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National Defense > Blog > Posts > Army Radio Competition Has Manufacturers on Edge
Army Radio Competition Has Manufacturers on Edge
By Sandra I. Erwin

A rifleman radio exercise in El Paso, Texas.

Army leaders over the past decade have promised to build a wireless “soldier network” so troops in war zones can stay connected at all times.

Officials in charge of the network spent the last three years evaluating radios and smartphones from dozens of vendors. Now comes what could be the toughest part of bringing the soldier network to fruition: the procurement process.

The Army program executive office for command, control and communications is expected to soon seek industry bids for large-scale production of handheld and vehicle-mounted radios that will be the building blocks of the soldier network.

Vendors see this program as possibly their last chance to score a big radio contract before military procurement budgets begin to dry up. The Army could spend as much as $750 million on as many as 120,000 rifleman radios, 68,000 manpack radios, 2,000 vehicular four-channel radios and possibly 7,000 small airborne networking radios. The procurement is being closely watched as a test of the Army’s ability to maneuver around the pitfalls of its acquisition process.

The umbrella program for Army radios, the joint tactical radio system, or JTRS, is a family of software programmable devices with a troubled history of cost overruns and technological setbacks. JTRS radios must operate government-owned software applications, called “waveforms.” One is the SRW, or soldier radio waveform. The other is the WNW, or wideband networking waveform. JTRS radios have to be interoperable with the Army’s single-channel legacy combat net radio, called SINCGARS.

The Army’s program office announced last month that it would kick off a “full and open competition” to procure handheld, manpack, small form fit (HMS) JTRS radios. "The intent is to leverage industry innovation, decrease costs and provide the most effective communications solutions to the soldier," Joshua Davidson, spokesman for the Army's PEO C3T, said in a statement. "More details of this approach will be released in the forthcoming request for proposals after the HMS acquisition strategy is approved at the Department of the Army and office of the secretary of defense levels."

There will be separate competitions for the manpack and handheld radios. Davidson said contract awards for both programs are expected in fiscal year 2014.

“The rifleman radio will be the first opportunity for the Army to build the tactical network down to the edge,” said Aaron Brosnan, vice president for business development at Thales Communications Inc. “This will be the Army’s first chance to build a cohesive network across all tiers — aerial, mid tier and lower tactical tier, down to the individual soldier.”

What “acquisition strategy” the Army will adopt is the big question swirling around the industry. One scenario would be the Army selecting a single manufacturer for the handheld and one for the manpack radios. Another would be choosing to support dual manufacturing sources for each radio type. Industry officials said in interviews that they anticipate the Army will opt for a winner-take-all, five-year, firm fixed price “indefinite delivery, indefinite quantity" contract for the rifleman and the manpack radios. They noted that Army Acquisition Executive Heidi Shyu informed members of the House Armed Services Committee that this is the preferred approach. A single supplier would be a departure from the original JTRS plan, which was to have at least two manufacturing sources for each radio.

Which way the Army goes, industry officials said, could determine whether it will be a level-playing field. A winner-take-all competition could skew the odds in favor of current JTRS contractors that have been building radios in low-rate production and are clearly in the driver’s seat. The Army already has spent $8.5 billion on handheld and manpack JTRS development and production. General Dynamics and Thales Communications manufacture the handheld radio. General Dynamics and Rockwell Collins make the manpack. The Army last year ordered 3,726 manpack and 19,327 handheld rifleman radios under a $250 million low-rate production contract.

Non-incumbent firms such as ITT Exelis and Harris RF Communications would have a greater chance to win production orders if the Army chose a dual-source approach.

Exelis and Harris have developed radios that are “JTRS certified” and, according to company executives, cost less than the “program of record” radios made by General Dynamics, Thales and Rockwell. But they worry that the Army has already invested large sums into the incumbents’ production lines and in the logistics support of these radios, and might not want to take a chance on a new supplier.

The prospect of a winner-take-all competition has alarmed non-incumbents because losing this contract could jeopardize their military radio business, as they might not be able to keep their production lines alive for the next five years in hopes of getting another shot.

The single-source approach may not benefit the Army because it would quell competition and, over time, prices might go up, said Brosnan. “You kill the ability of other competitors to stay in the fight for another five years and invest in their product,” he said in an interview.

Although Thales is one of the current rifleman radio suppliers on the General Dynamics team, the company intends to compete individually for the full-rate production contract.

Brosnan said it would make better sense to have two manufacturers involved in full-rate production. “It's clear that sustained competition helps contain costs,” he said.

A case in point is the Army’s ubiquitous SINCGARS radios. There has only been one manufacturer, ITT Exelis, which has produced more than 500,000 devices. “Nobody could compete” with ITT, said Brosnan. Whether the Army paid a premium for the lack of competition might never be known, he said, but he estimated that it probably would be considerable.

One of the arguments for a winner-take-all procurement is that equipping an Army brigade with radios made by multiple vendors adds to the unit’s maintenance and training workload. Brosnan said Thales has studied that issue and found that having handheld radios from multiple vendors creates a “negligible logistics burden.” When handheld devices break or malfunction, they are sent back to the manufacturer and do not require the unit to keep stocks of spare parts. “The cost of having multiple vendors’ radios is outweighed by the economic benefits of having competition” in the program, said Brosnan.

That is not the case, however, with vehicle-mounted radios, which do require integration into tanks or trucks, and demand more maintenance. A single-supplier strategy would be better suited for manpack or vehicular radios, Brosnan said.

Another expected contender for a JTRS production contract is ITT Exelis. Company leaders, though, are not yet entirely convinced the company should compete in a winner-take-all procurement if it appears that the cards are stacked in favor of the incumbent firms, said Jennifer Schoonover, vice president of communications solutions at Exelis Tactical Communications Systems.

“I wouldn't say necessarily that just because someone else has an LRIP [low rate initial production] contract we wouldn't bid,” she told National Defense. “We may have something better and cheaper than the program of record. Whether we bid depends on price point and quantities. All kinds of variables go into the analysis.”

Like Brosnan, she would like to see a dual-source strategy. “With a winner take all, the incumbent has more points on their side,” Schoonover said.

A sign that Exelis is prepared to throw its hat in the ring is the recent announcement that two of the company’s tactical radios received National Security Agency certifications. One is the “sidehat” that hosts the Soldier Radio Waveform and provides a second channel to SINCGARS vehicle radios. The company also earned NSA certification for its handheld software-defined radio that could be a candidate for the rifleman production award.

Procurement experts speculate that the Army leans toward a winner-take-all strategy, and that could ultimately dampen competition. It could result in entrenched suppliers and increasingly less innovation, said Allen Boyd, a retired Army intelligence officer and industry consultant.

Boyd noted that Army officials have been saying for the past several years that they wanted to shake up the traditional acquisition process. As the Army sought to build the soldier network, it started conducting “network integration evaluations,” or NIE, at Fort Bliss, Texas, to encourage companies to bring their equipment and pitch it directly to soldiers. Companies welcomed that chance, and have spent millions of dollars supporting the NIE, Boyd said. So far, the Army has not delivered on its promises, he said.

The Army opting for a winner-take-all JTRS procurement has industry shaking its head, said Boyd, as it is contrary to what the Army has been stating or implying for the past two to three years.

“Industry has heard ‘agile acquisition process’ and ‘full and open competition’ on a recurring basis,” he said “It has heard ‘buy fewer, more often’ and ‘buy different, more often,’ too, as a means of capitalizing on technology advances more frequently and for the Army to avoid being stuck with long-term procurements that inherently and historically limit innovation,” said Boyd.

“Industry was pumped up to invest on the basis of regularly opening windows of opportunity as the Army would offer period re-competitions in the face of a maturing architecture and innovative technologies,” he said.

The five-year winner-take-all approach is somewhat at odds with the Army’s rhetoric, said Boyd. The rationale given by the Army is that buying radios from multiple vendors increases life-cycle costs and logistics support requirements. “All of those reasons have been factors in tactical radio procurement for years, and they'll continue to be factors going forward,” he said. Installing radios in military vehicles is a complex engineering job, he said. “This isn't an Apple-like environment where we simply buy a new radio and watch it self-register and self-adapt to operate seamlessly in the network or where user training is largely intuitive,” said Boyd. “And if anything shows from multiple NIEs, it is that training is complicated and far from intuitive in most of these systems.”

Commanders typically want stability and minimum complexity in their tactical communications systems, he said. “Potentially mixing multiple different manpack radios is a concern with training and logistics in an environment where radios may change hands or even change platforms, if mounted, on short notice.”

Over the coming months, the Army will firm up its tactical communications architecture that will likely stand for years. Boyd said that could be a reason why officials might prefer to buy radios from a single vendor. “Getting the architecture stabilized and complete, integrated, tested, trained, fielded, and supported is incredibly difficult,” he said. “Perturbing that baseline very much or very often will see second- and third-order effects that are too much to stand.”

This affects vehicular radios far more than handhelds, which are easier to manage, said Boyd.

The reality for industry is that the Army said it would change how business is done but the JTRS procurement shows that not much has changed, said Boyd.

Industry has invested money in NIE, on the belief that the Army would procure faster but it is not seeing that happen, said Boyd. “Everyone was led to believe they would have regular opportunities to re-compete and see opportunities to get back in the game.” But the message from the JTRS winner-take-all procurement is that, “If you're not the winner of this five-year [IDIQ contract] upfront, you'll wait at least a few years before you have a chance to get back in the game, and you're probably out of that part of the market for some time.”

Photo Credit: Army


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