Commercial providers of satellite services face a trust gap with military buyers

WASHINGTON — Despite growing enthusiasm for new space internet services, some military buyers remain distrustful of commercial solutions as a replacement for government-developed systems, a senior procurement official said June 2.

“We see the LEO mania, and the new capability available … but customers have a bit of a trust issue,” Clare Grason, chief of the Space Force’s Commercial Satellite Communications Office, said during an online event hosted by the Aerospace Corp. 

Services provided by commercial satellites from low Earth orbit are one item on a growing menu of options offered by LEO, medium orbit and geostationary Earth orbit satellite operators to fill military communications needs. Grason said her office — which is responsible for matching military satcom demand with commercial suppliers — is “trying to get DoD comfortable that commercial solutions are reliable and dependable. We are trying to build confidence.” 

Grason noted that most military buyers of commercial satellite capacity still prefer the traditional approach of using commercial bandwidth under short-term leases rather than buy fully managed services now offered by the industry. 

An exception is a seven-year agreement DoD signed in 2019 with Iridium Communications for unlimited use of the company’s mobile communications constellation.

Otherwise, the “majority of what we’re procuring today is transponder capacity,” Grason said. “They [military customers] want to own and control the terminals, the ground segment and the management of the network traffic.”

Some users are warming up to commercial services, however, Grason said. The U.S. Army, for example, recently started a pilot program to evaluate commercial services, which is likely to be followed up with a managed service contract. The Marine Corps is looking to follow suit. 

“The barrier in many cases is largely cultural,” she said. 

Commercial satellite communications acquisitions peaked in 2012, fueled by the wars in Iraq and Afghanistan. “After 2012 there was a slight decline,” said Grason. “Now we’re seeing our numbers rising.”

Aerospace held the June 2 event to highlight a recent white paper that provides broad guidelines for government agencies to determine when it makes sense to buy commercial services.

The “commercial readiness assessment framework” lists recommendations for how government organizations can assess commercial providers and commercial markets to meet national needs. 

Ronald Birk, associate principal director at Aerospace and one of the authors of the assessment, said U.S. administrations for at least two decades have issued guidance to agencies to “use commercial as much as possible” but have not given guidance on “how to assess the appropriateness and readiness of providers.”

“When making the decision to acquire a commercial capability, government agencies should determine the level and scope of assessments needed to match their risk tolerance,” said the Aerospace paper. 

A new business model

Grason said the Space Force “is laying the foundation to grow and prioritize commercial relationships.” The space industry is leading in many areas “and we’re seeing that in satcom.”

Contracts like Iridium’s that aggregate demand is a more efficient way of buying satcom, compared to having multiple contracts for different military customers, Grason said. Her office currently manages 175 different contracts for satellite communications. 

“We believe that approach is a bit suboptimal,” he said. But transitioning to full-service contracts will be difficult for DoD users because it’s an unfamiliar business model.

Grason said her office is working with the consulting firm Deloitte to build an automated system to manage satcom procurements using the Salesforce customer relations management platform. “This should provide us with better information and promote better decision making and responsiveness,” she said.

An effort also is under way to educate military program managers, said Grason. 

“Space Force organizations are focused on building systems,” she said. Some organizations are not familiar with the types of contracting methods that are now available that they could take advantage of, and worry that if they use commercial services, their needs will not be prioritized, Grason said.

“Our customers need to understand that making a transition makes sense economically and they can scale without having to add significantly more cost,” she said.

It also would be helpful for commercial companies to make sure their business plans “match the budgets our customers have,” she said. “And what are the terms and conditions? If DoD wants to lease terminals, what are the terms of replacing them? There are concerns that seemingly attractive models could become cost prohibitive.”

Grason’s message to commercial industry: “Never assume that the audience you’re dealing with has a high level of understanding.”