MR. JOSEPH ROUGE: Good morning ladies and gentlemen. General Chilton, thank you again for inviting me back. As you probably notice, we have a rather large panel, and there's a reason for that. One of the things we wanted to do today is give you a view of all of industry, not just part of industry. So you're going to get views from the large primes, sub-tier contractors, launch people and the associations representing a broader community.
Today's topic is really trying to understand how does industry enable in many ways a new space policy? And in some ways I will argue that industry has actually stepped up in front of the policy and was actually implementing it even before we, on the government side, are able to do that. So what I've tried to do today is give you a variety of views. I'm going to start with John Landon, and John is right now the vice president of missiles, technology and space programs at Northrop Grumman. So with that, John.
MR. JOHN LANDON: Thanks, Joe. Can you hear okay? We'll give it a shot anyway. Thanks again, Joe, and thanks to General Chilton for sponsoring this conference and for all of you attending. I think, you know, typically this has been one of the really great conferences around and the information is always new and it's always great to engage all the people that are here.
Before beginning my comments on commercial space industry, I'd like to share a story with you that really doesn't have anything to do with the topic, but it is one that most of us can relate to if you think back. It turns out there were these four college seniors who were approaching their last final. They knew the subject well, and feeling their oats, they decided to go on a roadtrip the day before the exam. As things turned out, they had a little bit too much to drink and ended up sleeping through the start of the test. Now, being resourceful, they put their heads together and decided to tell the professor that they had driven to a quiet hotel away from the campus so they could prepare earnestly for the exam. As they returned the next morning, their car had a flat tire while they traveled down a back road. They had no spare and couldn't get help until it was too late. They all agreed the story would hold together. They told the professor their story, and he was sympathetic. He said they could make up the exam the next day. When they returned for the exam, he told the seniors they would have to each take the test in separate rooms. Puzzled, but not really having a choice, the seniors agreed. As they took their places in their separate rooms, the professor gave each of them the test and left them alone. The first student opened his test booklet and read the first question. It was worth five points and it was straightforward and easy to answer. He then turned the page, ready for the second question, and saw that it was worth 95 points. A little puzzled, he continued to read. The question simply said, Which tire went flat? I guess you could say the moral of this story is never underestimate the guy in charge. Okay.
In my comments on the panel topic, I want to offer you a way of thinking about government space and commercial space and how a comprehensive strategy can lead to a robust commercial space industry and at the same time better satisfy government needs. Think of it as not only a potential for building a robust commercial space industry, but also about how the commercial and government sectors can complement each other and become greater than the sum of the parts. I should add a disclaimer at this point that these are my comments and not those of my company. They make me say that because they usually like me to say that. It's worth taking just a moment to reflect on how U.S. activities in space developed and what it looks like today. Don't worry, it's not a history lesson, and there's no exam at the end of it.
First, it wasn't that long ago that the only objects in space were natural, unless you account for the stray UFO that visited planet earth. Then there was Sputnik and the Cold War. It soon became critical to the nation to know what was going on globally. The country needed to detect missile launches and see what the enemy was developing and deploying. Airplanes were the answer until May 1, 1960, when an SA2 destroyed the U2 Gary Powers was flying over denied air space. After that, space became one of only a few ways to gather strategic information. In those days, everything that was launched was a government system because there were no commercial uses for space.
As time passed, the commercial industry began to develop primarily around transpondent satellite communications because the industry that supported government programs saw there was a greater demand to be addressed and a profit to be made. Industry realized the private sector wanted satellite communications service, and the government learned that it could lease transponders from the private sector when they needed additional capacity. As it turned out, it was a perfect solution and remains that way today.
Much later, commercial imagery entered the picture, but only after a lengthy debate focused primarily on security issues. In the case of imagery, government realized it no longer held the secret of taking pictures from space, and the genie was out of the bottle. So why not offload part of that mission area and concentrate the remaining funds on other ways to collect imagery? So what's wrong with the way things are? The problem, as I see it, is that the government is still competing with a commercial market that is very capable of providing space services. So why is that a problem? The issue is about resources and how to apply them in the most effective way. For the government, there's an opportunity to offload projects that are commercially viable and concentrate those scarce remaining resources on developments that require government attention.
We haven't substantially shifted our strategy since we began space operations. If you think about it, the government doesn't own a fleet of passenger jets, they charter them when they need to move personnel. The government doesn't own its own phone company, it uses what is available on the commercial market. The government doesn't make its own computers, it buys them. I'm sure you can think of many other examples on your own, but you see the point. Government develops capabilities where none existed before. But at some point, commercial industry will pick up and continue the development if there is a market. So what does this tell us? It suggests that the government should take inventory of the capabilities it needs to satisfy from space and decide which ones it truly needs to do itself. For the others, put out an RFI and ask industry for input. Put incentives and assurances in place that will attract commercial interest and offload that burden to the private sector. At the end of the day, the government can build a national strategy that creates a robust private space sector and frees up scarce resources. The government can then use those resources more effectively to pursue capabilities that are inherently government in nature.
Thank you for your attention. I look forward to your questions later on.
MR. JOSEPH ROUGE: Our second speaker is Mike Bender. He's the vice president of government business development for SpaceX, our newest developer of space launch capability.
MR. MICHAEL BENDER: We have some slides to be brought up. I think three slides total. Thank you, General Chilton, U.S. Strategic Command, AFCEA and others involved in putting on this conference today. And thank you, Joe, for inviting SpaceX to participate in this panel.
For those of you that don't know SpaceX, the company was founded in 2002. Our singular goal was to provide highly reliable and low cost space transportation. As I like to tell people, we're sort of the Honda Accord of the launch vehicle industry, if you will, in that we focus on high reliability and affordability but not necessarily the highest performance. And the way we do that, really, is to focus on keeping things simple, reducing complexity in our processes and our operations and to deliver that high reliability and low cost.
First slide, please. This slide just shows the three vehicles that we're offering as solutions for the national security space community from a launch standpoint. These vehicles -- the first two, the Falcon 1 and the Falcon 9 are developed. The Falcon 9H, which we formerly called the Falcon 9 Heavy, but we've renamed it to Intermediate to Heavy, IH, is an item that still needs to be developed. But what we've tried to do is -- in reducing complexity is to also maximize commonality across our systems, reduce the number of stages. Each vehicle is only two stages. We're using locks and kerosene or RP1 as our propellants, redundant avionics and that in the Falcon 9 vehicle. On the small end we have the Falcon 1launch vehicle targeted for commercial use but also for responsive space uses and small government payloads.
We've had five flights to date of the Falcon 1. We're in the process of enhancing that to the Falcon -- or capability to be able do almost a thousand -- or a little over a thousand kilograms to LEO. Some of you may recall from previous briefings or brochures that we called it the Falcon 1E for enhanced. For branding reasons we're just calling it Falcon 1 going forward, but it will have that additional capability. In the middle of the slide is the Falcon 9. Capability here is 11 and a half metric tons to LEO, 4 and a half metric tons to GTO. For those of you familiar with the EELV program and capabilities, it's about double the capability of what a Delta 2 will provide to those orbits and somewhere between an Atlas 501 and 511 from that standpoint.
You see two different price ranges for the Falcon 9. What we've done to kind of spur additional commercial interest is offer a lower price if you have 80 -- using less than 80 percent capacity in the vehicle and giving SpaceX the right to go out and find second areas to fly on that particular mission, so that's the difference there. The far right, then, the Falcon 9IH, what we're basically doing here is taking -- building two additional first stages and using them as strap-ons. So it's a three-core vehicle. We've told the IC and the DoD that we can be ready to launch that within about 30 months from authority to proceed and, we're actively pursuing a first launch customer. In total, we have about 39 launches on a manifest right now. The Falcon 9 makes up about 32 of those launches split evenly between our NASA customer for commercial work with transportations services will be delivering cargo to the space station using our drag augmentation gone capsule on top to have Falcon 9 and then seven launches of the [inaudible] or seven missions manifested for the Falcon 1for commercial at this point.
Next slide, please. The other platform I want to point out for use by the national security space community is DragonLab. In NASA's launch services agreements with us for delivery of cargo to the space station; they don't have an interest in reusing the dragon capsule. So when it returns to the Pacific Ocean, we pick it up. We want to be able to refurbish it and use it for other applications. And an application that we've identified is what we call DragonLab, so it's taken the capsule, put some additional capability on it to allow it to have an extended period in the LEO up to two years so we can host pressurized -- or payloads that would go in the pressurized section of the capsule and ability to recover those payloads and then sections in the trunk, that's the cylindrical section there that you see the solar panels coming out of, we can deploy small spacecraft out of the back of the trunk, and in fact, you can use the EELV ESPA ring mounts on top of our second stage and can deploy an ESPA ring for satellites out of the trunk section. So our first flight of DragonLab is for late 2012. We also have a mission on the manifest for 2013.
Last slide, please. As Joe mentioned in the upfront comments, he wanted us to discuss our capabilities and how commercial industry is moving out ahead of the government in many areas. And one of the questions he posed to us is â€œwhat can the government do to fully enable U.S. commercial industry?â€ And I guess first I'd like to point out to that question is actually implementing national space policy. The latest policy continues the language of past policies of really promoting and facilitating the use of commercial and using the language such as maximize purchase and use commercial capabilities and services to the maximum practical extent. The government needs not only to encourage but, quote, facilitate use of commercial.
So we really at the top would like to see better implementation of that policy across all agencies of the government. NASA has obviously done a fantastic job recently on launch services with regards to facilitating commercial. There are pockets certainly within the DoD that have done that as well. But from a broader standpoint, there's more that can be done. This particular slide is one that we've used with the DoD and the IC over the last six months or so. With our encouragement to take the EELV program where it is today with a single monopoly provider and kind of go back the way it was in the late '90s with more than one provider FAR Part 12 type contracting. This we believe will allow more cost-effective launch services for the government customer and spur innovation in the community as well.
Some of the challenges to getting from here to there are I like to call it the risk aversion king. Yesterday Mr. Doug Loverro had his blue circle of death that he showed. That's kind of what I addressed there in that first bullet under challenges is that we have so much riding on each national security payload that we have in the launch vehicle right now that it's difficult for anybody in the government to justify putting that payload on a new entrant or an alternate provider at this time.
So what we need to do is identify opportunities within the community where SpaceX and others or perhaps with [inaudible] can launch DoD payloads, let the DoD get comfortable with our process and the way we do things, and then move up the food chain to launch increasingly more valuable national security payloads. And then the last bullet on there, obviously the contract structure that the EELV program is in now, it's going to take time to revise, renew, if you will. And certainly as we try to get to more responsive launch and responsive space, we need to have responsive contracting as well.
So I look forward to taking your questions, and thank you.
MR. JOSEPH ROUGE: Thank you, Mike. The next speaker is going to be Joe Rickers. He is the President of the Commercial Space Systems from Lockheed Martin.
MR. JOE RICKERS: Thank you, General Chilton. Thank you, AFCEA, for the opportunity for Lockheed Martin to have a seat and for you to hear my views as I sit with the commercial space business at Lockheed Martin. The last four years or so we've really tried to take our commercial business which at one point was set up as a siloed entity almost and tried to take the resources that support that. And be able to benefit across our full space portfolio. And so you'll hear me talk a little bit about product, we'll talk about process, about the people. But we've been trying to meld that together to be as efficient as possible to leverage some of what we've had out of a 40 to 50-year heritage in the commercial satellite business and be able to share that across all of our portfolio. I see some parallels there too.
It's really hard to sit here and say what is just commercial industry because it all comes together. And it really [inaudible] I think opportunities like this to share and hear different perspectives give us good reason to think maybe a little bit differently going forward. When I look at the commercial telecommunications market, demand is really stable. We're coming off of a peak here where there were 29 I think, depending on how you count them, commercial orders last year for commercial GEO spacecraft. And the demand won't go down a whole lot, I don't believe. There's so much opportunity out there in the financing and the new areas to try to put different constellations, different products on orbit that it looks like the communications has really withheld the economic crisis here. And these financial markets and the demand are quite good.
So given where we were back in the early 2000s, it looks quite stable, to me anyway. [There are] still a lot of variables that are out there as we deal internationally. The prime contracts and the, you know, currency volatility, a lot of our subcontracts are all through international sources, and it becomes very difficult when we go out on firm fixed-price contract to try to understand that and locking that down. So we have a lot of variability that we deal with there with the market.
You look at what's driving, about 80 percent right now of the demand in the commercial telecommunications market is really the fixed satellite services, broadcast services, seems to be the real anchor that is there. But it is really being driven you know as much by high definition, 3D TV, the desire for bandwidth. And certainly the broadband applications, the military demands for those commercial resources and the bandwidth needed there, all is really spurring some additional growth.
When we look at what we provide within the market, you know, bandwidth is really key to our customers and too many people out there. If you look at our children and what we do, you look at what we do every day with video and it's only going to grow, in my mind. When we look at that, we take that back to what does it mean to the commercial space market? It becomes payload power, it becomes satellite. The others here on the panel can probably talk to those. Certainly it drives some of what we do in the launch vehicle industry as well. We're seeing more emerging and regional type markets.
We look in Asia. You look towards the Middle East. We're seeing more regional capabilities coming online there. We're seeing even some national type programs. Yet, and we've been able to take advantage of that. So when I roll all that up it looks like a pretty robust market to me as far as commercial telecommunications, and certainly there's this real integration that's there with the military applications. I look at Lockheed Martin and where I sit from commercial space, we have a very large portfolio of space programs. We have a product called the A2100 which you could say it's boxes, it's subsystems, it's all the way to a spacecraft that we provide to GEO for telecommunications. We actually have 37 of those that we've provided commercially to customers; 39 we've actually provided to government customers as well. That product line is really an anchor for us. It supports from a 2-kilowatt payload power to a 13-kilowatt payload power. We're working, growing. The market seems to be driving us towards more power, more mass.
And so as we put money into our platforms, that's what we're trying to do, driving into our power systems, driving into our payload efficiencies. We've taken that platform in the communications market. It's the basis for much of mobile user objective system spacecraft that we have. It's going to be the [inaudible] it is the basis for a lot of the PNT [Positioning, Navigation, Timing], the GPS-3 program that we have. It's the basis as well for meteorology applications for the GOES-R spacecraft that we have. So we've really tried to take that product and align it.
There are challenges because there are requirements differences that come in on these different jobs, and commercial has a base that's there from an industry standard. And then there are other applications that come in and how do you do that because you won't be cost effective if you just take all those requirements and put them in because the commercial marketplace isn't necessarily going to pay for those. There's the ability to keep the nonrecurring down in what we call configurative orders so we can take that platform and configure it at a lower risk because as we've talked about the whole risk, you know, chasm as it was explained there, and we have to be sensitive to that because there are different risk profiles, clearly. As we look towards, you know, the addressable market and what do we do and what do we provide in the payload area, we spend a lot of time and effort looking at flexible payloads, looking at some of the antenna technologies. It really hadn't happened for us yet in the commercial marketplace. I'm hearing people interested again a little bit in those types of payloads, those types of processed applications. But it's pretty clear on the commercial side the customers have spoken to us and said they don't want to pay more for that. They can't pay more for that than for their core service. So we still continue to put in resources into those areas, but we really haven't found in the commercial marketplace those applications to take off yet. Clearly when it comes to value and what we can offer to our commercial customers, we at Lockheed Martin like to bring our resources whether it's an ITU coordination, frequency coordination, whether [inaudible] certainly in the financing application there are applications that are there that we try to bring to our customers. Keep our schedules down, value in our schedules. I have a commercial satellite right now that will be delivered to the launch site in 22 months. That's about as fast as we can go right now with the supply chain and the product that comes together. There's certainly value to what in a commercial marketplace. Talk a minute about hosted payloads.
That's clearly one of the areas that I see a lot of potential here. Some of our other panel mates here will probably talk to that area as well because in the commercial marketplace it's only picking up. We're seeing RFPs come in. We're seeing business cases put together where they're trying to add the value of a hosted payload together with their commercial applications. It's tough, though. What we're seeing is, you know, there are different business models. You've got to make those business models line up so it becomes a win-win for everybody. You have to make the schedules line up. You have to make the requirements line up. But there's clearly [the] application there where the commercial operators want to add that value onto their platforms and provide those payloads, and I don't see that going away.
But the challenges are there to really make that effective for us. I guess what I'll do here; I'll wrap up and certainly will take questions. But our strategy really has been to align and try to leverage within our space systems portfolio, try to take that commercial business that we have, that background and try to get it all so that we can use it efficiently across our portfolio. I have to be really selective on the commercial side. It all comes down to these fixed-price contracts and deals so we selectively are out there trying to look at who we do business with and the contracts that we cut. And then we really are putting money into our platform and trying to develop that so that we have a robust product that can be provided for not only commercial but across all the different applications. So that's my take here. Joe, back to you.
MR. JOSEPH ROUGE: We're going to go from kind of having the top of the food chain down to the people who really bring innovation and bring a lot of the substance to new concepts. Mr. Stan Kennedy, Jr., is the vice president and general manager of programs for Comtech AeroAstro.
MR. STANLEY KENNEDY, JR.: Mr. Moderator, fellow panelists, ladies and gentlemen, I would like to start by thanking General Chilton, USSTRATCOM, AFCEA and the national security space office for the invitation to be included in this discussion of how to build and maintain robust commercial space industry. I personally have spent over 25 years in the aerospace defense sector and have had the opportunity to work for the large companies, mid-sized and now a smaller space company, providing services to both commercial and government customers. I believe our industry is in transition as it has been continuously over the last 30-some-odd years. Aerospace and defense is characterized by boom and bust cycles that average eight to twelve years of periodicity. This should not be viewed with alarm nor acceptance but rather with an eye toward opportunity and for potential new ways of doing business.
The current aerospace defense industry transition is being driven as it has historically by aerospace workforce composition, government and private funding profiles, new technologies and innovations, and in today's environment, the proliferation of nation state and non-state space actors. As has been said in previous forums and now over the last day and a half and today's forum, the space environment is congested, competitive and contested. So where do we go from here? I would like to a pause at a few points that I will use during my discussion this morning. First, Comtech AeroAstro is bullish on our future as we seek to capitalize on the opportunities offered by the current environment. We like doing government business.
We think it is viable and realistic to make money working government programs, and we seek to be a valuable partner to our customers. The margins available in this environment are reasonable, and we believe that we can build a strong growing business in this market with small, high performance satellites components and mission payloads. This is due mainly to technology developments that have enabled higher mission utility and smaller spacecraft designs and through innovative leveraging of existing space industry infrastructure to include both terrestrial and space-based capabilities. Innovations to include concepts such as plug and play, rapid and reconfigurable mission payloads and open system architectures are examples of these new technology developments. This is not to infer that all missions can be accomplished with small satellites but rather there should be a conscious effort by national security space, including the DoD, the intelligence community and civil space to right size missions balancing programmatic cost, schedule and technical risks while maintaining a viable space industrial base. Four or five new start missions per year are willfully inadequate to sustain a robust space industrial base and inspire our youth to seek employment in the high-tech aerospace defense sector.
Second, Comtech AeroAstro believes this market niche, small satellites, not necessarily specifically science and technology missions, should and will continue to grow into the future as technology advances continue to allow us to do really useful things in these smaller packages. This coupled with the declining government budgets, both national security and NASA, are converging to force the nation to go this route. The timing of declining budgets and industry workforce dynamic are harmonically converging at this point in history to allow us one of the opportunities I mentioned previously.
Specifically, the nation should embark on a conservative effort to fund multiple small satellite efforts to jump start new and emerging science and technology missions. I believe these efforts should be tightly coupled with stem outreach programs, science technology, engineering map workforce development activities and establishment of a sound second and third tier supplier cadre to provide a sustaining industrial base for national security and economic development. Contrary to the popular belief in board rooms of large aerospace companies, workforce development and preservation is not going to be solved solely by awarding multimillion or multibillion dollar contracts to Lockheed Martin, Boeing or Northrop Grumman. We have many individuals at Comtech AeroAstro that have built from concept to launching and operations five or more missions under each of their belts. This is in contrast to many workers and larger firms that work one or two programs their entire career due to the long duration of those design development integration and test and then operations awards. Again, I want to clarify that we need our national and warfighting capital assets. Our men and women in uniform that rely on these systems deserve and actually they demand that these systems are ready and available to support our national objectives. What I am pushing hard for is a balanced portfolio of space assets that can provide value added mission utility within the new paradigm of the congested competitive and contested environment.
So where do we go from here? I guess I should step back and discuss a little bit about Comtech AeroAstro because many of you may not know the company, what we do as a company and what we need to be successful. Comtech AeroAstro builds high performance spacecraft components and mission payloads for our government and commercial customers. As a wholly-owned line of business under Comtech Telecommunications, which is a U.S. corporation, we are bound by ITAR and export control restrictions for all of our products.
I believe for us to continue to be successful, we need the U.S. government to completely overhaul the restrictions placed on space-related technologies and allow us to compete and collaborate in the open international marketplace. I participate on the ESA-CNES small satellite systems and services symposiums technical committee, which is the European equivalent to the AIAA small sat conference held in Logan, Utah, every year. And I find it completely unacceptable that basic, openly available technologies are prohibited from free and open competition by my government. I buy Japanese photodiodes, put them into an aluminum housing with a twisted pair cable lead and calibrate the angular performance for use as a core sun sensor that provides gross attitude information to the spacecraft, and magically, the CSS product becomes ITAR restricted.
A recent article by Jeff Foust discussed the fleeting opportunity the U.S. could lose in export control reform if we failed to act decisively in the next few months. In order for the U.S. to stabilize our market sharing in space sector related sales, we must streamline the ITAR export control process to protect what we are truly required to be protected and let the market decide best value for the remaining products and services. Also, we could be stronger as a company, as a national security space community and as a nation if we could change the government bureaucracy related to space authorization and acquisition.
Specifically we have lost the ability to quickly authorize, appropriate and acquire space systems for national and DoD mission needs. Even when an acquisition is successful and contract awarded, in-fighting the reprioritization of mission needs puts both government and industry program managers into the never-ending reprogramming and rebaseline cycle that increases program costs and incurs schedule delays. Firm fixed-price programs should be used more. Requirements have to be well understood and agreed to during proposal negotiations, and then the contractors have to be let alone to do the work.
Also, when requirements or technologies aren't completely nailed down at the beginning, sometimes it can be, and cost type contracts are appropriate, then strong government and contractor teams working together are the answer. If program budget is stable, then patriotic individuals on the contractor and customer side can work together to achieve great things as they have throughout our history and still do in some cases.
In summary, building a successful and sustainable robust commercial space industry will require more new program starts to address supplier base and workforce development, rapid and responsive technologies to provide augmentation, reconstitution and replenishment capabilities, and a strong commitment to international partnerships in open-space markets so that we can compete on an even playing field. Again, I thank the national security space office for the opportunity to discuss these important issues, and I look forward to the ensuing discussion during the panel question and answer period. Thank you, gentlemen.
MR. JOSEPH ROUGE: Thank you very much. The next person I have speaking is Ken Torok. He's vice president of navigation and communications systems at the Boeing Corporation.
MR. KEN TOROK: Good morning. I'd also like to thank General Chilton, AFCEA, and Mr. Rouge for the opportunity to be here this morning. I'm inspired by Mr. Landon's introduction to also share a story about a college student taking an exam. This is a good student who studies hard and did well in school. And one morning before his final exam, he didn't set his alarm clock correctly and overslept and arrived late to the large lecture hall to take the exam. So he came in took his seat in the back of the auditorium and began to feverishly work through the questions on the exam. When the time for the exam to end came, the professor announced time to put pencils down and come forward and hand in your papers, so students started to do that. The professor had to make the announcement again for the few folks who were still struggling to finish the last question and bring it up. Then he had a pile of exams in front of him on the table. He looked up and noticed one student sitting in the back still working away at the exam. So in frustration he said, you know, if you don't put your pencil down and come forward now and turn in your paper, you'll get a zero on the exam. The student looked up and continued to write. So with the last final warning, he finally finished the exam and came forward to the front of the room and challenged the professor. He said do you know who I am? And taken aback the professor said, why, no, I don't. So he took his exam and shoved it into the middle of the pile of exams and said, thanks very much. Have a nice summer and walked out the room. It has nothing to do with my prepared comments, but I guess it says that sometimes the student also can win.
So this morning I'll talk briefly about SATCOM and the PNT navigation and timing from the perspective of the commercial industry. I think an overarching challenge we all collectively face is how to sustain and enhance the capabilities we enjoy today in the face of flat or declining budgets. This challenge does provide the government and industry together as a team, opportunities to look at different ways of providing unique capabilities to our warfighter.
First choices are being made between exquisite requirement-driven solutions and more budget-driven affordable options. By the way, this is a very commercial mindset. In a commercial world, if a business case doesn't close the deal just doesn't get done. So for example, when does extending and evolving the current system preferable or a better business case than starting something new?
Second, architectures are being evolved to incorporate commercial [inaudible] with more intent and new ways to improve capability, flexibility and affordability. The MILSATCOM architecture is a great example of this, and I'll say more about that in a few minutes.
Third, we can also leverage more commercial acquisition practices, particularly more mature proven programs, to generate cost and schedule savings, which is a key ingredient in strategy to do more with less. In the SATCOM arena, one thing appears to be a constant: The ever-increasing demand for more comm services. Tactical comms on the battlefield, data, maps, full-motion video, airborne ISR support, antijam services, comm on the move, quality of life services for our deployed troops. The demand appears to be insatiable.
An essential element will continue to be government-owned systems such as Milstar, Advanced EHF, Wideband Global SATCOM, or WGS, and others. These systems provide the government greater operational flexibility and mission unique capabilities. For example, Advanced EHF operating in a nuclear environment where Wideband Global SATCOM operating in a contested environment. These systems may also be more cost effective in cases where long-term demand will provide fully-loaded assets. However, commercial services also play an integral part in this architecture, providing service capability, flexibility, robustness, responsiveness and affordability, which could be even greater if the government could figure out how to do longer-term leases.
An emerging element of the architecture I would like to highlight is payloads, providing government service payloads on commercial platforms. This is kind of a new and exciting arena of the architecture, and it's really blurring the lines between government and commercial systems. I'll give two examples. We are currently hosting UHF payloads on two satellites we're building for Intelsat.
The first of these will provide UHF services to the Australian defense force. The second is intended for use by the United States government, particularly the Navy and our allies. We're also in production for three satellites for INMARSAT [International Marine/Maritime Satellite] which will provide a high capacity KA band payload, provides global and spot beam coverage suitable for airborne ISR support with high bandwidth and comm on the move.
As part of that agreement, we are also the distribution for selling these services back to the United States government. Both of these examples share two important features.
The first is interoperability. UHF payloads are designed to be interoperable with the current UHF fleet program and with the legacy payload capability on the [inaudible] program. And for the KA on INMARSAT, they're designed to be fully interoperable with the existing Wideband Global SATCOM infrastructure.
The second feature of these two cases is the rapid time to market. The first UHF payload will launch at the end of 2012, and all three of the KA band satellites for INMARSAT will launch by the end of 2014 providing global coverage. These are more in keeping with commercial time lines and schedules. Of course, the hosted payload model also has potential applications beyond comm. Sensor-driven missions, space situational awareness are just two examples of the power of that model. So onto PNT or GPS. The current GPS constellation today is more robust than it ever has been with 31 active satellites. The most recent of these is the first 2F satellite which was just launched earlier this year. It provides new civil signals and more robust government signals. The most accurate clocks to date on the GPS constellation are actually demonstrating on performance that meets the GPS 3A level of requirements.
However, many of the space vehicles in the constellation are past their design lines in some amount. Military civil and commercial users around the world have all leveraged the current capability of the GPS constellation to accomplish their missions and meet their business needs. Our challenge is affordable low risk sustainment of this capability, which is vital for our nation and for the world. The GPS 2F program does have commercial features which helps to meet that challenge.
The contract allowed us to leverage block buys components as we were able to buy from more than one satellite at a time to generate savings. Space Vehicles 4 through 12 are being procured under fixed-price contract. And we established a manufacturing post line which borrowed from our commercial 737 factory to produce these in reliable production flow. This is a fixed-price production line that can be extended, if needed, to ensure our nation fields and affordable and robust constellation. WGS, which is also a fixed-price contract and GPS, are examples of programs that are leveraging commercial acquisition practices, but there is opportunity to do more and generate additional savings. One use of these savings which can be used on successful robust programs is to help them - to use them to fund parallel technology development and insertion as described by the acquisition panel yesterday. I think that's also a key element of the space strategy going forward.
With that, I'll close and state my remaining comments for the question and answer period. Thank you very much for your attention.
MR. JOSEPH ROUGE: Thank you, Ken. And again, one to have key emphasis I would like to point out is industry is stepping out. New policy gives us some direction, but industry is actually stepping out in front of us to actually implement that direction.
The last panelist today, and I actually asked Patricia to be last as clean up here is the president of Satellite Industry Association. What she is going to do is provide insight for not just her but from the broader association and the many companies that she represents. With that, Patricia?
MS. COOPER: Thank you. I also wanted to thank General Chilton not just for ensuring that this set of commercial issues are inserted as a topic in this extraordinary agenda for the last couple days but also for your leadership in the last few years in that engagement with the commercial industry. Mr. Rouge, I want to thank you also for asking SIA to take this seat. And what I'd like to do today is to revisit the actual topic of the panel which is a robust and commercial space industry and provide a little bit of context. I'll certainly touch upon some of the themes offered by my esteemed colleagues on the panel but also add a couple of my own.
To provide a little bit of context, building robust space industries really does by definition require consideration of the commercial side of this integrated industry. The commercial satellite industry globally SIA estimates was worth about $160 billion in 2009. And you can contrast that with the global space activity in 2009 estimated at $260 billion by the space foundation, so we're well over half of what is largely thought of as the global space environment. And commercial activity is certainly a robust driver of that. We saw an 11-percent growth last year over the previous year. And over the past five years, the commercial satellite industry had global revenue growth of an average of 11.4 percent. So that's a five-year picture of consistent growth. We also sought over four very different sectors within the satellite industry, the manufacturing sector, the satellite services sector and the ground sector.
So all four showed a strong growth, and it really highlights how interdependent these parts of the industry are and how intertwined we are with the larger space community. The defense department and U.S. military may contribute a relatively small percent of the revenue globally for the commercial space industry, but you are the largest single customer for the commercial satellite industry. Whether or not that market power is wielded in a concentrated and mindful way is I think a topic for another discussion. But I think it does highlight the place that commercial industry has in military space and also the defense department and military civil and intelligent space have in the commercial satellite industry's own context.
One of the themes that I wanted to talk on today was the way that the commercial industry engages with the defense department, and it seems a little bit facile because obviously satellite companies have been supporting the defense mission for many decades, whether as a supplier of MILSAT's building the military space infrastructure or by providing commercial satellite capacity by providing end-to-end services and managed networks or terminals and ground equipment. So that diversity I think has long been there, but there's a real change in the wind that I think is embodied by the national space policy that came out a few months ago and it is driven partly by budget constraints. Those require more creativity more efficiencies. But it also is driven by a considerable change in the nature of defense communications requirements.
Certainly the diversity and speed of the emergence of new requirements has changed in a way that I don't think anyone has expected from the warfighter's perspective all the way up to a space infrastructure aspect. Also, there is an astonishing hunger for more bandwidth, more services, more mobility. And the pace of that evolution has really required a different nature of engagement with the commercial companies that can innovate and provide those capabilities. The Satellite Industry Association, we're a trade association of about over 40 companies, including many of my colleagues here on the panel, many of the companies in the room and many of those on the trade show downstairs.
We seek to find areas where we have common interests, where we have common concerns and use that voice in a variety of different platforms, regulatory issues, export controls is certainly a high priority, public safety and emergency communications and the defense department and national space aspect. I wanted to highlight three areas where we've been spending time in addition to those mentioned by my colleagues. Infrastructure protection, EMI and RF interference and ensuring the readiness of the satellite industry.
As highlights of how the industry hopes to engage and has been engaging the military community and perhaps close with some thoughts that may charge us in the months and years ahead. With respect to infrastructure protection, the commercial satellite industry has its own impetus to provide commercially protected services and infrastructure whether the company is a satellite television provider hoping to avoid piracy for the end user or a FSS satellite operator providing capacity for an intelligence or UAV mission. There is an impetus there to try and ensure on-orbit safety and an impetus to ensure mitigation of debris. Those are common concerns among those that operate commercial space platforms.
And the satellite operators, the largest in the world from the commercial side, have joined together for a space data association which has as its goal to find a common language to share ephemerous data and ensure that on the commercial side that companies as diverse as a U.S. satellite operator and a Vietnamese commercial television satellite operator can use common reference points to explain their own flight activities and also any other kind of on-orbit threat.
This collaboration is in its early days. The three largest FSS and MSS providers are at the base of Intelsat, SES and INMARSAT, and I understand Paradigm, the UK commercial X-band provider, satellite operator has just joined. The space data association really envisions a way for commercial satellite operators to talk to each other. But in doing so, they also can improve and enrich the information that then is provided to Strategic Command and others in the defense department in the U.S. that are watching the skies for military on-orbit safety.
We also have been spending some time on infrastructure protection from the ground side, whether it's the physical infrastructure protection and also the information assurance of the traffic that runs over space-based networks. We just completed a report that was delivered to the White House as part of an advisory committee to the president called the NSTAC [National Security Telecommunications Advisory Committee] on the satellite task force report on physical protection, cyber and space protection for the satellite industry. And that satellite task force report had a number of recommendations that we were pleased to see already being incorporated into the national space policy. But that observance of infrastructure protection and recognition of its importance certainly is mirrored by a commitment of not only time and effort but infrastructure investment and management practices to ensure the protection of commercial space-based networks.
The second area where we've been spending a good deal of time is on EMI and RF interference. The space data association as well is looking to find common language to identify jamming, whether intentional or unintentional. And the Satellite Industry Association also worked with Strategic Command recently for a specialized workshop of experts to try and discuss what tools exist in the military and really a whole government range to deal with RF mitigation, identification of sources, both unintentional and purposeful. And I would note too that the commercial industry has been active not just in the defense context but in a whole government approach and also really a whole world approach.
The topic of purposeful interference was an active one at a recent meeting of the International Telecommunications Union which is a group of 192 countries, part of a UN administration, that looks at radio frequency allocations. And purposeful interference will certainly be a topic for their upcoming world radio conference in 2012. And the satellite industry is committed to moving that issue forward as well.
Thirdly, I wanted to address the question of how to ensure the readiness of the commercial satellite industry for the requirements that emerge from the military, civil, and intelligence communities. And here's where I'll have a couple calls to action. In my view, for maximum readiness, to ensure that the industry is ready to meet those requirements as they emerge, whether this is the provision of innovative spacecraft, whether it's the availability of bandwidth in an unexpected arena, whether it is to challenge the terminal synchronization or efficient bandwidth management, that kind of capability, that range of capabilities really rests on a robust exchange between companies in the satellite industry and the government end users and architects of those requirements.
This dialogue has been going on for some time, but I think the imperatives that I outlined at the beginning really charge us to refine and intensify that engagement. For the defense department, the most effective exchanges that I've seen from my perch at the nexus between the military community and the satellite community is characterized by a real curiosity about what drives the commercial satellite business. Understanding why the industry would take on the risk, whether it's of a new investing in a spacecraft, whether it's innovating a space capability that hadn't been flight tested yet, whether it's developing a new network management technique or the evolution of a new terminal comes on the move, those requirements all require a certain calculation, a business case that has to close. And understanding the dynamics of that, even though that may not be the full range of military requirement, is I think part of the effective exchange that can be enhanced and improved.
I would also note that the other characteristic that makes a useful exchange or rich exchange is an understanding of the marketplace in which the defense department finds itself. With whom do you compete for the services, for the investment, for the capacity? And understanding whether you're the driver of the technology, perhaps in something like comms on the move. Are you the driver or is it the satellite news gathering community? Is the bandwidth being developed because it's primarily carrying satellite television? Understanding, then, why they would be developing and investing in a certain region or a certain band I think it is certainly a useful aspect as that engagement becomes richer and more robust.
For the final point I was going to call out was just the sort of shift between the need-to-know requirements to (inaudiable) the requirement for industry to have investment grade decision material, information that helps them make those risk assessments and commit their capabilities, their innovation and their investment. We have a number of tools at our disposal to do this. In addition to one on ones with companies, there are a whole host of workshops that are targeted at understanding these dialogues, including some that the Satellite Industry Association addresses, targeted workshops on hosted payloads or interference and also executive level exchanges at the highest level of industry and the defense department.
To close, I would just say that I think this is really a turning point in the interaction between the commercial industry and the defense department. There's much work ahead. The Satellite Industry Association is committed to being there and doing what we can to enrich the engagement and leverage the innovation, the investment and the commitment of the commercial industry to the meet the military security mission. Thank you.
MR. JOSEPH ROUGE: I look at the questions that we received. It's amazing how many of them were already answered by the panel. But let me lead to one, I think a fundamental question that was posed by many people. In light of the new national space policy, do you believe changes are a vision to ITAR that will facilitate greater international cooperation? But more importantly, the second part of the question that I really want to pose to the team which is from an industry perspective, are there any pitfalls in national space policy or did it go far enough? Let me start at the end of the table.
MR. JOE RICKERS: On the ITAR?
MR. JOSEPH ROUGE: Across the board.
MR. JOE RICKERS: Across the board? I think I'll pass it on to one of my colleagues here.
MR. JOSEPH ROUGE: Anybody want to take this one on?
MR. KEN TOROK: I'll offer a couple thoughts, I guess. In terms of ITAR, I think it's been, you know, often discussed for quite some time the impediment that's put sometimes into the ability of United States companies to do business internationally in the commercial marketplace. And so moving in that direction I think would be helpful in terms of supporting that business and helpful, I think, in a trickle down just helping to support the industrial base. I think, you know, there's a big integration between government and commercial space going on right now, and it's many of the same technologies, the same people, same processes that are employed to build both of those systems. So I think the extra business can help to shore up some of the industrial-based concerns that we're seeing.
From a policy perspective, I think from the hosted payload perspective, I think it's important that the government continues to stay engaged and participate in that as industry moves out to try and offer these services which have been talked about for some time and are now beginning to happen, to make sure that the engagement is upfront so that the services, when they're finally put in place, are usable by the government. I think what I've seen is that that is happening.
As we talk to various people within the government, they're very excited by the work that's happening for hosted payloads and encouraged by what industry is doing. But I think the policy changes require coordination and things like frequency management for use of government-owned frequencies is very important and vital to the success of that going forward.
MR. JOSEPH ROUGE: Anybody else?
MR. STANLEY KENNEDY, JR.: I would like to comment on the ITAR because we live it every day. We do a lot of small components, S band radios, core sun sensors, miniature star trackers, the list goes on a number of mission payloads. And most of the stuff that we do is what I would consider openly available. It's not high performance encryption. It's not microvolumeters or IR sensors or things like that. The concern I have is ITAR right now as maybe it should be, it's a political issue, but it needs to get back into a place where people that know the technology and know what should be and shouldn't be protected are allowed to make those determinations. And you should start with being off the list and have to prove why you want to put it on the list rather than we're going to put everything on the list and you need to prove to me why it has to come off the list. As a smaller company within a large company structure, we struggle with that every day to the point of if ITAR continues to languish in the updates, you know, at some point we will exit the market from a components and technology supplier base and see that to overseas competition. And I see that in the industry, and it kind of makes me bite my tongue every day because we can do better.
MS. COOPER: I want to offer just a reality check on ITAR. We've been really pleased in the industry at the creativity and the commitment by the executive branch to revisit the regulatory treatment of satellites. But communication satellites are the only product area where Congress has mandated that we be treated as munitions, and that really constrains how much the defense department or other departments, the state, commerce, can differentiate among the satellite items. It requires legislative change, and we've had some success in last congress a provision to restore to the executive branch the authority to regulate satellites past the house, but it wasn't taken up by the senate. We have a lot of new landscape to understand as of today. I will say that the environment is on both sides of the aisle, both chambers, has been far more receptive to revisiting satellite expert control legislation than we expected, and it certainly would be a priority for us to try to get legislation through in the coming year.
MR. JOSEPH ROUGE: The second question I think is one I'm going to pose to John to start with because you raised it. Do you believe there are military mission areas where integration with commercial assets is unwise? And I'm going to ask you that from two-points of view, your previous job and your current job.
MR. JOHN LANDON: Unwise? Well, it's [inaudible] look, there are several mission areas I would say that really are government-centered missions. For example, I think the early warning mission is one that says not only is it vitally important for the government to have the assurance that they're getting the data they have to have for, I mean, presidential level decisions, but you know, frankly I'm not sure there's a business case that would say commercial go off and do early warning. So they're fairly separable. I think there are some areas that are difficult and as I made in my comments, there are areas that the government intrinsically focuses on that are hard things to solve, that require technology and development, it requires, you know, concentrated effort and it requires getting that requirement set established.
On the commercial side I think, you know, as you look at it there are areas that have been under development, well understood and can be delivered as mentioned on a fixed-price contract. And so, you know, the two areas are fairly distinct as you go forward, but I would say in the area of services particularly, I mean, look at GPS, how many things have come out of GPS, user equipment, for instance, and the way we use it today? There's just a tremendous opportunity out there, you know, if I think government said let's go out and see what you can do.
MR. JOSEPH ROUGE: All right. With that we are out of time. And again I'd like to thank the panel. I think they did a great job of answering the questions that you had posed and providing you a view of where industry is and how industry is prepared to not only implement the space policy but in some cases is already out there implementing the policy before we even asked them. With that, again, thank you to the panel.
MR. GANDY: All right. Thank you again, Mr. Rogue, and panel members that was fantastic. We're going to take an hour break now. If you could, if you could take your great discussions you're going to be having after all these panels out in the foyer and down to the exhibit hall, if you can go out and mingle with some of our exhibitors down there and then carry those conversations, that would be great. We can clear the room so we can have the event staff in here to be able to get the tables set up for lunch, and we'll see you back in if you can for lunch at 12:30. Thank you much.