Military Space Business Plagued by Indecision

The military space community is mired in debate about how to modernize satellites and the broader space infrastructure at a time of unprecedented innovation by the private sector. Discussions revolve around pivotal questions such as whether the Pentagon should take a leap of faith and outsource space services, and whether it should abandon expensive satellites programs in favor of lower cost alternatives.

“We’re talking about fundamental change in the way we think about and acquire space capabilities,” said Air Force Maj. Gen. Roger W. Teague, director of space programs at the office of the assistant secretary for acquisitions.

There is a definite desire in the Pentagon and the Air Force — which oversees most military space programs — to harvest emerging innovation in the commercial industry, Teague told executives at a recent meeting of the Washington Space Business Roundtable.

Privately funded technology is making inroads in some segments of the business, notably the satellite launch market, but the Pentagon remains undecided on how it should work with the private sector in areas like satellite communications, navigation, surveillance and weather monitoring.

The Air Force’s space hub in Vandenberg Air Force Base, California, is sponsoring a growing number of government-industry partnerships as a result of efforts by Lt. Gen. John W. Raymond, commander of the 14th Air Force. Teague commended Raymond for standing up a commercial space operations center that “for the first time allows us to explore how to do business more efficiently.”

The commercial ops center has given the Air Force a glimpse into the world of space-based services provided by the private sector, a much different environment than the traditional “stove piped mission systems,” Teague said.

The government is still conflicted about privatizing space activities, however, and continues to study the pros and cons. The Space and Missile Systems Center in Los Angeles has piqued the ears of industry executives when it announced it would consider turning over the operation of the military’s Wideband Global Satcom constellation to a commercial firm. That could be an attractive proposition for an Air Force that is overstretched and lacks sufficient manpower to manage its vast space apparatus.

While privatization in theory might make sense, it is not an easy transition for a military that has been raised to build its own satellite constellations and to not have to worry about how much they cost. 

In this new world of shrinking budgets, increasing threats and flowing private investments, “What’s the business model?” Teague asked. “For so long, we never thought about or operated that way. Now we are thinking differently. There’s about to be a new dialogue.”

The Pentagon’s budget request for fiscal year 2016 includes $7 billion for Air Force space programs, of which $5.4 billion will be spent on modernization efforts. Leaders are being cautious about where to make investments and worry about repeating the missteps of the 1990s, when key satellite programs were fraught with setbacks from which it took decades to recover.

Buying space services from the private sector could be the answer, but there are still too many unsettled questions about how to meld new approaches with the Pentagon’s rigid procurement system. “Who says we can’t have a commercial model?” Teague asked. “We’ve never done this before. … We have to start having these conversations.”

Labor-intensive operations like running the Air Force satellite control network might be an area that is ripe for a different business model, he said. The network supports the operation, control and maintenance of many government satellites. “That could be bought as a service,” Teague said.

Geostationary weather satellite services is another area that is now the subject of much debate as U.S. Central Command faces a significant gap in coverage over the Indian Ocean after the

European satellite Meteosat-7 is decommissioned next year. Lawmakers have grilled Air Force leaders over the issue.

“There’s a conversation in the department and on the Hill on how we are going to backfill that capability,” Teague said.

Air Force Secretary Deborah Lee James told the Senate Armed Services Committee that the Defense Department had initially concluded it could forgo launching the last of its weather satellites to save money. But circumstances changed in the wake of the European satellite decision, as well as new pressures from the weather and geospatial intelligence communities. James then opted to request that Congress restore funding for a new satellite launch.

Commercial services also could be considered for future weather systems, Teague said. Other areas that could be targets for privatization include command and control of satellite ground systems, even if concerns about security would weigh more heavily. “What are the most important elements of the government capability we ought to preserve?” Teague asked.

Defense leaders understand the private sector’s growing impatience with the glacial pace of government decisions in this area, so he asked executives to hang in there. “This is going to take us a bit,” he said. “We are going to look before we leap. The government moves slower. But there are real opportunities.”

The space industry has grown especially frustrated by the Pentagon’s protracted studies that have held up procurement decisions.

In the words of one space executive, the general mood in the industry is one of ennui. For decades the “government has been saying they need to do things more like commercial industry,” he told National Defense. “There was a big push for commercial technology in the ‘80s to buy faster, better, cheaper. Then came commercialization, hosted payloads, commercial architecture options, and on and on.” Military space leaders have good ideas and intentions but the institutional inertia is hard to overcome.

A number of comprehensive “analysis of alternatives” studies were launched in recent years to consider less costly and more innovative ways to provide satellite communications, weather monitoring and missile warning. Some of the options include disaggregating — breaking up large satellites into smaller spacecraft or payloads — and greater reliance on commercial systems. “Decisions on the way forward, including satellite architectures, have not yet been made,” said procurement analyst Cristina Chaplain, of the Government Accountability Office.

She noted that the Defense Department has completed one AOA for the weather monitoring mission area and is working to finish others for protected satellite communications and overhead persistent infrared sensing. “These AOAs have the potential to dramatically shift DoD’s approach to providing capabilities, affecting not only satellite design, but also ground systems, networks, user equipment, and the industrial base,” Chaplain wrote in a report requested by the Senate Armed Services Committee’s subcommittee on strategic forces.

“DoD is faced with making decisions over the next several years about the way forward,” she noted. The satellite communications and overhead sensing studies are not scheduled for completion for several months, and decision making based on those studies could drag for years. “The longer DoD takes to complete the AOAs and come to a consensus on how to proceed, the more its range of choices will be constrained. … If decisions are not timely, DoD may be forced to continue with legacy systems” and would risk being stuck with obsolete technology, Chaplain observed. Defense Department culture has “generally been resistant to changes in acquisition approaches, and fragmented responsibilities in DoD space programs have made it difficult to implement new processes.”

The military for decades has procured commercial satellite communications services to augment military capacity but now the Defense Department is looking for ways to better manage procurements of these services. To its credit, Chaplain said, the Pentagon is pursuing new avenues for innovation and competition. “This is not easy to do in light of the importance of space programs to military operations, external pressures and the complicated nature of the national security space enterprise.”

Teague recognized that the studies have taken far longer than expected, but that there is still a “sense of urgency in senior leadership to get those AOAs wrapped up and set priorities for the 2017 budget.”

The findings of the AOAs will eventually have to be cleared though senior Pentagon and White House leaders, Teague said. “These are critical survival-of-the-nation systems we’re dealing with,” he said. “We have to make sure the architectures have a whole-of-government viewpoint.”

Yes, the process is taking way too long, he said. “The department is doing its homework. These are not seat of the pants decisions. You’re trying to balance capability, resiliency and affordability. We have to have all three.”

Launch services has emerged as a bright spot in the military’s quest for commercial innovation. “The launch industry has fundamentally changed over the last decade,” said Gen. John E. Hyten, head of Air Force Space Command. “The Air Force no longer owns the rockets that we fly. We purchase access to space as a service. Industry is now investing large amounts of private capital in developing new engines and rockets. And we're collaborating closely with them to determine how best to invest in public-private partnerships and U.S.-made rocket propulsion systems. This is a difficult business.”

Just 10 years ago, said Hyten, “I was very concerned that we would even have a launch industry in this country, because the launch industry was about to collapse. There was no real private funding going into it,” he said. “When I look at the industry today and I see the health of SpaceX and Blue Origin and ULA and Orbital ATK, it's just a much healthier industry today than it was. We just have to figure out an effective way to do business with that industry to make sure that we have assured access to space.”

Topics: Procurement, Space