The United States Government Accountability Office has dismissed the protests of Artel, CapRock Communications and Segovia over the US Navy’s award of the US$543m five-year Commercial Broadband Satellite Program (CBSP) contract to Intelsat’s…
The United States Government Accountability Office has dismissed the protests of Artel, CapRock Communications and Segovia over the US Navy’s award of the US$543m five-year Commercial Broadband Satellite Program (CBSP) contract to Intelsat’s government-focused subsidiary Intelsat General.
The companies were competing with Intelsat General to win the CBSP contract and following its award to the latter in January 2010, they filed a complaint with the GAO, which has authority over the contract.
The plaintiffs accused Intelsat of abusing its dominant market position, arguing that the satellite operator unfairly favoured its Intelsat General subsidiary with regard to wholesale access to its satellite capacity.
Subsequent to that allegation, Artel and CapRock, along with satcoms specialists Globecomm Systems and Spacenet, then extended their protest to the FCC, which was in the process of seeking comments as part of its annual review of the Open-Market Reorganisation for the Betterment of International Telecommunications (ORBIT) Act.
The ORBIT Act judges whether the former intergovernmental organisations (IGO) Intelsat and Inmarsat have been fully privatised and now compete on a level playing field with other satellite providers.
Intelsat denied both accusations and in its reply comments to the FCC argued that “the comments filed by Intelsat’s competitors and customers are a transparent and inappropriate attempt to use the instant proceeding to gain advantage in ongoing commercial matters. These comments have no place in a proceeding dedicated to evaluating the success of Intelsat’s privatisation according to the requirements of the ORBIT Act. Indeed, the increased competition envisioned by the Congress in passing the ORBIT Act is precisely what has led to the commenters’ complaints.”
According to Intelsat, the FCC’s ORBIT review process has since finished and no action has been taken.
Intelsat revealed the GAO’s judgment as part of its Q1 2010 results. The satellite operator said that following the decision, the company expects to begin receiving orders under the indefinite delivery, a indefinite quantity (IDIQ) program in the near future. Under the contract, Intelsat General will provide C-band, Ku-band and X-band satellite capacity, terrestrial backhaul and network management services as the prime contractor for the Navy’s CBSP.
In its Q1 2010 results, Intelsat reported a 2% year-on-year fall in revenue to US$621.1m, which it said was primarily due to the resale of a launch vehicle during Q1 2009. The satellite operator recorded a first quarter net loss of US$102.6m and a quarterly interest expense of US$339.8m. Adjusted EBITDA was US$483.1m, a margin of 78% but down 2% year-on-year.
Commenting on the results, Intelsat CEO, David McGlade said: “Q1 2010 performance was as anticipated in light of the previously reported events that are restraining our growth in H1 2010. Our confidence in our business is well-founded. Our attractive contract backlog, which increased to US$9.5bn at the end of the first quarter, provides stability to our business and visibility into our future revenue streams.”
