Filed under: ComTech, logistics, northrop grumman, Syndicated Industry News, ViaSat
The US Army is finally integrating a blue-force tracking system common to manoeuvre and logistics elements. For the first time on the battlefield, maneuver and logistics forces will share situational awareness and messaging, forming a complete and...
Filed under: Acquisitions, Business Line, Companies, ComTech, Contract Awards, Department of Defense, Events, IT, Northrop Grumman Corp., production program, Services, U.S. Army
In July we wrote about the U.S. Army awarding its next increment of the Blue Force Tracking (BFT) contract to ViaSat. One of the losing contenders was Comtech Telecommunications (CMTL).
BFT is a system of terminals, radios and datalinks that allow units to track the position of other friendly units. The goal of the system is to avoid friendly fire incidents that proved such an issue in Desert Storm. Northrop Grumman (NOC) is the prime contractor for BFT with ViaSat winning a contract to build parts of the system.
The loss of the contest for this contract was a major blow for Comtech and its stock price suffered accordingly. This then put pressure on the planned acquisition of CPI International for over $470 million. This deal was heavily based on CPI International shareholders receiving Comtech stock. The fall in price of shares affected how much money would be transferred.
Now in part due to the loss of the BFT contract Comtech announced that the deal has been terminated by mutual agreement.
At a time when M&A within the defense industry is supposed to pick up this illustrates that not all deals will go through. Comtech certainly had good reason to acquire CPI as it would have increased their market share in a variety of products and also expand their customer base. Unfortunately the two companies could not negotiate a deal based on the current status of Comtech’s stock.
Filed under: Business Line, Companies, ComTech, Contract Awards, Department of Defense, development program, Events, IT, production program, S&T, Services, U.S. Army, ViaSat
One of the major issues that was identified in Desert Storm way back in 1991 was a need to minimize Blue-on-Blue engagements. The problem of friendly fire has existed in warfare for generations. The death of Stonewall Jackson at Chancellorsville in 1863 by North Carolina troops being a good example. The increased lethality of modern tank and air launched weapons only exacerbates the problem. The U.S. military has put a lot of money and time into developing systems to track friendly forces and let others know where they are on the battlefield to protect against them. The generic term for these systems is Blue Force Tracking (BFT).
The U.S. Army awarded a contract to ViaSat last week to develop the next increment of their equipment as part of the Force XXI Battle Command Brigade and Below (FBCB2) Program. The contact is an ID/IQ one worth up to $477 million if all options are exercised. A separate contract for $37 million will be used to buy terminals and other ground equipment supporting BFT. The BFT-2 is part of moving the system to a new network and includes things like terminals to be mounted on aircraft and vehicles, central equipment as well as engineering support services. Northrop Grumman (NOC) remains the lead contractor for BFT and ViaSat and its partners developed this new equipment as part of the overall BFT upgrade program.
As with any contract win there are also losers. Comtech Communications (CMTL) had also bid for this contract but were not selected. The Army told them that the ViaSat bid came in at a much lower price. Comtech had been working on the BFT-1 increment and had successfully received a contract worth $384 million in the past. The loss of this follow on contract significantly affected the company’s share price. Last Wednesday it lost almost twenty-five percent of its share price. Since then it has traded flat. The loss of this contract effort also is affecting a plan by Comtech to acquire CPI International by reducing the value of the stocks being transferred.
Blue Force Tracking is a key combat enabler for the U.S. military. Knowing where you are in relationship to other friendly forces not only prevents blue-on-blue but allows better coordination in combat. The system has been used successfully in Iraq and Afghanistan and the Army continues to move forward in further developing and improving it.
Photo from Nevada Tumbleweed’s flickr phtostream.