DOD leases commercial SATCOM primarily though the Defense  Information Systems Agency. Prior GAO Findings on Procurements of Commercial Satellite Bandwidth Services

In 2003, we found that while the process for acquiring commercial  satellite bandwidth is fair to DOD’s vendors and their subcontractors,  some major DOD users of commercial satellite bandwidth services were   They viewed the process as being too  dissatisfied with DISA’s process.lengthy, particularly for time-critical military operations, and they believed  that the cost was too high. Thus, we specifically recommended DOD implement a strategic  management framework for improving the acquisition of commercial  bandwidth, that, among other things, inventories current and potential  users of commercial bandwidth to determine their existing and long-term  requirements; identifies and exploits opportunities to consolidate  bandwidth requirements of combatant commanders, the military services,  and defense agencies; and adopt commonly used commercial practices,  such as conducting spend analyses and negotiating pricing discounts  based on overall DOD volume, to strengthen DOD’s position to acquire  bandwidth; and finally, improve the current funding structure by  considering new funding approaches such as centralized funding of  commercial bandwidth, and seeking legislative authority for multi-year  procurements. At the time of our 2003 review, DOD generally agreed with our  recommendations. That is, some DOD components independently procure commercial  SATCOM to meet their individual needs, rather than relying on DISA. Additionally, these procurements limit opportunities for sharing  commercial SATCOM among components and for creating savings by  streamlining purchases. For example, DOD reported in its most recent  commercial SATCOM usage report that the average cost for commercial  capacity leased though DISA was 16 percent lower than comparable  services not acquired through DISA.report, approximately $280 million or about 32 percent of fixed satellite  commercial SATCOM services was procured outside of DISA, in conflict  with current DOD policy. Specifically, in its congressionally mandated 2014 Satellite  Communication Strategy Report (Strategy Report), DOD did not identify a  specific mix of military and commercial SATCOM to meet its needs, but it  was able to outline a strategy that may allow DOD to project the  appropriate military/commercial mix in the future. At the request of the Strategic  Command, DISA also conducted a study looking into the optimal mix of  military and commercial SATCOM—its 2014 Mix of Media Report (Media  Report)—which indicated DOD demand for SATCOM is growing, but  expected capacity will remain flat, suggesting military capability will need  to be significantly supplemented with commercial SATCOM in the  future. DOD’s 2014 Strategy Report Outlines Plans to Determine Optimal Mix of Military and Commercial Satellite Communications

DOD prepared its 2014 Strategy Report in response to committee  direction that DOD provide a 5-, 10-, and 25-year strategy for using an  appropriate mix of military and commercial SATCOM. DOD Study Aimed at Identifying SATCOM Needs Was Partially Based on Incomplete Information

In September 2014, DISA completed its Media Report, which was  intended to provide a representation of future SATCOM demand and  capacity in a planning scenario, but the data on which the SATCOM  demand predictions in that study were based were incomplete. As stated  previously, DOD’s most recent commercial SATCOM usage report  indicates that roughly 32 percent of fixed satellite services are procured  outside of DISA. Other Steps Being Taken to Improve Commercial SATCOM Procurement, but Challenges Remain

DOD is taking other actions to better understand its commercial and  military SATCOM needs and improve management, but as DOD moves  forward with its plans to reform its commercial SATCOM acquisition and  management processes, the department faces challenges, the most  prominent being a lack of critical data and resistance to centralizing  procurements. The pathfinders are intended to identify various opportunities to improve  DOD procurement of commercial and military SATCOM, but it will be  several years before DOD gains enough information and experience from  its pathfinder efforts to determine what, if any, changes to make to its  acquisition approach. The WGS analysis is not expected to begin  until fiscal year 2017, but DOD officials are optimistic that the resulting  investments could mitigate DOD’s future reliance on commercial  SATCOM, and could also help the department maximize its military  SATCOM capability and usage. Second, centralized management of service procurements is a leading  practice that DOD has already embraced. This approach is inefficient  and costly. Utilizing strategic sourcing best practices for DOD’s use of  commercial and military satellite bandwidth, beginning with robust  analyses of spending and better enforcement of centralized management,  would increase chances of success for DOD’s improvement efforts. To address DOD’s fragmented  procurement of commercial SATCOM, to better position DOD to identify  needs, manage and acquire commercial SATCOM, and to address the  incomplete data on commercial SATCOM spending and demand, we  recommend that the Secretary of Defense, in coordination with the Joint  Chiefs, U.S. Strategic Command, combatant commands, military  services, and DISA, enforce current policy requiring DISA to acquire all  commercial SATCOM for DOD. To better leverage DOD’s buying power and help DOD understand its  military and commercial SATCOM spending, and enable DOD to reform  its commercial SATCOM acquisition and management processes, we  recommend that the Secretary of Defense, in conjunction with the Air  Force and DISA, complement the pathfinder efforts by conducting the  following:
A spend analysis that identifies procurement inefficiencies and  opportunities to consolidate purchases. In its written  comments, DOD concurred with all three of our recommendations to  improve the department’s procurement of SATCOM.
Why GAO Did This Study

DOD depends on commercial SATCOM to support a variety of critical mission needs, from unmanned aerial vehicles and intelligence to voice and data for military personnel. In fiscal year 2011, the most recent information available, DOD spent over $1 billion leasing commercial SATCOM. In prior work, GAO found that some major DOD users of commercial satellite bandwidth were dissatisfied with DISA's acquisition process seeing it as too costly and lengthy. These users also indicated that the contracts used were too inflexible.
The Senate Armed Services Committee's report accompanying the National Defense Authorization Act for Fiscal Year 2014 included a provision for DOD to report on the future mix of military and commercial SATCOM and for GAO to review DOD's report, issued in August 2014. This report (1) assesses the extent to which DOD efficiently procures bandwidth, (2) analyzes the extent to which DOD has identified its future SATCOM requirements using DOD and commercial satellite services, as well as how those requirements will be met, and (3) identifies the steps DOD is taking to improve its procurements of commercial SATCOM.
To conduct this work, GAO reviewed DOD's reports, DOD SATCOM procurement guidance, prior GAO reports, and interviewed DOD officials.

What GAO Found

The Department of Defense's (DOD) procurement of commercial satellite communications (SATCOM), or bandwidth, is fragmented and inefficient. Historically, commercial SATCOM was used to augment military capability, but DOD has become increasingly reliant on commercial SATCOM to support ongoing U.S. military operations. DOD policy requires all of its components to procure commercial SATCOM through the Defense Information Systems Agency (DISA), but GAO found that some components are independently procuring SATCOM to meet their individual needs. DOD's most recent SATCOM usage report estimates that over 30 percent of commercial SATCOM is bought independently by DOD components, even though DOD found the average cost of commercial SATCOM bought through DISA is about 16 percent lower than independently bought commercial SATCOM. Fragmentation limits opportunities for DOD to bundle purchases, share services, and streamline its procurement of commercial SATCOM.
DOD recently completed two studies aimed at identifying the appropriate future mix of military and commercial SATCOM and predicting future SATCOM needs, however, the reports are partially based on incomplete data. First, the 2014 Satellite Communications Strategy Report did not identify the appropriate future mix of military and commercial SATCOM; rather, it outlined a plan that, if successful, may allow DOD to do so at a later time. Second, the 2014 Mix of Media Report based its predictions of future SATCOM requirements and demand on DOD's SATCOM Database, which DOD officials acknowledge lacks comprehensive usage and demand data.
DOD is taking steps to improve its SATCOM procurement and address challenges through “pathfinder” efforts aimed at identifying short- and long-term options. For example, DOD intends to study the potential benefits of using innovative contracting approaches as it procures military and commercial SATCOM, and refine its understanding of DOD's global SATCOM requirements. However, it may be several years before DOD is able to evaluate the results of its pathfinder efforts. For example, all of the 10 pathfinders planned or already underway are expected to be completed in or beyond fiscal year 2017. DOD's efforts to improve its procurement of military and commercial SATCOM will also be hampered by two long-standing challenges—lack of knowledge of what DOD is spending on commercial SATCOM and resistance to centralized management of SATCOM procurement—both of which GAO reported on and made recommendations to improve in 2003—regarding commercial SATCOM. Specifically, GAO recommended that DOD strengthen its capacity to provide accurate and complete analyses of commercial bandwidth spending and implement a strategic management framework for improving the acquisition of commercial bandwidth. DOD generally concurred with GAO's 2003 recommendations and developed a plan to address them, but none of DOD's corrective actions was carried out as intended. These challenges are commonly faced by organizations seeking to strategically source procurements of services, but they can be overcome by employing best practices, which include conducting detailed spend analyses and centralized management of service procurements to identify procurement inefficiencies and opportunities.

What GAO Recommends

GAO recommends that DOD (1) enforce current policy requiring DISA to acquire all commercial SATCOM; (2) conduct a spend analysis identifying procurement inefficiencies and opportunities; and (3) assess whether further centralization of commercial SATCOM procurement could be beneficial. DOD concurred.