Satellite Industry Dissatisfied with Hosted Payloads Program
Photo: NASAA contract vehicle designed two years ago to help the Air Force piggyback communications and sensor packages on commercial satellites has yet to get off the ground, and is frustrating industry leaders.
Once viewed by commercial satellite operators as an opportunity to share the cost of spacecraft and launch, while offering a budget-friendly and more flexible option for military and government payloads, the Hosted Payload Solutions (HoPS) program has thus far failed to live up to its promise, several executives told National Defense.
“We were extremely excited to be part of the program,” said Richard Larson, executive director of business development for Merging Excellence and Innovation Technologies, a Houston, Texas-based payload integrator company. “A lot of us are kind of in a ‘wait and see’ mode; there are some payloads going up, but they’re not going through this program.”
In 2014, the Air Force Space and Missile Systems Center (SMC) at Los Angeles Air Force Base awarded 14 companies the opportunity to compete for piggybacked government payloads on indefinite-delivery, indefinite-quantity contracts. The companies ranged from small payload integrators, to mid-sized commercial satellite operators, to major defense contractors including Boeing and Lockheed Martin.
The contract vehicle’s objective was to “create a streamlined and reproducible acquisition structure to secure affordable and resilient access to space,” said Lt. Gen. Samuel Greaves, SMC commander and program executive office for space. “In a fiscally constrained environment, the HoPS program attempts to maximize hosting opportunities to provide competitive pricing and flexibility to meet a wide spectrum of user requirements.”
The contract would be worth up to $495 million over the next 15 years and scheduled to run through 2029, according to a 2014 statement.
Two years later, not a single military contract has run through the HoPS program, and two government programs committed to using the program — NASA’s tropospheric emissions monitoring of pollution payload, and a National Oceanic and Atmospheric Administration program called the Cooperative Data and Rescue Services mission — remain in the early stages of drafting requests for proposals, according to the SMC’s Hosted Payload Office.
Commercial satellite operators have been in talks with the Defense Department to use hosted payloads for over a decade, said Philip Harlow, president and chief operating officer for XTAR LLC, an Ashburn, Virginia-based satellite operator that works exclusively in the X-band frequency for government uses.
Harlow was one of several industry executives in those talks, as a vice president for PanAmSat and later Intelsat following its acquisition of PanAmSat in 2006. “Our goal was to get hosted payloads up because that helps to defray costs … of launch and insurance of the satellite,” Harlow said. XTAR is serving as a subcontractor for two of the companies awarded IDIQ contracts, he said.
“The biggest hurdle we came up against was they [the Air Force] wanted to do it, but they didn’t have a contract vehicle to do it,” he said.
The establishment of a Hosted Payload Office in 2011 and the 2014 HoPS announcement seemed to show that the department was finally interested in giving the idea of hosted payloads a shot, Harlow said.
“But as it matured and was put in place, it started to come to the fore that while DoD was saying they wanted to do innovative things, that really wasn’t in the mind of the DoD user,” he said.
“I do think the expectations [for the program] were overstated,” Harlow acknowledged.
The experience may make some smaller companies — that made big investments to compete — hesitant to participate in a similar future program, Larson said.
“For a small business, when you invest in a proposal of that magnitude, you have to think twice about how much you’re going to spend on these opportunities,” he said.
David Hardy, assistant deputy undersecretary of the Air Force for space, said at the annual Hosted Payload Summit in Washington, D.C., that the issue has always been how to ensure sufficient capability to justify the lower cost point.
“For many applications we have in the military, power and aperture or power aperture are the coin of the realm, and it’s hard for smallsats oftentimes to meet a sufficient capability to argue that it’s the most cost-effective and militarily important way to meet the requirement,” he said.
Piggybacking on a commercial satellite also means giving up an element of control, he said.
“We at the DoD space community like to have control of our own assets, we are most comfortable when we own and run our assets,” he said. “I, quite frankly, think that that is an outmoded concept.”
Becky Yoder, chief financial officer and interim CEO for Surrey Satellite Technology, an Englewood, Colorado-based small satellite company that received an IDIQ award through the HoPS program, said the service may struggle with the idea of “buying a ticket to ride” on commercial satellites.
“When you buy an airline seat, you don’t tell the airlines how to fly their planes,” she said.
Harlow, who served in the British Royal Armed Services, said he understood the U.S. military’s hesitancy to use a satellite it doesn’t fully control.
“As a former military guy myself, I can kind of understand why you don’t want to have the commercial satellite operator as the primary,” he said. “The feeling is always, if it’s a commercial entity or a contractor, that you can’t control it.”
But the commercial satellite industry has been the cornerstone of satellite capability and development for nearly two decades, “and we have done so very effectively,” he said. Satellite companies worked with the military during key missions in Iraq and Afghanistan, adding transponders and beams over the Middle East and moving their satellites to serve the needs at the time, he noted.
“Now, the DoD is looking to its future. They’re saying: ‘Thanks very much, but you’re not a part of our future,’” he said. “Of course as somebody who has been integral to supply commercial bandwidth to DoD, that’s quite disheartening … that’s quite frustrating.”
Larson noted the program may have suffered from losing several of its top supporters in the Air Force.
Gen. Ellen Pawlikowski, who served as the commander of the Space and Missile Systems Center at the time the HoPS program came online, and Gen. William Shelton, who led Air Force Space Command prior to retiring in 2014, were some of its biggest champions, he said.
“When Gen. Shelton retired and Gen. Pawlikowski moved on [to lead the Air Force Materiel Command], we lost some of the major muscle supporting this program,” he said.
What has transpired with the HoPS program is the result of trying to meld the two cultures of the Defense Department and the commercial industry, something both sides have been working on in efforts to develop cost-effective technologies in an era of tough budget cuts.
“With the military or with NASA, you’re going to be much more careful,” said Marco Caceres, senior space analyst at the Teal Group, an aerospace and defense market analysis firm. “The taxpayer is the insured, so you have to make sure you get it right.”
Despite industry’s frustration that little has moved forward with the HoPS program, Caceres didn’t see any unusual delay in the program’s implementation. “In the world of space, two years is nothing in terms of transitioning to a new paradigm.”
The timing hasn’t been quite right for the military to move to hosted payloads, Caceres said. It’s easier to transition to hosted payloads when you’re dealing with commercial systems that are part of large satellite constellations launched over a period of months, because you have more flexibility to decide on when to launch a military payload, he said. But when you have a market that is dominated, as it is now, by big communications satellites that cost hundreds of millions of dollars and take several years to build and send to space without any delays, “it’s tougher to gel” with the timeframe.
The process may speed up as companies replace their satellites in the near future, he noted.
The government has struggled to meet commercial acquisition timelines within its own acquisition process, Greaves said.
“The HoPS contract is commercial in nature, but we are still held to the same traditional acquisition timelines and our ability to put hosted missions on the contract,” he said. Government and military program budget cycles are longer than what is typically seen in the private sector, where decisions must be made quickly, he noted.
Several company executives advocated for the Air Force to use the program for less sensitive or low-priority payloads.
“My personal opinion was find some smaller payloads, find something that isn’t so sensitive from a national security perspective, to prove that it works,” Yoder said.
In 2011, SES put an Air Force payload on one of its satellites in the Commercially Hosted Payload Flight Demonstration, a test flight now seen as a precursor to hosted payload capability.
“I think at the end of the day, people felt like that was a pretty successful program,” Yoder said.
Hosted payloads are not the answer for every mission, said Al Tadros, vice president of civil and DoD business at Space Systems/Loral LLC, a Palo Alto, California-based satellite builder, which also received an IDIQ award. He is also the chairman of the satellite industry’s Hosted Payload Alliance.
“In some cases they provide a great advantage and in other cases only dedicated platforms make sense,” he said.
Larson said that a hosted payload could work well to quickly test out a sensor.
“If you’re just trying to prove the technology of the sensor, it may be perfect,” he said. “Turning things around more quickly is a good thing.”
Greaves said that operational payloads that include strategic national security assets may not be a good hosting fit, but commercially hosted payloads continue to be of “great interest” to the government, particularly for weather sensors and other scientific missions.
The program has helped develop several planning processes for the Air Force to work more closely with commercial satellite operators, he said.
“Hosted payloads have been considered in recent Analysis of Alternatives for Overhead Persistent Infrared and Protected SATCOM Services,” he said. The upcoming Space-Based Surveillance Follow-On program, set to launch in 2021, will allow proposals for hosted payload solutions for its upcoming contract, though it would not be part of the HoPS program, he noted.
There isn’t any one solution to all of the missions important to the U.S. government, Tadros said. “The mission requirements should drive the infrastructure and not the other way around. Large satellites, small satellites and hosted payloads are all good solutions depending on the problem to be solved and can all have a role in the space architecture that maximizes the security of our nation,” he said.