GSA’s presentation of sample task orders did little to quell contractors’ unease with the division of opportunities.

“On a percentage basis, where does government see the business going?” asked Skot Butler, director of strategic initiatives and FCSA capture at Intelsat General Corp.

“Government’s reaction is that this contract will be very different from others, so they don’t want to make a prediction," Butler said. "But on a historical basis, they must know, based on the task orders for the Defense Information Systems Network-Global (DSTS-G). I think that would help industry, help some companies to determine whether this is worth their investment as a prime or should they be teaming up with somebody to try to capture a smaller piece of the pie.”

After awards are made, FCSA will present user agencies with sets of qualified contractors within defined requirement areas: transponded capacity, subscription services and end-to-end solutions, said Jim Russo, GSA SatCom II program manager. User agencies will then choose which program best meets their needs, he said.

Raging Debate

Meanwhile, questions continue to arise over how bids would be evaluated and who would be handling the job.

“All proposals for the new comsatcom SINs will be evaluated by technical subject-matter experts to ensure that the core technical and project experience requirements are met,” Russo said. The evaluation process will ensure that all schedule-holders will be qualified and all offerings will be approved, he said.

Past performance is another hot-button issue. Although rules for individual task orders will vary, as it stands, companies bidding on the FCSA contracts might not count past performance of teammates or partners.

“I think maybe government’s objective is they wanted real capability in a contractor," Butler said."They don’t want somebody who’s going to just be standing in front of a team."

The FCSA SINs have core technical requirements, including information assurance, delivery and responsiveness, and network monitoring, specific to civilian and DOD solutions, Russo said. “In addition to satisfying the terms and conditions required for all Schedule 70 contracts, [the bidder] must also demonstrate project experience in delivering comsatcom services,” he said.

But “even the largest integrators in the world have lots of subcontractors that provide different pieces of an overall submission,” Butler said. Northrop Grumman makes nuclear submarines, but it still has partners and subcontractors, he said.

The schedules structure and emphasis on price are attracting red flags.

“One of the areas where I’m sort of skeptical is where Schedule 70 does tend to commoditize bandwidth,” said Rebecca Cowen-Hirsch, vice president of Inmarsat plc’s global government services unit. She also is former DISA satcom director.

Money vs. Mission

It becomes an especially dodgy — and dangerous — proposition when it comes to providing satcom capabilities for ground forces in southwest Asia, Cowen-Hirsch said.

Contemplating the idea of going to a schedule to meet a warfighter-critical requirement raises questions, she said. “Would you actually get good value? Would you get the services that make the satellite capacity able to meaningfully align with that warfighter requirement? Or is it just an all-out price war?”

There is a place, albeit limited, for that kind of commoditization, said Tony Bardo, assistant vice president of government solutions at Hughes Network Systems LLC. For example, some agencies want only the bandwidth and plan to handle the service part in-house. “If a customer wants it raw, they can get it off the schedule,” he said.

And a vehicle that saves DOD money while increasing support has a positive side, said Rick Lober, vice president and general manager for Hughes’ defense and intelligence systems division.

DOD will need every penny it can pinch to pay for its galloping bandwidth appetite. Central Command officers, including former Brig. Gen. Mark Bowman, have publicly conceded that 96 percent of satcom in the area — CentCom’s responsibility stretches from Kazakhstan to Egypt — comes from commercial satellite providers.

Need for Long-Term Planning

That could be a problem in coming years. During the next decade, satellite bandwidth will be scarce, said IT consulting firm Frost & Sullivan in its “World Satellite Very Small Aperture Terminals Markets” report in December 2009. “The largest commercial satellite operators are operating at or near peak capacity, and demand for bandwidth is much greater than current supply. Planned satellite launches will not be enough to satisfy demand requirements,” the report states.

“There’s no question that the Defense Department is extremely dependent on commercial satellite bandwidth for the foreseeable future,” said Warren Suss, president of Suss Consulting LLC. “There’s a tremendous reliance on bandwidth that’s competing with commercial demand. It’s a huge issue, especially since the next-generation satellite project [Transformational Satellite Communications system, better known as TSAT] got shot down,” he said.

Looking to the private sector for innovation might be DOD’s only real option, and it could be its best option. The department was planning to use Hughes’ Spaceway 3 satellite technology as a starting point for its now canceled IPv6-based TSAT program satellite.

“To my mind, DOD is not using bandwidth efficiently,” Hughes’ Lober said. A big — and inefficient — consumer of bandwidth is manned aerial vehicles, he said. And the problem is what is usually a solution. Standardizing on technology is generally a positive thing, Lober said, but “DOD is standardizing on technologies that are 10 years old or older. The people who really lose in the bandwidth battle are the guys on the ground.”

Planning is key to turning that around and ensuring access to adequate bandwidth. With the exception of the Navy, DOD relies on supplemental funding to pay for comsatcom expenditures instead of making them part of the annual budget. DOD can’t legally sign long-term contracts to commit funds, said Bruce Bennett, DISA's satcom director. “It’s something we’re working on.”

Private-sector organizations budget for satellite expenses and commit to multiyear buys. That lets providers plan ahead to ensure capabilities and capacity and better plan for customer needs, Cowen-Hirsch said.

The converse also is true. “There really hasn’t been a reason to have a lot of capacity over Afghanistan — there hasn’t been a demand for it,” Intelsat’s Butler said. “When one of your largest users is only committing to you on an annual basis, it makes that business case a little more difficult to make.”

Although agreeing that “it’s a real potential issue,” Suss warned against treating it as a catastrophe. “It could drive up prices, but presumably, we’ve got a marketplace that’s operating. So as demand goes up, additional entrepreneurs will invest and shoot up additional capacity. “

Besides, he added, “the other solution of having the government build, launch and operate its own satellites is not such a great one either, because that’s a huge cost.”

Getting caught in the scissor action of stagnant bandwidth capacity growth and skyrocketing demand is bad enough, but it's more broadly problematic — for industry and government — that DOD largely pays for comsatcom through supplemental funding.

The looming crisis is what happens if Congress makes good on its vow to eliminate supplemental funds.

“It’s a zero-sum game,” Butler said. DOD “will have to take money from somewhere else.” It’s illogical, he said. “DOD spent half a billion dollars on comsat last year. You’d think that would be the kind of thing you might want to have in your budget rather than rely on a sort of ad hoc funding.”

Arguably, the Navy has more defined and stable comsatcom needs. “It takes a lot to make any sort of changes aboard a ship,” Butler said. But more than that, he said, “I think they understand the scope of their requirements, their base requirements, very, very well.”

That type of intentional funding and careful planning might need to extend departmentwide soon, Cowen-Hirsch said. “When you look into the future, budgets will likely continue to constrict,” she said. “And this administration has made it very clear that they intend to review supplemental resources over time and roll those requirements into the appropriated budget.”

The first schedule awards under FCSA are expected in the second quarter of fiscal 2011.

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