The U.S. military may spend $1 billion during the next decade to piggyback its communications equipment onto commercial satellites.
The Air Force, which plans to ask companies for contract bids as early as September, has heard from “numerous’’ satellite operators and manufacturers interested in the deal, said George Sullivan, a contract specialist for the service. Boeing and Loral Space & Communications expect to compete, company executives said.
The Defense Department has been looking for ways to ease stress on its own satellite networks and has increasingly turned to commercial providers for extra bandwidth to handle demands such as drone surveillance and radio communications.
“The requirement for bandwidth is insatiable,’’ said Jim Simpson, vice president of business development for Boeing Space and Intelligence Systems, part of the Chicago-based aerospace company.
Contract winners would qualify to fly and operate government equipment on commercial spacecraft. That hitchhiking gear, known in the industry as a “hosted payload,” may include sensors or other instruments to detect missiles, monitor orbital debris and track troops.
The U.S. military may fly more than a dozen hosted payloads during the next decade, said Don Brown, vice president for hosted payloads at Intelsat General, part of closely held Intelsat SA, the world’s largest commercial satellite operator.
That would put the potential value of the Air Force contract at almost $1 billion, assuming it flies 12 payloads at a cost of $82.5 million apiece, the service’s price tag for a demonstration program last year.
There is pent-up demand for the business, according to a report published last month by Northern Sky Research, a market research company based in Cambridge, Mass.
The Defense Department has about 70 experimental payloads, and NASA and other agencies have “instruments sitting on shelves waiting for a ride,’’ according to the report.
The global market for hosted payloads is expected to at least triple to more than $300 million annually in the next decade, with at least $1.8 billion in total revenue during that period, it states.
The Pentagon has experimented with hosted payloads. It’s a different approach than the current practice of leasing bandwidth, or capacity, on commercial satellites already in orbit.
The military now relies on commercial satellites for about 80 percent of its bandwidth needs, which has soared because of demand from war zones, Christopher Baugh, president of Northern Sky Research, said in an interview. Drone video captured over Afghanistan is distributed on satellites owned by companies such as SES SA and Intelsat, both based in Luxembourg.
The Pentagon spent at least $655 million on commercial satellite services in fiscal 2010, up more than sixfold from fiscal 2001, according to estimates compiled by the Defense Information Systems Agency. The amount of bandwidth it purchased increased sevenfold, to 9.1 gigahertz, during the same period, according to the defense agency.
Piggybacking has the potential to save money at a time of waning defense budgets, Boeing’s Simpson said in an interview.
“We see the hosted payloads as a very economical way to supplement and complement the existing fleet of communications and other satellites,’’ said Simpson, who said Boeing would bid on the hosted-payload contract.
Putting government payloads onto commercial satellites may also shorten the time it takes the United States to plan and launch missions from between seven and 15 years to two years, according to the Commerce Department’s Space Commercialization Office, which promotes the policy.
Jason Kim, the office’s acting director, said the Air Force effort is consistent with his goal of encouraging the government to buy or lease space on commercial spacecraft instead of building, launching and operating its own constellations of satellites. “It’s just a much more cost-effective and intelligent approach,’’ he said in an interview.
Lt. Gen. Ellen Pawlikowski, the Air Force’s top buyer of satellites and space systems, last year created an office that is surveying
offices and agencies to determine how many hosted payloads the government may launch in the next 10 years.
Projected costs for the military’s major satellite programs, developed by companies such as Lockheed Martin and Boeing, have increased $11.6 billion, or 321 percent, from original estimates for the six-year period through fiscal 2016, according to a Government Accountability Office report last month.
David Anhalt, vice chairman of the Hosted Payload Alliance, a Deerfield, Ill.-based trade group formed by satellite companies, said members aren’t surprised by the Air Force plan, “but we’re delighted that it’s moved to reality.”
Anhalt is vice president of U.S. government solutions at Space Systems/Loral, part of New York-based Loral.
“Space Systems/Loral will be very interested in supporting the Air Force in using whatever tools they wish to have for encouraging hosted payload solutions,” he said in an interview.
The alliance’s steering committee includes units of Boeing, Intelsat, Iridium Communications, Lockheed Martin, SES, Orbital Sciences and Loral.