Comtech Telecommunications Corp. anticipates protesting against U.S Army award to third party for Blue Force Tracking-2 Program

Jul 21, 2010

Comtech Telecommunications Corp. /quotes/comstock/15*!cmtl/quotes/nls/cmtl announced today that its Maryland-based subsidiary, Comtech Mobile Datacom Corporation, has been advised by the U.S. Army Contracting Command-CECOM Contracting Center that it was not selected as the program manager and vendor for the Force XXI Battle Command Brigade and Below, Blue Force Tracking 2 (FBCB2-BFT-2) program.

The Contracting Center also advised Comtech that an award was made to a third-party vendor based on a total evaluated price of $249.9 million which is approximately 50% lower than the total evaluated price of Comtech's BFT-2 proposal. This $249.9 million award implies that the BFT-2 program will spend an average of approximately $41.7 million per year on BFT-2 services and hardware based on a six-year anticipated roll-out.

Fred Kornberg, President and Chief Executive Officer of Comtech Telecommunications Corp., said, "Given our proven performance during a war-time environment, the performance capability of our BFT-HC transceiver and our belief that Comtech offers a lower overall program risk to the U.S Army as well as other factors, we anticipate protesting the award given to the third party."

Comtech's current BFT-1 contract of $384.0 million enables the U.S. Army to place orders through December 2011. Total orders received to date against the BFT-1 contract are $262.7 million. Comtech's existing BFT-1 program is expected to generate approximately $50.0 million of revenue in fiscal 2010 of which approximately $30.0 million relates to satellite network bandwidth and network operational services. Assuming the BFT-2 contract award is not overturned, Comtech anticipates that BFT-1 satellite network bandwidth and network operational services will approximate $30.0 million in annual revenue for fiscal 2011 and will decline thereafter through fiscal 2015. The ultimate amount of BFT-1 revenue in any future fiscal year will likely depend on the speed of the transition to the BFT-2 network and future U.S. Army operational needs. In addition, the Company expects to continue to perform and generate revenue under its current MTS contract as well as participate in the solicitation process for the next-generation MTS contract.