In the face of mounting budget pressures, the U.S. Army is attempting to whittle down the price of tactical radios by inviting any interested vendor to compete for five-year, winner-take-all contracts in two major competitions scheduled for 2014.
That strategy, which has been announced for the Army’s Joint Tactical Radio System (JTRS) Handheld, Manpack, Small Form Fit (HMS) Rifleman and Manpack radio competitions, is drawing the ire of industry executives who say it may lead to higher prices in the long run by reducing the pool of competitors vying to produce Army radios.
In the past, the Army often purchased radios through annual contracts awarded to two or more vendors. That strategy was designed to promote competition while supporting the defense electronics industrial base. Army leaders have been forced to rewrite their acquisition strategies, however, as they wrestle with the task of fielding a family of sophisticated software-defined radios in an era of declining budgets.
“The Army’s investment accounts are taking it on the chin,” said Loren Thompson, chief operating officer of the nonprofit Lexington Institute. Unless Congress passes a comprehensive budget plan, the Defense Department will be forced to scale back 2014 spending to $475 billion from its proposed $527 billion level.
In August, President Barack Obama vowed to shield military personnel spending accounts from the cuts and limit their impact on operations. As a result, research and procurement accounts are expected to decline sharply.
Against that backdrop, the Army is preparing to select contractors to begin full-rate production of single-channel, Handheld Rifleman radios and larger, two-channel Manpack radios, key elements of the Army’s $3 billion-a-year campaign to modernize tactical communications.
One unique feature of the Rifleman and Manpack radios is their ability to extend the Army’s network by acting as communications towers, Chris Marzilli, General Dynamics C4 Systems president, said by email.
Aaron Brosnan, Thales Communications business development vice president, added that the radios feature “cutting-edge technology that enables the Army to build-out one cohesive, infrastructure-less, tactical network.”
The service has purchased 19,327 Rifleman and 3,826 Manpack radios under low-rate, initial-production (LRIP) orders.
“The current Army Acquisition Objective is 193,726 for the Rifleman Radio, and 65,622 for the Manpack Radio,” said Col. Russ Wygal, project manager for tactical radios in the Army’s Program Executive Office for Command, Control and Communications-Tactical.
With such a large quantity at stake, competition for full-rate production orders is expected to be fierce. General Dynamics produces both radios under LRIP contracts. In addition, Thales Communications manufactures Rifleman radios, and Rockwell Collins manufactures Manpack radios under LRIP contracts. Each of the incumbents has signaled its intention to bid on full-rate production awards.
The Army’s plan to invite additional firms to bid has widened the competitive field. ITT Exelis is prepared to offer its Soldier Radio-Rifleman (SR-R), which meets requirements published in the Rifleman radio draft request for proposals issued Aug. 16, said Jennifer Schoonover, ITT Exelis vice president for communication solutions.
While competing radios are likely to be quite similar, “we think we are in a position to build a very good radio that will run the [Soldier Radio] waveform as well if not better than anyone else, because we are the developer and inventor of the waveform,” said ITT Exelis spokesman Tim White.
Meanwhile, Harris RF Communications plans to enter the Rifleman competition with its new RF-330E Wideband Team Radio, a lightweight, hand-held device that provides voice, data and situational awareness to individual squad members, according to an email from Chris Aebli, Harris RF Communications vice president for Defense Department business.
Harris also is developing a radio for the Manpack program. Aebli declined to describe that radio except to say it offers “a next-generation platform with substantial new capabilities for wideband tactical communications.”
Harris plans to unveil its Manpack entry at the Association of the U.S. Army convention in Washington in October.
Many industry executives were reluctant to speak on the record for fear of weakening their competitive position or irking service officials preparing to dole out contracts worth billions of dollars. Privately, however, companies are speaking up.
During a series of meetings held Sept. 5 during an industry forum at Aberdeen Proving Ground, Md., executives questioned the Army’s plan to select a single vendor to manufacture Rifleman radios for five years. Vendors that do not win will find it extremely difficult to “hang around for five years and then try to get back in the business,” Schoonover said.
Brosnan couched the issue in more general terms.
“Contract vehicles promoting continuous, ongoing competition and recognizing best-value in the source selection process serve to contain acquisition costs and encourage industrial innovation and investment,” he said by email. “That said, we understand the resource and budget challenges facing the Army in the current economic climate.”
The Senate Appropriations Committee questioned the Army’s acquisition plan in a 2014 budget bill passed Aug. 1. Senators warned, “When the Army tries to compete the next JTRS Manpack contract award in 5 years, there will likely be only one vendor left,” according to the Senate report. “The future JTRS Manpack program will not receive benefit from vendor investment, innovation, or price competition.”
Wygal declined to comment on the Army’s acquisition strategy except to say, “We continue to examine options that would meet the intent of the competition by driving down costs while increasing capability for the soldier.”
Even if the Army awards multiple contracts for Rifleman and Manpack radio production, some vendors may exit the military radio business.
“The military electronics sector is overcrowded,” Thompson said. “Some of these companies need to either consolidate or exit the business. Trying to keep them all viable just isn’t practical.”